The Corner

The Issues with Scott Walker’s Obamacare Replacement Plan

Yesterday, Wisconsin Gov. Scott Walker laid out his plan to repeal and replace Obamacare. Full credit to him for putting his ideas out there on this important topic, something that all Republican presidential candidates should do over the course of this campaign. Health care reform is never easy, and Walker’s plan suffers from a number of problems that conservatives should be aware of as we consider how best to replace Obamacare.

The core of Walker’s approach is a new, universal entitlement that every legal U.S. resident would be eligible for, regardless of income or need. In a February post for The Corner, I described some of the issues with this approach. (I am an adviser to former Texas Gov. Rick Perry, but the Corner post predates that affiliation.)

Most importantly, from a standpoint of political economy, creating a new, universal, multi-trillion-dollar entitlement will have significant unintended consequences. Such a subsidy will be extremely difficult to reform, in the same way that Medicare is, and for the same reasons: politicians will have a powerful interest in increasing the size and value of this universal entitlement over time.

As I note in a new piece at Forbes, Walker’s approach to health care would not only create a new universal entitlement, but it would expand Medicare spending by around $800 billion over ten years, because it repeals Obamacare’s cuts to Medicare without replacing them.

Walker promises that his plan won’t increase the deficit. But that means that he will need to offset the cost of his replacement plan—as much as $1 trillion over ten years, depending on unknown details—with spending cuts and taxes elsewhere. Walker specifies that he would fund his plan by and large through cuts to Medicaid.

The end result is that Walker’s plan would reduce federal health spending on lower-income Americans by trillions of dollars over time, while substantially increasing federal health spending on upper-income Americans by trillions of dollars over time. Welfare for Republicans is still welfare. The likelihood of such a plan garnering 60 votes in the Senate is slim to none; any plan that fails to pass Congress further ensures Obamacare’s permanence, and makes real entitlement reform that much harder.

There are some good ideas in the Walker plan, particularly in its encouragement of health savings accounts. And Walker is right to try to replace Obamacare’s expansion of health insurance coverage with a more market-oriented approach. But the plan has grave deficiencies, deficiencies that I hope Walker—and other candidates—take steps to correct.

Avik RoyMr. Roy, the president of the Foundation for Research on Equal Opportunity, is a former policy adviser to Mitt Romney, Rick Perry, and Marco Rubio.

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