GOP pushes carrot approach to insurance, over ObamaCare mandate's stick

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Published July 06, 2012

| FoxNews.com

Part of the the effort to repeal and replace the President Obama's health care law, as Republicans see it, is to find a way to entice the uninsured to buy insurance rather than force them to do so.

The existing law that the Supreme Court recently upheld relies on the proverbial stick -- the individual mandate, which requires people to buy insurance or face a fine.

Republicans argue for a carrot approach, to help more people voluntarily buy insurance, including by offering broader tax incentives.

"I think that many on the other side see that there is an alternative," Nina Owcharenko of the Heritage Foundation said. "If we actually use carrots and provide the right incentives for people who want to buy insurance and actually give them more choices for the health care coverage that they think is valuable to them."

Republican lawmakers acknowledge you can't have millions of uninsured in the country without creating chaos for the health care system. So some analysts have proposed federal tax credits to help people buy insurance.

"I think we ought to have a tax credit for about $2,500 for an adult. I think a family of four could get about $8,000 and that would buy the core insurance that we want everyone to have," said John Goodman, author of "Priceless: How to Cure the Healthcare Crisis."

"It gets us closer to universal coverage than ObamaCcare does," said Josh Arshambault of the Pioneer Institute and co-author of "The Great Experiment: The States, The Feds, and Your Health Care." "This allows the 50 million individuals that are currently uninsured to be able to actually have the money to go out and purchase in a competitive market their own insurance."

Conservatives would take the $300 billion or so now spent to subsidize health care and simply turn that into what are called refundable tax credits -- meaning people get the designated money even if they don't pay that much in taxes.

"With the refundable tax credit, you can really have universal coverage," Goodman said.

One hope is to eliminate a bias in the tax code. Now, everyone who gets health insurance through their employers gets it tax free, while individuals and small businesses get no tax help.

"If you're buying health insurance on your own, you have to use after-tax dollars to buy your health insurance. That's an unlevel playing field," Owcharenko said.

Archambault of the Pioneer Institute says, "It's a very good idea for us to equalize the tax treatment of health insurance for those that are working on their own or in unstable work environments at a small company. We want to give them the same benefit that those of us have had for many years who work for much larger companies."

One question is how to structure such tax credits. Are they available just for the uninsured? Or should they be used for Medicaid as well, which the president wants to expand by some 17 million people? The problem is that Medicaid reimburses so little that the poor often cannot find a doctor.

"And I think a lot of folks right of center would like to see them eventually expand (tax credits) into the Medicaid population," Archambault said. "So that you would have a tax credit and allow them to get off public insurance and go out into the competitive marketplace and pick the insurance that's best for them."

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http://www.foxnews.com/politics/2012/07/06/gop-pushes-carrot-approach-to-insuring-americas-over-obamacare-mandate-stick/