us-capitol-477987_1920-300x225-9627020Sen. Bill Cassidy of Louisiana and Rep. Pete Sessions of Texas are making waves in Washington by introducing what’s being called the first Republican alternative to President Obama’s Affordable Care Act that stops short of repealing it.

The sponsors are calling their bill “The World’s Greatest Healthcare Plan,” but it’s hard to see how it amounts to a workable Obamacare replacement at all—especially for New Yorkers.

Its central thrust is to create an individual tax credit that consumers could use to buy insurance on their own, apply toward employer coverage, or deposit in a health savings account for paying medical bills directly. At the same time, the deductibility of employer-sponsored insurance would be phased out.

In principle, ending the historical accident of employer-provided insurance–and empowering people to more directly control their own health care–is a worthwhile goal. Such a change could better harness market forces to improve care and control costs. It could also lubricate the economy by lowering the costs for companies to hire and remove a barrier to entrepreneurs striking out on their own.

But the tax credits in the Sessions-Cassidy plan would be just $2,500 per adult and $1,500 per child. That’s less than half the average premium for individuals in the U.S., which was $5,832 as of 2014. The shortfall would be even larger in New York, with an average individual premium of $6,307.

The proposed credit would not enable a low-income family to afford comprehensive coverage, but it would bestow a savings on wealthier families who could easily pay full premiums.

Meanwhile, Sessions-Cassidy would preserve much of Obamacare, but only for those already in it. People who have used ACA purchasing exchanges to buy insurance, and taken advantage of ACA tax credits to lower the cost, could keep doing so. But young people just entering adulthood, or those who lose employer-sponsored coverage in the future, would find themselves on the outside looking in.

Similarly, employer-provided health benefits would still be fully tax deductible–but only for companies already offering them. This would put start-ups at a major disadvantage in recruiting employees.

The Sessions-Cassidy bill would preserve some of the ACA’s more popular mandates, such as the requirement that health insurers accept all customers regardless of pre-existing conditions. But it would abolish tax penalties for people who fail to obtain coverage and for companies that fail to offer it, known as the individual and employer mandates, likely causing the uninsured rate to soar once again.

The long-term effect would be to undermine if not blow up the employer-provided health care dynamic without establishing a viable substitute. This amounts to a far more radical change than anything the ACA attempted to do. And Session-Cassidy’s “grandfather” clauses, while sending a conciliatory political signal, would only compound the system’s already absurd levels of bureaucracy and complexity.

New York has disproportionately benefited from Obamacare, in the form of increased federal funding and crucial fixes to its dysfunctional individual insurance market. It has all the more to lose from ill-conceived changes in Washington.

Those who support market-oriented health-care reform need to seriously grapple with challenges of making coverage affordable. A $2,500 tax credit does not come close to meeting the test.

The wait for a serious Republican alternative to Obamacare goes on.

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

You may also like

Hochul’s Emergency Order Imposes Insurer Restrictions Sought by Hospital Group

Buried in Governor Hochul's emergency order on health-care staffing is a temporary bar against insurance companies challenging claims submitted by hospitals–and an influential hospital association is taking credit. Read More

New York’s health benefits remain the second-costliest in the U.S.

New York's health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S. The state's average total cost f Read More

New York’s ‘Single Payer’ Health Plan Would Disrupt Coverage for Out-of-State Commuters, Too

Under the latest version of the single-payer bill – which has broad support on Democrats in the Legislature – hundreds of thousands of commuters from other states would face the replacement of their current health insurance with a Medicaid-like plan funded with tax dollars and managed by Albany. Read More

Lawmakers Mull Medicaid Proposals That Would Speed New York Toward a Fiscal Cliff

As a budget deal nears in Albany, reining in spiraling Medicaid costs seems to be the last thing on anyone's mind. Governor Cuomo is advancing only Read More

Cuomo Pushes Budget Change Sought by Hospital Group Implicated in Pandemic Scandals

A hospital lobbying group at the heart of scandals plaguing the Cuomo administration is again getting the governor's help in pushing a late change to the state budget. Aides to Gove Read More

New York’s Health Premiums Remain Among the Highest in the U.S.

The average cost of New Yorkers' health benefits increased by less than the national average in 2019 but remained among the highest in the U.S., according to recently published federal data. Read More

Unsure of COVID Impact, NY Insurers Roll Dice on Rate Hikes

The health insurance industry's rate applications for 2021, posted this month by state officials, reveal deep uncertainty about the long-term impact of the coronavirus pandemic on medical costs. Read More

Essential Plan surplus hits $3B

As Governor Cuomo pleads for financial help from Washington, one of his state's programs is sitting on $3 billion in unspent federal aid: the Essential Plan. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!