The GOP's Laughable Alternative to Obamacare Is a Sop to Big Business and Screws Workers

Republican efforts to replace Obamacare with their version of constructive alternatives keep self-destructing on Capitol Hill, where budget analysts this week said that one high-profile GOP proposal would result in “about 1 million people” losing work-based health insurance and end up costing taxpayers an additional $83 billion over the next decade.

H.R. 2575, the Save American Workers Act of 2013, from Rep. Todd Young, R-IN, says that employers do not have to offer health insurance benefits to people working less than 40 hours a week. Obamacare now says employers must cover employees working 30 hours or more, or pay a sizeable fine for dodging that responsibility.

The non-partisan Congressional Budget Office (CBO) and Joint Commiteee on Taxation (JCT) looked at the impact of H.R. 2575. Its analysis more than suggests that the Save American Workers bill was badly mislabeled:

“In most years over the 2015-2024 persiod, CBO and JCT estimate that the legislation would:

• Reduce the number of people receiving employment-based coverage – by about 1 million people;    

• Increase the number of people obtainng coverage [through state-run] Medicaid, the Childen’s Health Insurance Program (CHIP), or health insurance exchanges – by between 500,000 and 1 million people; and 

• Increase the number of uninsured – by less than 500,000 people.”

This is a political horror story involing Obamacare, but not the one that Republicans like Americans For Prosperity have been blaring around the country fanning fears about people losing health care and blaming Democrats—even as Washington Postfact checkers, New York Times columnists and others have said that those claims are big lies.   

The “Save American Workers” bill is one of a handful of GOP proposals in Congress that purport to fix Obamacare. What they really do is roll out old ideas that would likely lead to employers rescinding health care coverage, writesTheWeek.com’s Peter Weber in a new piece entitled, “The GOP’s push to replace Obamacare is cynical. And doomed.”

Every GOP tactic to fix Obamacare would end up shrinking work-based coverage.

The first approach would cap or end employer tax breaks for providing health insurance. That would prompt some employers to drop coverage to save money—in much the same way that Young’s “Save American Workers” bill redefines full-time employment under the law at 40 hours and not 30 hours. CBO/JCT said Young’s bill would dump employees onto state insurance exchanges and onto federally subsidized welfare programs, costing taxpayers an additional $5.5 billion between 2015 and 2024.

The second purported ‘Repair Obamacare’ tactic turns to a GOP favorite, tax credits. A Senate plan would grant tax credits to people in different age brackets to buy policies—people age 18 to 34 would get $1,560 a year; individuals 50 to 64 would get $3,720 a year; and families would get double that. Another version of this approach would grant all Americans a $7,500 annual insurance-buying tax credit, or $15,000 for families. This too would be another great incentive for many employers to cut back benefits.

The third alternative would be to allow insurers to sell policies across state lines, which theoretically would increase competition and lower premium costs. In 2005, CBO put those potential savings at about 5 percent. But that proposal, Weber writes, “would require scrapping the minimum standards required for all plans under Obamacare – a selling point for conservatives who aregue we use too much health care, anyhow.”

No matter how you slice it, the GOP’s purported new ideas for Obamacare are old ideas. They’re predictably good for business owners and predictably bad for employees. That dichotomy bring us back to the most interesting figure in the CBO/JCT’s analysis of the mislabeled “Save American Workers Act.” 

Apparently, the Obama Administration is expecting a lot of big employers will not follow the law and simply pay the fines—by not giving health care coverage to people working less than 40 hours a week. “CBO and JCT estimate that those [penalty] payments would be $63.4 billion lower over the next 10 years” if H.R. 2575 became law. That’s because fewer employees would fall under the employer responsibility requirements, it said, and as a result that threshold would undermine the size of employer fines.

Stepping back from this week’s news, it’s clear that for years, the GOP has been rooting for Obamacare to fail on its own. Last fall’s botched insurance exchange website rollout encouraged that intellectually weak hope. But now, as millions of people have signed up, Republicans aren’t offering anything substantive or even new as an alternative.