March 31, 2017

In recent weeks, as Congress debated whether to pass the American Health Care Act (AHCA), the Foundation for Research on Equal Opportunity (FREOPP) has promoted its work on how to reform the U.S. health care system, a 102-page study titled “Transcending Obamacare.” FREOPP focuses on conducting original research in order to expand economic opportunity for the most underprivileged populations of the United States, and health care is one of the most dysfunctional areas of U.S. policy for the country’s poor.

“The individual or non-group health insurance market is of particular importance to those with below-median incomes, because it is the market that serves those who do not receive employer-sponsored health insurance and who do not qualify for other federal programs like Medicare, Medicaid, and the Veterans Health Administration,” writes Avik Roy, president of FREOPP. “Transcending Obamacare provides a bipartisan path for improving health outcomes for the poor, reducing the cost of coverage, and increasing the number of Americans with health insurance, all with less regulation, spending, and taxation than we have today.”

Although momentum for the AHCA stalled in Congress after failing to garner enough support, Roy insists that more substantial reforms could succeed. He points out that some aspects of the AHCA would have expanded government involvement in health insurance markets, rather than reducing it.

“The AHCA’s original flat tax credit — a new, universal entitlement — would have moved us farther away from a health-care system in which federal involvement is limited to those who truly need the help,” Roy writes in National Review. “While the final bill contained some reductions of that new tax credit for the highest earners, its structure was not designed to benefit the working poor; indeed, the AHCA would have made premiums unaffordable for millions of blue-collar Americans.”

Targeting health insurance tax credits so that they apply to truly needy segments of the population could unite the congressional factions that could not agree on the AHCA as it stood.

“If … the AHCA’s tax credits were means-tested, and structured to kick in after premiums exceeded a certain percentage of an individual’s income, every change in Obamacare’s insurance regulations would affect premiums, and thereby federal tax credit expenditures,” Roy writes in Forbes. “The right type of tax credit structure—like the one contemplated by the AHCA’s Section 202 for the transitional years 2018 and 2019—would address the key concerns of both pragmatists (health insurance for their constituents) and conservatives (repealing as many of Obamacare’s regulations as possible).”