Four Conservative Health Plans Side by Side, From Tax Credits to Block Grants

There is a charge that has followed conservatives for years: "You have no plan." It is repeated so often that many conservatives half believe it. It is false. Conservatives have written real bills, with real titles and real numbers, and some of them passed a chamber of Congress.

The charge has a kernel of truth, though, and the kernel is this: conservatives have written several plans, not one. They overlap on principles and diverge on details. That is a strength in a free country, and a weakness in a legislature that needs 218 votes. This post puts four of the plans side by side so you can see where they agree, where they truly disagree, and which one fits which goal.

The terms

A short glossary, so the table reads cleanly.

A refundable tax credit is a subsidy delivered through the tax code that is paid even if you owe no tax. It is the conservative alternative to subsidizing insurers or tying a benefit to your employer.

A per capita cap limits federal Medicaid payments to a fixed amount for each enrollee, adjusted over time. A block grant sends a fixed lump sum to a state, with fewer strings. Both aim to replace the open-ended match that rewards states for spending more.

Preexisting conditions are health problems a person has before he buys a policy. How a plan treats them is the hardest question in the debate, and the plans answer it differently.

State flexibility is the degree to which a state may depart from federal rules.

The four plans

The four proposals are these.

1. The Patients' Choice Act of 2009, introduced by Representative Paul Ryan and Senator Tom Coburn, with colleagues in each chamber, as the Republican alternative while the Democratic bills moved through Congress.
2. The Empowering Patients First Act, authored by Representative Tom Price, a physician, first introduced in 2009 and brought back in later years.
3. The American Health Care Act, the House Republican bill that passed the House on May 4, 2017.
4. The Graham-Cassidy proposal of 2017, named for Senators Lindsey Graham and Bill Cassidy, the last serious Senate attempt that year.

A caution before the table. These are long bills, and different versions were introduced in different years. The table gives the central design of each at the level I am confident of. For the full text, go to Congress.gov and read the bill itself. A summary on a website, including this one, is not a substitute for the statute.

The table

I have kept the Medicaid and preexisting rows cautious in the two older plans because the versions differed, and I would rather tell you to check the text than invent a precision I do not have.

What they share

Read across the table and the same principles appear in all four.

One. Replace the mandate with choice. None of the four leans on a requirement to buy insurance; each tries to attract people with a benefit rather than a threat. This is the heart of the conservative objection to the 2010 law, an objection the Court partly endorsed in 2012 when it held that the Commerce Clause did not let Congress compel the purchase.

Two. Give the subsidy to the person, not to the insurer or the employer. The refundable credit is a conservative idea because it treats the family as the decision-maker. It also moves the subsidy toward neutral treatment, an argument made in The Biggest Tax Break in America Hides in Your Paycheck Stub.

Three. Let states experiment. Federalism is a conservative principle, and every plan expands the room for states. Justice Brandeis, in 1932, called the states "laboratories" in which a state could try a new social or economic experiment without risk to the rest of the country. Four plans, one principle.

Four. Use health savings accounts. Eleven Questions About Health Savings Accounts, Answered for Working Families explains why: the account puts a patient in charge of the money.

Where they truly differ

The disagreements are not trivial, and pretending otherwise would be dishonest.

Who gets the credit, and how big is it? The 2017 House bill used age as the main variable, giving older people larger credits, which was simple but did not adjust for income in the way the 2010 law's subsidies did. Critics said this left some low-income families worse off and some well-off families better off. Supporters said it was simpler and more neutral. Other plans differ in how they set the amount and whether it is advanceable, meaning paid when you buy coverage rather than reclaimed at tax time.

How to treat Medicaid. This is the sharpest dividing line. The House bill and Graham-Cassidy both end the open-ended federal match, but they do it differently: a per capita cap counts each enrollee, and a block grant hands states a lump sum. A per capita cap keeps federal funding tied to the number of people served. A block grant gives states more freedom and a stronger incentive to economize, and it puts a state at risk if costs rise faster than the grant. Conservatives who favor block grants say states are better managers. Conservatives who worry about them say that a fixed grant and a recession are a poor mix. The existing financing problem is laid out in The Medicaid Match That Pays States More for Adults Than for Disabled Kids.

How to protect people with preexisting conditions. This is where the politics are hardest. Every plan says it protects people with preexisting conditions, but they do so by different means. Some tie protection to continuous coverage: if you keep your insurance without a gap, you cannot be charged more when you get sick. Some fund high-risk pools for those who fall outside. Some leave it to states under waivers. The best conservative answer, in my view, is the risk pool, described in High-Risk Pools Covered the Sick Before 2014, and They Could Do It Again, because it protects the sick without raising prices for everybody else. But pools must be funded generously, and the record of underfunded pools is poor. A plan that promises protection and does not pay for it makes a promise it cannot keep, and conservatives who spent years pointing out broken promises should not make one.

How much to centralize. The Patients' Choice and Empowering Patients plans leaned toward individual choice in a national market. Graham-Cassidy leaned toward the states. The question is whether the better engine of reform is a person with a credit or a governor with a grant, and thoughtful conservatives come down in different places.

Why 2017 went the way it did

The table explains the substance. The calendar explains the failure. The House leadership first brought the American Health Care Act to the brink of a vote in March 2017 and pulled it on March 24 because it did not have the votes. That is the legislative equivalent of arriving at the airport and discovering you are holding a ticket for the wrong week. The bill was revised, and the House passed it on May 4, 2017, by a vote of 217 to 213, with no Democrats in favor.

Then it went to the Senate, where the arithmetic was tighter. The Senate could not pass a comprehensive replacement. A slimmed-down repeal bill failed on July 28, 2017, by 49 to 51, and in September the Graham-Cassidy proposal was withdrawn without a floor vote when its sponsors saw they lacked the support. Four plans, and none of them became law.

Why? Three reasons stand out. The plans asked a handful of Republican senators to vote for something that could be described, fairly or not, as taking away coverage, and some of them would not do it. The party had spent seven years promising repeal and had not settled which replacement it would stand behind, so each bill was a new fight inside the family. And the reconciliation process, which lets a bill pass the Senate by simple majority, limits what can go in, and the Byrd rule, named for the late Senator Robert Byrd, keeps out provisions that are not primarily budgetary. A policy designed to fit a procedure is rarely the policy you would design from scratch.

The lesson is not that conservatives cannot govern. It is that a plan must be settled, scored and sold before the vote, not during it.

The other side's best objection

Critics of all four plans make the same argument, and it deserves a fair statement. It runs: a credit smaller than the cost of coverage leaves poor and sick families unable to buy it, a Medicaid cap shifts risk to states and eventually to patients, and the protection for preexisting conditions is only as good as the funding behind it. Some analyses of the 2017 House bill by the Congressional Budget Office projected a significant reduction in coverage compared with current law. I will not quote the figures from memory, and I recommend you read the CBO's report yourself.

The answer has three parts. First, coverage is not the same as care, and counting people with a card is not the same as counting people who got treated. Second, a reduction measured against a law whose mandate had forced people into coverage reflects the end of compulsion, not a loss of something people wanted. Third, the right response to a gap in funding is to fund it, and conservatives can write the bill that does. The honest reading of the CBO's work is that the design details matter more than the philosophy, and that is a challenge to the drafters, not an argument against the approach.

Which approach suits which goal

Here is the verdict, stated in the plainest terms, goal by goal.

• If the goal is to give every family ownership of its health dollars, the tax-credit-and-HSA approach of the Patients' Choice Act and the Empowering Patients First Act fits best. It moves control to the individual.
• If the goal is to reduce federal spending growth while respecting federalism, the Medicaid reforms in the 2017 House bill and Graham-Cassidy fit best, with per capita caps being the more cautious and block grants the more ambitious.
• If the goal is to protect the sick without raising everyone's premiums, a funded high-risk pool, with the continuous-coverage rule of the older plans, fits best.
• If the goal is to let fifty states compete, Graham-Cassidy's model is the boldest, and the most politically exposed.
• If the goal is to pass something this decade, the narrowest bill with the clearest funding wins, whichever philosophy it carries. The record of 2017 teaches that a bill with a good idea and an unfunded promise will fail on the floor.

My own judgment is that the best conservative plan would be a combination: a refundable credit and expanded HSAs for individuals, a per capita cap for Medicaid to start and state flexibility to follow, and a funded risk pool for the sick. No single bill on this table does all three, and that is the work still to do.

The Founding connection

The Founders did not write on health insurance, but they wrote on the structure of a federal republic, and the plans on this table are arguments about it. The Tenth Amendment says that "the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Notice the last four words: "or to the people." The conservative plans divide into those that give power back to states and those that give it back to people. Both are in the Tenth Amendment. The best plan reserves as much as it can to the people first, and to the states second, and leaves Washington the least.

The history of 2017 also carries a lesson in the way a republic is supposed to work. The House passed one bill on May 4. The Senate could not pass another. That frustrated many of us. But a law touching a sixth of the economy should be hard to pass, and a divided result is the Constitution doing what Madison designed it to do, which is to slow change that does not have broad agreement. The task is not to complain about the slowness. The task is to win the agreement.

The case in brief

1. Conservatives do have health plans: the Patients' Choice Act of 2009, the Empowering Patients First Act, the American Health Care Act that passed the House on May 4, 2017, and the Graham-Cassidy proposal of 2017.
2. All four rely on choice rather than an individual mandate, favor credits or state flexibility over open-ended subsidies, and rely on private choice and health savings accounts.
3. They differ most on Medicaid financing, per capita caps against block grants, and on how to protect people with preexisting conditions.
4. A plan that promises protection for the sick must fund it, and a funded high-risk pool is the strongest conservative answer.
5. The best path combines the credit-and-HSA design for individuals, Medicaid reform that starts cautious, and a funded risk pool, and it is still waiting to be written.

What you can do: pick one of the four bills, find its text and summary on Congress.gov, read the section on preexisting conditions, and send your member of Congress one sentence on what a replacement must protect.