Barack Obama’s Faulty Memory About Health Reform

By Dr. John C. Goodman

Originally posted at Forbes, January 2017. 

President Barack Obama says he’d be happy to get rid of Obamacare — if Republicans can replace it with something better. Addressing his comments to Republicans, Obama said, “If you can in fact put a plan together that is demonstrably better than what Obamacare is doing, I will publicly support repealing Obamacare and replacing it with your plan.”

He went on to say something that is truly astonishing:

“From the earliest negotiations in 2009 and 2010, I made clear to Republicans that if they had ideas that they could show would work better than the ideas we had thought of, I would be happy to incorporate them into the law … And rather than offer ideas, what we got was a big no.”

Barack Obama in an interview with Vox

It’s amazing how memory fades.

Here is the inconvenient truth. In his 2008 race against Sen. John McCain, the Obama campaign spent more money than has ever been spent on television advertisements addressing a single issue (an estimated $100 million). The ads were not only the most expensive in electoral history, they were the most down loaded.

The focus of the ads: John McCain’s health plan.

If memory serves, McCain himself spent not even a dime promoting his health plan. When asked about it, he did a poor job of explaining it. All the attention directed toward McCain’s health plan came from the Obama forces – who did their level best to distort, smear and demagogue the idea. And because that effort is viewed as having been imminently successful, Republicans have shied away from endorsing the McCain approach to health reform ever since.

But here is what is especially amazing. The McCain plan was actually better than the plan Obama was advocating by just about every criterion. And that’s not just my opinion. It was the opinion of Ezekiel Emanuel, the White House doctor who helped give us Obamacare.

On Emanuel’s telling, after the election he and other advisors tried to get President Obama to adopt the McCain approach. Furthermore, prior to becoming President Obama’s economic adviser, Jason Furman endorsed a health reform that looked very much like the McCain proposal. The problem: the political advisors, led by David Axelrod, objected – arguing that the president could not possibly be credible if he endorsed a health plan that he had been campaigning against for months.

What was the McCain health plan? As I wrote during the 2008 election, John McCain was the real radical on health reform. His health plan called for giving every single citizen the same tax subsidy for health insurance. That means 200 million people would be receiving a tax credit instead of the 7 or 8 million who currently receive one under Obamacare. Ironically, such a plan would have been far more progressive than Obamacare. It would have involved much more redistribution of income

Incidentally, the legislative version of the McCain plan was the Coburn/Burr/Ryan/Nunes bill. But far from welcoming the Republican effort, Harry Reid refused to allow a vote on it when Obamacare was voted on in the Senate. Today, the proposals most similar are a Senate bill sponsored by Sen. Bill Cassidy (R-LA) and bicameral legislation sponsored by Cassidy and Rep. Pete Sessions (R-TX).

Had Barack Obama endorsed John McCain’s health plan, it would have sailed through Congress with bi-partisan support. At a very minimum, the president could have asked John McCain and Max Baucus (the Democrat chairman of Senate Finance Committee) to chair a task force to write a reform plan. And health reform would not have been a hugely divisive election issue six years after the fact.

There would have been three other big benefits.

Universal coverage. The Obamacare approach to health reform is a defined benefit approach. The government dictates what must be in a health plan, then lets the private sector worry about how to pay for it. That’s why almost 30 million people are still uninsured. It’s why employers are offering low-wage employees health plans that are clearly unaffordable.

The McCain approach, by contrast, was a defined contribution approach. The government gives everyone a tax subsidy and then lets the supply side compete to see what it can offer for that amount. Benefits may not be as generous under this approach. But there would be no reason for anyone to be uninsured.

Fairness. Under Obamacare, families at the same income level are receiving radically different amounts of tax relief from government when they obtain health insurance. In fact, the difference in subsidies can be $10,000 a year or more. Furthermore, the practice of paying for health insurance with pre-tax dollars is of far more benefit to highly-paid Silicon Valley workers facing a 50 percent marginal tax rate than it is to fast food workers who don’t pay income taxes at all.

Under McCain, everyone would receive the same tax relief, regardless of income.

Simplicity. As is well known, Obamacare requires people to guess next year’s income and if they guess wrong they can face significant tax penalties. Also, verification of income is the principal reason the exchanges still aren’t working the way they are supposed to.

Under McCain, there is no need for people to guess their income and there is no need for government to verify those guesses.

Bottom line: Republicans did show Barack Obama a plan that people on the right and left agree was a better plan. They did that eight years ago. And he ignored them.

Oh, and there is one more myth that needs to be discarded. That is the idea the reason Barack Obama was not more successful was that Republicans refused to cooperate in any way. (See for example, Charles Blow.) That just doesn’t wash. In his last two years in office, Bill Clinton and a Republican Congress worked together admirably – giving us welfare reform, a capital gains tax cut and a balanced budget. There’s nothing in the Republican DNA to keep that from happening again.

This article was originally published at Forbes on January 10, 2017.