If the U.S. Supreme Court pulls the plug on Obamacare, a conservative think tank has a replacement standing by for families.
A fixed $2,000-per-person federal tax credit would enable households to purchase health coverage through the workplace or on the open market.
Providing additional subsidies to households with incomes of less than $44,700, the Heritage Foundation proposal limits costs by phasing out credits for upper-income earners.
By bringing more Americans into the insurance pool, the Heritage plan would reduce Medicaid rolls, thus stanching the skyrocketing expenses at one of government's costliest programs.
Under the plan, low-income, able-bodied adults and their children who are currently on Medicaid would no longer participate in that government-run program. Instead, they would receive credits and subsidies of up to $9,000 annually to obtain private coverage.
"It transforms the remainder of today's Medicaid program -- for the frail elderly and disabled -- into a health-care safety-net program, rather than today's catch-all patchwork program," states the Heritage report, "Saving the American Dream."
Heritage researchers say their plan "replaces the open-ended federal-state financing arrangement that is crippling state and federal budgets with a more consistent and sustainable capped allotment."
"In exchange for capped allotments, states are given much more flexibility to redesign health services for the disabled and the elderly poor."
Florida -- where Medicaid consumes roughly a third of the state's total budget -- has been experimenting with managed-care Medicaid models for the past five years. But each new initiative must go through a lengthy waiver process in Washington. The state is currently awaiting federal approval to expand its five-county pilot program.
By utilizing federal tax credits, the Heritage plan imposes no mandate on individuals to obtain insurance, but those who opt not to participate would have to forgo the credit or subsidy (for low-income earners).
The "individual mandate" of Obamacare -- declared unconstitutional by two federal courts, and upheld by others -- is now under review at the Supreme Court.
Heritage says its plan would cap costs by phasing out the federal tax credit beginning with individuals earning $55,000 and families earning $100,000. The credit would zero out at $90,000 and $170,000 respectively.
"In the labor market, employers would likely adapt to the tax reform either by increasing the wages for their employees instead of offering health insurance, or by continuing to offer coverage to their employees," Heritage predicted.
Analysts say the Heritage tax-credit model is more equitable than the existing tax "exclusion" system, which favors higher-income workers who receive coverage through their company plans.
Health-care economists John Sheils and Randall Haught of the Lewin Group estimated average tax benefit under current law amounted to $2,780 for families with incomes of $100,000 or more, but only $102 for families making less than $10,000 per year.
The proposed tax credit would be "advanceable," meaning it is available when premiums are due, enabling families to claim the credit for premiums already paid before the end of the tax year.
It is also "assignable," allowing households to assign their tax credit to a health plan in return for a dollar-for-dollar lower premium, eliminating the need to claim it on their own tax forms.
The Florida Medical Association said it has not analyzed the Heritage proposal, but the FMA has long been critical of "fraud and abuse" in the Medicaid program while opposing "government, hospital, and insurance company interference in the patient-physician relationship."
Read the full Heritage health-care proposal here.
Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
