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Rubiocare Would Upend Traditional Health Insurance

Rubio throws a football with children during a Family Night event at Dean Park in Ankeny, Iowa, Monday. He's pitching a new health plan. (Al Drago/CQ Roll Call)

Sen. Marco Rubio’s proposed health care alternative would dramatically alter the health insurance landscape in America — well beyond repealing Obamacare.  

The Florida Republican’s health care outline was published in a Politico op-ed .  

One key bit is that Rubio would limit the tax-free status of health insurance bought through employers. There are nearly 150 million people on those plans now. They would eventually have to pay taxes on some of that income unless they buy a plan cheap enough to be covered entirely by Rubio’s new individual health tax credits.  

"The value of these credits should increase every year, and we should set the tax preference for employer-sponsored insurance on a glide path to ensure that it will equal the level of the credits within a decade," Rubio wrote.  

He’d also repeal the many tax hikes under Obamacare.  

Rubiocare has similarities with many other health care plans proposed by Republicans in recent years that have never actually made it to the floor for a vote. And while lacking in details, Rubio's proposal shares some similarities with a tax-credit plan outlined by Gov. Scott Walker of Wisconsin — though Walker's plan  doesn't mention shrinking the employer break.  

One political problem is that people tend to prefer their current, often generous employer-provided plans and want to keep them. (That is, after all, why President Barack Obama made that flawed “if you like it you can keep it” promise. )  

And while taxes overall would be lower, millions who don’t pay income taxes on their employer health insurance benefits would necessarily see a tax increase as the tax benefit shrinks.  

Five years after the Affordable Care Act became the law of the land, the number of people getting insurance through employers hasn’t changed all that much. But it would if the Rubio plan became law, per the Rubio campaign.  

“We expect people currently with employer-sponsored coverage to find the tax credits more appealing and therefore to no longer participate in their employer-sponsored coverage,” Rubio spokesman Alex Conant emailed.  

“In other words, it retains the exclusion for employer-sponsored insurance. It equalizes treatment for someone who [buys] their health insurance at work as someone who buys their insurance on their own. We're still working on the details, but one thing is for sure: It repeals every penny of the $1.2 trillion in tax increases in Obamacare,” Conant added.  

There are lots of reasons to prefer the Rubio approach. Employees would have far more choices, rather than being stuck with the plans chosen by their company. There would arguably be more competition — and many economists have argued the employer tax credit has incentivized high-cost health care. (That includes key Obamacare adviser Jonathan Gruber, who has touted the so-called Cadillac tax set to take effect in 2018 as a way to also squeeze the employer health exclusion.)  

And phasing in the new tax on employer-provided health plans over a decade would prevent a big shock in people's paychecks.  

Many have also argued there’s a fairness issue for employer health insurance to have a total tax exclusion when individuals and self-employed people don’t have the same options.  

Rubio made those same arguments in his op-ed as he argued for his glide path.  

"This will prevent large-scale disruptions and reform a provision in our tax code that has been driving up health costs, hurting those who are self-employed and preventing Americans from having truly portable health insurance plans that travel with them regardless of where they work," he said.  

Rubio and Walker would both also deal with the thorny question of pre-existing conditions by saying sick people who don't have coverage would have access to revived state-based high-risk pools.  

Finding the money to make that coverage affordable has always been the rub, however, and neither plan lays out the numbers on how their plans would score.  

 

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