Paul Krugman Shreds Republican Healthcare Plan

“It’s not Obamacare 2.0. It’s Obamacare 0.5. A half-assed attempt to preserve ACA successes without spending nearly enough money.”

Paul Krugman, the Nobel Prize-winning Economist and New York Times Columnist, just shredded the Republicans’ new bill to replace Obamacare. Krugman says the Republican plan should not be called Obamacare 2.0. He says instead it’s more like Obamacare 0.5.

In his column on Tuesday morning, Krugman argued that with the tax credits and penalties for people who don’t have insurance, “the GOP proposal basically accepts the logic of Obamacare.”

But he says that two of the big problems with the Republican plan are how it deals with subsidies and the individual mandate.

“First, the individual mandate – already too weak, so that too many healthy people opt out – is replaced by a penalty imposed if and only if the uninsured decide to enter the market later. This wouldn’t do much.

Second, the ACA subsidies, which are linked both to income and to the cost of insurance, are replaced by flat tax credits which would be worth much less to lower-income Americans, the very people most likely to need help buying insurance.”


Krugman argues that to make health insurance both affordable and available for nearly everyone, regardless of income or health status, and doing it through private insurers, you have to do three things.

1.Regulate insurers so they can’t refuse or charge high premiums to people with preexisting conditions
2.Impose some penalty on people who don’t buy insurance, to induce healthy people to sign up and provide a workable risk pool
3.Subsidize premiums so that lower-income households can afford insurance

Obamacare did that. And so did Romneycare before that. They resulted in a sharp decline in the number of uninsured and 20 million more people gaining coverage. But despite all the good that Obamacare has done, Republicans still call it “a total disaster.”

Krugman believes that the Republican plan is not only bad, but it’s also not sustainable.

“These moves would almost surely lead to a death spiral. Healthy individuals, especially low-income households no longer receiving adequate aid, would opt out, worsening the risk pool. Premiums would soar – without the cushion created by the current, price-linked subsidy formula — leading more healthy people to exit. In much of the country, the individual markets would probably collapse.”

Here’s the bottom line.

“It’s an amazing spectacle. Obviously, Republicans backed themselves into a corner: after all those years denouncing Obamacare, they felt they had to do something, but in fact had no good ideas about what to offer as a replacement. So they went with really bad ideas instead.”

Featured image via Don Surber blog

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