John C. Goodman

Republicans are virtually unanimous about one thing: They want to repeal and replace the Affordable Care Act (ObamaCare). But what would they replace it with?

Actually, there is a serious GOP proposal. It's called the Patients' Choice Act, sponsored by Sen. Tom Coburn (R-Okla.) and Rep. Paul Ryan (R-Wisc.). This is essentially the health reform plan that John McCain proposed when he ran for president in 2008.

The GOP proposal is actually more "progressive" than ObamaCare. And, unlike the Democratic approach, it solves problems rather than creating new ones. Yet Republican politicians almost never mention it.

How does it work? Let's consider the current system's problems that need solving:

•People who obtain insurance through an employer are able to buy insurance with pre-tax dollars, whereas people who purchase insurance on their own are basically forced to purchase it with after-tax dollars. For a middle-income family, having to buy individual coverage almost doubles the after-tax cost of the insurance. This encourages people on their own to remain uninsured and to seek insurance through an employer if a family member happens to get sick.

•Group insurance, however, is not portable. So the kind of insurance the government encourages all of us to have is the kind of insurance that does not travel with us from job to job and in and out of the labor market. This, in turn, virtually guarantees problems with pre-existing conditions and lack of continuity of care.

•Further, the subsidy for employer-provided coverage is open-ended. This means people can always lower their taxes by buying more insurance. As a result, most Americans are over-insured -? leaving patients with perverse incentives to over-consume care and providers with perverse incentives to maximize against payment formulas. This is the principal reason why health spending is growing faster than our incomes in this country and elsewhere around the world.


John C. Goodman

John C. Goodman is Senior Fellow at The Independent Institute and author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts."