The Heritage Plan Was A Plan For War on Medicaid, Not a Serious Plan For Universal Coverage

I am, needless to say, a huge admirer of Paul Krugman. But I genuinely can’t understand why he keeps making this false and deeply pernicious argument:

Every once in a while people make the point that much of what eventually became Obamacare came from, of all places, the Heritage Foundation – that is, the ACA is basically what conservatives used to advocate on health care. So I recently reread Stuart Butler’s 1989 Heritage Foundation lecture, “Assuring Affordable Health Care For All Americans” – hmm, where have I seen similar language? — to see how true that is; and the answer is, it really is pretty much true.

First of all, this wasn’t just one guy at Heritage writing: Butler referred to his proposal as “the Heritage plan”, referring to a monograph that lays it out and does indeed present it as the institution’s policy, not just his opinion.

Second, while the Heritage plan wasn’t exactly the same as ObamaRomneycare, it was pretty close. Like the ACA, it imposed a mandate requiring that everyone buy an acceptable level of coverage. Also like the ACA, it proposed subsidies to make sure that everyone could in fact afford that coverage. That’s two legs of the three-legged stool.

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Overall, what’s striking about the Heritage plan is that it’s not notably more conservative than what Obama actually implemented: a bit less regulation, a substantial amount of additional spending. If Obamacare is an extreme leftist measure, as so many Republicans claim, the Heritage Foundation in the 1980s was a leftist institution.

The claim that that the Heritage plan is “not notably more conservative than what Obama actually implemented” is just flatly false. The plans are radically different, and indeed the Heritage Plan has far more in common with the AHCA and BCRA than the ACA. We’ve been through this before, but to summarize again:

• The ACA contained a historic Medicaid expansion that has led to millions of poor people receiving health insurance, and would have insured many more without the unholy alliance between the Supreme Court and sociopathic Republican public officials. The Heritage Plan wanted to replace Medicaid with bad catastrophic insurance. In and of itself, this difference renders claims that the ACA was essentially similar to the Heritage Plan false.
• The ACA preserved Medicare and employer-provided insurance. The Heritage Plan would have eliminated them, requiring everyone to buy insurance on the individual market. Again, in and of itself this is a difference that renders assertions that the plans are essentially similar false.
• But even if we just consider the exchanges, the comparison fails. It is true that there is a superficial structural similarity, but this just reflects the self-evident truths that 1)insurance not provided by the public has to be provided by markets and 2)health insurance markets don’t work if healthy people don’t have incentives to maintain coverage. (The Heritage Foundation hardly holds a patent on these banal observations.) But the regulatory differences between the Heritage exchanges and the ACA’s exchanges are far from minor. The essential benefits requirements of the ACA required insurers to offer comprehensive insurance to sell on the exchanges. The Heritage Plan not only did not have such requirements, it was designed to incentivize the purchase of catastrophic insurance, because its architects wanted most healthcare expenses to be paid out of pocket.
• The differences between the two plans are greater in sum than in comparisons of individual parts (which are massive in themselves.) The difference between giving people tax credits to buy catastrophic insurance is substantial enough under the ACA’s structure, where the individual market is there to mop up the minority of people who aren’t covered by employers, Medicare, or Medicaid. Under the Heritage structure, where everybody is buying insurance from the individual market, the differences between the regulatory structures of the exchanges is hugely important.
• It is true that the ACA is largely similar to the plan passed by veto-proof supermajorities of Massachusetts Democrats. But this is because the plan is nothing like the proposal put forward by Stuart Butler and Heritage in 1989.

I understand why people on the left who hate the Democratic Party and are emotionally committed to minimizing the difference between the Republicans and Democrats make this false argument. But Krugman strongly supports the ACA, and he was one of the first national pundits to recognize the Republican Party for what it is. I really don’t get it.

But I do want to emphasize again that this argument is not merely false, but politically toxic. It plays into the hands of hucksters like Avik Roy, who assert that of course conservatives want to cover everyone, but they just want to use markets. But what conservatives really want is for Congress to bring them the heads of Medicaid and Medicare, and if a Republican proposal inflicts major damage on one or the other, it turns out that they can live with Congress doing little or nothing to help poor people by private insurance. The Heritage Plan is much more accurately viewed as a plan to destroy all public insurance than a serious plan for universal coverage. And erasing the Medicaid expansion from the ACA, which Krugman’s analysis does, helps people like John Cornyn, whose speech before the vote on the HCFA attacked the ACA for leaving many poor Texans uninsured, hoping that many people wouldn’t know that this was the case because Texas turned down the Medicaid expansion.

In short, the claim that the ACA is similar to the Heritage Plan (and the implicit claim that the ACA is the policy outcome that conservatives have generally favored) is both demonstrably false and extremely damaging politically. I really wish Krugman — again, an otherwise invaluable voice — would stop making it.