There are two paths to a genuine bipartisan consensus on contested issues. One is compromise. The other is innovation.
On repealing Obamacare, the GOP tried the first. Now it’s time for the second.
Take refundable tax credits, which proved a major sticking point in the debate last month. As of January, 10.1 million Americans  obtained health insurance thanks to the credits available through Obamacare. But conservatives rightly regard “refundable” as little more than a euphemism for “subsidy”: it means that if someone doesn’t have enough tax liability to make use of a normal tax credit, they can get the money in the form of a check from the government instead (sent either to them or directly to the insurance company). In Republicans’ eyes, simply lowering the amount—the failed approach of the GOP leadership—does not make these tax credits any less a subsidy.
The preferred plan of the Freedom Caucus, advanced by Sen. Rand Paul , shows little bipartisan promise—and nor is it very innovative, for that matter, at least when it comes to helping the so-called near-poor. The plan strips away the refundable part of the tax credits, offering a straightforward $5,000 credit for those who contribute their earnings to a Health Savings Account, as well as a deduction for health-insurance premiums that can be applied to payroll taxes in addition to income taxes. (A deduction, as opposed to a credit, reduces taxable income rather than being directly subtracted from one’s tax bill.)
At the start of 2015, it was estimated  that the average subsidy per person enrolled on the Obamacare exchanges would be $4,330. It might seem like Paul’s tax benefits were designed to cover these costs. But many Obamacare enrollees don’t make enough money to benefit from nonrefundable  tax perks.
Obamacare’s tax credits are most popular with those making between $11,770 and $17,655 , or between 100 and 150 percent of the poverty level. Even considering both income and payroll taxes, these folks pay far less than 10 percent of their income  to the federal government—indeed, their income-tax liability is usually negative thanks to the refundable credits already available. So they can’t come close to taking full advantage of Paul’s offerings.
Is there a way to help these people that doesn’t involve the strong arm of government? The experience of states points to two alternatives.
One is a transferable or tradable tax credit.
These are used all the time to spur on economic development in states, particularly  to bring in major film productions. A state will issue a tax credit to one of these companies—but the company might be in town for just a few weeks, so it won’t have enough tax liability to take full advantage of the credit. The company then sells the surplus amount to a wealthy investor or large company, for, say, 90 cents on the dollar, using the earnings to fund the film.
Normally, it is businesses that sell the credits and reap the benefit. But at least one state, Colorado , also has transferable tax credits for individuals who donate some of their land to conservation purposes, based on the value of the donated land.
Transferable tax credits are a way for government to incentivize behavior—such as economic development and environmental conservation—without higher taxes, regulatory mandates, and subsidies. In fact, quite the opposite: they have the added bonus of reducing the amount investors and companies owe in taxes.
Could the same concept be used to help low-income Americans purchase health insurance?
Two experts—one an economist with a background as a health-care consultant, the other a health-care policy specialist—expressed skepticism. Ed Mazze, an economist at the University of Rhode Island, questioned the feasibility of implementing a broad-based transferable tax credit to help individuals obtain health coverage. For businesses, tax-credit brokers sometimes handle the transactions. For individuals, exchanges would need to be set up.
These do already exist  for businesses. And many individuals already have experience using the Obamacare exchanges. But Americans’ patience for complicated online exchanges may have already been exhausted. Plus, the notion of the poor selling their tax credits to large corporations seems to some to carry the perceived risk of predatory price-haggling. As Shana Charles, a faculty member at the UCLA Center for Health Policy Research, told me, “I think this is really something that would make it even more complicated and would in essence be trading people’s lives in a way that I don’t think would be appropriate for health insurance.”
But there is another state model for using tax credits, and this one involves broad-based assistance for the low-income: tax-credit scholarships. According to the National Conference of State Legislatures , such programs are in place in 17 states. The program allows businesses to donate money to an organization that issues scholarships to lower-income students to attend private schools. The business, in return, gets a tax credit.
In Florida, donations have amounted to $2.7 billion, funding over 575,000 scholarships since 2002, according to Step Up for Students , the nonprofit that primarily awards the scholarships. The credits there are “dollar-for-dollar”: businesses reduce their tax payments by the exact amount they contributed.
Still, the Florida program reportedly saves the state money. Every dollar that goes to the scholarships results in $1.49 in savings for state government, according to the national legislators group , because private-school tuition is cheaper than the per-pupil cost of a public school.
Many businesses see their contributions as a long-term investment in having an educated workforce. Some also simply want to be good corporate citizens, help fight poverty, and like the idea of having a say in where their tax dollars go, according to Jillian Metz, director of development for Step Up for Students.
And there already is a precedent for government entities soliciting private donations to fund health insurance for the needy. In the 2000s, amid a statewide debate over the issue, a number of California counties took the initiative to provide health-care coverage to children whose families were not eligible for existing public assistance for financial reasons or because of their immigration status, according to Charles. Their strategy was simple: they asked local businesses to help out.
For a while, it actually worked. One of the programs covered over 80,000 children at its peak in 2007, according to a 2012 report  from the California HealthCare Foundation. But over time, businesses—which were not receiving any major financial benefit—lost interest, according to Charles.
It’s not hard to envision how something like the California program could be reinforced with Florida-style tax credits and extended across the country. Charles considers the idea plausible. “The things you have come up with are good temporary solutions,” she said. (Her ideal is a baseline health-insurance safety net for all Americans, close to a single-payer system, but with room for private insurance add-ons: more like Australia and Germany than Canada and Great Britain.)
Such a program seems to promise a surplus of winners over losers: moderate Republicans queasy about repealing Obamacare without a real replacement, advocates for smaller government, advocates for expanded health-care access, businesses that want to be good corporate citizens and reduce their tax liabilities at the same time, and, of course, millions of low-income Americans who cannot afford to purchase health insurance on their own.
For now, Obamacare remains the law of the land. But Republicans aren’t giving up . And the next bill that passes the House may be an even greater evisceration of Obamacare than the milquetoast version that flopped in March. The program suggested here may be imperfect, but under the current political circumstances, it might be our best hope of insuring the near-poor.
Stephen Beale is a freelance writer based in Providence, R.I. Email him at [email protected] .
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