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Resuscitating Health-Care Reform With a Shell Game

A crazy idea that just might work.
Shell Game

In a simpler and more idealistic time of my life—2011—I heard tell of a rather odd program in Arizona. Legislators there had seemingly figured out a way to overcome political resistance to school vouchers. Instead of the government providing the money, the private sector would donate it.

Except these weren’t really … donations, per se. In exchange for funding the vouchers, the contributors got tax credits in the exact amounts of the sums they’d provided—in effect, a full reimbursement by the government. The entire “donation” mechanism was a sham, a shell game designed to disguise what was really happening. Its sole purpose was to launder public subsidies into something that looked like private charity, so as to skirt political opposition to the subsidies.

I found this quite offensive at the time, as can be seen in a piece I wrote for National Review. School vouchers are good policy, my thinking went, but their supporters have to convince the public of that. They can’t just funnel the money through a private entity and call it a “donation.” I was also worried that the idea opened the door to future liberal abuses: any time there was an objection to the government funding something—say, abortion—this setup could be trotted out to allay any concerns.

But what if, instead, the idea could grease the wheels for health-care reform this year by putting an end to intra-GOP squabbles? That’s the notion Stephen Beale floats in his piece today.

House conservatives object to any bill that subsidizes health care through refundable tax credits (i.e., credits you can receive even if you don’t have any tax liability to offset). So why not have private donors fund health care for the low-income, and in return give them tax credits worth exactly what they spent?

It’s not a subsidy, it’s a donation followed by a tax cut! What’s not to like?

I still think this setup is fundamentally dishonest, as at the end of the day it’s economically indistinguishable from the straightforward subsidy it’s supposedly trying to avoid. But at this point I’m old, wise, and cynical enough that this solution doesn’t offend me so much. Maybe it’s best to see it as one of those routine lies we tell in Washington to keep things moving.

If Republicans create a functional post-Obamacare health-care market this way, and the House Freedom Caucus thinks it works by “cutting taxes” for “donors,” I’ll just roll my eyes and move on with my life.

Robert VerBruggen is managing editor of The American Conservative.



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