Echoing concerns I expressed last week, Reason’s Peter Suderman notices a problem with House Republicans’ new plan to replace ObamaCare:

As it turns out, the health care policy that Republicans might pursue looks, well, a lot like Obamacare—except, possibly, worse.

Although the plan starts by repealing the health care law in its entirety, it ends up replacing many of its central components with similar provisions: preexisting coverage rules, subsidies for the purchase of insurance, and even an (implicit) mandate.

After six-plus years, congressional Republicans have finally offered an ObamaCare-replacement plan. They should have taken longer. Perhaps we should not be surprised that House Republican leaders* who have thrown their support behind a presidential candidate who praises single-payer and ObamaCare’s individual mandate would not even realize that the plan cobbled together is just ObamaCare-lite. Don’t get me wrong. The plan is not all bad. Where it matters most, however, House Republicans would repeal ObamaCare only to replace it with slightly modified versions of that law’s worst provisions.

Here are some of ObamaCare’s core private-health insurance provisions that the House Republicans’ plan would retain or mimic.

1. ObamaCare offers refundable health-insurance tax credits to low- and middle-income taxpayers who don’t have access to qualified coverage from an employer, don’t qualify for Medicare or Medicaid, and who purchase health insurance through an Exchange. House Republicans would retain these tax credits. They would still only be available to people ineligible for qualified employer coverage, Medicare, or Medicaid. But Republicans would offer them to everyone, regardless of income or where they purchase coverage.
2. These expanded tax credits would therefore preserve much of ObamaCare’s new spending. The refundable part of “refundable tax credits” means that if you’re eligible for a tax credit that exceeds your income-tax liability, the government cuts you a check. That’s spending, not tax reduction. ObamaCare’s so-called “tax credits” spend $4 for every $1 of tax cuts. House Republicans know they are creating (preserving?) entitlement spending because they say things like, “this new payment would not be allowed to pay for abortion coverage or services,” and “Robust verification methods would be put in place to protect taxpayer dollars and quickly resolve any inconsistencies that occur,” and that their subsidies don’t grow as rapidly as the Democrats’ subsidies do. Maybe not, but they do something that Democrats’ subsidies don’t: give a bipartisan imprimatur to ObamaCare’s redistribution of income.
3. As I have tried to warn Republicans before, these and all health-insurance tax credits are indistinguishable from an individual mandate. Under either a tax credit or a mandate, the government requires you to buy health insurance or to pay more money to the IRS. John Goodman, the dean of conservative health policy wonks, supports health-insurance tax credits and calls them “a financial mandate.” Supporters protest that a mandate is a tax increase while credits—or at least, the non-refundable portion—are a tax cut. But that’s illusory. True, the credit may reduce the recipient’s tax liability. But it does nothing to reduce the overall tax burden imposed by the federal government, which is determined by how much the government spends. And wouldn’t you know, the refundable portion of the credit increases the overall tax burden because it increases government spending, which Congress ultimately must finance with additional taxes. So refundable tax credits do increase taxes, just like a mandate.
   
4. Health-insurance tax credits also give the federal government as much control over the content of your health plan as ObamaCare’s individual and employer mandates do. The government has to define both (a) how much coverage you must buy to qualify for the credit, and (b) whether your employer offers sufficient coverage to make you ineligible for the credit. What House Ways & Means Committee chairman Kevin Brady (R‑TX) said yesterday of the tax preference for employer-sponsored insurance–“You only get it if you do exactly what Washington says”–is also true of his proposed tax credit. Republicans may try to allow for flexibility in insurance design, but they would still be creating (preserving?) tools that future Congresses and unelected bureaucrats would use (a) to restrict choice and innovation in both the individual and employer markets, (b) to push consumers back and forth between these markets, and (c) to increase government spending.
5. Since House Republicans would offer tax credits for non-employer coverage without imposing an employer mandate to discourage employers from dropping coverage, their plan would do even more than ObamaCare to encourage employers to drop coverage. I don’t necessarily think that employers dropping coverage a bad thing–but wait until you see what happens next.
6. House Republicans appear to want to retain ObamaCare’s guaranteed-issue regulations: “No American should ever be denied coverage or face a coverage exclusion on the basis of a pre-existing condition,” they write. “Our plan ensures every American, healthy or sick, will have the comfort of knowing they can never be denied a plan from a health insurer.” (Emphases added.)
7. They also would modify, rather than repeal, ObamaCare’s community-rating price controls. A bit of explanation. Rather than allow reality-based (i.e., actuarially fair) premiums, ObamaCare requires insurers to charge everyone of a given age the same premium, and forbids insurers to charge their oldest enrollees more than three times what they charge their youngest enrollees. The centerpiece of ObamaCare, these government price controls literally punish insurers (like United Healthcare) who offer coverage the sick actually want, while rewarding insurers who offer coverage that’s unattractive to the sick. House Republicans propose not to repeal these price controls, but merely to increase the age-rating ratio to 5:1 (better, but still binding) and, more importantly, to preserve pure community rating in cases where consumers switch plans. That last part is a big problem. Imposing community rating for plan-switchers would create the same perverse penalties and rewards, and cause the same race to the bottom among health plans, that we observe in ObamaCare’s Exchanges. The race to the bottom might be even worse under the House Republicans’ plan than under ObamaCare. The GOP plan contains none of the mechanisms ObamaCare uses to slow down the degradation of coverage. And if the House Republicans’ tax credits and lack of employer mandate cause employers to drop coverage, which is a real concern, then House Republicans could trap tens of millions more Americans in an even quicker race to the bottom than ObamaCare does.
8. House Republicans would also keep ObamaCare’s millennial mandate.
9. Like ObamaCare, they would cap the tax exclusion for employer-sponsored coverage in a way that increases taxes on workers with expensive health benefits.

Expect howls from conservatives who protest that the House plan is not ObamaCare-lite. I mean, gosh, Chairman Brady promised it would create “health care freedom in a way Americans have never experienced”!

Please. The above similarities to ObamaCare include at least remnants of all three legs of ObamaCare’s three-legged stool. Conservatives, libertarians, and independents have spent seven years fighting ObamaCare…for this?

Moreover, this plan is downright dishonest. House Republicans say they want to “Repeal ObamaCare” and make “a clean start,” because they want to signal to their conservative base that they remain committed to full repeal. But then they too start down the same path ObamaCare has blazed. That is arguably worse than framing this plan as partial repeal and promising to finish the job later. Pretending to repeal all of ObamaCare but then reinstating some of its provisions with a Republican imprimatur would make those provisions completely repeal-proof.

To be fair, the plan includes some proposals that move in the right direction. It would modestly expand tax-free health savings accounts (HSAs) and health reimbursement arrangements (HRAs). It would allow people to purchase health insurance licensed by states other than their own. It would limit federal spending on Medicaid by giving states the option of a fixed amount of federal dollars per enrollee or a block grant (except for the elderly and disabled). A pure lump-sum, block-grant approach would be better, but at least this would be a step in the right direction. The Medicare reforms would move that program ever so slightly in the direction of Social Security, where the government subsidizes enrollees’ health care simply by giving them cash. But there would have to be a lot–a lot–of Medicare and Medicaid cuts to make up for Republicans keeping an ObamaCare entitlement they are pretending to repeal.

And still other parts of this plan betray Republicans’ lack of seriousness about health care reform and/​or their own principles. Its authors claim, “ObamaCare set America on a path that leads to a larger government having a greater role in how health care decisions are made,” even though just a few paragraphs before they were lauding and promising to protect Medicare–a disaster of a program–and even boasting that it was Republicans who expanded it with a new, unfunded entitlement to prescription-drug coverage. They apparently see HSAs as a product to be promoted–or a nice way to shave a little off your tax bill–rather than as a mechanism for fundamental reform that gets the IRS out of your health care decisions entirely. Sen. Jeff Flake (R‑AZ) and Rep. Dave Brat (R‑VA) have introduced legislation that includes the basic elements of that approach. At press time, the House Republicans’ plan didn’t even include that bill among its list of health care proposals Republicans have offered this Congress. And then there are House Republicans’ wrong-headed, unconstitutional, anti-federalism, special-interest-pandering medical malpractice liability reforms. At a time when the estimated number of annual deaths due to medical errors in the United States (251,454) is seven and a half times the number of firearms deaths (33,636), these geniuses are proposing to reduce incentives for providers to invest patient safety–oh, and to abandon their principles along the way.

Health care reform should make health care better, more affordable, and more secure, particularly for the most vulnerable. ObamaCare does the opposite, and Republicans are right to oppose it. If they really care for patients, Republicans need to go back to the drawing board until they find a better way.

*One of the architects of this plan, House Committee on Energy and Commerce chairman Fred Upton (R‑MI), has refused to endorse presumptive GOP presidential nominee Donald Trump.

The welfare state is so vast and complex that it often works against itself. Regulations and taxes kill jobs and work incentives, but EITC subsidies are supposed to boost incentives. The government tells women to breastfeed, but the federal WIC program subsidizes baby formula.

The food stamp program provides billions of dollars for people to buy junk food, but liberals are pressing governments to penalize junk food with special taxes. Philadelphia just passed the first special tax on soda.

May I suggest that health do-gooders wanting people to eat less junk food focus on cutting subsidies rather than imposing taxes?

At the same time as Philly is imposing this new tax, Maine Governor Paul LePage is fighting the federal government to cut junk food out of the food stamp program. He is not getting much help from the Obama administration.

The federal government won’t reveal what share of $78 billion a year in food stamps are spent on junk food, but one estimate put soda alone at $4 billion of the total.

The Feds: Drink soda! Philly: Don’t drink soda! Me: Drink whatever you want, but not on my dime!

Food subsidies should be ended altogether, and we should have a simple and neutral tax code. Imposing special taxes on things that liberal elites dislike is a dangerous trend. Much better if those elites rallied around LePage, and focused on cutting junk food subsidies.

That is the title of a chapter in a new book by Jennifer Grayson, Unlatched: The Evolution of Breastfeeding and the Making of a Controversy. Grayson is a Los Angeles writer, and her book includes endorsements from film stars Anne Hathaway and Alyssa Milano.

Jennifer is a breastfeeding advocate, and she explores the science, history, and cultural practices surrounding breastfeeding. While breastfeeding is now known to be superior for child development than infant formula, apparently too few moms follow through with it for the recommended period of time. Jennifer is a champion of “Breast is Best.” 

Jennifer contacted me when she was writing her book because she had come across my essay criticizing the federal government’s $6 billion Women, Infants, and Children (WIC) program. I found that while WIC administrators are supposed to encourage moms to breastfeed, the program actually incentivizes moms to use formula because WIC provides it to them for free. WIC accounts for half of all infant formula used in the nation. About 90 percent of WIC infants use some formula, and the share of moms on WIC who breastfeed is substantially less than the share of moms not on WIC who breastfeed.

WIC makes no sense. American pediatricians universally recommend breastfeeding, as do government health officials. Yet the U.S. Department of Agriculture (USDA) runs a $6 billion subsidy program that induces mothers to use manufactured baby formula.

Jennifer explores this conundrum in Unlatched. She and I appear to hold different political views, but we come to similar conclusions about the harmful effects of this federal program. WIC administrators across the nation essentially tell millions of new moms, “Breastfeeding is the best for your baby, but here’s a bunch of coupons for free cans of formula.” Jennifer reports that low-income, often immigrant, moms covet formula and perceive it to be valuable because it is expensive on store shelves. Also, the government is handing it out, so they figure that it must be the best thing for their babies.

Jennifer quotes me noting that the perverse aspects of WIC are “akin to how the government tells people to eat healthy, but the eighty-billion-dollar food stamp program subsidizes untold billions in junk food spending.” I hate government hypocrisy.

I also hate the lack of accountability for the harm caused by government programs, as Jennifer found with WIC. No health official in the “most transparent administration in history” would speak to her about her findings: “I contacted the USDA for feedback. No one was available to speak with me.” Ditto with the Centers for Disease Control and the Department of Health and Human Services. Ditto for the California agency that runs the WIC program in that state.

Last word to Jennifer: “The government can promote breastfeeding all it wants, but as long as it continues to hand out free formula, mothers will assume that formula is endorsed by the government.”

Yesterday the D.C. City Council unanimously approved a measure that would gradually raise the $10.50 minimum wage to $15.00 by 2020, and then index future increases to changes in the Consumer Price Index. These new scheduled increases will come on the heels of an already significant 39 percent increase currently being phased in. With the passage of this bill, D.C follows California and in passing substantial minimum wage hikes beyond the scope of past experience in the U.S. The related adverse disemployment effects will primarily impact younger workers and people with limited job skills or educational attainment, putting the important first rung of the job ladder out of reach for many of them.

While proponents of an increase tend to focus on families, roughly half of minimum wage workers are between 16 and 24, and a more than one-fifth are teenagers. People lacking a high school diploma are more likely to be in minimum wage jobs, and even with some recent incremental improvements, the 4‑year adjusted cohort graduation rate for D.C. public schools is only 64.4 percent and for African-American students it is less than 62 percent. While the aggregate unemployment rate for the District might not seem alarmingly high at 6.4 percent in April, there is a lot of variation between the eight wards, with the unemployment rate as high as 9.9 percent in Ward 7 and 12 percent in Ward 8. One survey found that almost half of responding businesses had already reduced staff or hours to cope with the first raft of minimum wage increases. Younger workers and people with limited educational attainment will find it increasingly difficult to find employment as labor costs continue to surge.

These minimum wage jobs often play an important role in helping people develop the skills they need to eventually move on to more lucrative and promising jobs, far from being a dead-end where these workers get stuck forever. The majority of minimum wage workers that stick with it get a raise within a year. An earlier study looking at data from 1979 to 2002 found that almost two-thirds of minimum wage employees who continue working earned higher than the minimum wage within a year. More recently, 72 percent of minimum wage earners got a raise between 2014 and 2015. About a fifth of these people saw their earnings rise due to mandated minimum wage increases, but 57.5 percent of people working continuously got a raise or moved into a higher-paying job outside of those effects, and this share could have been even higher in the absence of those legislated minimum wage increases. Far from stagnating in these entry-level jobs, most of the people in these positions use these opportunities as a springboard to better things.

Supporters of the new bill may say that they want to ensure that hard work is rewarded and that people can support their families, but D.C.’s substantial minimum wage increases will make it much harder for many people, especially younger workers and people with limited job skills, to find any work at all.

Waste, fraud, and abuse are a common target on the campaign trail. Politicians from both parties point promise that eliminating this problem is a cure-all for whatever mathematical problems their tax and spending proposals might face. Eliminating waste, fraud, and abuse is not controversial, and allows them to avoid naming any actual programs they would phase out or reduce. As my Cato colleagues have pointed out, even completely eliminating all improper payments (which are somewhat related but not quite the same thing) won’t magically make next year’s budget deficit disappear and would do nothing to address the country’s more serious longer-term fiscal issues. Even with that caveat, improper payments are a pervasive and persistent problem, reaching $137 billion in 2015, a new record. Given the persistently high error rates and the outsized problems in government health care programs, it’s very likely that there will be another record high next year.

Total Improper Payments by Program, 2011–2015

Source: OMB via pay​men​tac​cu​ra​cy​.gov

Improper payments are somewhat related to the oft-cited triumvirate of waste, fraud, and abuse. These payments can stem from fraud and abuse, but also misidentification, insufficient documentation, and clerical errors. The vast majority of improper payments are overpayments, 92 percent in 2015, but a portion of this total does come from underpayments, or payments that are too low according to program rules. These amounts only measure amounts and rates relative to these rules, so say nothing about the effectiveness or propriety of the programs themselves.

If the $137 billion in combined improper payments were one program, it would be almost as large as the Social Security Disability Insurance program. As the figure above illustrates, most of these improper payments are concentrated in a few “high-error” programs. Three of the programs with the biggest improper payment amounts are health care programs, and projected growth in health care spending overall and recent government expansions in this sphere will likely lead to even higher amounts over the next decade. If Medicaid’s error payment rate were to remain constant over the next decade, improper payments in this program alone would be more than $60 billion in 2026.

While the magnitude of these improper payments is a serious concern, it is almost more troubling that they are so persistent, despite repeated efforts to address them. Since 2011, cumulative improper payments totaled almost $600 billion, which is more than total domestic discretionary federal spending last year.

While a few “high-error” programs have seen some progress in reducing improper payment rates, in most cases the rate has been relatively steady over the past five years, and in some instances has even increased. Medicare Fee-for-Service, one of the largest components with $358 billion in total outlays last year, had an improper payment rate over 12 percent the last two years, the highest on record.

Improper Payment Rates by Program, 2011–2015

Source: OMB via pay​men​tac​cu​ra​cy​.gov

Note: Some programs lack data for specific years.

Cutting down the scope of the federal government’s improper payments won’t solve all of our other fiscal problems, but these outlays do represent a significant misallocation and waste of taxpayer money. In many cases, error rates remain stubbornly high even after a program has been identified as one needing additional oversight. It is one thing for a politician to promise they’ll address the persistent improper payment problem, and quite another to actually do it.