Now that President Obama and the rest of the Democratic leadership no longer need to hide from their base that the new health care law is in fact a pro-health insurance industry Republican plan as part of a push to enact the law, they are openly admitting the plan’s true origins. This bill is a not a “progressive” or “centrist” piece of legislation but a Republican idea put forward by the Heritage foundation and is almost identical to the reform advocated by the health insurance lobby.

In his first interview since signing the new bill into law Obama acknowledges that the bill is basically Romneycare and clearly based of a decades old proposal from the Heritage Foundation as an alternative to Bill Clinton’s health care plan. Last week, Nancy Pelosi basically made the same acknowledgment.


There are no significant differences between the new health care law and the one proudly signed into law by Mitt Romney. The very poor were put on Medicaid. People with employer provide insurance kept it and employers faced a small penalty for not offering insurance. Those without either Medicaid or employer provide insurance are force to buy mildly regulated private health insurance. There is a new purchasing pool marketplace, called the connector, (basically the new state-based exchanges) for people to buy private insurance and there is some subsidies meant to help people afford it.

Heritage Foundation plan from the ’90s

The new health care law championed by Obama is strikingly similar to the Republican alternative to Clinton’s health care plan put forward by Sen. John Chafee (R-RI), and has basically the same structure as the Heritage Foundation plan from the same time. Does this description of it in Reason sound familiar?

In a nutshell, Heritage proposes that consumers be able to choose from among a host of health-care options ranging from traditional insurers to health maintenance organizations (HMOs). Using refundable tax credits that decrease as income grows, Heritage would empower families to choose plans on the basis of coverage, service, and price. As part of the “healthcare social contract” thus formed, Butler says, heads of households would be required by law to buy basic health-care coverage “to protect society from citizens who would try to exploit the good nature of ordinary Americans” by free-riding on the system.

The tax deduction for employer-provided health insurance would be phased out, in favor of the family-based tax credit. Families could still choose to join group plans. But by helping people buy insurance directly, rather than relying on employers to provide it, Heritage would solve the “portability” problem, in which employees are trapped in undesirable jobs because they’re afraid of losing health coverage.

Butler and health-care analyst Edmund Haislmaier introduced the key elements of the Heritage plan in a 1989 book, A National Health System for America. In 1992, Heritage began to tout the Federal Employee Health Benefits Program (FEHBP) as a model for how a national consumer-choice system in health insurance might function. Robert Moffit, deputy director of domestic policy studies at Heritage and a former manager of FEHBP, became one of the foundation’s key spokesmen on the issue.

Heritage’s embrace of FEHBP–a regulated and flawed government program, according to some critics–nevertheless provided a great “hook” that may well have enhanced the foundation’s overall sales pitch on health-care reform. As voter disaffection with elected leaders soared, Heritage could say, “What is available for Congress and its employees should be made available to every American family.” This message resonated with the public.

An individual mandate forcing people to buy private insurance on an exchange with a sliding scale of tax credits and the program is paid for by phasing out the tax deduction for employer-provided insurance. Sound familiar?

AHIP plan

Most disturbing, though, is how closely this new law mirrors the health care reform proposal put forward by the health insurance lobby, AHIP, in December of 2008. (PDF, short, but well worth a read)

AHIP’s plan to expand coverage had several key components:

  • Provide Medicaid to all those under 100% FPL.
  • Provide tax credits for those up to 400% FPL to buy private insurance
  • Force everyone to buy private health insurance with an individual mandate
  • Some new regulations like ending guaranteed issue
  • Have state agencies one stop place to buy insurance for small employers and individuals (state-based exchanges)
  • “Allowing benefit packages to vary based on actuarial equivalence”

Not surprisingly, the health insurance companies are very supportive of the idea of forcing people to be their customers and having the federal government pick up the tab. Massive government subsidies and a forced, captive customer base for the only major industry exempt from federal anti-trust laws sounds like a winning combination for the health insurance industry no matter how you slice it. Also, AHIP does not really seem interested in covering poor people who are more likely to have chronic health problems.

While there are a few difference between the new health care law from President Obama and AHIP’s reform plan, they are minor compared to the overwhelming similarities. If AHIP did not get everything they wanted, they sure got pretty close to it.

Time to stop pretending

This new law at its heart is a pro-private health insurance, pro-big business Republican bill. It is not liberal or progressive, and it would be hard to justify even calling the law “centrist” because it lacks very popular elements like a public option and drug re-importation–reforms wanted by the broad “center” of the country.

It is nearly identical to previous Republican bills and laws. It is strikingly similar to a plan from the Heritage Foundation. It almost exactly follows the same proposal put forward over a year ago by the health insurance industry itself. After it passed, the drug companies spent big on ads thanking Democrats for passing this massive giveaway to their industry.

The law is a completely wasteful and poorly designed piece of corporate welfare. It is nothing for progressives to be proud of. If you want to argue that we should have supported it because the rampant corruption in our Congress and the fact that a huge number of senators are wholly owned by the health care industry means that this wasteful, pro-corporate bill was the only way to get some help to some people in need, I can at least accept the honesty of that argument. But let’s all stop pretending this was some great victory over the health care industry and for progressive policy.

Jon Walker

Jon Walker

Jonathan Walker grew up in New Jersey. He graduated from Wesleyan University in 2006. He is an expert on politics, health care and drug policy. He is also the author of After Legalization and Cobalt Slave, and a Futurist writer at