A group of Republican scholars (all of whom I believe are associated with the presidency of Bush 41) have weighed in on how Congress should respond if the Supreme Court declares that the federal ObamaCare tax credits are illegal in 34 states.

It is called a “market-based” contingency plan, although that stretches the term “market” beyond normal recognition. For at least two decades now, both Republicans and Democrats have fully endorsed the idea of managed competition. It’s hard to find any dissenters other than yours truly and a few of my colleagues.

Under managed competition, health plans must be community rated. Their premiums cannot reflect the expected health costs of potential enrollees. That means that no one – no buyer and no seller — ever faces a real price for health insurance. And that produces perverse incentives, which I have described here.

The difference between scholars who associate with the two political parties is Democrats favor lots of mandates and lots of regulations, and Republicans prefer a lot fewer of them. Put our Bush Republican scholars in the latter camp. As a post at the Health Affairs blog and a longer American Enterprise Institute report explains:

For ACA opponents, demonstrating that there are other ways to help people get the coverage they prefer, without the ACA’s mandates and regulations, ought to be more attractive than doing nothing because it will demonstrate that a viable alternative to the ACA is possible.

So how would they do that? They would repeal the federal mandates on individuals and employers and devolve the whole enterprise to the states. However, the states would be free to impose these very same mandates and regulations. They could even impose worse ones. And no matter what they decide to do, federal taxpayers would continue to pay the cost.

Why is that a good thing to do? Ah, that’s the problem with that pesky vision thing.

There is something refreshing about listening to Democrats talk about health care. To the representative congressional Democrat, health reform is simple – or at least it should be. If you get sick, you should go to the doctor and the government should pay for it. Or if not the government, an employer. Or if not an employer, an insurance company. Or maybe the tooth fairy. Anyway, somebody, anybody, other than you should foot the bill.

Democrats don’t spend a lot of time worrying about who pays for things. Their general approach is to take from Peter and give to Paul. Most of the time they don’t care very much about who Peter is. They care even less about what perverse incentives are created by taking from Peter and giving to Paul. They don’t care much about fairness either. They are rarely moved if you explain to them that much of the time Peter and Paul are the same person!

Republicans, on the other hand, tend to get so bogged down in detail, that you can easily lose sight of the point of the whole exercise.

Two of the Republican scholars, Yuval Levin and James Capretta previously outlined a proposed response to a potential Supreme Court ruling in a Wall Street Journal editorial:

1. There would be no federal mandates – either for individuals or for employers.
2. People could buy insurance inside an exchange or outside of it, with the states choosing their own regulations.
3. Everyone in the individual market would get a fixed sum tax credit for the purchase of health insurance. The credit would increase by age, but would not vary by income.
4. People who have continuous insurance coverage could not be discriminated against because of pre-existing conditions, but this protection is lost for those who try to game the system by remaining uninsured while they are healthy and buying insurance only after they get sick.
5. People on Medicaid would be free to leave the program, claim the subsidy and buy private insurance instead.

The latest proposal is a watered down version of Levin and Capretta. Gone is the option to opt out of Medicaid. And their tax credit idea is cast alongside of other approaches. I guess this is the price you pay for getting a whole group of people to sign on.