Donald Trump made repealing Obamacare one of the cornerstones of his campaign. Now that he has won, his administration will face the daunting task of unraveling nearly seven years of Obamacare. Republican policymakers cannot agree how to proceed. Some Republicans believe Trump should repeal Obamacare piecemeal; others worry that would be a disaster.
Whether you oppose or support the Affordable Care Act (ACA), it has structural flaws that will have to be addressed. Addressing those flaws will be less painful if repeal of the costly insurance provisions is accompanied by a replacement plan. Congress can repeal some Obamacare provisions using budget reconciliation, which requires only a simple majority. Only those provisions involving taxes and the budget can be repealed this way. The individual and employer mandates and all the ACA taxes can be repealed using budget reconciliation. However, the regulations that prevent insurers from designing affordable health plans cannot. Repealing the insurance mandates require a filibuster-proof majority. A slight Republican majority in Congress means the Trump Administration likely has the power to gut the ACA. However, Trump cannot replace Obamacare without maybe a dozen Senate Democrats willing to go along.
What else can Trump do? Consider this a Scorched Earth strategy, since it is premised on making Obamacare so unprofitable for insurers they would drop out of the individual market. As president, Trump could command his appointed HHS Secretary to drop the appeal of House vs. Burwell. The Obama administration already lost the court case, which found the ACA cost-sharing reduction payments are illegal, because they have not been appropriated by Congress. Insurers are required to provide cost-sharing reduction payments to low-income enrollees whether or not the health plans are reimbursed for them. Without being reimbursed for the cost-sharing subsidies, insurers would likely leave the market. The administration could also seek to prevent any Court Settlement Funds from being used to reimburse insurers for loses above the budget neutral risk corridors payouts.
Another powerful weapon Trump will possess is the power to order his HHS Secretary to merely stop enforcing Obamacare’s provisions. Some provisions are not on the chopping block. Trump has already indicated he supports allowing young adults to stay on their parents’ employer plans. He has also indicated he favors retaining the ban on pre-existing condition exclusions. A ban should come with restrictions, however, such as guaranteed issue and guaranteed renewability only for those who maintain continuous coverage. Obamacare provisions that allow anyone to sign up for coverage without proving they have continuous coverage (no gaps of more than 62 days) is what allows people to game the exchange — driving up premiums for continuous enrollees and bankrupting insurers.
The most pressing goal should be to replace all the costly provisions in the ACA with the consumer-friendly health plans most Americans prefer. Increased flexibility in health plan design should also encourage the use of cost-containment tools, such as transparency tools and expanded health savings accounts (HSAs). Trump has already indicated he supports expanded transparency and HSAs. Why not allow HSAs to be a vehicle for saving for family leave, sick days and retiree medical care — regardless of the coverage people choose?
Many Americans do not have access to coverage through work and must pay for health insurance with after-tax wages or pay the full cost of medical treatment out of their own pockets. Trump supports allowing a tax deduction for those who lack access to health coverage at work. Many Republicans also believe a tax credit should be available to those who do not get employer subsidies. The tax credit could replace the cost-sharing and sliding-scale subsidies of the Obamacare exchanges and could be used to purchase private health insurance or to pay directly for care. The credit could be adjusted for health status, or age as a proxy for health status.
Another goal of any reform agenda should be to expand Americans’ access to primary care. If you ask moderate-income Americans what they want out of health insurance, they mainly want to be able to see a doctor should they become ill. Obamacare’s high-deductibles with unlimited lifetime benefits is generally not the kind of coverage they clamor for.
Medicaid also needs reformed to better serve low-income families. States should be allowed to experiment and find solutions that meet each state’s unique needs. A block grant would do this, while holding states accountable for cost-overruns. For able-bodied adults on Medicaid, the program could be designed to transition them to private plans as their incomes rise, including requiring enrollees to pay small premiums; to work, seek work or participate in job-training programs; and requiring enrollees to pay nontrivial copays and cost sharing. States should also be allowed to remove beneficiaries who fail or refuse to pay premiums, co-pays or follow the rules.
The past seven years have been an exercise in futility for many people who have to buy their own health coverage. In its current form, the Affordable Care Act is unaffordable for taxpayers and many consumers. Maybe both major parties can now come together to work on a replacement plan we can all live with. It will not be easy.
Devon Herrick, PhD is a health economist and a senior fellow at the National Center for Policy Analysis (NPCA).
I read an article today which stated that HSAs can be used for DPC membership fees
The article provided quotes from the ACA
HSAs can also be used for retiree health care
Contributions are not allowed past 65
HSAs are a great tool to pay known expenses such as the DPC membership fees
For future expenses like retiree the HSA offers 2 options: one percent interest in a savings account or a manipulated stock market which increases the risk
Instead of investment return, wouldn’t it be great to have an account which builds 213(d) medical dollars instead of cash?
Then actuarial pooling in which we have decades of experience is used to determine the monthly expenses
For retiree expenses or any future unknown expense, consider the patented Health Matching Account
Retirees average $125,000 in medical expenses not including what is covered by Medicare and not including long term care
Plans range from $5,000 to $60,000
Contributions are the same per thousand, and are projected to reduce, not increase
Lifetime coverage available for any American citizen
The $50,000 plan costs $605 a month
After 35 months you have paid in $21,175 and your coverage has more than doubled to &50,000
Due to the rich accelerated monthly credit the build up is significant even after large claims
Very practical way to receive $100,000 in benefits from the $50,000 plan
But HSA’s aren’t allowed to be used with DPC. just having an hsa with a high deductible plan simply gives the hospital lab the opportunity to charge you $600 for labs. A capitated model run through physicians exerts tremendous downward pressure on cost. You can bet there would be a lot fewer specialist referrals in that model. And when you do need a cardiologist, the physician has found someone who’ll take a reduced rate for advanced testing. And this doesn’t have to be mandatory.. just let it exist alongside ACOs or whatever other genius construct that exists in spitzer-gawande wet dreams. I’m confident the patient will figure out where the value is
“I’m confident the patient will figure out where the value is”
Any idea how much money patients will have to have at risk before this happens? I sure don’t. Our network offers prices about 20%-30% less that our primary competitor, with outcomes that are roughly equivalent. As deductibles have climbed, you would think we would see a shift in market share. Not happening. Have tried advertising prices (transparency) which are much lower than what one would pay anywhere in the broader region. Little impact.
Allowing HSA monies to be used for DPC could have, should have, been fixed long ago. We offered our staff HSAs a while back. Only the healthy and those w/o young kids have adopted them, but those who have would use DPC more often if they could use HSA monies.
Sometime THCB has insightful essays that identify real problems and articulate how the solution must address the complexity of our healthcare conundrum. This essay is not one of them.
It adds nothing to the discussion. Yes there are problems with Obamacare, mostly having to do with controlling costs. None of Dr. Herrick’s suggestions will accomplish that. He simply reiterates right wing talking points, ignoring the reality that the taxpayer is currently paying 66 cents on every dollar “we” spend on healthcare and “multiplayer” financing wastes about 20 cents on every dollar in the friction of taxpayer-subsidized health insurance carriers fighting over money while they carve out the lowest risk, least expensive patient population (working people) while the TAXPAYER pays for all the highest risk, most expensive patient population (old people, disabled people, poor people, vets, active military, and native Americans). HSA’s and the like are simply smoke and mirrors. We need definitive healthcare reform that reflects the underlying reality that we are all paying for everybody, which makes healthcare a precious public resource that should be treated as such instead of being treated as any other commodity, like gin and golf clubs. Really. Put everybody in the same risk pool and pay for it publicly. THEN we will have leverage to control costs. But that’s a longer discussion requiring more than simply reiterating left wing talking points.
The federal government won’t do monopsony. This is how they bribed Pharma and the AHA to come on board the PPACA.
How does Derron keep this logic in his head without having smoke come out of his ears? He wants more high deductible plans and HSAs–yet Obamacare has delivered more deductible plans than a libertarian could imagine in a wet dream & the ability to have an HSA exists in almost all of them. I have one! Yet he says ” If you ask moderate-income Americans what they want out of health insurance, they mainly want to be able to see a doctor should they become ill. Obamacare’s high-deductibles with unlimited lifetime benefits is generally not the kind of coverage they clamor for.”
The reason Obamacare plans and all health insurance are expensive is that the individual market now has to cover sick people.But if you keep the pre-existing condition mandate that remains the case. And that’s where all the money in a risk pool is spent. If you dont have the rest of the insured paying into the pool, then the math doesnt work
The more I read these proposals and recall long arguments with Michael Cannon et al 10+ years ago on THCB, the more I think the NCPA, Cato, Heritage crowd just doesn’t understand arithmetic.
The irony is that GOP politicians have helped lead complaints about Obamacare high deductible plans, yet that is now what they appear to want to expand. As you note, you can already have HSAs. (Cant you already use HSAs for retiree health care?) Suppose your company offers an HSA, but they offer no contribution and you are one of the lower level employees making little money? States can already experiment with health care, including Medicaid, if they want. It has always been a great disappointment that states have largely been unwilling to take on the task of innovating in health care. Expanded transparency? Sounds good, but you need to use big government to achieve that.
Do they understand arithmetic? Sure they do, but their primary goal is to cut govt spending.
Query(s)- For those who are out of work for a while, and unable to afford continuous coverage, what happens to them? Do you need to maintain the same level of insurance continuously? What would stop someone from gaming the system and buying a $50k deductible plan, as an example, just to keep continuous coverage? Finally, you get really sick, say meningitis like one of our pts in the ICU recently. Do Americans really just want to see a doctor when they get sick, or do they want appropriate health care?
We seem to be mired in the “Persecutor” phase of the cyclical Rescuer-Victim-Persecutor socioeconomic triangle. And, we suffer from the concomitant anti-empathic “Ich-Du-Sie” problem:
The adversity POV:
Ich, Du, Sie
I innocently suffered a misfortune.
YOU should have done more to avoid calamity.
HE is is a parasite, a Moocher.