As the 45th president, what to do with “disastrous” Obamacare will top President-elect Donald Trump’s list of priorities.
Repeal isn’t enough. Republicans must enact a replacement that will expand access to affordable coverage, foster more competition in the healthcare marketplace and reduce long-term costs.
Speaker of the House Paul Ryan’s “A Better Way” reform agenda is the foundation of such a plan. (It has an awful lot in common with my own plan.) The GOP should spend the next two months transforming that plan into a formal bill, complete with estimates of its cost.
Most importantly, Ryan’s “A Better Way” plan would begin to equalize the tax treatment of health insurance. Employer-sponsored health benefits have long been exempt from tax. The Ryan plan would extend similar, modest tax benefits to individuals in the form of age-based refundable tax credits that consumers could apply toward the cost of a policy.
Those who choose plans that are less expensive than the credit could save the difference in a health savings account. They could use the contents to cover out-of-pocket health expenses, co-pays and the like down the line.
Because they’d control both the credit and the funds in their HSAs, they’d have a strong incentive to shop around for the best deal on care. Such consumerism could reduce overall health costs.
Ryan’s plan also guarantees that anyone can get affordable coverage, provided they’ve maintained continuous coverage over the previous year. Such a rule protects consumers from outrageous premium hikes from one year to the next, even if they get sick. But it prevents people from buying insurance right when they need care and cancelling it after they receive treatment, as Obamacare effectively encourages them to do. Such abuse of insurance raises premiums for everyone.
A third key aspect of the Ryan plan: $25 billion in federal funding over 10 years for state-level high-risk pools, where patients with serious chronic illnesses who can’t afford conventional coverage can obtain subsidized plans. By taking the costliest patients out of the standard risk pool, this reform would drive down premiums for those that remain, mainly those with more conventional, actuarially predictable health costs.
House Republicans have a clear plan for rebuilding our health sector in the wake of Obamacare. In January, they’ll finally have the chance to implement it.