Donald Trump’s victory over Hillary Clinton bodes well for the future of America’s healthcare system.
With Obamacare in a full-on “death spiral,” voters were clearly in no mood for Clinton’s plan to “build on” the president’s healthcare law. Instead, they chose a president who has said that his first order of business following President Trump’s inauguration on January 20, will be to “ask Congress to immediately deliver a full repeal of Obamacare.”
What comes next? According to President Obama and his allies, it’s an open question. As he put it at a Clinton campaign rally days before the election, Republicans “got no plan” to replace Obamacare. “Nothing, zero, nada.”
He’s wrong. Under Speaker Paul Ryan’s leadership, House Republicans have put forward a replacement plan, “A Better Way.” And it’s far more detailed than anything Obama proposed when he was running for president.
The Ryan reform agenda — which is remarkably similar to my own plan for healthcare reform — promises to reduce costs, expand access to coverage, and protect those with pre-existing conditions.
At the moment, it’s just a plan. The next step is to develop it into official legislation, complete with federal cost estimates. Once implemented, it promises to succeed where Obamacare continues to fail.
Eliminating Obamacare’s onerous marketplace regulations and benefit mandates alone will dramatically reduce insurance costs. Under the current health law, exchange plans are required to cover a host of “essential benefits,” including everything from pediatric dental care to speech-language pathology.
Such mandates have helped drive exchange premiums through the roof, with rate increases averaging 22 percent in 2017.
Before Obamacare, low-premium, high-deductible plans were in ample supply. Under the Republican’s replacement plan, those affordable options will quickly return.
The Republican plan also does away with Obamacare’s byzantine and unpredictable system of insurance subsidies for Americans enrolled in the state and federal exchanges.
These subsidies are pegged to a family’s income relative to the federal poverty rate and to the cost of a “benchmark” insurance plan. This ridiculous set-up requires individuals to guess their income for the following year — and forces millions to pay back a portion of their subsidy if they guess wrong.
Under the GOP plan, Americans buying coverage on the individual market would get a simple refundable tax credit that varies only with age — reflecting the fact that health costs, and thus insurance costs, tend to go up as people get older.
Unlike Obamacare, which sends its subsidies to insurance companies, the Republican tax credits would go directly to individuals. Consumers could use the credits to help pay for whatever plan best suits their needs and budget. And any of the subsidy funds they don’t spend on insurance could be deposited into a health savings account.
These accounts allow individuals with high-deductible health plans to put aside money tax-free to cover out-of-pocket medical expenses. Consumers can roll the funds in their HSAs over from year to year. Because they “own” them, they have a strong incentive to use care wisely and avoid needless or wasteful medical expenses. Injecting a dose of consumerism into the healthcare marketplace will drive down overall costs — just as it has in every other sector of the economy.
A new report from Mercer found that the shift among employers toward high-deductible, HSA plans — a model that now accounts for 29 percent of the employer market — has held employee benefit cost increases to a mere 2.4 percent this year, the lowest in decades.
And despite what Democrats claim, the GOP replacement plan doesn’t leave those with pre-existing conditions to fend for themselves. Obamacare’s disastrous “guaranteed issue” mandate forced insurers to accept all comers regardless of their health status — an arrangement that encourages individuals to wait until they’re sick to purchase coverage.
The Republican plan, by contrast, would protect anyone who maintains continuous coverage from severe premium hikes — regardless of whether they have a chronic or pre-existing condition.
In other words, people could no longer game the system, zipping in and out of the insurance pool when it suits them — and driving premiums for everyone else up in the process.
For truly uninsurable Americans, the GOP plan provides $25 billion in funding over 10 years to state-level “high risk” pools. These programs provide subsidized coverage for those with extremely expensive chronic ailments.
That leaves the standard insurance pool with patients with ordinary, actuarially predictable health risks. Insurers can predict with much greater accuracy how much it will cost to pay for these peoples’ care — and so can offer lower, more stable premiums.
Critics of the GOP replacement plan allege that it will force 22 million people to lose the insurance coverage they’ve had under Obamacare either through the exchanges or individual plans. But that claim simply isn’t true.
The House agenda includes a transition plan for exchange customers and would continue to allow children to stay on their parents’ plan until they are 26.Besides, since the GOP replacement plan is poised to sharply reduce the cost of insurance, it’s likely that Americans will find insurance coverage more affordable and accessible, not less.
None of this is to say that repealing and replacing Obamacare will be easy. Without a 60-vote majority in the Senate, Republicans won’t be able to roll back the legislation in its entirety. They must instead eliminate key Obamacare provisions through the budget reconciliation process, which will only require 51 votes.
The good news is that Republicans have one thing working decidedly in their favor. And that’s Obamacare itself. Every day that the law remains in force, a new shortcoming — be it skyrocketing premiums, or crashing websites, or exchanges with a “choice” of one insurer — comes to light.
Americans support repealing and replacing Obamacare — they made that clear when they cast their ballots on election day. The GOP has a coherent, workable, free-market health care reform plan ready for President-elect Trump’s signature. Come January, they’ll finally have a chance to implement it.