Replacing Obamacare: A Path Forward

It seems that we are on a fast track for the replacement of the Affordable Care Act (ACA), commonly called Obamacare. There is clearly a need for an overarching approach to the health insurance marketplace that will ensure both affordability and access—which Obamacare simply failed to deliver. Skyrocketing premiums, a lack of participating providers, and diminishing plan choice are clear indications that a new solution is needed.

There are a number of ideas floating around for an ACA replacement—and a fair amount of opposition from Democrats to shelving President Obama’s signature domestic program—but failure to provide the American public with a program that does the job and is financially viable would be a catastrophe.

Obviously, any replacement is going to have to pass the most important test, public approval and acceptance, but I have five suggestions for President Trump, the Senate, and Congress that I believe will both please our citizens—and perhaps make the task a little easier to accomplish.

1.  Dump the ACA insurance exchanges. 

It would seem obvious to anyone that laying a complex and expensive layer of government bureaucracy atop the bureaucracy of the private insurance marketplace is an incredibly bad idea—unless, of course, you happen to be a government employee. Although the taxpayer-funded exchanges and the associated payments to community groups to hire “navigators” to help people figure out the exchanges has been a wonderful jobs program for many, it might be easier to let companies that offer health insurance simply explain their own plans to their customers. Sometimes it’s best to let the private sector do their jobs and have government step aside.

2.  Get rid of the employer mandate.  

If you set out to design a system that would encourage employers to actively suppress the number of work hours they offer to their employees, you could hardly create a more effective program than Obamacare. Its brilliant designers thought that defining full-time employees—for whom businesses would then be required to provide health insurance—as those working a mere 30 hours per week would compel more businesses to offer coverage. Instead businesses—surprise!—simply reduced the hours they offered to employees in order to avoid the mandate. It’s time to go back to the standard forty hour workweek and allow businesses to decide for themselves if they want to offer health insurance as an employee benefit.

3.  Continue premium supports—for now.  

Direct 2016 costs associated with Obamacare were estimated to be roughly $110 billion—not a cheap program. Plan costs and the deductibles and co-pays borne by participants will continue to grow because the cost of healthcare in America is high—and getting higher. The signal failure of Obamacare is that it did not drill down into reducing the costs of healthcare—which are still scandalously and frighteningly inflated compared with the very same procedures, medicines, equipment, and services elsewhere in the world. There is a reason, for examples, that those mail-order Canadian pharmacies do so much business with Americans.

Therefore, any solution is going to need to continue some sort of premium support in the near-term while we put other policies in place to drive down healthcare costs until they are at least in the vicinity of what is paid by countries that are our economic peers and partners.

Unfortunately, any subsidy linked to household income inevitably translates into a disincentive to work. Moreover, is it at all smart or fair to financially penalize those Americans who work more and earn more by forcing them to bear the full cost of their healthcare plans if they would otherwise qualify for a subsidy that would reduce their out-of-pocket expense? That, to quote The Bard, is the question—particularly for many small business owners.

With this in mind, it seems sensible (although it will not be politically popular in some quarters) to simply provide every citizen who is unable to obtain health insurance from another source with exactly the same level of premium support for themselves and their dependents. This approach will anger a lot of people who will rail against millionaires who receive the same premium support as a dishwasher, but I suspect the small cohort who are extremely well off—yet for some reason have no health insurance options other than an improved version of the ACA—will be relatively few in number. Besides, the much higher local, state, and federal taxes paid by the affluent certainly provide a balancing factor that likely easily exceeds the premium subsidies they might receive.

However, in the long run, reining in galloping price increases—and outright price gouging—must be a high priority if we are going to improve the affordability of care for all Americans and eventually be able to discontinue premium supports. This will be a Washington war to end all wars because the healthcare industry has tremendous economic and political power, but these battles simply need to be fought.

4.  Continue to prohibit premium surcharges for pre-existing conditions, but also aggressively push Wellness programs to get patients to care for themselves.

There is an old saying that death and taxes are inevitable—we should add chronic illness or injury to this list. Sadly, the majority of us will eventually have something go wrong with our bodies or minds that will never improve. Therefore, we must continue the ACA prohibition against charging Americans who have pre-existing conditions higher insurance premiums—or excluding us from coverage altogether—because the ongoing need for the affordable care of chronic health problems simply cannot be ignored.

Unfortunately, as the past few years have shown, this policy also makes it impossible for insurers to forecast or manage claims when setting premiums for customers, which has led many insurers to flee the program because of escalating losses. Provisions to reimburse insurers for unexpectedly high losses were perhaps inadequate—or even actively resisted by political opponents of Obamacare—but we now know the dollars and cents simply did not add up. Nonetheless, we cannot return to the days when private insurers cherry-picked healthier customers and dumped those who truly needed coverage on the curb to fend for themselves. Access to affordable healthcare is something that all Americans have a right to expect, and providing this must be a priority when making any changes to the ACA.

However, one mechanism for reducing chronic health problems that needs to be more fully exploited is to increase our public and private investments in Wellness programs. Encouraging healthful behaviors and habits—reducing weight, increasing physical activity, improving core strength and balance, removing avoidable risks in our homes, and a host of others—could be the single most important investment we can make to transform American healthcare from a system that drains our pockets by treating disease and injury to one that enhances our lives by promoting good health. For example, the Centers for Disease Control and Prevention estimates that tobacco-related illness and disease alone results in annual medical costs of roughly $170 billion—which is both incredible and very, very sad. We must do better.

5. Don’t play politics!

My last bit of advice for those seeking to reform or replace Obamacare is exceedingly simple: Write a “clean” bill. The enormously complex task of writing a healthcare reform bill that provides a relatively seamless transition from Obamacare to a new system (“Trumpcare”?) will be infinitely more difficult if lawmakers decide to load up the legislation with riders only tangentially related—or perhaps not related at all—to the matter at hand in order to please certain constituencies or fulfill other campaign pledges.

Partisan gridlock and infighting is quite likely to be the order of the day as Democrats push back in the wake of Clinton’s stunning loss in November, but to needlessly create more headaches and conflicts—and in so doing fail to improve upon a system that is overly expensive and tremendously unwieldy—would be a huge mistake that will only further erode our already stunning lack of faith in our national government.

Now is the time to do some hard work in order to improve the delivery of healthcare to all Americans. Failure, as the saying goes, is not an option.

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