OPINION – The Trump administration is considering a major Obamacare repair within the scope of existing law. If instead you’d rather repeal and replace, I offer a simple, comprehensive Obamacare replacement.
Trump’s repair offers the prospect of Obamacare evolving into what it should have been all along: government-subsidized insurance for those at high-risk or with pre-existing conditions.
Here’s how he might do it without new legislation.
Obamacare exempts large group health insurance plans funded by unions or big companies from its expensive “essential benefits” requirements. These plans are regulated instead under the Employee Retirement Income Security Act of 1974.
Question: If Obamacare’s essential benefits are essential, why aren’t they required for large group plans?
Answer: Because of their cost, Democrats didn’t want to antagonize their union supporters.
Small business employees and sole proprietors aren’t so lucky. About 11 million of these workers are uninsured. Others have been forced onto state insurance exchanges with their high premiums and deductibles.
The Obama administration precluded small employers from forming association plans that are exempt from ERISA by narrowly interpreting ERISA’s “commonality of interest” provision.
Why? Obamacare depends on the young and healthy paying inflated premiums for insurance in order to subsidize older people and those with pre-existing conditions.
Trump’s Labor Department, responsible for administering ERISA, proposes a new rule that would more broadly define “commonality of interest” among employers to include a geographical area – say, a metropolitan area or even a state – as well as an industry, trade or profession.
This interpretation would be analogous to credit unions whose members are required to share some commonality of interest. For example, several local credit unions serve specific Southern Utah counties.
Local chambers of commerce and national industry groups could sponsor plans. The rule would also treat sole proprietors as both employers and employees, which would allow independent contractors to form or join association plans. How about anyone with a job in all of Utah?
Government-subsidized Obamacare and Medicaid coverage would remain in place for low income families and high-risk individuals unable to find insurance elsewhere.
Not satisfied with Trump’s repair? How about repealing Obamacare entirely and replacing it? Here’s my proposal:
Get rid of all six of the government’s existing health care programs, every one of them from Medicare to the Indian Health Service.
Replace them with a simple, comprehensive plan I’ve been touting for years. Bloomberg columnist Megan McArdle describes something very similar.
As we both suggest, the plan can be written on a postcard (okay, maybe a half-dozen pages) and would include the following:
- Federal government single-payer catastrophic coverage for everyone, regardless of age, for medical expenses that exceed 15 or 20 percent of a family’s adjusted gross income.
- Expanded, voluntary tax-free Health Savings Accounts for medical expenses below the catastrophic coverage threshold.
- Government contributions to HSAs on a sliding scale for those below a specified income level.
That’s it. No one bankrupted by medical catastrophes, no one denied coverage for pre-existing conditions, no one required to buy insurance coverage, no one required to open an HSA.
Few object when our federal government steps in to help communities recover from natural disasters. Providing catastrophic coverage for family medical disasters follows the same principle: helping in situations that no one can reasonably anticipate or be expected to face alone.
Health Savings Accounts have a number of virtues. Most importantly, they belong to the individual but can only be spent on health care. Each family chooses how much to contribute up to some limit and how much to spend for routine care, knowing they are backed up by catastrophic coverage if needed. Funds remaining at year-end can be rolled over indefinitely.
HSAs can be converted to individual retirement accounts at age 65, a powerful motivator for thoughtful spending. A tip of my hat to a regular reader who suggests that after age 65 all IRA withdrawals should be tax-free when spent on health care.
HSAs introduce market incentives: Individuals spend their own money for medical care, even if that money was first given to them by the government. Consumers can shop around for medical services and will think twice about going to the emergency room for a common cold.
Individuals and families could purchase private health insurance using their HSA funds if they prefer coverage similar to today’s policies. Private insurance would cover expenses only up to the point where catastrophic coverage begins, reducing premiums.
Those with good health could build up HSA balances after several years that exceed the amount needed before catastrophic coverage begins; they would have little incentive for private insurance.
Progressives should be happy that everyone is covered and higher income folks pay more than the poor for their health care.
Conservatives should be happy with a market-based health care system rather than a government-based one.
Medical providers should be happy with time-of-service HSA payments and no claims to file unless the catastrophic limit is exceeded.
Health insurers will be unhappy: Fewer policies plus lower maximum liabilities equal lower premium income.
Some will argue that people won’t see a doctor if they have to pay for visits. Reporting their Oregon Experiment results in the prestigious New England Journal of Medicine, Harvard researchers concluded that even when medical care was provided at no cost, there were “no significant improvements in measured physical health outcomes.”
Why no improvement? Visiting a doctor doesn’t make people healthy; following a doctor’s advice improves outcomes. Too many people are overweight, get too little exercise, don’t eat a balanced diet, smoke or abuse alcohol and drugs, all of which are major contributors to poor health.
Personal freedom requires personal responsibility. My plan offers everyone the means to exercise both.
Howard Sierer is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.
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