With the election behind us, it’s time to look forward. Many things will change with a new President in the White House, but I doubt as many as you think. Every conservative predicted the end of the world with Obama, but we’re still here. So, deep breath… One thing that most definitely will change, and I’d argue is the main reason Trump got elected, is ACA or Obamacare. It took a back seat to so many other issues, but I think the shock of the insurance notices swayed the votes just enough in those swing states.
I have a unique experience with ACA in that I’ve had to address it in my job and personally. I’ve bought my insurance on the exchange and seen it more than quadruple. I’ve searched for insurance offerings for the employees at TriCorps and seen how limited the options are, but also how the system was gamed to meet the letter of the law, but probably not the spirit of the law.
So below I’m going to address what went wrong and what we need to do to fix it.
What has gone wrong?
States rejecting Medicare expansion
Medicare expansion was controversial, but I don’t think anyone predicted that states would openly reject the money. But it happened. It happened to make a political point and left a donut hole of missing coverage that hurt some very vulnerable people.
Insurers withdrawing from markets
Insurers have withdrawn from markets because the costs of have been astronomical. This has led to many states seeing over 100% increases from 2016 to 2017. I’ve seen it myself, and heard lots of talk of the real effects it has had on people. The requirement that 80% of premiums go toward health costs sounds great, but it has led to a system where the insurers bear all the risk for a smaller portion of the reward.
ACA, done right
With Trump in office, this could go many different ways. It seems everyone agrees to keep the dependent age at 26 and to not allow discrimination on preexisting conditions, so I won’t address these. So, for the sake of not arguing a point that doesn’t need to be argued, I’ll assume those provisions stay. So, here’s my plea on what to do.
Maintain having no out-of-pocket costs on preventative services
More proactive care should lead to less issues down the line. While this might not currently be the case, if you fix the system, I think this normalizes in the future. While I think individuals should be more aware of the cost of their healthcare and budget for these costs, I realize this is not likely to happen with most. So, the only way to get the intended benefit and ability to catch and correct health issues early is to encourage people to go to the doctor.
Remove state line boundaries
Full on raise the Republican flag. To me this is a no-brainer. I think the reason it has never happened is because insurance companies don’t want it. This and the fact that policies are tied to the employer have made a system where costs aren’t known. Removing boundaries means a couple things. First, it makes the pools extremely big. States don’t have different payment structures because all the people who buy $1,000 deductible plans are in the same pool. This should mean national competition and overall a more competitive market. The 80% minimum of premiums going to health costs is an attempt to do this, but good old-fashioned competition should have the same effect without creating more regulation.
Remove the Medical Loss Ratio
This is the provision that requires insurers to pay 80% of premiums to policy expenses. You may think, why do you want that??? That’s a good thing! It limits their profits! Well, yes, it can. But by removing state lines, you’ll find increased competition. At that point, this provision just becomes another regulation that raises the cost of doing business. I truly believe if you have competition across state lines, you’ll have too many companies in the marketplace to count. This sort of competition will drive down profits to bare bones.
Untie healthcare incentives from workplaces
Get rid of the employer mandate and further untie healthcare from workplaces. Allow companies to offer healthcare reimbursements, but don’t allow companies to host the plans. It’s an individual decision what healthcare you get. This shouldn’t be determined by where you work or anything else. Part of the gridlock and rising costs in the market is related to the fact that many getting insurance from the open market are small employers and those who don’t have a good enough job to afford healthcare. This means that many healthy people are part of company groups, making the open market group more risky. Ultimately, if everyone is in the same pool, the risk is more spread out. The law has limited insurers’ ability to differentiate one group offering from another, which has also increased the gridlock in the system. Now, they just don’t offer plans to these groups.
Companies could offer essentially the same thing the government offers: pre-tax deductions. They could choose to only offer it for the employee, but every deduction would be the same. They could choose to offer it for the full family. Many companies already do this sort of thing, adjusting an employees income based off the size of their household. This still allows for employers to differentiate themselves because of their good benefits, but ultimately allows the employee to have their choice. Now, you might have to put some law or regulation in place to make sure employers aren’t offering all income as “health” income to avoid taxes, but that should be a simple thing if you limit the pre-tax offering to some sort of previous year average policy cost.
Keep and increase the individual penalty
Now, I’ll differ from many on this, but you have to keep costs down somehow. I personally don’t think you can prevent discrimination on preexisting conditions for the companies, but then not have a penalty to the individual if they refuse to buy health insurance. This would make a market where no young person would buy healthcare, thus pushing the insurance even higher. By requiring insurance, you’re keeping healthy people in the system. I know it’s not popular, but it’s completely necessary. Increase the penalty to essentially create government-sponsored plans. Is this ideal? No. But if everyone has insurance, all costs should go down. The reality of our system is that hospitals won’t turn away patients. If hospitals cannot turn people away, there has to be a mechanism to force payment, and I believe this method could be more efficient than everyone else bearing that cost.
Also, the individual mandate was original a conservative idea. The Heritage Foundation was the first group to suggest this, and it was brought by Republicans to Congress in the 1990s.
So there you have it. I don’t have an opinion on the subsidies, but do believe the above solutions will significantly lower cost. I’d love to see the penalties rolled into Medicare, but Medicare is not an area I know enough intricate details to make any suggestions.
I believe the combination of the individual penalty along with removing boundaries stabilizes the law. It would be tough to find the political capital to change it if both had a significant piece of their wishlist. I think this, with a combination of more health savings accounts, makes people more aware of their actual healthcare costs. I still prefer a system with more catastrophic plans, but I don’t think we’ll ever see that. In today’s market, costs are hidden so well, we don’t see shopping for services. With an increase in competition and transparency, we should see the marketplace return to the competitive nature it should be.
But, this is just one man’s opinion! Thanks for listening!