It's a 2,700 page bill. There are 20,000 pages of regulations. Major provisions seem to change every other week. And despite Nancy Pelosi's promise, four years after it passed most of us still aren't sure about everything that's in it.
How can something like that possibly be fixed?
It's easier than you might suppose. Previously, I recommended four simple ideas:
1. Replace all the Obamacare mandates and subsidies with a universal tax credit that is the same for everyone.
2. Replace all the medical savings accounts with a Roth Health Savings Account (after-tax deposits and tax free withdrawals).
3. Allow Medicaid to compete with private insurance, with everyone having the right to buy in or get out.
4. Denationalize and deregulate the exchanges and require them to institute change of health status insurance.
Clearly much more needs to be changed. But you could keep an awful lot of Obamacare and still have a workable health care system by making these changes and these changes alone.
In this post, I will describe all of the mechanical problems that would be solved with these four changes. In a subsequent post I will show that these changes would also get all the important economic incentives right.
Technical problems with the online exchanges would be gone.
Virtually every problem with the online exchanges has one and only one cause: People at different income levels and in different insurance pools get different subsidies from the federal government.
Consider that when you apply for insurance on an exchange, the exchange has to check with the IRS to verify your income; it needs to check with Social Security to see how many different employers you work for; it needs to check with the Department of Labor to see if those employers are offering affordable, qualified insurance; and it has to check with your state Medicaid program to see if you are eligible for that.
To make matters worse, the subsidy you get this year is almost certain to be the wrong amount. Whether people use last year's income or guess what this year's will be, they are almost certain to err. If they underestimate what they will earn, their subsidy will be too high and they will have to give money back to the IRS next April 15th. If they overestimate, their subsidy will be too low and they will be entitled to a refund. All this will be annoying. It may also cause financial hardship.
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