America dodged a bullet on health care -- but still has a lot of work ahead. Obamacare was rammed down America’s throat nearly seven years ago without a single Republican vote. The program is now failing; individual premiums are skyrocketing while insurers are abandoning entire state markets. Many conspiracy theory proponents believe Obamacare’s failure was preordained to usher in single payer health care. Yet a ballot initiative in Colorado to enact a single-payer health insurer, Prop 69 "ColoradoCare," was also voted down.
The high cost of Obamacare is arguably one of the many issues that drove Americans to the polls to vote for Trump or against Clinton. If it did nothing else, Trump’s victory is important because it blocked the plethora of bad health policy ideas championed by Clinton. The leading presidential candidates’ positions on health reform could not be farther apart. Whereas Hillary Clinton wanted to double down on Obamacare and expand it, Donald Trump hopes to repeal Obamacare in its entirety. Clinton wanted to expand Obamacare subsidies, Medicaid eligibility, and even eligibility for Medicare. She also wanted to enact a Soviet-style system of price controls on drugs and make drug makers justify their prices -- whatever that means.
Donald Trump has the opportunity to replace Obamacare with something better -- and far better than HillaryCare 2.0 (Obamacare on steroids). For one thing, your health savings accounts (HSAs) are now safe. Clinton’s proposed three free physician visits prior to the deductible being met would have made most health plans noncompliant with HSAs. Donald Trump supports expanding HSAs and allowing them to be used for more purposes. A great idea would be to allow families to use them to replace income lost to sick days and for family leave/care needs.
The Affordable Care Act (ACA) changed the way individual health insurance is regulated. The goal was to expand coverage, make coverage more comprehensive, and remove the restrictions on applicants that insurers placed on them to avoid losses. With those restrictions gone, losses have mounted. The non-profit Blue Cross Blue Shield Association found that Obamacare enrollees are about 22 percent costlier than people covered through employer plans. Indeed, the consulting firm McKinsey & Company found insurers lost money on individual insurance in more than 80 percent of the state marketplaces in 2014 -- the first year Obamacare exchanges were open. In the years since, insurers have lost billions on exchange plans. But at least Medicaid expansion is cheap, right? No, not really. As recently as fiscal year 2011, Medicaid-covered adults cost $3,247 per individual, while children cost only $2,463. However, a new report from the U.S. Department of Health and Human Services found Medicaid expansion enrollees are 50 percent more expensive than originally projected. New Medicaid expansion enrollees’ costs were $6,366 in 2015.
With problems like these in mind, the first thing a Trump Administration should look at is dismantling the current system for financing Medicaid and allowing states more control and room to innovate. Federal matching funds should be a function of the state population living in poverty. Federal funds should be allocated to states in the form of a block grant, and the states should decide how best to spend the money. The marginal cost of losses from fraud, graft and inefficiency should be borne entirely by states.
The most pressing goal of health reformers in Congress should be to replace all the costly provisions in Obamacare with the consumer-friendly health plans Americans prefer. In the process, reformers must change the way medical care is financed so that consumers have control over their health care dollars as well as the means to pay for medical care over their lifetimes. Under Obamacare, essential benefits and policy limits were prescribed by law -- making coverage unaffordable for millions of families. Congress should start by repealing the Obamacare mandates on employers, individuals and health insurers. Insurers should be granted the flexibility to design plans consumers can afford and are willing to buy. To help those in need of coverage, Congress should provide a refundable tax credit which families would be free to use towards premiums or on direct care.
In place of ACA regulations guaranteeing coverage for pre-existing conditions, Congress should restore the right to renew coverage if an applicant has maintained insurance with no gaps of more than 63 days (COBRA) and allow insurers to sell multiyear coverage. This would ensure nobody games the system by enrolling only after becoming sick. Creating a national market would also allow insurers to sell policies across state lines, resulting in competition among states to reform overly-restrictive state mandates.
Another goal of any reform agenda should be to expand Americans’ access to primary care. The supply of physicians is relatively inelastic; it takes time to train a doctor. The shortage of primary care providers is expected to get much worse over the next 20 years. Expanding the number of primary care residencies would help. In addition, there are many foreign medical graduates who would like to immigrate, but find insurmountable barriers to licensure in the United States. Reforming the practice of medicine would also better serve patients and boost access to primary care. Medical practice has hardly changed in the past century. Many states have regulations that inhibit talking to a doctor over the phone, and prevent so-called physician extenders, such as physician’s assistants and nurse practitioners, from practicing to the limits of their training. Reformers should focus on removing barriers to competition in the hospital sector and expand price transparency.
Donald Trump and Members of Congress have a big job ahead of them. After seven years of Obamacare, the task should not be taken lightly.
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