Donald Trump is continuing to make his case for an overhaul of the Affordable Care Act. "We're going to fight for much better health care than Obamacare. Obamacare is a catastrophe," he said just before his victory in the Iowa Caucuses in January.
He's right to put healthcare reform at the center of his pitch to voters. Obamacare is failing to deliver affordable, quality care. Better approaches are out there. They start with acknowledging that American health care needs less government bureaucracy and more market-based reform.
For many of the Democrats who voted for Obamacare nearly 14 years ago, the complex system was a waystation for their real goal -- a complete government takeover of the health insurance system à la "Medicare for All."
They couldn't find the votes for "single-payer" then, nor can they now. So they settled for a system that directs private insurers to provide a list of ten mandated benefits, with strict regulations on how much they can charge and a complicated scheme of subsidies that obscures the cost of coverage.
Those mandates have led to high premiums, deductibles, and out-of-pocket costs, as well as narrow provider networks.
Short-term, limited-duration health plans are a viable alternative in the three dozen states where they're available. These plans do not have to comply with Obamacare's mandates. In many cases, they provide coverage that's every bit as comprehensive as exchange plans for a fraction of the price.
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Former President Trump issued an executive order that aimed to allow short-term plans to last up to 364 days and to be renewed for a total term of up to three years.
Because short-term plans don't have to comply with Obamacare's mandates, Democrats call them "junk insurance." President Biden is working to rescind the Trump-era rule -- and set a maximum duration for short-term plans of three months, with an option for a one-month renewal. Blue states like New York and California have banned them outright. In 14 states and the District of Columbia, no short-term plans are available.
That's a shame for people in search of affordable coverage. A 2019 study from Manhattan Institute scholar Chris Pope found that short-term plans can provide equivalent coverage to exchange plans at almost half the price, even for older people and smokers.
Association health plans are another alternative to pricey exchange plans. AHPs allow small groups of employers to band together to negotiate as one larger group with insurers for a better deal on health benefits. Large groups -- those with 50 or more employees -- are exempt from many of Obamacare's regulations.
Former President Trump loosened the rules about who could form an AHP through a 2018 executive order. But the courts blocked that rule in 2019, and President Biden is trying to rescind it altogether.
Fortunately, several states are taking up former President Trump's call for meaningful health reform.
Take the inflated costs flowing from certificate-of-need laws on the books in just under three dozen states and the District of Columbia. These laws prohibit hospitals and other healthcare providers from expanding their facilities without first obtaining permission from the government.
The intention is to prevent healthcare inflation through excess medical capacity. In practice, these laws give incumbent providers the opportunity to lobby against new competitors.
Restraining competition in this way is actually a recipe for higher costs. So it's good news that states including West Virginia, Connecticut, South Carolina, and North Carolina have all relaxed their certificate-of-need laws within the last year.
State "scope-of-practice" laws governing the activities of over 350,000 nurse practitioners nationwide also serve to inflate costs by restricting competition. These medical professionals have graduate degrees, advanced training, and prescribing privileges. But in just under half the country, they can't diagnose or treat patients without a doctor's sign-off.
Repealing scope-of-practice laws would not only save money but also help address the dire shortage of medical care in many low-income and rural areas.
Utah is one of 15 states without certificate-of-need laws. The Beehive State also allows nurse practitioners to practice unencumbered. Not coincidentally, Utah has the lowest per-person healthcare costs in the country -- just over $7,500 annually, as of 2020.
Former President Trump is right -- Obamacare is a catastrophe. Our best hope for health care is market-based reform.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on X, formerly Twitter, @sallypipes.
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