Modify Obamacare, don’t repeal it

From the pages of In Business magazine.

Since his stunning victory, President-elect Donald Trump has backtracked on several campaign pledges, but the most telling is his intention to keep parts of the Affordable Care Act, which he vowed to repeal and replace. He might still do so, but here is a modest suggestion. Forget repeal and focus on amending.

Trump offered to keep the ACA’s more popular aspects such as the protection of people with pre-existing conditions (good) and allowing children to stay on their parent’s medical insurance plan until age 26 (fine). Even Wisconsin Senator Ron Johnson, one of the law’s fiercest critics, says he doesn’t want people who gained coverage under the law to lose their coverage, so ACA 2.0 could well be taking shape.

With medical insurance premiums skyrocketing, the focus should be on amending the ACA in ways that expand access to affordable coverage (perhaps by allowing insurers to offer low-cost plans), and reduce long-term costs and stimulate more competition in the health care market.

House Speaker Paul Ryan’s “Better Way” blueprint touches on each of these, especially with a provision to equalize the tax treatment of health insurance by extending the same tax benefits enjoyed by employer-sponsored health benefits to individuals through age-based refundable tax credits. Consumers could apply the credits toward the cost of an insurance policy. Anyone who chooses a plan less expensive than the refundable tax credit could save the difference in a health savings account and use the HSA funds to cover out-of-pocket health expenses and copays.

Perhaps the most promising “Better Way” idea is to take the costliest (sickest) patients out of the standard risk pool with $25 billion in federal funding over 10 years for state-level, high-risk pools. The high-risk pools would enable patients with serious chronic illnesses who can’t afford conventional coverage to obtain subsidized plans. By taking the costliest patients out of the standard risk pool, we could reduce medical insurance premiums for people with more actuarially predictable health costs. It’s worth a try.

Trump has shown welcome signs of magnanimity, including his preference to not launch new investigations into Hillary Clinton’s conduct as Secretary of State. Similarly, mending but not ending a health care law (aka Obamacare) named for your predecessor would be a grand gesture, especially because something had to be done to control rising costs. Since that’s still the case, it’s better to focus on ways to improve the health care market rather than settle old scores.

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