The Affordable Care Act (aka Obamacare) was supposed to be a market-based healthcare system where individuals could shop for the best (and least expensive) health care insurance option for themselves and their families. The concept (first introduced as “Romneycare” in Massachusetts and then adopted by Republican lawmakers as the best solution for providing consumers with their health care solutions) quickly became anathema to conservatives as it was passed into law under a Democratic administration and Congress.
Now the Democrats are proposing a single-payer “Medicare for All” system to replace Obamacare which would essentially be expanding Medicare to include everybody. While this would probably be the most efficient and workable system, it likely won’t pass given the opposition to government paid health care by a large segment of the population and the cost associated with this expansion.
The Affordable Care Act (ACA), however, created a hodge-podge of insurance offerings and ended up not being very efficient or cost-effective.
What could be done to fix the ACA to make it much for efficient and cost effective, or, more directly, what can be done to make it actually work as a market-based system? I offer these thoughts, which admittedly might be radical, but also might make a lot of sense:
- Create a category of health care insurance options which can be construed as “Qualified Plans.” These plans would have the following characteristics:
- Cover pre-existing conditions
- No lifetime caps on the cost of care
- Offered to everybody and everywhere (not just in cherry-picked counties as insurers are able to do under the ACA)
- Offered by financially sound healthcare insurance companies who have the capacity to pay claims
- Not subject to state regulation or cost controls
- Consolidate state market exchanges into one national exchange and eliminate all state regulations. Currently there are over 30 state marketplace exchanges operated by the federal government but with varying rules and regulations imposed by the states as well as multiple state exchanges. When you buy a car, however, all of them are required to have seatbelts, airbags, other safety features and standard emissions (other than California). When you buy health care insurance, however, the plans must be approved and priced according to each state regulator. This is nuts. We are one country with 50 states, but we are not the Balkans. Why must we have any state regulation if we were to have something like “Qualified Plans” at the Federal level?
- Make all “Qualified Plans” available nation-wide on the national health-care exchange. A Qualified Plan would be available to everyone everywhere. Insurers would no longer be able to pick and choose which states and which counties where they would sell their plans.
- Eliminate tax deductions and tax credits for all healthcare insurance other than “Qualified Plans” both for businesses and individuals. Employers would be able to continue offering healthcare benefits to employees but only for a subsidy to purchase a Qualified Plan on a Health Care Exchange if they wish to deduct the cost from their taxes. The tax deduction for “Qualified Plans” only would discourage employer, affinity group and association healthcare plans. These plans are special deals cut between employers (and other affinity groups and associations) that reduce the number of healthy individuals in the market place, thus substantially driving up the cost of healthcare insurance for those not fortunate enough to belong to one of these organizations. A Qualified Plan would be one that is available to everyone on the healthcare marketplace. This is counter to the current thrust to create more of these special healthcare affinity groups or associations which, I contend, only drives up the cost for the rest of the individuals attempting to purchase healthcare insurance as it reduces the number of healthy individuals in the larger pool. (Note that this change would also provide substantial cost savings to employers who would no longer need to have staff on board to negotiate and maintain their employer-based plans. Employers could simply determine how much of a subsidy they would be willing to pay their employees for healthcare and the employees would choose which Qualified Plan they would sign up for.)
- Rather than the “Individual Mandate” that was imposed as part of the ACA and subsequently repealed, impose a surcharge for those healthy Millennials who chose to wait to enroll until they actually need healthcare insurance. This is what is done for individuals who delay enrolling the Medicare Part “D” drug coverage instead of signing up when they are first eligible. This would help expand the pool of healthy insured individuals to reduce the cost of the “Qualified Plans.”
Although some the above reforms may be somewhat radical, I believe they could substantially increase competition between health care insurance companies, reduce the cost of regulation, lower costs for employers, while retaining a market-based system using non-governmental payers. This model would result in a single market place for purchasing health care and would possibly resemble the model of our stock markets where you can buy stock regardless of which state you reside in or whether you are employed by a particular company, affinity group or association.
