4 Obamacare Alternatives That Don't Suck
Not as good as the real thing, but better than nothing.
During last week's Republican retreat in Philadelphia, Paul Ryan circled March or April for the Obamacare repeal, even as leaked audio reveals many are privately sweating the political, if not human, fallout of taking health insurance from 20 million Americans. "Republicans will own it lock, stock, and barrel," warned Tom McClintock (R-CA), "and we'll be judged on that." Senator Ron Johnson (R-WI), for his part, now argues that we should fix Obamacare, rather than blow it up. Meanwhile, President Trump swears that he is nearly done with a separate health care plan that will provide "insurance for everybody," something members of his own party can't even pretend to believe.
Mathematically, though, the chances of Republicans not repealing Obamacare are somewhere in the range of a TV hostage telling a serial killer, "you don't have to do this." Even though Obamacare is more popular than it has ever been, more than 60 percent of Republicans still say repealing the law is a top priority, according to a recent Kaiser poll.
But if President Trump is serious about getting Americans "beautifully covered," there are clear fixes to Obamacare that will make health insurance more affordable and cover more people, which he can then proudly slap his name on. Here are four.
The easiest way to make Obamacare work better is to let Obamacare work as intended. "Republicans need to stop their opposition to letting law work as designed," says Jonathan Gruber, an MIT health economist who advised President Barack Obama on the ACA. "The states that haven't expanded Medicaid are states with the highest premiums."
One key piece of Obamacare is Medicaid expansion, which aimed to give healthcare to more people who otherwise couldn't afford it—people making at or below 138 percent of the federal poverty line, or $33,498 for a family of four. But Republicans fought Obamacare all the way to the Supreme Court in 2012, which ultimately preserved the law while giving states the option to expand access to the poorest Americans or not—and 19 states have refused to do so.
The refusal to expand Medicaid has created a coverage gap: 2.5 million people make too much for Medicaid but not enough for tax credits. More than 90 percent of these people live in the South, and more than a quarter in Texas. This drives premiums up. People without insurance still get sick and need to go to the emergency room. If they can't pay, guess who does? Their cost is covered downstream by higher premiums. The good news is that the governors of these 19 states could heal this self-inflicted wound and let Obamacare do what it was meant to do. That would cover more people and lower their costs—data shows premiums are lower in states that have expanded.
Improve What Is Known
Polls have long shown that Americans don't know how Obamacare works—and that's not an accident. A key part of the Republican sabotage of the health care plan was preventing education about the law. In August 2013, the Obama administration announced that they would pay $67 million to 105 organizations ("navigators") to help educate the public on the new law. Republicans were helpful as ever: Florida forbade navigators from working at county public health offices and Tennessee, among others, required, as is so popular in conservative circles, criminal background checks.
"There are people who are eligible for significant subsidies who aren't getting them," says Sarah Lueck, a senior policy analyst at the Center on Budget and Policy Priorities. Nearly 2.5 million people are paying more for health insurance than they have to, because they aren't buying plans on the Obamacare exchanges, according to a report from the Department of Health and Human Services.
So, another way to make Obamacare work better is to make sure people know how it works—and whether they can save money from a plan on the exchange. "People aren't aware of the options available to them," says Lueck. "That's a big challenge, outreach and enrollment. There should be a renewed effort to make sure people have the help that they need."
Replenish Reinsurance Funds
Insurance companies also need help. When Obamacare launched, they had to play a guessing game: What should they charge in a new market? To figure out that number, they had to guess how many healthy and sick enrollees they would have. But that guess could be way off, so Obamacare built in a protection for insurance companies: reinsurance.
The reinsurance fund was temporary, designed to last three years and pick up the tab for any enrollee that cost more than $60,000. That's helped keep premiums down: The American Academy of Actuaries calculates that the reinsurance program reduced premiums by as much as 14 percent in 2014, 11 percent in 2015, and 6 percent last year. The sunset of the program is expected to push premiums in the opposite direction: they may increase by as much as 7 percent.
"Is there a need to continue reinsurance in some locations to help protect against unexpected or high cost claims? Alaska has implemented something, because they were having particular problems in their market," Lueck says.
Add a Public Option
One of the problems with the Obamacare exchanges right now is a lack of choice. Insurers are pulling out of marketplaces because they are losing money, especially as so-called young invincibles choose to take the penalty rather than purchase health insurance that they couldn't possibly need because nothing bad could ever happen to them (and which would cover the cost of sicker people). Alabama, Alaska, Oklahoma, South Carolina, and Wyoming will only have one choice for individual coverage in 2017; thirteen others will have two.
The solution, then, is a public option, which was part of Hillary Clinton's healthcare plan. "It makes sense to create a Medicare-like public option, where you would start by having it available in places where there are only one or two plans, which is a lot of the country, or roll it out on a nationwide basis," says Jacob Hacker, a political science professor and director of the Institution for Social and Policy Studies at Yale University. "There's no question given recent cost trends that Medicare has the capacity to provide good coverage for less than most private insurers and to create a benchmark for the private sector."
RAND estimated that adding a public option would cover 400,000 more people, lower out-of-pocket costs for people with modest incomes, and slightly lower the federal deficit. Many Republicans oppose it.