How to fix Obamacare

Our nation reached a critical juncture in history where Republicans are poised — after waiting seven years for their turn — to try to fix what’s wrong with America’s health insurance system.

Since 2010, we’ve been disappointed by the dishonesty and lack of depth in the debate over the Affordable Care Act. The basic principle of Obamacare was a sound one: Americans benefit in a system of shared risk, where everyone is insured with plans that promote less-expensive preventative health care and that discourage expensive emergency care with high deductibles.

Yet the reality is that the promise of Obamacare has faltered within a broken system: the federal government spends billions of dollars on a heavily regulated private health insurance marketplace without offering a competing public option to bring down costs. That system isn’t working. President Donald Trump, Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan are starving the broken system of money needed to keep it afloat.

Complicating matters, many Democrats, led by Sen. Bernie Sanders, are doing Americans a disservice by proposing a single-payer system that would abandon the free market and force everyone into government run health insurance paid for with an undetermined source and quantity of tax dollars.

Almost all of this debate is focused on how we provide health insurance for a mere 15 percent of the U.S. population. Yes, parts of Obamacare mandated what must be in the employer-sponsored plans that cover most Americans. But no one is targeting those mandates for reform.

We estimate that about 50 million people are living in the chasm of insurance that Obamacare tried to bridge.

The Kaiser Family Foundation estimates a total of 27 million people under the age of 65 are uninsured. In tax year 2015, the IRS reported 6.7 million Americans paid a total of $3.1 billion in tax penalties for not having qualified health insurance. Those are people who don’t get insurance through their employer, refused to buy insurance on the free market and couldn’t prove a “hardship” that the insurance was too expensive to avoid the penalty.

But we include others in the chasm.

Another 10.7 million taxpayers, according to the IRS, claimed $37.1 billion in federal tax credits to help make premiums in the individual market affordable.

And another 11 million Americans gained Medicaid coverage as part of the expansion under the Affordable Care Act. The Congressional Budget Office estimated in 2012 the federal cost of the Medicaid and Children’s Health Insurance Program expansions would be $931 billion over 10 years.

With fiscal conservatives in office, the challenge becomes how do we bridge the chasm without spending billions.

Republican efforts this year focused on ending the Medicaid expansion, dropping those people into the chasm along with some people who have always been covered by Medicaid by placing caps on the federal spending that wasn’t related to Obamacare.

We think a reasonable compromise would be for Republicans to end the expansion but provide federal funds to lure those 11 million people into the individual market.

Sadly, for too many of those Americans, the only way they can enter the free market is with the federal government paying 100 percent of their premiums for high deductible plans, and for those going uninsured, clearly more generous subsidies are needed.

Moving away from Medicaid will force low-income families to pay off their deductibles and co-pays over several years when emergencies strike. But the coverage should prevent most people from succumbing to bankruptcy under insurmountable medical debt, leaving the bills unpaid and everyone else picking up the tab. The good news is Obamacare mandates mean some preventative care in the plans will still be provided.

Higher federal subsidies to help those in the chasm enter or stay in the free market would allow the GOP to responsibly repeal the individual mandate, a win for conservatives, who can also claim ending the Medicaid expansion even if it costs more initially.

Over time, as the market stabilizes, insurance premiums should come down and the federal government would be paying less to insure the poor in the private market. Yes, insurance companies will need some encouragement to do the right thing and lower premiums when the government is handing out free money — enter a governmentrun insurance option that charges actuarially-sound premiums to provide competition to drive down prices.

Finally, Congress cannot win this race alone. Americans need to dramatically alter their expectations and consumption of health care and stop their abuse of the insurance system.

Everyone needs to be more frugal when accessing health care as the federal government becomes more generous in making sure everyone is covered with health insurance.