Busting O’Care’s Logjam
‘OBAMACARE is collapsing,” President Trump warned the nation in his Tuesday night speech. “Action is not a choice — it is a necessity.” Democratic lawmakers sat on their hands, and after the speech falsely accused Republicans of wanting to “rip affordable health insurance away from millions.”
Sorry, the Affordable Care Act is in a death spiral. Facts are facts, no matter which party you favor. Premiums have doubled since the end of 2013. Yet, insurers are losing billions fleeing the individual market, putting consumers at risk of losing coverage altogether.
Politicians have until early May to find a remedy. That’s the deadline for insurers to announce their 2018 health plans and premiums.
With Democrats in denial, Republicans huddled behind closed doors Wednesday to resolve their own differences. Their biggest quarrel is over whether Uncle Sam should subsidize everyone who buys a private health plan.
Low-income Americans already get help from Medicaid. Conservatives like Sens. Ted Cruz and Rand Paul reject subsidies as ObamaCare Lite. Leaving the meeting, Paul said, “I don’t think we need a new entitlement program.”
Another sticking point: Some GOPers want to pay for the subsidies by taxing workers who have generous health plans. That would betray the union workers who helped elect Trump.
The GOP is deadlocked. But House Speaker Paul Ryan’s proposal for high-risk pools offers a remedy. If adequately funded, high-risk pools can lower premiums so substantially that buyers don’t need subsidies.
High-risk pools will also protect people with pre-existing conditions, as the president promised his reforms would do.
ObamaCare forced two groups — the healthy and the seriously ill — into the same insurance pool with the same premiums. But the sickest 5 percent of the population consume 50 percent of the nation’s health care. Medical needs are that lopsided.
Forcing a healthy person to pay the same as a sick person who uses 10 times as much health care is a rip-off. That’s why the healthy re- fused to sign up. Enrollment skewed sicker and older than expected, and insurers lost billions — and fled the market.
Funding care for the sickest separately in high-risk pools would remove the largest costs from the individual insurance market, lower premiums considerably and save the market from collapse.
At Wednesday’s GOP huddle, lawmakers focused on Ryan’s proposal. It includes taxpayer-funded grants to the states to establish these high-risk pools.
There are at most 500,000 people in the individual market who would need high-risk coverage. Covering them would cost $16 billion to $20 billion a year, based on costs in the ACA’s now defunct temporary high-risk pool.
That’s a hefty price tag, about a third more than Ryan’s plan currently budgets. But it’s far less than the $56 billion the nation currently spends on ObamaCare subsidies.
Voters elected Trump to repeal ObamaCare and make insurance affordable again. High-risk pools will bring premiums down.
On the other hand, offering everyone subsidies to buy private health plans — the most controversial part of Ryan’s plan — is likely to push premiums higher, not lower. Just look at how federal loans and aid have pushed college tuition out of sight.
Whether or not Republicans take subsidies off the table, they should drop their toxic proposal to tax generous on-the-job health benefits. It’s a watered down version of ObamaCare’s Cadillac tax that unions loathe.
Richard Trumka, head of the AFL-CIO, tentatively praised Trump on Tuesday for scuttling the Trans-Pacific Partnership trade deal, and proposing huge infrastructure projects. Trumka says he can foresee this GOP president winning serious support from union members. Republican health reformers shouldn’t torpedo this budding alliance.
GOP lawmakers will take several weeks to hammer out a final bill. But the priority is clear: affordability. Trump said himself Tuesday: “The way to make health insurance available to everyone is to lower the cost of health insurance.”