Almost eight years ago, Democrats passed ObamaCare using some tricky procedural maneuvers and a party-line vote. Not one Republican in the House or Senate voted for it. Obama signed the legislation promising it would reduce costs, increase choices, and that anyone who wanted to keep their health plan could keep it.
Since then, health insurance and health care costs have skyrocketed, the number of available insurance plans has declined, and millions of Americans have lost coverage. And the worst is yet to come.
Every election since its passage, Republicans have promised to repeal ObamaCare. “Repeal” was a central theme of the Tea Party revolution that gave Republicans the majority in the House of Representatives in 2010. It continued to be a commitment by Republicans in 2014 when voters gave them the majority in the Senate.
Republicans then passed a repeal bill through the House and Senate in 2015. Obama, predictably, vetoed it, but this effort was advertised as a practice run for when Republicans won the White House in 2016.
They now need to be as serious about keeping their promises as President Trump is.
As Republicans clamor to “replace” ObamaCare, it is important to remember that ObamaCare is not America’s health care system. It is a cancer on that system. If ObamaCare is repealed, we will still have our doctors, nurses, hospitals, insurance companies, Medicaid and Medicare.
But once the cancer is removed, Congress and the president have proposed a number of ideas that will make our health care system work better for every American. If Republicans in Congress insist on complicating the repeal process, they should at least include some of the ideas that will push down costs and increase choices of affordable insurance plans.
The current GOP health plan, the American Health Care Act (AHCA), provides perverse incentives for states to continue to expand Medicaid to able-bodied people without dependent children. The more we expand Medicaid, the higher the costs of private health insurance. Why? Because doctors and hospitals have to shift costs and charge insurance companies more to cover the losses from low Medicaid reimbursement.
It is hard to understand why the current GOP plan actually gives states more money to enroll healthy singles than it does for the poor, sick, disabled or elderly. The plan is also unfair to more responsible states that did not expand Medicaid under ObamaCare.
The AHCA should be amended to freeze Medicaid expansion and to phase out the extra funding that has already been provided. It should then break Medicaid into three discrete programs focused on the unique needs of low-income children and parents, the elderly, and the disabled. Each state should receive a per capita cap for each eligible population. Finally, the bill should allow states to use Medicaid dollars to assist people in the purchase of private insurance plans through health savings accounts (HSAs) or other mechanisms.
It should also be amended to give people a choice by allowing them to use the money in their HSAs to buy a health insurance plan of any design- a health-maintenance organization (HMO), a preferred-provider organization (PPO), a high-deductible plan, or other arrangement- that they can own and keep from job to job and into retirement. Further, this amendment should.
- Allow people to put more of their own money in their HSAs tax free;
- Allow employers who don’t offer health insurance to contribute to the HSAs of their employees (there should be a cap on the amount employers can spend on health plans or contribute to HSAs);
- Allow individuals who receive the proposed refundable tax credit to deposit it directly into their HSAs (the current bill sends the tax credit directly to insurance companies); and
- Allow retirees to keep their private insurance by electing to take a payment into their HSAs to use for a health plan of their choice instead of enrolling in the traditional Medicare plan. Only individual contributions should be counted toward the annual maximum contribution of $6,750. This amendment would create millions of healthcare shoppers applying significant downward pressure on the costs of insurance and healthcare.
Another important amendment would address one of the most serious problems with the AHCA: people can wait until they are sick to buy insurance. The current bill removes the ObamaCare mandate to buy insurance (which many Americans have ignored) and requires insurance companies to increase the costs of their premiums by 30 percent for one year on those who have not maintained their insurance coverage (uninsured for 63 days during the previous 12 months).
Given the costs of maintaining insurance coverage while healthy, however, the logical economic decision for many healthy Americans will be to delay buying insurance until they develop an expensive medical condition. The cost of insurance plans will continue to rise because fewer people will buy insurance and those that have insurance will be sicker.
The AHCA should be amended to apply the set of rules to the individual-health-insurance market similar to the ones that already govern the employer-group-coverage market. In that market, Americans who switch from one plan to another cannot be denied new coverage, be subjected to pre-existing-condition exclusions, or be charged higher premiums because of their health status.
In the group market, such exclusions could be applied only to those without prior coverage, or to those who wait until they need medical care to enroll in their employer’s plan. However, there are limits even in these cases. Such individuals could still obtain the group coverage, and any pre-existing medical condition could not be excluded from that coverage for more than 12 months.
Applying the rules governing the group market to the individual market will provide a stronger incentive for healthy Americans to buy insurance and will thus lower the price of health insurance overall. Additionally, allowing individuals to buy insurance with HSAs with multiple funding sources will encourage people to buy and keep affordable plans throughout their lives. This will greatly reduce the number of uninsured Americans with pre-existing conditions.
Other improvements could and should be made to the AHCA. But many of these are promised in “Phase 2 & 3” of the Republican ObamaCare replace plans. Phase 2 will be the deconstruction of the expensive ObamaCare regulatory regime by HHS Secretary Tom Price. I am confident regulatory reform will help lower the cost of health insurance. Yet while this may be doable without Congress in the short-term, any long-term solution requires congressional action.
Waiting until Phase 3 are many of the real drivers of lower costs, like interstate competition of insurance companies and other legislative changes that will create more competition in the insurance market, and more consumer choices of plans.
But Phase 3 is unlikely to ever happen. As I recently told the president, “Every time I bet on the come in Washington, I lose my bet.” Once the insurance companies get their money in Phase 1, they will block the passage of any legislation that promotes competition, individual plans, and consumer choice.
If Republicans were smart, they would first remove the cancer on our health care system (the 2015 repeal bill) and then pair the refundable tax credits with cost-cutting legislation to open up interstate competition and alternative insurance arrangements.
It would be hard for many Democrats to vote against a bill like that. But they will all vote against the ACHA because it includes the repeal of ObamaCare. So why not be smart about it?
Jim DeMint is president of The Heritage Foundation. He represented South Carolina in the United States Senate from 2005-13.
The views expressed by contributors are their own and are not the views of The Hill.