HEALTH CARE :
Heres Why Trump is Already Waffling on Obamacare
Heres Why Trump is Already Waffling on Obamacare
Repeal wouldnt be hard. Replace is another story.
By David Cutler
November 12, 2016
David Cutler is Otto Eckstein Professor of Applied Economics at Harvard
A shorter URL for the above link:
President-elect Donald Trump is already signaling that he might backpedal
on his promise to repeal the Affordable Care Act, telling the Wall Street
Journal Friday that hed consider hanging onto popular Obamacare provisions
such as the prohibition against insurers denying coverage because of
patients existing conditions, and a provision that allows parents to
provide years of additional coverage for children on their insurance
I like those very much, he said. Three days into his transition, and it
looks like the real estate tycoon is becoming a politician.
His apparent reluctance to scrap the entire ACA is understandable. In the
long run, waffling on repeal will probably be less painful than causing a
health-care catastrophe. Trump capitalized on Republicans long dislike of
the Affordable Care Act by focusing on news, in the last weeks of the
campaign, that premiums would increase sharply for many Americans
purchasing insurance through its exchanges. But he didnt promise a
pared-down health-care regime. He promised to repeal and replace Obamacare
with a plan that would cover everyone, offer more choice and cost less.
It was a populist approach to health care that wasnt new. Sixteen years
ago, in The America We Deserve, he wrote: Im a conservative on most
issues, but a liberal on this one, an appeal that didnt hurt candidate
Trump. But President Trump is likely to find the issue challenging. Repeal
requires only the will of Congress. Replacement is subject to the laws of
economics and mathematics, which arent on his side.
In the campaign, Trump proposed replacing the Affordable Care Act with a
tax deduction for individuals who pay for health insurance out of pocket.
Like all tax deductions, such a deduction is worth more to people with
higher tax rates. But most of those who would be left without coverage by
an ACA repeal are lower-income individuals with tax rates that are already
low. Thus, the benefit theyd receive from a deduction doesnt come close to
the financial hit they would experience from an ACA repeal. Independent
estimates suggest repeal would cause about 20 million people to lose
coverage, only one-quarter of whom would purchase insurance with the
deduction. The rest wouldnt be able to afford it.
Perhaps with this in mind, Trump proposed several steps to lower the cost
of health insurance. Each of them represents Republican-friendly
alternatives to the current system, but none is likely to have the
Our replacement plan, Trump told a crowd in Roanoke, Va., in September,
includes expanded access to Healthcare Savings Accounts, with support for
those who need it. HSAs, which combine tax-free savings with a
high-deductible insurance policy for families, a deductible of $2,600 or
more have long been a conservative favorite. In fact, legislation
enabling HSAs was passed as part of the Medicare prescription drug benefit
in 2003. There has been a very rapid increase in the use of HSAs in the
interim, as employers offering health plans turned to them to offset
rising health costs.
HSAs may be reasonable for higher-income families, who can afford to put
aside a portion of their household income each month for future
health-care spending, but they are not a compelling answer for people of
modest means. Few families who will lose ACA coverage will want to pay
thousands of dollars for an insurance policy that doesnt pay out anything
until they have spent another $2,600 on direct medical bills. Its possible
that Trump could subsidize the insurance premiums or savings account for
moderate-income families, but such a subsidy would drive up government
costs immensely. The large number of families with modest incomes who need
help affording health insurance is the primary reason why the Affordable
Care Act subsidies were not more generous.
When it comes to buying insurance, Trump says, We have to get rid of the
lines around the state, artificial lines. The idea is that insurers should
be free to sell in any state, regardless of where they are domiciled. A
laudable concept in spirit: Insurance market competition allows consumers
more choice and could drive down premiums.
But experience is not on Trumps side. Three states have already eliminated
restrictions on out-of-state sales of insurance Georgia, Maine and
Wyoming and not a single insurer has entered any of these markets. Why?
To sell insurance in one of these states, the big barrier for carriers
isnt meeting individual state regulatory requirements.
The complete article may be read at the URL above.
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