Why Obamacare Should Be Redesigned, But Not Repealed

Deft revisions to the health care law could solve its long-term financial problems, preserve broad catastrophic coverage and allow more consumer choice.

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From left: Speaker of the House Rep. John Boehner (R-OH), House Republican Conference Vice Chair Rep. Cathy McMorris Rodgers (R-WA), House Majority Leader Rep. Eric Cantor (R-VA), and Rep. Nay Hayworth (R-NY) attend a news conference July 10, 2012 on Capitol Hill in Washington.

Last week’s vote by the House of Representatives to repeal President Obama’s health care plan was the 33rd such attempt – and just as unlikely to have any real effect as the previous 32 votes. In fact, repealing the entire law and replacing it with something completely different will be quite difficult politically. Nonetheless, over the long term, financial pressures are likely to force substantial alterations in the law as it currently stands. If those changes are made intelligently, they could lower costs and increase consumer choice, while preserving universal coverage.

Experts argue over every aspect of the Affordable Care Act, including its financial implications. But as even some of Obamacare’s greatest supporters admit, the goal was to craft a plan for universal health care coverage that could pass Congress and be signed into law. If there were flaws and awkward compromises, they could be fixed later. In my view, there are in fact two big flaws – Obamacare does not sufficiently control costs and its standards are too restrictive when it comes to determining what types of health care coverage are allowed. Both those flaws could be addressed by recognizing that the standards for catastrophic health coverage – protection against serious illnesses that are hideously expensive to treat – should be different from those for everyday medical expenses. Over the long term, I believe, financial realities and consumer preferences will encourage changes in just such a direction.

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On paper, Obamacare has always been billed as a deficit reducer. But if you look solely at the part of the law concerned with health insurance, it adds more than $100 billion annually to federal spending, and that amount grows over time, according to the Congressional Budget Office. To prevent this from increasing the deficit, the cost is supposed to be more than offset by additional taxes and also by large cuts in Medicare spending. These proposed changes to Medicare are already meeting strong resistance from doctors and other health care providers.

Another part of the true cost of Obamacare is paid for by raising the income ceiling for Medicaid eligibility, and part of the cost of doing so would end up being funded by state governments. But the recent Supreme Court decision that upheld the constitutionality of the most important parts of Obamacare also included a provision that would make it easier for states to opt out of this Medicaid expansion, and some have talked about doing so. The CBO is preparing new projections, due out later this month, which will take this Supreme Court ruling into account. These new figures are expected to show higher long-term costs.

The bottom line is that there are multiple constituencies – especially in today’s financial climate of soaring government debt – who will press to reduce the costs of Obamacare and the policies meant to pay for it. At the same time, there is strong popular support for preserving certain parts of Obamacare. While it’s true that the number of people who oppose the law have always outnumbered those who favor it by around five percentage points, a sizable minority of around 40% have consistently supported it. Even more important, some specific provisions have always been generally popular, such as those that allow young people to stay on their parents’ insurance up to age 26 and those that prevent insurers from limiting or denying coverage.

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Over the long term, these pressures should – and probably will – promote the redesign of Obamacare along the following lines. People who currently don’t have health insurance and have difficulty affording it will probably still be covered in more or less the same way that the current law envisions. That may be through the expansion of Medicaid or with insurance that is subsidized in one way or another. But for people who get health insurance through their employers or who buy it themselves, there will be enormous opportunity for innovation.

The key is recognizing that the parts of Obamacare that are most popular with middle-class Americans all really pertain to catastrophic coverage. Even people who have long had first-rate health insurance worry that if they became seriously ill they could run up against lifetime limits on their coverage. Or they could become too sick to work and lose the insurance provided by their employers. Or the insurance company could find some way to terminate their policy. And if they subsequently need to buy insurance, they could be denied or limited because of pre-existing conditions. These concerns could all be addressed with health care coverage composed of two parts. One would be a high-deductible policy that preserved all the provisions and protections of the current health care law. The other part would pay for medical expenses up to that deductible – and that’s where there should be much more flexibility.

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You can see this in concrete terms by considering one of the fastest growing options today – coverage that includes a health savings accounts (HSA). These plans consist of a high-deductible policy coupled with an account, similar to an IRA, that can be used only to pay for medical expenses. Because a high-deductible policy is cheaper than typical health insurance, the money saved can be used to fund the HSA (you also can usually contribute some additional pretax income). The disadvantage of such a plan is that in years when your health care expenses reach the high deductible, you end up spending more than you would have with traditional insurance. On the plus side, however, you are free to choose the doctors and other health care providers you want, and whatever money you don’t spend can be rolled forward for use in future years. In addition, such plans help to reduce the cost of health care overall since administrative expenses are much lower for someone who is paying in cash – or through a disbursement from an HSA – than for claims that have to be processed by an insurance company.

Where HSAs are currently available, they have proved highly popular. The number of Americans with such plans has tripled since 2007 and grown 18% to 13.5 million over the past year. Yet current Obamacare rules greatly restrict the eligibility of plans that include HSAs – and this is only one example of the ways in which requirements that may be appropriate for catastrophic coverage unnecessarily restrict the options for plans that cover everyday medical expenses. Some people, for financial or other reasons, may prefer traditional health insurance. But there is no reason not to encourage as much flexibility and diversity as possible for non-catastrophic coverage,  especially where doing so would reduce unnecessary administrative costs and increase consumer choice.

8 comments
tommariner
tommariner

The repeal of ACA, like its passage, was and is pure politics. We need what the Democrats lied and said the law does, and yes redesigned.

The problem is that the number one priority of politics is to stay in office. The next priority at number 20, is to try to represent their constituents if there is time left over from the first priority. The law picks winners and losers, although some fairly, most pandering for votes. Therefore it administers the law, rather than setting and enforcing rules and getting out of the way. It would be like a soccer referee demanding the goalies stand aside and kicking the ball into the net of their favorite team. Gotta have both players and referees.

But the Democrats could not control themselves -- the gigantic number of permanent patronage jobs, the advantage to buy votes, the chance to force the federal government further into towns and villages was too much to resist. So the medicine is not as effective as it could have been, and will cost enough to bankrupt the country. Think the competence of the Post Office system keeping you healthy.

Firozali A.Mulla
Firozali A.Mulla

The Obama Administration has a one-size-fits-all solution for our

nation's problems: put more people on welfare! We've just seen moves like running

radio soap operas to encourage people to sign up for food stamps and claiming

the right to waive welfare's work requirements. But that's just the tip of the

iceberg! The federal government actually runs 126 separate anti-poverty

programs. They're managed by 13 different agencies. We use the word

"welfare" to describe money that goes to needy people. But the government's

war on poverty is a whole lot bigger. And it's rife with waste and redundancy.

The federal government runs 33 different housing programs: 21 programs to

provide food, eight healthcare programs, 27 cash or general assistance

programs. It's hard to find a government department that doesn't run an

anti-poverty program. All this adds up -- and this is just the federal

government. If you also include state and local spending, the government will

spend nearly a trillion dollars this year fighting poverty. That's almost the

size of the national deficit this year. Now let me be clear, I don't object to

poor people getting help. My problem is a government throwing money at programs

that clearly aren't working. Consider this: All this welfare spending adds up

to $20,610 for every poor man, woman and child in the country. For a poor

family of three, that's nearly $62,000 dollars. The poverty line for that

family is just $18,500. With this kind of spending, poverty should be wiped out

- instead it's growing.

Today, one in seven Americans is living in poverty. The most in almost

two decades. All the while spending is soaring. And, welfare spending for the

last four decades -- adjusted for inflation? Up, up, up. How can we spend all

this money, and see so little progress? Instead of pushing this line higher and

higher, and expanding the welfare state, we should be stopping the taxes and

bloated regulations that hold back economic growth and job creation. People

need work, not handouts. Unfortunately the only solution the president sees is

throwing more money at the problem. More government, instead of less. More

dependency instead of empowerment. Instead of going forward, we're going in

circles. I thank you Firozali A.Mulla DBA 

 

 

 

 

 

SixSixSix
SixSixSix

The biggest single overhead reduction and coverage improvement is to add a public option.

Ultimately it will come because of cost containment and portability. Once this expanded market opens up all the initial abstract philosophical objections will evaporate like the objection to single payer did in Canada. The worst mistake that Obama made, and interestingly Romney did not, was to delay implementation for four years while all sorts of myths were created. Trying fix myths is a waste of time shadow boxing - sort of like getting ready for the big (non-existent) backlash to ending Don't Ask, Don't Tell, or Y2K.

superlogi
superlogi

It's pile of steaming excrement.  First of all, the premise for ACA is that it would be affordable and was paid for.  It isn't.  It is a 2600 page law which no one can understand with another 10,000 pages of regulations yet to be created by unelected bureaucrats.  It was suppose to reduce deficits.  It doesn't.  It was to give one a choice of keeping their present insurer and providers.  It doesn't.  Not only will the law cannibalize another entitlement (Medicare), but will force the states to increase their own Medicaid costs during a period when most of them are running huge cost overruns.  It also threatens to force employers to either drop their health programs or reduce employment to pay for them.  And, last but not least, it will make the service providers that much less likely to get into the profession and/or drop many of their current clients.  The system we had was better and could be improved upon with some tort reform, increased competition and providing a wider range of services at a wide range of pricing options.  Unfortunately, progressives are afraid of the "free market" guiding individual decision making and think government could do it more effectively and efficiently.  But when has that ever happened?

Davel6969
Davel6969

yes for once you maker since other than you blame the wrong folks blame the fools who put bush in office after 8 years of that wannabe conservative the democrat's could of ran Hitler and won but folks who vote party line blind to the fact his record in Texas told you all you needed to know but folks of both party's to their home work after the fact so you clowns got what you deserved with Obama by voting your way with bush for 8 years so put the blame where blame is due on the idiots who put bush in office (THANX YOU IDIOT'S)

Dennis Barnhardt
Dennis Barnhardt

they should let people with income below 100% fpl claim the premium credit and cost sharing subsidies,     then states could repeal their medicaid laws and everyone would have private insurance.  

Gary McCray
Gary McCray

So far the Republicans have shown themselves to have utter contempt, in the end even for the Supreme Court (who they thought would vote their way).

President Obama was amazingly able to get this through and the thing the Republicans really hate is that he was able to succeed so admirably even in the face of their utter opposition.

From the start the Republican mantra has been stop the President at any cost regardless of how it affects the people or the country.

Obamacare is certainly not perfect, but it is a great deal better than what we had before and it is certainly a lot better than the Republicans do nothing at all approach.

It can and should be changed into something that even more benefits the people of the United States.

Now that we have it we can do that.

Without it we were nowhere (Which is the way the Republicans wanted it.)

Symptoms Of Depression
Symptoms Of Depression

What we had before was a system where the citizenry were not being taxed based on how they chose to care for their bodies.  

The problem with all legislation that attempts to codify and enforce a "common good" is that it is hopelessly subjective.

How the left, who campaign so tirelessly for the right to choose, are so willing to allow the government to determine the course of their healthcare, and interfere in their relationships with their own bodies is utterly beyond me.