“Obamacare has been wonderful for America,” Senate Majority Leader Harry Reid, a Democrat from Nevada, said on NBC’s “Meet the Press.” “Six million seniors have wellness checks now; 3.1 million young people now have insurance…If you have a preexisting disability, you’re covered.”
Yet on the same program, Senate Minority Leader Mitch McConnell, a Republican from Kentucky said, “The American people dislike it even more now than they did when it was passed, and they hope that the Congress will respond to their desire to stop this train wreck before it happens.”
In response, Reid noted that Republicans should be working to make it better rather than launching yet another repeal attempt. Diana Furchtgott-Roth, a former chief economist with the U.S. Department of Labor and a senior fellow with the Manhattan Institute, outlined several ways the Affordable Care Act could be improved for The Wall Street Journal. In her opinion, the primary problem with the system is that it mandates a one-size-fits all, overall generous plan, with required free preventive care, mandatory mental health and drug abuse coverage, free contraceptives, and no lifetime maximum. The nature of the insurance coverage combined with the requirement that enrollees can sign up for insurance coverage at anytime makes the insurance plans offered on the exchanges very expensive.
Here’s a look at a few of her suggestions:
1) Raise individual penalties: One of the primary reform of aims of the Affordable Care Act is to ensure every American is insured, and the primary vehicle of that goal are the state-run or federally facilitated exchanges. To ensure that these exchanges are sustainable — meaning that enough young, cheap-to-insure people enroll for coverage using the online marketplaces to balance out the sicker, more-expensive-to-insure enrollees — tax penalties will be levied beginning next year. As it currently stands, these penalties amount to $95 or 1 percent of adjusted gross income in 2014 — whichever number is greater. The fine increases to $325 per person, or 2 percent of AGI in 2015, and $695, or 2.5 percent of AIG, in 2016 and thereafter. According to Furchtgott-Roth, that number is too low relative to the cost of insurance; people could potentially pay the tax and wait until they need insurance before they buy it. If a similar loophole existed in other insurance markets, people could purchase auto insurance after a car accident or home insurance after a fire. Naturally, this problem increases premium costs.
2) Give all Americans refundable tax credits for health insurance purchases: Currently, only those Americans whose employers do not offer insurance coverage and who make between 100 percent and 400 percent of the federal poverty line, which tops out at around $45,960 for an individual and $92,000 for a household of four, are eligible for a federal tax credit to subsidize the cost of insurance. But Furchtgott-Roth proposed that all enrollees be able to receive a tax credit and that the amount could be adjusted up or down depending on income.
3) Allow plans to compete over state lines: Because of the way the Affordable Care Act created the exchanges, access to health care will vary dramatically across the nation. Speaking earlier in July at the Brookings Institution, Gary Cohen, the U.S. Department of Health and Human Services official in charge of the law’s implementation said, “Because of the Supreme Court’s decision making Medicaid expansion optional with the states, we’re going to see some pretty significant differences in this country from one place to another in terms of access to health care and access to health insurance.” How many insurers decide to offer plans on the exchanges will affect the system as well. Take Mississippi for example: It is America’s poorest state, it has the shortest life expectancy, its current Medicaid program is among the least generous, and residents devote more than 10.5 percent of their income to health care. One resident in five is uninsured.
But as it stands, the federally facilitated exchange, which will be implemented because the state declined to create its own, has seen only two insurers make bids to sell health plans on it. This means residents of 42 counties will have a choice of only one subsidized plan and 26 counties will have none. And because the state has not expanded Medicaid, many poor Mississippians will be ineligible for that program.
If insurers were allowed to compete at a national level, consumers would have more choices, thereby reducing prices.
4) State risk pools: According to Furchtgott-Roth, between 2 million and 4 million people each year have uninsurable conditions, a figure that equates to about 1 to 2 percent of the U.S. population of 313 million. Part Obamacare’s mission was to ensure that those individuals would be able to receive coverage, which will increase overall insurance costs. Creating state risk pools would enable insurance companies to offer health coverage with low-cost premiums because those with severe illness would be give the option of special health insurance programs through the state. The federal government should be prepared to help states set up pools if they request assistance, and this would provide more choices to those who need extra help with difficult-to-insure conditions.
5) Offer more choices: Furchtgott-Roth believes state-run or federally facilitated exchanges should be allowed to offer multiple health insurance choices, including catastrophic health plans for those who want to pay out of pocket for routine care and insure only against major catastrophic health plans.
What Furchtgott-Roth’s analysis does not take into account is the fact that her fixes may not address all the concerns that Obamacare’s detractors may have.
Follow Meghan on Twitter @MFoley_WSCS