Health Care 2019

Barring something unexpected, as discussed in Doc Jess’s post, the major action for the rest of this Congress on health care is likely to be at the administrative level with Tom Price doing his best to undermine the Affordable Care Act.  However, there have been some unanticipated holes that have developed over the past seven years that do need to be fixed.  As such, if Democrats regain control of the House and Senate in 2019 what issues should they be looking to address.

At the top of my list is the Medicaid expansion hole.  Back in 2012, the Supreme Court ruled that states did not have to participate in the Medicaid expansion.  The Affordable Care Act assumed that every state was going to participate in the expansion and only provided for subsidies for those who did not qualify for Medicaid.   When a significant number of states opted to not expand Medicaid coverage, this created a group who earned to much to sign up for Medicaid, but too little to get subsidies to purchase insurance.  The obvious fix is to expand the subsidies to cover this gap group.

The second issue concerns the exchanges.  Again, the Affordable Care Act assumed that most (if not all) states would opt to set up exchanges just on principles of state autonomy.  (Why would Republicans who complain about the feds taking over the insurance market let the feds take over the insurance market in their states?)  It turned out that Republicans in the state wanted the symbolism of resisting more than actual local control.  This problem offers a chance to offer the Republicans a two-edged sword.  The Republicans complain that one of the problems with health insurance is that companies are unable to offer policies that cross state lines.  (Placing the blame on regulations is not accurate, and the biggest restraint on such policies is the need of insurance companies to have deals with the local hospitals.)  So I would offer up for discussion an exemption for policies offered on the federal exchange.  If a state does not have its own exchange, policies on the federal exchange will be exempt from state regulations and will only be subject to federal regulations.   If a state wants to regulate those policies, it can take over the exchange.  If not, a state will not be permitted to sues state regulations to obstruct the federal exchange.  My hunch says that the states will not opt to set up their own exchanges and that the exemption of insurance companies from state regulations will not increase the number of policies that cross state lines.

The third issue concerns deductions and the growth in the level of deductibles that insureds must pay before the insurance policy covers medical bills.  This issue is probably the most serious long-term problem for the average person with health care.  I will leave this one to the experts as to what the “cap” on the deductions on regular policies should be.  However, health care is not “affordable” if every health care policy becomes a high deductible policy.

The last issue is the mandate.  Insurance works by having people who are currently healthy pay the expenses of people who are currently sick with the healthy persons knowing that, if they become ill, the insurance policy will cover their expenses.  Keeping premium down requires having enough healthy people buy insurance (or excluding people who wait until they become ill to purchase insurance).  The problem is that most people are lousy at understanding the risk of becoming ill.  Even if they understood the risks better, the odds are still in favor of younger people who opt against buying insurance in their twenties and thirties.  (Of course, if they are in the group that “loses” that bet, not having insurance is a financial disaster.)   The long-run stability of the Affordable Care Act will require making some adjustments to the penalties for not purchasing health insurance.

While not necessarily a legislative change, one thing that may want to be considered is altering the enrollment period for the market place.  Typically, enrollment is in the early 4th quarter (October and early November) for a policy that takes effect in January.  Most people, however, are doing their taxes in the first quarter of the year.  If people had to sign up for the marketplace at the same time that they were doing their taxes, they could compare the subsidized cost of purchasing insurance against the penalty on their taxes for not having insurance.  (Additionally, companies could be required to give the insured a summary of actual expenses covered by the policy — including expenses that were charged against the deductible — giving people a clearer view of their health care expenses.)  If — at the time that people had to decide whether to buy insurance — potential purchasers could clearly see that the penalty for not purchasing insurance is close to or exceeds the net cost of insurance (premiums less benefits used), people might be more likely to sign up for insurance.   (Of course, for this to work, the penalty has to be significant enough to make purchasing insurance look like the better alternative.)

I am dubious that any of these proposals could get through the current Congress.  (Maybe the insurance regulation provision could.)  However, these seem to be sensible adjustments that could increase coverage and reduce the risk  that too many healthy people will opt out of health insurance (only to take advantage of the ban on pre-existing condition exclusions when they become ill.)   Of course, we could wait until 2021 and reconsider the public option.  President Trumped, however, seems to want a deal that he could claim fixed the problems with current law.  These ideas might be something that he might be willing to consider when faced with a Democratic Congress in 2019.  (Of course, we have to get the Democratic Congress first.)

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