Calling Obama's Bluff On Obamacare
With the closure of the government on Tuesday, President Obama on Monday said he is open to fresh ideas on health care reform.
"So here's the bottom line," said Obama in a speech from the White House Briefing Room, "I'm always willing to work with anyone of either party to make sure the Affordable Care Act works better, to make sure our government works better.... I've demonstrated this time and time again, oftentimes to the consternation of my own party."
Never mind that the president did not seek any input from Republicans before passing the Affordable Care Act. Taking him at his word, here are three ideas "to make sure the Affordable Care Act works better."
Allow All Plans on the Exchanges. Mr. President, when you were lobbying for the bills that became the Affordable Care Act, you repeatedly promised Americans that, if they liked their current health insurance, they could keep it. It turns out that under your administration's implementation of the Act, most Americans cannot purchase the exact same health insurance they had just a few years ago.
Mr. President, you love the exchanges. Let's broaden them to allow them to carry all plans, including the ones many Americans used to have just a few years ago.
Another problem, Mr. President, is that you promised that the cost of health insurance would decline. For all too many Americans, the opposite is happening, health insurance costs are increasing.
One factor raising prices of health insurance on the exchanges is that only expensive plans are allowed. Mr. President, you can solve this problem as well by allowing all insurance plans on the exchange.
Your Administration is using the Affordable Care Act to mandate a one-size-fits all, overly-generous plan, with required free routine care, mandatory mental health and drug abuse coverage, and no lifetime maximum. Combined with the requirement that people can sign up anytime, health insurance becomes very expensive, with the young subsidizing the old, and with many Americans deciding it is better to avoid insurance rather than paying too much.
Mr. President, take a close look at your exchanges, if they ever get off the ground. They do not look like an American supermarket with endless choices in every possible price range. Your exchange has at most a few options, all very expensive. A few expensive options might be good enough for some countries and some consumers, but not for America and American consumers. Americans want lots of options, and, Mr. President, you can provide by allowing all insurance on the exchanges.
The State Health Reform Assistance Network, funded by the Robert Wood Johnson Foundation, publishes a "Certification of Qualified Health Plans (QHP) Cheat Sheet." You can read it here. It contains 34 criteria for plans to be listed on state exchanges. Since it is a cheat sheet, you can be sure there are many more.
If you want to know why few insurance plans are available on the exchanges, just look at all of the requirements. Exchanges must have a certification process, a recertification process, and a decertification process for qualified health plans. These health plans "must meet criteria for certification," "provide Essential Health Benefits package," "comply with exchanges processes, procedures, and requirements," "implement and report on quality improvement strategies," and "comply with risk adjustment standards."
Your regulations require that "enrollment information must be collected and transmitted to the exchange, and enrollment files must be reconciled with exchange enrollment files monthly." That's a lot of paperwork.
Categories for getting health plans accredited include "clinical quality measures, patient experience rating, utilization management, quality assurance, provider credentialing, complaints and appeals, network adequacy and access, and patient information programs."
No wonder that some Americans have lost their plans, and that the cost of health insurance is rising, and is set to reach $20,000 for a family plan in 2016, according to the Internal Revenue Service.
End the employer mandate. With a new $2,000 or $3,000 penalty for not offering health insurance, it is no surprise that hiring has slowed and that more employers are hiring part-time workers, who do not incur a penalty. Firms with more than 49 workers are subject to these penalties, leading some establishments to halt hiring at the magic 49-employee number.
Mr. President, employers are not required to provide food, clothing, or housing to employees. Why make them provide health insurance? Rather, raise the $140 billion over 10 years in employer penalties through some other means. One suggestion: eliminating those green energy grants and tax incentives that make electricity more expensive will get you 85 percent of the needed revenue.
Give everyone subsidies to buy insurance. The Internal Revenue Service is already overwhelmed figuring out which nonprofits qualify for tax-exempt status. It cannot effectively handle the calculation of whether the 24 million Americans who are expected to sign up for the exchanges qualify for subsidies, and how much the subsidy should be.
The subsidy process is made more complex because the insurance is received a year after enrollment. Americans will enroll on October 1 for coverage in 2014. But they only know their 2012 income from the tax return they filed on April 15, 2013. If their income is higher in 2014, they will lose part of their premium subsidy, and the IRS by law is supposed to reclaim it the following year.
In addition, the IRS has to calculate penalties (taxes) for those who choose not to buy insurance. Come 2018, it will have to collect excise taxes on high-priced plans. With the cost and complexity of the plans, many plans will likely qualify for the excise tax by 2018.
Rather, give everyone a refundable tax credit to use to purchase their own plans, with the amount varying by income. Congress could pay for this by ending the tax-free status of employer-provided health insurance.
Mr. President, here are three steps to simplify the Affordable Care Act. Since you're willing to work with anyone, why not give House Speaker John Boehner a call?
This piece originally appeared in RealClearMarkets
This piece originally appeared in RealClearMarkets