Plan To Fix Obamacare That Many Democrats Could Support

(Cartoon image is by Jimmy Margulies at jimmymargulies.com.)

In their effort to repeal Obamacare and replace it with a plan of their own, the Senate Republicans (and Trump) have been telling two huge lies.

The first is that Obamacare is imploding, and if nothing is done, it will fail on its own. That is not true. While Obamacare does have some problems that should be fixed, it is NOT imploding. And the problems it does have (especially with rising insurance premiums) have been exacerbated by Republican threats to stop funding the Obamacare subsidies. This has resulted in many insurance companies rising premium costs more than necessary to protect themselves if the subsidies are stopped.

The second is that Democrats think Obamacare is fine as it is, and have no suggestions for making it better. The truth is that Democrats were locked out of the process in the Senate, while Republicans crafted their terrible plans in secret. Democrats were not asked for input, which makes it more than disingenuous for McConnell and his minions to now claim Democrats offered nothing.

Democrats would love to join a truly bipartisan effort to fix the problems of Obamacare -- and they do have some ideas of how to do that. Here is one suggestion for a bipartisan solution from Neera Tanden and Topher Spiro at the Center for American Progress:

First, the legislation would need to guarantee continued payments for ACA subsidies that reduce enrollees’ cost-sharing—removing the administration’s threat of sabotage. This guarantee would not actually add any costs to government spending because these subsidies are already being paid. But resolving the uncertainty would lower premiums significantly: The nonpartisan Kaiser Family Foundation estimates that premiums would be 19 percent lower with guaranteed cost-sharing payments.

Second, the legislation would follow the model of states like Alaska and Maine that reimburse insurers for high-cost enrollees. In Alaska, this so-called reinsurance recently lowered premium increases from 40 percent to less than 10 percent. Similarly, Maine implemented a reinsurance program in 2011 for the state’s pre-ACA individual market that helped reduce premiums by 20 percent in the first year. This is not hypothetical or abstract; it is a solution that works in the real world.

If the legislation provided $15 billion to states for reinsurance, this would lower premiums by more than 14 percent. Because this funding would lower premiums, it would save money on tax credits—resulting in an overall cost of slightly more than $4 billion per year.

If the legislation provided this reinsurance for 2018 and 2019, senators working together in good faith could easily find $8 billion in savings to pay for it. CAP presents here just two options:

• When there is a generic version of a drug, Medicare could eliminate beneficiary costs for the generic drug and increase costs for the brand drug. Congress could also speed up discounts for brand drugs for beneficiaries in the doughnut hole. These two policies would save $32 billion over 10 years, according to the CBO.
• Reform payment for health care to pay for value and quality. For instance, when he was a member of Congress, U.S. Health and Human Services Secretary Tom Price sponsored legislation to reform Medicare payments for care after discharge from the hospital. Under Price’s bill, Medicare would pay a fixed rate for a bundle of services over a period of time, allowing providers to share any savings. CBO estimates that such bundled payments for post-hospital care would save about $10 billion over 10 years.

Third, the legislation could use carrots to encourage insurers to enter markets where there is a single or no insurer. With respect to counties that were underserved as of June 1, insurers that enter such counties could be exempted from the health insurance tax. The government could offer a Guaranteed Choice Plan in areas where there are not sufficient choices, particularly in rural areas. People in underserved counties could be allowed to buy into the Federal Employees Health Benefit Program (FEHBP). Sens. Bob Corker (R-TN), Lamar Alexander (R-TN), and Claire McCaskill (D-MO) have all supported the concept of filling in the gaps in underserved counties until the other stabilization policies have a chance to change market dynamics.

Conclusion

These policies are commonsense solutions. Insurance commissioners, actuaries, economists, the CBO, and policy experts across the political spectrum can all testify that such policies would stabilize insurance markets and lower premiums. The only barrier standing in the way of real improvement in insurance markets is the partisan rush to repeal the ACA.

Personally, I think the best fix would be to go to a single-payer system (something like a Medicare-for-all). But that would require some political courage from Congress, and that is currently not something they have much of (in either political party).