“If the Supreme Court rules that Obamacare is out,” President Donald Trump said last week, “we’ll have a plan that is far better than Obamacare.”
Democrats couldn’t believe their luck. They still were reeling from special counsel Robert Mueller’s finding that the Trump campaign neither conspired nor coordinated with Russian efforts to interfere in the 2016 elections.
Now the president was changing the subject from collusion (a suddenly awkward topic for Democrats) to health care (which helped them capture dozens of House seats last November).
Besides, the president really doesn’t have a plan that is far better than Obamacare, or any plan at all. Right?
Wrong.
A look at his fiscal year 2020 budget shows that the president has a plan to reduce costs and increase health care choices. His plan would achieve this by redirecting federal premium subsidies and Medicaid expansion money into grants to states. States would be required to use the money to establish consumer-centered programs that make health insurance affordable regardless of income or medical condition.
The president’s proposal is buttressed by a growing body of evidence that relaxing federal regulations and freeing the states to innovate makes health care more affordable for families and small businesses.
Ed Haislmaier and I last year published an analysis of waivers that have so far enabled seven states to significantly reduce individual health insurance premiums. These states fund “invisible high risk pools” and reinsurance arrangements largely by repurposing federal money that would otherwise have been spent on Obamacare premium subsidies, directing them instead to those in greatest medical need.
By financing care for those with the biggest medical bills, these states have substantially reduced premiums for individual policies. Before Maryland obtained its waiver, insurers in the state filed requests for 2019 premium hikes averaging 30 percent. After the federal government approved the waiver, final 2019 premiums averaged 13 percent lower than in 2018—a 43 percent swing.
Best of all, Maryland and the other waiver states have achieved these results without increasing federal spending or creating a new federally funded reinsurance program, as House Speaker Nancy Pelosi, D-Calif., has proposed to do.
State innovation also extends to Medicaid. Some states have sought waivers permitting them to establish work requirements designed to help Medicaid recipients escape poverty.
Arkansas, for example, last June began requiring nondisabled, childless, working-age adults to engage in 80 hours of work activity per month. The program defined “work activity” broadly to include seeking a job, training for work, studying for a GED, engaging in community service, and learning English.
More than 18,000 people—all nondisabled and aged 30-49—were dropped from the rolls between September and December for failing to meet these requirements. The overwhelming majority did not report any work-related activity. All became eligible to re-enroll in Medicaid on Jan. 1. Fewer than 2,000 have done so, suggesting that most either don’t value the benefit or now earn enough to render them ineligible for Medicaid.
Nonetheless, last week a federal judge ordered Arkansas to drop its Medicaid work requirement, a requirement that would likely improve lifetime earnings of Medicaid recipients.
Administration efforts to relax federal rules to benefit employees of small businesses also were nullified last week by a federal judge.
Most uninsured workers are employed by small firms, many of which can’t afford Obamacare coverage for their employees. The Labor Department rule allowed small firms to band together, including across state lines, giving them purchasing power comparable to that of big businesses.
A study of association health plans that formed after the new rule took effect last September found that they offered comprehensive coverage at premium savings averaging 23%. The court ruling stopped that progress in its tracks.
Waivers and regulations that benefit consumers are susceptible to the whim of judges and bureaucrats, which is why Congress should act on the president’s proposal.
It closely parallels the Health Care Choices Proposal, the product of ongoing work by national and state think tanks, grassroots organizations, policy analysts, and others in the conservative community. A study by the Center for Health and the Economy, commissioned by The Heritage Foundation, found that the proposal would reduce premiums for individual health insurance by up to 32 percent and cover virtually the same number of people as under Obamacare.
It also would give consumers more freedom to choose the coverage they think best for themselves and their families. Unlike current law, states could include direct primary care; health-sharing ministries; short-term, limited-duration plans; and other arrangements among the options available through their programs.
Those expanded choices would extend to low-income people. The proposal would require states to let those receiving assistance through the block grants, Medicaid, and other public assistance programs apply the value of their subsidy to the plan of their choice, instead of being herded into government-contracted health maintenance organizations.
Outside groups that helped develop the proposal, which is similar to the president’s, are looking to refine it by incorporating other Trump administration ideas like expansion of health savings accounts, health reimbursement arrangements, and association health plans. They’re also reviewing various administration ideas to reduce health care costs through choice and competition.
The president really does have “a plan that is far better than Obamacare.” Congress should get on board.
