Health Care Insurance Transition

I have offered my opinions about reform of health care insurance and costs in several other posts on this site. The subject of this post is how we get from here to there. First, where are we now? We are mired in the midst of a failed policy commonly called Obamacare. Where do we want to be? Well, I’ll begin by saying that we want to be outta here. Next, we want insurance that cannot be cancelled, except for nonpayment of premiums. Beyond that, we want insurance that is portable. Finally, we want insurance that is affordable. How can we get from here to there? We need a transitional law that can be sold to Republicans  and some Democrats in the House and the Senate in sufficient numbers to override a presidential veto. That is, we would need 2/3 majorities. This can only be obtained if we retain some of the look and feel of Obamacare while changing a few key elements.

Let’s keep State exchanges, but let’s give State exchanges the power to design the policies that will be offered through their offices. How could this work? They could eliminate the subsidies of one part of the population by another if they should wish. Right now, one of the more obvious subsidies that is currently creating problems is the subsidy by the young of older policyholders. If a State exchange were to allow bids by insurance companies to provide different policies for different ages, then the young might be more willing to join in. Similarly, different policies for men and women might possibly be desirable. Suppose that this would be done only by offering policies that include maternity coverage and those that do not. Regardless of what a State exchange tries to accomplish, it is likely that the menu of available policies would typically increase in comparison to the Obamacare offerings. Initially, it would be reasonable to include the current Obamacare offerings, but one would reasonably assume that these plans would soon die from the lack of use.

I would assume that the State exchanges would not provide for premium differences associated with preexisting conditions. Of course, once individuals are in a State exchange, the whole issue of preexisting conditions would go away, because they cannot be cancelled . . . except for nonpayment.

Let’s allow people who currently live in a State and buy a policy in that State to carry that policy or any policy from that State with them . . . regardless of where they might move in the future. This is not quite what Republicans have in mind by buying policies across state lines, but it has some of that flavor. I would assume that such a policy would require a Federal law, since it interferes with State insurance regulations.

Who would pay for the policies on a State exchange? The policyholder could be the residual payer in most situations, but other parties could pay the share that they wish to pay. For example, if the policyholder is employed, his or her employer could pay. Similarly, his or her relatives could pay. Members of a social group such as a church or a club could pay, and of course, governmental entities could pay. Tax benefits could flow to the various payers: employers or other tax payers.

Should you be able to keep the policy you have if you like it? Sorry, but I’m afraid that this particular bridge may have been burned by Obamacare. It is unlikely that insurance companies would be willing to recreate policies that they have had to cancel. Of course, I cannot be sure about this.

What about mandates? Forget mandates! I would suggest that State exchanges utilize pricing policies to encourage residents to join their exchange. This could take the following form: benfits from a policy through the exchange increase with each year of “membership” until a plateau is reached. So if you join in the first year, you get full benefits immediately. However, if you join in subsequent years, then you have to go through this period of increasing benefits.

What is this going to cost the Federal government . . . or any government for that matter? The answer is that it is going to cost whatever these governmental units decide is appropriate to directly subsidize the policies. The beauty of this transitional policy is that it makes most, but not all, subsidies explicit. It does not make the subsidy to those with preexisting conditions explicit, but many people can agree on that one.

My purpose here is to include elements that Democrats like and elements that Republicans like. My hope is that there are sufficient grounds for a compromise. This is not going to get done without compromise.