Now that repeal-and-replace appears to be dead, it would be nice if Congress focused its health care efforts on another “r” verb: repair.
To do that, President Donald Trump and other Republicans need to dial down the rhetoric suggesting that Obamacare is near collapse. It’s not, although the insurance exchanges created by the Affordable Care Act have some obvious problems — and Trump is making them worse by threatening to halt payments that go toward reducing participants’ out-of-pocket costs.
When we discuss the Obamacare exchanges, we need to keep in mind that they’re a small piece of the nation’s health care puzzle. Fewer than 5 percent of Americans buy insurance on the exchanges, and the vast majority of those buyers receive federal subsidies. So when you hear that premiums on the exchanges are rising by double-digit percentages, most of the increase is borne by taxpayers.
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That doesn’t mean rising health care costs aren’t a problem — they are. Overall, however, health care inflation is similar to what it was before the Affordable Care Act was passed in 2010.
Political fault lines have only widened since then, with Republicans vowing to repeal the law and Democrats digging in their heels to defend it. At this point, it may be wishful thinking to hope the two parties can get together and address the law’s shortcomings.
If they did, though, experts say a handful of sensible fixes would make the exchanges work better. One would be to reinstate the reinsurance program that was a part of Obamacare for its first three years.
The reinsurance could be funded by the insurers themselves, but it would give them a fund to draw on if losses were higher than expected. Estimating medical expenses is especially difficult in sparsely populated areas, which is why some rural counties are at risk of having no insurers offering coverage.
“Almost everybody who understands insurance or economics would say a reinsurance mechanism is not a bad idea,” says Tim McBride, a health care economist at Washington University.
McBride also suggests that lawmakers also could reduce the number of rating areas, which the law creates for purposes of setting premiums. Missouri has 10 zones, the cheapest of which include St. Louis and Kansas City.
“What’s going on is an economies-of-scale issue,” he says. “Any insurer looking at northeast Missouri has to spread their fixed costs across fewer people, and the risk is higher.”
Even on hot-button issues such as the individual mandate, which Republicans dislike but insurers say is necessary to keep healthy people in the insurance pool, there may be room for compromise.
A Republican bill in the House would have replaced the mandate with a premium penalty: If you go without insurance and decide later that you want it, your premium jumps. Medicare’s Part D drug plan uses a similar approach, and McBride thinks it could work for Obamacare.
So an optimist, at least, can see room for a modest compromise. Republicans could kill the dreaded individual mandate, while Democrats could ensure that individual coverage remained available and affordable.
Any such action would be too late to prevent big premium increases for 2018.
“It’s getting late in the game to make any changes for next year,” said Cynthia Cox, associate director of health reform and private insurance at the Kaiser Family Foundation. “Legislation could be useful in keeping companies from dropping out of the market, but it will be too late to keep premiums from going up. They will be locked in on those.”