ObamaCare enrollment is down 11% from last year. Yet in the recent mid-term elections, Democrats were able to convince many voters they should trust them to protect their healthcare.
This paradox of declining ObamaCare popularity mixed with voter loyalty to Democrats on healthcare is largely due to the media’s refusal to give President Trump credit for anything. In fact, the Trump administration is continuing to improve ObamaCare – without Congressional cooperation.
President Obama made a habit of using executive orders to enact legislation he couldn’t get through Congress. President Trump has followed his example in this age of partisan politics. While the Supreme Court struck down many of the Obama executive orders, the Trump changes to ObamaCare have yet to be challenged. That may be because most people regard the changes as good news.
John C. Goodman, healthcare economist writing in Forbes, details the improvements Trump has made or proposed. Here is his list:
Personal and portable health insurance
Employer-provided health insurance is not taxed so employees receive this without a tax consequence. However, individuals who purchase their own health insurance must pay for it out of income that is taxed (both federal and state income taxes and FICA payroll taxes). This makes it very beneficial to receive your health insurance through your employer.
Therefore, when people leave their job and must find their own individual health insurance policy, there is a large additional expense for taxes. This also contributes to the “pre-existing condition” problem that has received much attention in the media. Before ObamaCare, these pre-existing conditions allowed many insurers to deny coverage to some people with chronic health conditions.
By allowing people to take their healthcare insurance with them when they leave their job we could solve both problems. Yet, the Obama administration penalized employers who did this by fining them $100 per employee per day, or $36,500 per employee per year – the largest fine of all in ObamaCare.
The Trump administration is proposing to get rid of those fines and actually encourage the purchase of individually owned insurance, using employer funds, through something called a health Reimbursement Arrangement (HRA). Small businesses are already allowed to do this as a result of the 21st Century Cures Act, passed in 2016. The new Trump proposal is to allow all employers to do the same.
To facilitate this change and make ObamaCare more popular, the Trump administration announced states will have the ability to:
- Create risk pools and/or risk reinsurance
- Create defined contribution accounts
- Use ObamaCare money to create a new and different system of subsidies
- Create new insurance options including non-qualified health plans
The Treasury Department has estimated as many as 10 million people will obtain individually owned insurance through their employers under these new rules. Harvard Business School’s Regina Herzlinger thinks the number could be much higher than that.
These changes will go a long way toward leveling the playing field when it comes to tax fairness. For higher income families, purchase of their health insurance will mean substantial tax benefits. For lower income families who don’t pay income taxes, their only tax subsidy at work is the avoidance of the payroll tax. With these changes these families will be able to use employer money to obtain subsidized insurance in the exchanges.
Flexible Savings Accounts
More than 30 million Americans have a Health Savings Account (HSA). These accounts allow them to manage some of their healthcare dollars but these accounts are rigidly constrained. HRAs, by contrast, can wrap around any health insurance plan and are available to pay for expenses insurance doesn’t apply. Employer deposits to HRAs would give employees access to the full range of products available on the individual market. Money not spent on premiums would be available to pay other expenses, including deductibles and copayments.
Insurance Tailored to Family Needs
Under the new executive order, employers can deposit up to $1,800 in an Excepted Benefit HRA, from which employees can purchase all types of primary care, including phone and email consultation, Uber-type house calls, services at walk-in clinics, etc. These options were unavailable with original ObamaCare. Now families can tailor their insurance to their specific needs.
Free Market Health Insurance
The Trump administration has increased the duration of Short Term Limited Duration (STLD) health plans from 3months (Obama) to 12 months and allowed guaranteed renewals for up to 3 years. These plans are much cheaper than ObamaCare because they do not have to conform to all ObamaCare regulations.
The Trump administration has also allowed the sale of a separate plan, called Health Status Insurance, which protects people from premium increases due to changes in health condition should they want to buy STLDs for another 3 years.
With these two plans purchased together, people can remain insured indefinitely with plans that mimic a typical employer-provided plan. Estimates of expected enrollees in such plans range from 1.9 to 4.3 million. Goodman believes even these estimates are too conservative. He says, “Yet as long as people are free to chose insurance that meets individual and family needs and as long as it is fairly priced, I think the real number will be even higher.”