Short-Term Solutions for ObamaCare


Repeal of ObamaCare is dead; at least for the near future. Republicans have now shifted to a new strategy of piecemeal fixes for the failing Obama healthcare system.

A major accomplishment was the repeal of the Individual Mandate of ObamaCare as a provision of the new tax reform legislation. This eliminated the IRS tax penalty imposed on anyone who did not have ObamaCare-compliant health insurance. By eliminating this mandate, consumers are free to purchase short-term, non-compliant coverage without fear of the tax consequences.

Prior to 2016, during the Obama administration, many people turned to short-term, limited-duration plans (STLDI) that are exempt from most ObamaCare regulations because they were cheaper. But they had to accept the penalty then for non-compliance with the Individual Mandate. Despite this, they became so popular that the Obama Administration restricted their duration to three months.

Now, the Trump administration has proposed new rules under which these affordable STDLI plans would be available for up to 364 days. The elimination of the Individual Mandate makes these plans more attractive than ever and Trump wants to encourage these plans.

The Wall Street Journal editorial board says the people who could benefit most from an alternative are those the law has slammed: Americans above 400% of the poverty line – a couple making about $65,000 – who have been coerced to buy a product without subsidies. HHS estimates that 100,000 to 200,000 individuals would migrate to short-term plans from the exchanges, and a mere 10% or so would have been eligible for subsidies.

Supporters of ObamaCare will argue that these plans will harm the exchanges by luring the young and healthy away. But most millennials already figured out the exchanges offered a bad deal for them because they were forced to pay exorbitant premiums to subsidize the cost of the old and sick. These STDLI plans allow insurers to price them by actuarial risk (the real cost!) making them much more attractive to young and healthy Americans.

Republicans have also delayed or repealed two other significant parts of ObamaCare: the law’s “Cadillac tax” on high-cost insurance, and its Independent Payment Advisory Board (IPAB) for Medicare oversight. These are popular changes that were much needed. They were intended to serve as cost-controls of healthcare spending. IPAB was never actually impaneled but represented a significant threat to the quality of medicine for seniors in the future.

Avik Roy, writing in Forbes, believes these changes are good policy, but will also mean fewer people agitating for dramatic health law changes. That may make full repeal of ObamaCare even less likely.

These changes do not represent a long-term solution for ObamaCare. But they do offer consumers attractive new choices over the status quo that are far better than the single-payer options progressive Democrats are proposing.

One comment

  1. Dr. Bob’s blogs are always short and to the point. He is well informed and his writings are well documented. Thanks, Dr. Bob

    Comment by David R. Godfrey on March 8, 2018 at 2:38 pm