Former President Donald Trump made waves late last month when he announced that he was “seriously looking” at replacing Obamacare if elected to a second term.
Democrats’ reaction to this announcement was unsurprising. President Joe Biden leapt into action to defend his former boss’s signature healthcare law, claiming that Trump’s plan would “rip away health insurance for tens of millions of Americans.”
More surprisingly, several Republicans met Trump’s pledge with skepticism. Sen. John Thune, R-S.D., said he’d “want to know what the proposal is” before supporting Obamacare repeal.
That’s reasonable. Republicans have plenty of ideas for providing Americans with affordable, high-quality health care, even if they are typically shy about sharing them. By removing regulatory barriers that render insurance unaffordable and encouraging competition and transparency throughout the healthcare market, lawmakers can advance an alternative to Obamacare that even skeptics should be able to get behind.
It’s been roughly a decade since the Affordable Care Act’s insurance exchanges launched. In that time, it’s hardly lived up to its name. Individual market premiums more than doubled between 2013 and 2019. This year, the average unsubsidized Obamacare premium cost enrollees $605 per month.
And while Obamacare’s defenders boast that most Americans do not pay such a steep price, it’s only because of the massive subsidies the law provides. This year, federal subsidies for nongroup coverage were $92 billion. Over the next 10 years, total subsidies for coverage in this market will eclipse $1 trillion.
Such astronomical subsidy spending is made all the more egregious by the fact that it is precisely Obamacare’s regulations—including its mandate that all health plans cover a list of 10 “essential” health benefits—that have caused premiums to skyrocket.
A federal program designed to make health care affordable that has the opposite effect—and spends billions of taxpayer dollars to cover up that fact—is clearly a failure.
There are better ways to help Americans access affordable, quality health care.
Take low-cost short-term, limited-duration health plans, which are exempt from Obamacare’s cost-inflating rules and regulations. The president calls them “junk insurance.” But as the Manhattan Institute’s Chris Pope has shown, short-term plans can offer more generous coverage than exchange plans at a fraction of the cost, even for people with pre-existing conditions.
The Trump administration lifted Obama-era restrictions on these plans, making it possible for insurers to sell policies that lasted up to 364 days and that could be renewed for a maximum total duration of three years. The Biden administration has since proposed rules that would cap short-term plans at three months, with an option for a one-month renewal.
Democrats don’t want people to have options aside from those on the exchanges. Some blue states, including New York and California, have banned short-term plans outright.
An alternative to Obamacare must also expand access to health savings accounts. These vehicles allow people to set aside money tax-free for future healthcare expenses. The proceeds also grow tax-free.
By giving people control over their healthcare dollars, HSAs empower consumers to shop around for the best-value care.
Lawmakers have introduced measures that would more than double the yearly individual and family contribution limits for HSAs and allow Medicare beneficiaries to contribute to these accounts as well.
For people to use their HSA proceeds most effectively, providers will have to be transparent about their prices.
Most hospitals are not complying with federal price transparency rules. But that won’t slide when patients are hunting for deals. Providers will have to embrace transparency or watch customers take their business elsewhere. As providers begin competing with each other to offer the best deals, friendliest customer service, and most navigable menus, prices will fall—and the patient experience will improve across the board.
President Trump’s call to repeal Obamacare may seem like a political provocation. But that doesn’t change the fact that there are better alternatives in reach. Hopefully lawmakers realize this—and remain open to supporting the reforms outlined above. There is the possibility of doing so much better for patients than the status quo.
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