In a move to inject open competition into the health insurance market – and to slow down skyrocketing premiums – President Trump used his executive authority last week to jump-start the healthcare reform process. Even as we have all witnessed the Affordable Care Act imploding before our very eyes, the president’s critics jumped on the opportunity to accuse him of “gutting” and “sabotaging” Obamacare. Despite the failure of the Republican Senators to pass any major legislation, President Trump is committed to repeal and replace, and he will continue to push forward to find an escape route for the American people.
Dems React To Trump’s Order With Typical Chicken Little Response
For those of us who don’t get sucked into the Chicken Little “the sky is falling” mentality, let’s put some perspective on each of the areas covered under Thursday’s executive order and the announcement Friday regarding the end of cost-sharing subsidies.
First, Trump’s EO allows small businesses to pool together to purchase group health insurance plans and expand across state lines. Because those programs will not have the same minimum coverage requirements as Obamacare, the premiums will be less expensive and insurance companies will have to fight for consumer dollars. Small businesses and group associations will have the same purchasing power as large companies.
Second, the order restores the ability of individuals to buy short-term plans (STLDIs). These are less expensive, as they are temporary and exempt from some Obamacare rules. It also rolls back to the original components of ACA from before Spring of 2016, when the eligibility period went from less than one year to three months. Moving back to less than one year will have no impact on premiums for those currently enrolled in the exchange. Democrats claim that by allowing people to buy more affordable coverage, Trump depletes the number of healthy uninsured in the exchange who subsidize the sick. This assertation is false, however, as the premiums are based on the average of the population enrolled and ACA just expands to cover the gap.
The president also aims to expand employers’ ability to offer Health Reimbursement Accounts (HRAs) to employees and to allow the use of the funds in conjunction with nongroup coverage. So long as participants remain with the employer, the unused money can be rolled over into future years, thus encouraging comparative pricing, customizing coverage based on individual needs, and rewarding employees who save the company money. The real benefit here is that by allowing HRAs to be used to purchase non-group coverage, patients gain control of their healthcare dollars and shop for the plans which meet their needs in the open market. If this phenomenon takes hold and sparks competition as many supporters think it will, more people will negotiate and buy their insurance products here as opposed to the traditional employer-provided model of the past.
Cost-Sharing Subsidies are Unconstitutional
Finally, this ends the disbursement of cost-sharing subsidies (CSRs) – at least until Congress appropriates them. This issue has more to do with the constitution than healthcare. The Constitution provides in article 1, section 9, clause 7: “No money shall be drawn from the Treasury, but in consequence of Appropriations made by Law.” Because Congress never approved the subsidies, they are deemed unconstitutional and illegal. Again, you will hear the outcry of the Dems that lower-income individuals in the exchange will see higher premiums and out-of-pocket costs due to this decision. They’ll wail and gnash their teeth at the reduction of approximate $7 billion in subsidies, and we’ll all hear how sure they are that it’ll devastate those in the exchange who need coverage the most.
The fear is that insurance companies will pass the cost on to exchange participants. That claim is not accurate, as Obamacare mandates that insurance companies cannot increase premiums and therefore, anyone who benefited from cost-sharing subsidies before the executive order would see no change to their net premiums or cost-sharing. Instead of illegally subsidizing the insurance companies, the government will pay the participants through tax credits. In the meantime, it is up to Congress to decide whether to approve the appropriations. If they do, then it will be law and President Trump will not have a bone to pick.
Obamacare Sinking Like the Titanic
While supporters of Obamacare voice concern over the president’s dismantling of Obamacare, they seem to ignore the fact that it has no future. Before long, there will be nothing left to dismantle. One might liken it to fighting for a lounge chair on the deck of the Titanic.
What is next on the president’s agenda for keeping repeal and replace moving forward? Who knows, maybe tackling big pharma? Better yet, how about ending the generous healthcare subsidies paid to members of Congress and their staff, which again bypassed congressional appropriation? Now that might just get some lawmakers’ attention.
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