Monday, March 27, 2017

How to Build on Obamacare

Photo
President Trump speaking about the health care bill in the Oval Office on Friday.CreditAl Drago/The New York Times
Nobody knew that health care could be so complicated.” So declared Donald Trump three weeks before wimping out on his promise to repeal Obamacare. Up next: “Nobody knew that tax reform could be so complicated.” Then, perhaps: “Nobody knew that international trade policy could be so complicated.” And so on.
Actually, though, health care isn’t all that complicated. Basically, you need to induce people who don’t currently need medical treatment to pay the bills for those who do, with the promise that the favor will be returned if necessary.
Unfortunately, Republicans have spent eight years angrily denying that simple proposition. And that refusal to think seriously about how health care works is the fundamental reason Mr. Trump and his allies in Congress now look like such losers.
But put politics aside for a minute, and ask, what could be done to make health care work better going forward?
The Affordable Care Act deals with the fundamental issue of health care provision in two ways. More than half of the gains in coverage have come from expanding Medicaid — that is, collecting taxes and using the revenue to pay people’s medical bills. And that part of the program is working fine, except in Republican-controlled states that won’t let the federal government aid their residents.
But Medicaid only covers the lowest-income families. Above that level, the A.C.A. relies on private insurance companies, using a combination of regulations and subsidies to keep policies affordable. This has worked well in some places. For example, in California, which has tried hard to make health reform work, the number of people with health insurance has soared, while premiums are still well below expectations.
Overall, however, too few healthy people have purchased insurance, despite the penalty for failing to sign up; this is partly because many of the policies offered have high deductibles, making them less attractive. As a result, some companies have pulled out of the market. And this has left some areas, especially rural counties in small states, with few or no insurers.
No, it’s not a “death spiral” — subsidies keep insurance affordable for most people even if premiums rise sharply, and the Congressional Budget Office believes that markets will remain stable. But the system could and should be improved. How?
One important answer would be to spend a bit more money. Obamacare has turned out to be remarkably cheap; the Congressional Budget Office now projects its cost to be about a third lower than it originally expected, around 0.7 percent of G.D.P. In fact, it’s probably too cheap. A report from the nonpartisan Urban Institute argues that the A.C.A. is “essentially underfunded,” and would work much better — in particular, it could offer policies with much lower deductibles — if it provided somewhat more generous subsidies. The report’s recommendations would cost around 0.2 percent of G.D.P.; or to put it another way, would be around half as expensive as the tax cuts for the wealthy Republicans just tried and failed to ram through as part of Trumpcare.
What about the problem of inadequate insurance industry competition? Better subsidies would help enrollments, which in turn would probably bring in more insurers. But just in case, why not revive the idea of a public option — insurance sold directly by the government, for those who choose it? At the very least, there ought to be public plans available in areas no private insurer wants to serve.
There are other more technical things we should do too, like extending reinsurance: compensation for insurers whose risk pool turned out worse than expected. Some analysts also argue that there would be big gains from moving “off-exchange” plans onto the government-administered marketplaces.
So if Mr. Trump really wanted to honor his campaign promises about improving health coverage, if he were willing to face up to the reality that Obamacare is here to stay, there’s a lot he could do, through incremental changes, to make it work better. And he would get plenty of cooperation from Democrats along the way.
Needless to say, I don’t expect to see that happen. Improving Obamacare requires doing more, not less, moving left, not right. That’s not what Republicans want to hear.
And the tweeter-in-chief’s initial reaction to health care humiliation was, predictably, vindictive. He blamed Democrats, whom he never consulted, for Trumpcare’s political failure, predicted that “ObamaCare will explode,” and that when it does Democrats will “own it.” Since his own administration is responsible for administering the law, that sounds a lot like a promise to sabotage Americans’ health care and blame other people for the disaster.
The point, however, is that building on Obamacare wouldn’t be hard, and wouldn’t even be all that complicated.
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