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  • Fears Of GOP Plan To ‘Repeal And Replace’ Obamacare Are Unfounded

    If President Donald Trump and Republicans in Congress succeed in repealing and replacing Obamacare, 20 million Americans will lose their health insurance — or so the conventional wisdom goes.

    Of course, predictions about Trump have tended to be wrong. This one is no different.

    In fact, repealing Obamacare and replacing it with the best the GOP has to offer will likely expand access to coverage, provide a wider choice of plans and drive down the cost of insurance. On top of that, it will strengthen the incentive for healthy people to get insured.

    The doom-and-gloom predictions about our post-Trump healthcare system ignore that Trump never claimed he would simply repeal Obamacare and call it a day. All along, his intention has been to work with Republicans in Congress to develop a replacement plan — which Republicans have largely crafted in the form of House Speaker Paul Ryan’s “A Better Way” health agenda and incoming Healthy and Human Services Secretary Dr. Tom Price’s “Empowering Patients First Act.”

    There’s evidence that both versions of the GOP plan can do a better job than Obamacare at covering those who lacked health insurance before the law took effect.

    The administration boasts, for example, that 6.1 million people have gained coverage because of Obamacare’s rule that lets children stay on their parent’s health plan until age 26. Trump has made it clear that he would keep this measure in place. Ryan’s health-care agenda would do the same.

    This provision alone reduces the number of Americans who would supposedly “lose coverage” under Trump by nearly one-third.

    What’s more, most of the gains under Obamacare came not from its much-ballyhooed exchanges but from its dramatic expansion of Medicaid. According to the Congressional Budget Office, Obamacare has added 13 million people to Medicaid’s rolls.

    Under the House’s proposal, Medicaid wouldn’t change at all until 2019. At that point, those states that expanded Medicaid under Obamacare “would receive the same amount of dollars they receive today” and would “be given new authorities to better manage their health care, and better control the costs, of the expansion population.” The 19 states that never expanded Medicaid in the first place would be entirely unaffected.

    So there’d be no loss of Medicaid coverage under the GOP plan in the near term.

    In the long term, the Republican plan would reform how Medicaid is financed by giving states greater control over their health spending in exchange for fixed block grants from the federal government.

    What about Obamacare’s popular regulations that ban insurance companies from denying coverage to someone with pre-existing conditions?

    This so-called “guaranteed issue” rule has caused far more problems than it’s solved. By forcing insurers to cover everyone no matter what their health status, it encourages the young and healthy to avoid buying insurance until they need it.

    The result has been very high premiums. Those for 2017 exchange plans rose an average of 22 percent. Eighty-five percent of the Americans who have remained uninsured under Obamacare have cited the high price of coverage as the chief reason why, according to a recent Commonwealth Fund survey.

    The GOP plan, on the other hand, protects those who maintain continuous coverage from major rate hikes when they get sick or change plans. Unlike Obamacare’s approach, this provision encourages the young and healthy to get covered before they get sick — not after.

    Buying coverage will be a whole lot easier, since the Republican replacement plan would get rid of Obamacare’s complicated scheme of income-based subsidies with a straightforward refundable tax credit that increases in value as patients get older. Whereas Obamacare’s subsidies are paid to insurance industries, these tax credits would go directly to individuals.

    At the same time, with Obamacare’s onerous coverage mandates and regulations such as the Essential Health Benefits requirements gone, insurers will be free to offer more modest, low-cost plans tailored specifically to patients’ unique needs. Such affordable insurance options were in ample supply before Obamacare’s insurance regulations took effect.

    As recently as 2013, in fact, a 30-year-old man living in Arizona could get covered for less than $460 a year. Under Price’s proposal, that person would also receive an age-based refundable tax credit worth $1,200 — more than enough to pay for his premium. He could deposit the funds leftover tax-free into a Health Savings Account, where it could be used to pay for any out-of-pocket health expenses or accumulate tax free until he decides to use it.

    For uninsured Americans with serious health issues, Ryan’s “A Better Way” plan provides $25 billion in funding to state-based high-risk pools over the next decade. These insurance plans offer government-subsidized coverage aimed specifically at those with costly chronic illnesses, so that no one will have to go uninsured because of a preexisting condition.

    What would such plans cost? Before Obamacare took effect, Minnesota’s high-risk pool offered coverage for as little as $130 a month, with a deductible of $5,000. By contrast, the lowest-priced policy sold on the state’s Obamacare exchange carries monthly premiums of $268 and a deductible of nearly $7,000 — and that’s for somebody without a costly chronic disease.

    Claims that millions of people will lose their coverage if Trump repeals Obamacare are misinformed. What’s more, Americans know it — which is why they’ve put someone committed to repealing the law in the White House.

    Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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