The shaky case for the individual mandate is based on mistaken premises, faulty economic analysis, short-sighted politics, and flawed health policy. Opponents have found the mandate to be administratively challenging, politically unsustainable, economically unnecessary, beyond the proper role of government, and constitutionally questionable. Arguments in favor of the individual mandate usually present it as a necessary, though far less popular, means to more laudable ends.
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Republicans are nervous about repealing ObamaCare’s supposed ban on discrimination against patients with pre-existing conditions. But a new study by Harvard and the University of Texas-Austin finds those rules penalize high-quality coverage for the sick, reward insurers who slash coverage for the sick, and leave patients unable to obtain adequate insurance.
The researchers estimate a patient with multiple sclerosis, for example, might file $61,000 in claims. ObamaCare’s rules let MS patients buy coverage for far less, forcing insurers to take a loss on every MS patient. That creates “an incentive to avoid enrolling people who are in worse health” by making policies “unattractive to people with expensive health conditions,” the Kaiser Family Foundation explains.
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Obamacare has already failed, and it failed because the government violated several basic economic and free-market principles, resulting in devastating outcomes for those seeking coverage, people already covered, and taxpayers.
Under Obamacare, our most vulnerable citizens in Pennsylvania are paying more for health insurance with fewer choices. According to the Kaiser Family Foundation, individual premiums increased by more than 50% in Philadelphia this year. Deductibles for a family plan now exceed $6,000, and the choices continue to shrink.
Pennsylvania’s health care delivery system should encourage participation in the health-insurance market rather than mandating it as Obamacare did, offer the option of using open network, lower-cost, catastrophic plans supported by health savings accounts, and place much greater emphasis on prevention and addressing the causes of poor health.
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President Donald Trump’s initial budget outline signals he won’t immediately press forward with major entitlement reforms, but House Speaker Paul Ryan pointed to Republican efforts to repeal and replace Obamacare as proof that the GOP is unified on addressing the issue.
“Two entitlements are being reformed with repealing and replacing Obamacare, right now,” the Wisconsin Republican told reporters Tuesday at a weekly Capitol Hill news conference. “We are well on our way to repealing Obamacare.”
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Congressional Republicans have been struggling for months to resolve one of the most vexing problems in their tortuous effort to replace the Affordable Care Act: What to do about the generous federal funding for states that broadened their Medicaid programs under the law, while not shortchanging the 19 states that balked at expansion?
Now, as the House begins to hone details of its legislative proposal, a possible compromise has emerged. It would temporarily keep federal dollars flowing to cover almost the entire cost of the roughly 11 million Americans who have gained Medicaid coverage but would block that enhanced funding for any new participants.
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On Friday, Politico released a leaked version of draft budget reconciliation legislation circulating among House staff—a version of House Republicans’ Obamacare “repeal-and-replace” bill. The discussion draft is time-stamped on the afternoon of Friday February 10—and according to my sources has been changed in the two weeks since then—but represents a glimpse into where House leadership was headed going into the President’s Day recess.
A detailed summary of the bill is below, along with possible conservative concerns where applicable. Where provisions in the discussion draft were also included in the reconciliation bill passed by Congress early in 2016 (H.R. 3762, text available here), differences between the two versions, if any, are noted. In general, however, whereas the prior reconciliation bill sunset Obamacare’s entitlements after a two-year transition period, the discussion draft would sunset them at the end of calendar year 2019—nearly three years from now.
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Anthem Inc. and other U.S. health insurers complained to the White House for more than a year that they were losing money on people who waited to sign up for Obamacare coverage until they were sick.
They pleaded with the Obama administration to stem their losses by tightening up on the enrollment rules. When their pleas went unmet, UnitedHealth Group Inc, Humana Inc, and Aetna Inc pulled out of most of the government subsidized health insurance market.
But now that the new Trump administration and Republican lawmakers control the future of healthcare, the industry is getting a new hearing.
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The House could use regular order, not reconciliation, to pass a bill that not only fully repeals ObamaCare—returning control of the private market to the states—but simultaneously puts into effect at least the core components of reform while including grandfathering and other provisions to smooth the transition to lower-priced options on the free market.
Such a bill could easily pass the House, putting pressure on the Senate. Would Minority Leader Chuck Schumer allow proper consideration of much-needed health-care reform? And with all the evidence that ObamaCare has been a disaster and—untouched by Republicans—is quickly unraveling, would Democrats, 25 of whom are up for re-election next year, vote to defend the status quo?
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America spends too much on Medicaid relative to other programs and services that might have a bigger impact on measured health outcomes for the poor. Giving states more flexibility in reaching these broad population health goals and better tools for measuring their progress would help states and the federal government scale up what works, while phasing out what doesn’t. Seema Verma, Trump’s pick to lead the Centers for Medicare & Medicaid Services, called for CMS “as the nation’s largest purchaser of health care…[to] do more, achieve more than the mere distribution of insurance cards,” saying it should use its programs to “truly make a difference in people’s lives to prevent and cure disease, manage chronic illnesses, and promote healthy lifestyles and independence from government assistance.”
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Current federal tax policy treats workers and their families who do not or cannot get health insurance through employment-based coverage unfairly and contributes to disruption in coverage when employees change jobs. Obamacare imposes a hefty excise tax on expensive employer coverage, a punitive measure that adds to the complexity of the current health care system.
Congress should repeal Obamacare’s Cadillac tax and set a simple cap on the employer exclusion. In addition, Congress should create a new type of individual tax relief that would be available to everyone, regardless of where they purchase coverage. Together, these policies would help to ensure that the federal government is not favoring one type of coverage or consumer over another and would go a long way toward restoring a functioning market in health care that is responsive to consumers.
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