Republicans are getting battered at town halls on ObamaCare, with constituents—or least protestors—yelling about the benefits they’ll lose if the entitlement is repealed. But maybe the better measure of public sentiment is the choices that the people who are subject to ObamaCare have made in practice. Consider the remarkable persistence of health insurance plans that aren’t in compliance with the ACA’s rules and mandates. These “grandfathered” and “grandmothered” plans aren’t obligated to meet ObamaCare’s very high “essential benefits” floor, nor are they required to obey price controls that limit how much premiums can differ based on pre-existing medical conditions. These regulatory differences have thus set up an instructive market test about the need for ObamaCare’s mandates. 8.1 million people chose to remain in their existing plans instead of purchase ACA coverage.
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Vice President Pence forcefully defended on Thursday night the Trump administration’s plans to repeal and replace the Affordable Care Act, saying the law known as Obamacare is a “nightmare” and that the administration is committed to “an orderly transition” to a new health care system. Pence said he and President Trump are committed to giving every American “access to quality, affordable health insurance. . . . We’ll have an orderly transition to a better health-care system that finally puts the American people first,” Pence said.
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The United States Court of Federal Claims just ruled that the federal government failed explicitly to appropriate money for an ACA program known as “Risk Corridors” to stabilize the ACA exchanges, and therefore sent the United States an $8 billion bill to make these payments to insurers. It is unlikely that this decision will result in much money actually being sent to insurers or in many insurers returning to the ACA markets. Many of the insurers owed money have already gone out of business. Others have, quite literally, written off any chance of recovering any of this money. Insurers are instead likely to see the money as a bit of a windfall that will not affect business decisions one way or the other as to whether and how to remain in the ACA marketplace.
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As policymakers debate repealing and replacing the ACA, they grapple with how to address the ACA’s “Cadillac Tax.” Rather than repealing the 40% tax on high-cost insurance plans outright, many advocates of “repeal and replace” have proposed replacing it with a limit on the tax exclusion for employer-sponsored health insurance. Doing so would be a wise choice, and limiting the ESI exclusion would both generate significant revenue to pay for an ACA replacement and help to limit the overall growth of health care spending. Other options include capping the income tax exclusion, capping the payroll tax exclusion, and replacing the income tax exclusion with a fixed-dollar credit/deduction.
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As Republicans in Congress look to repeal and replace the ACA, they’re considering a return to high-risk pools like one in Wisconsin, which some considered a national model. The “Health Insurance Risk-Sharing Plan” — which ran from 1979 to 2014, when the federal health law’s exchanges started — was funded through premiums, insurance company assessments and reduced payments to providers. “Pooling the high-risk individuals together and managing their needs separately was a huge factor in the state’s success in offering a competitive insurance market,” J.P. Wieske, the state’s deputy insurance commissioner, told the House Energy and Commerce Committee this month.
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