The Affordable Care Act (ACA), known as Obamacare, may be crumbling before our very eyes. UnitedHealth and Aetna have already left most states' exchanges, and Humana is gearing up to leave Obamacare's individual market entirely in 2018. And now it looks like Anthem, a stalwart Obamacare insurance provider, will be scaling back its participation in 2018.
On March 30, Jefferies analysts David Windley and David Styblo revealed that Anthem "is leaning toward exiting a high percentage of the 144 rating regions in which it currently participates." This is in large part because, as Bloomberg reported, "the insurer lost $374 million on its individual health plans last year, and is targeting a modest profit for 2017."
Already one-third of all counties in the United States have one or fewer health insurance providers on the individual market - and all indications point to this getting even worse. Unfortunately, the fight to repeal and replace Obamacare has been at a standstill since the initial failure of the American Health Care Act (AHCA) on March 24. Yet there is increasing chatter in Republican circles that suggests the effort may reawaken, perhaps with a bill on the floor as soon as May.
The Millennial Policy Center recently published a paper and released two videos calling for repealing and replacing Obamacare and proposing specific elements for reform. The question remains as to how this can be accomplished. It may need to be done through piecemeal reform - that is, by dividing up the repeal and replacement effort into multiple pieces of legislation requiring either 51 or 60 votes in the Senate, depending on the bill.
The first step would be to pass a variation of the AHCA by repealing a big chunk of Obamacare and replacing some of the ACA. Like the AHCA, this first bill would include the repeal of all the Obamacare taxes, the individual mandate, the employer mandate, the healthcare exchanges, the essential health benefits, the ACA restrictions on health savings accounts (HSAs) and the current structure of Obamacare subsidies. The AHCA already takes these steps.
The first bill also would enable insurers to price plans based on risk, establish block grants for Medicaid to the states on a per capita basis, encourage states to introduce work requirements for Medicaid recipients, and expand the contribution limits substantially for HSAs - already included in the AHCA.
Unlike the AHCA, we also would repeal the 26-year-old mandate, and we would cap the employer exclusion that gives big business a distinct advantage over small- and medium-sized businesses.
As for helping those who currently benefit from and rely on subsidies to obtain coverage, refundable tax credits should be directed toward individual tax-free HSAs, not insurance premiums. Individuals and families would be given a credit based on age and income factors, and the credit would be exempt from contribution limits.
Whether they receive a tax credit or not, everyone would be able to use HSA dollars to pay for over-the-counter drugs, prescription drugs, copays, and even insurance premiums. This development would truly put consumers in the driver's seat and hopefully instill within them a greater sense of responsibility for their own healthcare spending.
This first bill would be the first step in a chain of legislation geared toward fixing the healthcare system. However, unlike the three-phase approach originally put forward by Speaker Ryan and President Trump, this strategy would put forward multiple bills simultaneously. While the "large bill" would still need to be passed first, this would give greater confidence to conservative members of Congress that the whole process can be completed in a swifter fashion than before and pass the Congress.
One bill would permit insurance sale across state lines. Another would unleash Association Health Plans, allowing community organizations and small businesses to pool together resources to affordably insure members and employees. A third would create high risk pools for those who have expensive, preexisting conditions.
While these bills would be unlikely to pass at the same time, this strategy would repeal most of Obamacare in the first bill through reconciliation, requiring only 51 senators. The subsequent bills would chip away at other components of Obamacare and implement reforms that would likely bring Democrats on board with individual bills. Only a multifaceted approach like this can Congress truly do away with Obamacare and inject real, market-based reform.
Jimmy Sengenberger, a millennial, is President and CEO of the Denver-based Millennial Policy Center. Dr. Michael Parra, a semi-retired oncologist for over 25 years, is a MPC fellow in healthcare reform.