Designing that something wonderful may turn out to be harder than Trump and many Republicans think.
As bad as ObamaCare has been, it has played a role in reducing the uninsured rate to below 9 percent. The coverage may be overpriced and poor quality, but it will be both politically and practically difficult to take away. For example, some 9 million people are currently receiving subsidies to buy insurance through the exchanges. Will Republicans simply repeal those subsidies? If not, can they repeal the taxes that pay for them? Another 10 million people have been covered through ObamaCare’s Medicaid expansion. Studies show Medicaid is a deeply flawed program that provides remarkably little value, but Republicans are unlikely to simply pull coverage out from under recipients.
And some of the most popular provisions of ObamaCare are those that guarantee coverage for people with pre‐existing conditions. Leaving those provisions unchanged while repealing the individual and employer mandates would simply accelerate the adverse selection problem that already plagues the program. There are alternative ways to protect those with existing illnesses, such as high risk pools and private “health status insurance,” but Republicans will have to explain those ideas to a wary public.
One of the few specific ideas that Trump has offered is “removing the lines from around the states,” by which he means allowing people to buy insurance across state lines. There are more than 1,300 insurers nationwide, but in many states a handful of companies control the market. Moreover, in some states regulations and coverage mandates have driven up the price of coverage. Breaking up insurance cartels and forcing greater competition, while allowing consumers to escape expensive and unnecessary regulations, will help bring down the cost of insurance.
Beyond this there are a number of replacement plans floating around coverage. In fact, one reason that Republicans have been more focused on “repeal” than “replace” is that they have had trouble coalescing around a single plan. Perhaps the most widely supported proposal right now is a bill sponsored in the Senate by just re‐elected Sen. Richard Burr (R-NC) and in the House by Rep. Fred Upton (R‐Mich.) that would replace ObamaCare with a universal refundable tax credit for the purchase of health insurance, along with other reforms.
But some ObamaCare opponents prefer an approach offered by Sen. Jeff Flake (R‐Ariz.) and Rep. David Brat (R‐Va.) that would dramatically expand health savings accounts, allowing families to save up to $18,000 tax‐free, and use that money to pay for insurance premiums or out‐of‐pocket health‐care costs. That puts control over health‐care spending, in the hands of consumers.
ObamaCare remains extraordinarily unpopular, and President Trump will have something of a mandate to fix it. A free and competitive market in health care, including health insurance, can drive down costs and expand coverage.