What to Expect from ObamaCare’s Replacement

Former Senate Minority Leader Harry Reid paused on his way out the door to warn, “People are going to die” if the health-care law is repealed. His successor, New York Sen. Chuck Schumer, was only slightly less gloomy, warning of “chaos” and claiming ObamaCare repeal would “make America sick again.” New York Times columnist Paul Krugman suggested Republicans were preparing to “snatch insurance away from millions,” while a CNN report claimed that repeal would lead to the loss of 3 million jobs.

Let’s all get a grip.

Initially, any changes will be very small and incremental. Repeal won’t happen overnight, or all at once. Rather, Republicans are likely to establish a sunset date, three or four years from now, allowing time to craft a replacement. Still, sooner or later, we’ll be living under a very different health-care system. Therefore, over the next few days, we’ll take a look at what it’s really going to mean for health-care consumers, patients, doctors, hospitals, insurers, businesses and taxpayers.

One of the first things most Americans are likely to find is that they’ll have more choices when it comes to buying insurance. You may have to pay more for insurance that covers some providers and conditions, but you’ll also be able to buy cheaper, less-comprehensive insurance if you want to.

ObamaCare required all insurance to cover a wide-ranging — and expensive — “essential benefits package.” Repeal will mean more of an a la carte approach to insurance, based on individual consumer preference.

In fact, this is likely to be one of the first changes to ObamaCare. While the law requires that there be an essential-benefits package, it gives the president a great deal of discretion in determining what that package should be. President Trump can take action by executive order to repeal some of the requirements that President Obama included.

People will even have the choice not to buy insurance at all, since the much-reviled individual mandate will be gone. Going without insurance may not necessarily be a wise choice, but it does re-establish a fundamental limit to state power over the individual. And it allows young and healthy people to purchase low-cost catastrophic coverage that makes much more sense for them.

Most people will find more choice to be a good thing, but there's a downside. If people opt out of services that they won't use — such as men choosing not to buy maternity coverage — it will drive up the price for those who do use those services.

Consumers won't just find more options in the types of plans; there should also be more insurers to choose from. Recently, insurers have been abandoning ObamaCare exchanges in droves. Roughly a third of US counties have only one insurer participating in their exchange. Repeal will lure insurers back into the market.

Finally, a replacement plan will almost certainly let you shop for insurance out of state. Today, it's illegal for someone living in New York to buy insurance in, say, Pennsylvania even if a plan there is cheaper. This gives a near monopoly to a small cartel of New York insurers. Allowing consumers to shop across state lines will force some much-needed competition into the insurance market. It will also help prevent New York regulators from recreating the failures of ObamaCare at the state level.

Those changes will mostly affect the individual insurance market, but the majority of Americans who get their insurance through their employer are also likely to see more choice. That's because any ObamaCare replacement is expected to significantly expand Health Savings Accounts.

HSAs shift control of health-care spending from employers to employees. An expansion of HSAs will most likely allow much larger tax-free contributions to these accounts, and allow them to be used for more health-related expenses, including insurance premiums. That would mean that you — not your boss — would be able to choose your insurance plan.

Expanded HSAs would also mean increased portability for health insurance. Because you could use your HSA to pay your premium, you wouldn't be as likely to lose your insurance if you changed or lost your job.

In general, then, most consumers will find themselves with more and better insurance choices after ObamaCare is repealed. Still, there are likely to be some people who face challenges, including those with low incomes and those with pre-existing conditions. Tomorrow, we'll look at what repealing ObamaCare means for them.