When people find out I was never a fan of Affordable Care Act, I’m often asked how I would fix it. In my ideal world I wouldn’t since I consider the structure inherently bad.
If I were emperor I would completely replace it with a plan to steadily move the country to single payer. I would start by incrementally lowering the Medicare age and giving the uninsured access to it. I would then progressively expand the system from there. Everyone would be inherently covered by it, but if people really wanted to buy private insurance with their own money they could.
If I’m asked to simply improve the law, the task becomes more complicated since you are working from such a stupid foundation. There are, though, six big changes I think would make it noticeably better:
- Add a strong public option – This would reduce premiums and the deficit. It would also serve as a benchmark for people struggling with the complexity of the choices.
- Improve the subsidies – The exchange subsidies are too small and poorly designed. There is a cliff at 401% FPL where people no longer qualify for any subsidies. This can create a huge marriage penalty and means a slight increase in income could ironically leave people much worse off. I would set the subsidies so everyone’s premium are at least capped at 7 percent of their income.
- Lower the annual out-of-pocket limit – Obama claims the reason for his law was to make sure no one goes bankrupt from getting sick, yet the maximum annual out-of-pocket limit for a family plan is over $12,000. That is a price most families can’t afford. I would cut the limit in half at least.
- Auto-enrollment in the Public Option – If people fail to choose insurance on the exchanges on time they should be automatically enrolled in the cheapest plan the public option offered. Individuals are given a chance to opt out. This would significantly expand coverage.
- Standardize plans – Obama apparently just realized buying insurance is inherently always going to be very complicated. The best hope for making competition on the exchange work is to require all insurers to offer the same basic plan design with the same co-pays and deductibles. That can allow real apples-to-apples comparison.
- Fix the employer mandate – This is just a terrible designed provision which creates many needless problems. It can easily be replaced with small flat fee per hour.
Even with these changes it would still be a needlessly complex Rube Goldberg system, but it would at least be a more effective version of the idea. It would also do significantly more to accomplish the Democrats’ supposed goals of expanding coverage, reducing costs, and protecting people from medical bankruptcy.