Trump Is Delivering the Obamacare Savings That Obama Only Promised
WHY YOU SHOULD CARE
Because health care is more expensive than it should be.
By Lanhee Chen
Lanhee Chen is a research fellow at the Hoover Institution and director of domestic policy studies in public policy at Stanford University. He served as policy director for Mitt Romney’s 2012 presidential campaign.
The stated goals of Obamacare when it was signed into law in 2010 were to lower health care costs (and insurance premiums in particular), expand access to care and install consumer protections such as prohibiting rate differences based on pre-existing health conditions. When President Donald Trump took office, supporters of the law were worried that he would seek to undermine and eventually repeal it. Their fears seemed validated by Republican efforts in 2017 to do away with the core of Obamacare and replace it with market-based reforms.
But since those efforts failed, premiums on Obamacare’s marketplaces for coverage in many states have actually stabilized, according to a recent study by the Associated Press and Avalere Health. In fact, 2019 premiums are expected to decline in 11 states, with another 30 states experiencing premium increases of less than 10 percent next year. This leads one to a provocative conclusion: The Trump administration has actually done more to lower costs (and therefore achieve one of Obamacare’s core stated goals) than the Obama administration did over its many years of implementing the law.
These are precisely the sorts of policy changes needed if the goal is to make health coverage more affordable for more Americans.
It’s impossible, of course, to draw a causal line directly connecting the Trump administration’s policy changes to the lower or more stable health insurance premiums we’re seeing on Obamacare’s marketplaces next year. And this stability could be short-lived, particularly if healthier enrollees drop coverage because of the most significant blow Congress successfully struck against the law — removing the tax penalty for not buying health insurance. But this administration undeniably has a laser-like focus on advancing policies that create more choice and competition in the health care marketplace. And, over time, this enhanced optionality serves to bring down premiums and health costs more generally.
Progressives have decried some of these policy changes as hostile to the essence of Obamacare, in part because they expand access to coverage that they consider skimpy or have the potential to erode some of the federal protections put in place by the law. But these are precisely the sorts of policy changes needed if the goal is to make health coverage more affordable for more Americans.
So where has the Trump administration focused its cost-reducing efforts?
First, in June 2018, Trump’s Labor Department made it easier for businesses — including sole proprietors and other small companies — to come together by industry or geography and offer health coverage through Association Health Plans. These plans give small businesses the opportunity to purchase health insurance as if they were larger businesses, thereby lowering premiums and enhancing options for employers and their employees.
Then, later in the summer of 2018, the Trump administration expanded access to short-term, limited-duration health insurance plans. While these plans offer a more limited set of benefits than those available on Obamacare’s marketplaces (and have therefore been opposed by Obamacare advocates), they are frequently more affordable and therefore accessible to lower- and middle-income consumers. In a report released last week, the Trump administration repeated its estimate that millions of Americans will benefit from coverage under these sorts of plans.
Within the last several weeks, the Trump administration has taken two additional steps that are aimed solely at lowering health insurance premiums and expanding options for consumers. The first is the supercharging of a little-known provision, found in Section 1332 of Obamacare, which allows states to craft their own health plans and waive many of the law’s most onerous regulatory requirements. While the Obama administration adhered to very narrow guardrails limiting how states might reform their marketplaces to lower health costs, the current leadership of the Department of Health and Human Services has proposed much more expanded optionality. The new regulatory guidance would allow states, for example, to deploy targeted assistance to low-income or high-risk patients to lower their premiums and make it easier to afford coverage.
The second action is a proposed regulation to give employers new flexibility in reimbursing their employees’ health expenses through so-called Health Reimbursement Arrangements (HRAs). The Trump administration has proposed a significant expansion of HRAs to effectively allow employees of small businesses that don’t currently offer health benefits to purchase coverage with the same tax preferences given to employees of bigger companies. This regulatory change runs counter to Obama administration regulations limiting the use of HRAs. A Treasury Department study suggests that this change alone could allow about 800,000 employers across America to furnish individual health insurance coverage to more than 10 million employees over the next decade.
President Barack Obama famously promised before the passage of his health law that its reforms would reduce average premiums by thousands of dollars for a typical American family. That, of course, never happened under his watch. As counterintuitive as it sounds, it’s the Trump administration that has enacted policies that will help make Obamacare what its original proponents — including Obama — said they wanted it to be: a law that would lower health costs and make insurance coverage more affordable for more Americans.
Read more: Trump forces Big Pharma to swallow a bitter pill.
- Lanhee Chen, OZY Author Contact Lanhee Chen