There’s good reason for Congress to remodel some aspects of Obamacare. More than half of people who get health coverage through the insurance exchanges have high out-of-pocket costs, for example; 1 in 10 say they’ve gone without medical care because of the expense.
Unfortunately, the congressional proposal getting attention at the moment — from Rep. Tom Price, R-Ga. — wouldn’t fix these problems. And it would do away with parts of the law that are working well.
The truth is, people are surprisingly happy with the coverage they’re buying on the exchanges, according to a recent survey from the Kaiser Family Foundation. Three in 4 consider their policies excellent or good, and they like their choice of primary care doctors and hospitals. Two-thirds also have found it easy to shop for plans, including figuring out whether they qualify for financial help. Perhaps most important to assessing how the Affordable Care Act is working, two-thirds are satisfied with their monthly premiums.
Price’s plan would undermine much of this success. It would close the state insurance exchanges and end income-adjusted subsidies. Policy buyers would still get help with the cost of their insurance, but it would come in the form of refundable tax credits, which would vary not by income but by age. (People 18 to 35 would get $1,200 a year; those 35 to 50, $2,100; and 50 or older, $3,000.)
The expressed goal is simplicity. Under Obamacare, if you underestimate your income and thus receive an excessive subsidy, you have to return some portion of it. Unsurprisingly, this causes widespread frustration at tax time. H&R Block estimated that two-thirds of people who bought coverage on an exchange had to repay an average of $729 this year. (The 25 percent who overestimated their income got an average refund of $425.)
But Price’s solution — making the subsidies income-neutral — is akin to demolishing your house because the roof leaks. The reason Obamacare subsidies are complicated is so people can get affordable coverage, whatever their age, at the lowest government cost. Because premiums vary enormously — by age, type of coverage and geography — that necessarily entails something more complex and flexible than three numbers set by Congress.
At the same time, Price’s plan would remove requirements that health plans cover hospital visits, emergency care, mental health and other essential services. The aim is to make insurance cheaper, but the effect would be to shift the full cost of those services onto those who need them. That would exacerbate the financial insecurity about health care that under Obamacare remains a concern.
Price’s bill would also end the Affordable Care Act’s most basic protection: the requirement that insurers provide coverage to people with pre-existing conditions, without charging higher premiums. And it would do away with any limits on out-of-pocket payments. In the name of simplicity, it would bring back an insurance market that’s predatory and inadequate.
By no means should Obamacare be considered a finished product. Any attempts to improve it, however, need to be careful to address real weaknesses, not imagined ones.