Senate Republicans just announced in which the repeal of the individual mandate (within the form of reducing the penalty tax to zero) will be within the Senate Finance Committee’s type of tax reform.
The individual mandate has never been successful toward the objective of attracting people to the program. There are much better ways to do in which.
yet killing the mandate while simultaneously opening up the market to cheaper stripped down alternatives would certainly combine to create unintended consequences the Republicans haven’t appeared to comprehend.
Recently, President Trump encouraged his administration to craft regulations in which would certainly enable insurance companies to sell short-term medical policies having a duration of 12 months.
These short-term medical policies would certainly not have to comply with the Obamacare benefit mandates. They could exclude people with pre-existing conditions.
Today, buying one of these policies would certainly trigger the individual mandate tax penalty because a person had not purchased qualified coverage.
yet, if the individual mandate tax penalty is usually repealed as part of the Republican tax bill there would certainly be no such penalty to buy one of these policies.
I could easily see the individual health insurance market bifurcated into a sick along with healthy pool because of these alterations:
- The sickest taking advantage of the guarantee issue protections within the Obamacare compliant market.
- The healthiest buying a succession of these “short-term” 12 month policies while guaranteed to be able to opt back into the Obamacare market when they got sick. In fact, I could see these “short-term” policies sold on a calendar year basis so those prohibited via renewing, because of a recently acquired condition, would certainly be able to conveniently opt into the Obamacare guaranteed insurability market when their short-term coverage expired right in line with the annual open enrollment.
I can envision these “short-term” policies offering a fairly comprehensive medical along with hospital benefit set even though they did not cover all of the mandated benefits. These policies could also be much cheaper by excluding things like pregnancy along with mental health along with substance abuse coverage.
I could easily see these policies costing half of what the Obamacare compliant policies cost.
So, the healthy would certainly hold the best of both worlds–cheap along with even arguably attractive coverage while still being guaranteed to be able to opt into a much more comprehensive Obamacare policy every January 1st if they got sick.
the item’s not hard to see what would certainly happen. We would certainly have two risk pools:
- The very expensive Obamacare compliant risk pool with only the very sickest left within the item, along with
- The very cheap “short-term” policy risk pool with the healthiest people.
along with, the unsubsidized cost for those who acquired a pre-existing condition along with were forced to opt back into the Obamacare compliant market, would certainly be simply astronomical. Remember, 40% of those within the individual health insurance market make too much to qualify for a premium subsidy.
In different words, This kind of scheme works much better than what we have today–until you get sick. along with, everyone ultimately acquires a pre-existing condition.
A health insurance system in which works only while you are healthy is usually not a health insurance system.
Obamacare is usually a disaster because the item only works best for the sickest along with those with the lowest incomes. As a result, the healthy have disproportionately stayed away driving the costs up to unaffordable levels for those who don’t get the big subsidies. along with, only 40% of those who are subsidy eligible are right now participating.
This kind of Republican scheme would certainly work best for the healthiest. the item would certainly also work well for the poor because the premium subsidy system would certainly protect them via the even higher costs inside of Obamacare.
yet the Republican scheme would certainly be devastating for those within the unsubsidized middle class who would certainly not be able to afford coverage once they got sick.
Ironically, the people the Republican scheme would certainly hurt the most would certainly be those within the middle class (the unsubsidized) in which have been most vocal in calling on the Republicans to fix the system.
Commentary by Robert Laszewski, the president of Health Policy along with Strategy Associates. He has 20 years of experience within the insurance industry, serving as a chief operating officer for nine of those years, before beginning his Washington, D.C. policy- along with market-consulting business.
This kind of article first appeared on Robert Laszewski’s blog.
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