Op-Ed: If it ain't totally broke

Last Friday, facing severe opposition to their Obamacare replacement bill, the American Health Care Act (AHCA), House Republicans withdrew the bill from consideration. This is a good thing because the proposed legislation was a mess, addressing the rising costs of the ACA by crippling benefits to the poor. AHCA follows Speaker of the House Paul Ryan’s long-term agenda by undoing the Affordable Care Act’s Medicaid expansion — which has helped 16 million Americans secure insurance — and placing spending restrictions on the program.

Next, the GOP’s plan called for replacing the lavish subsidies available under the ACA with a relatively simple subsidy program that grants more money to older enrollees. Currently, in most states, Obamacare subsidies are only available to families earning under 400 percent of the poverty line, a conscious attempt to provide financial relief to those who need it most. However, the Republicans know they are attempting to repeal a law that is very good to elderly people, a key conservative constituency, and therefore have decided to prioritize age over need. This decision means that Mitt Romney is eligible for the largest subsidy available — about $4,000 — while a recent college graduate making $20,000 a year would receive just $2,500.Compounding mistakes, the plan calls for subsidies to rise at the rate of inflation (CPI), but healthcare spending tends to rise at a much faster rate. This means the already-weakened subsidies will continue to diminish in value over time.

That bill’s failure is a victory for Democrats, the elderly and the poor. But let’s be clear: the ACA has real flaws that need to be addressed, namely that Obamacare enrollees are poorer and sicker than healthcare experts expected. The Congressional Budget Office projected that 43 percent of enrollees would purchase insurance without a subsidy, but currently just 17 percent of enrollees fit that description. And where the Obama administration projected that young adults would constitute 38 percent of the marketplace population, they currently make up just 28 percent of the exchange participants.

This composition means that there aren’t enough healthy people to offset the costs of insuring the sick. Citing these concerns, UnitedHealth and Aetna have drastically reduced their participation in the exchanges, which has diminished competition and coverage in many rural areas.Five states — Alaska, Alabama, South Carolina, Oklahoma and Wyoming — currently have just one insurance plan available in 2017. The lack of young, healthy enrollees has also caused premiums to skyrocket, with an expected 22 percent increase coming this year.

GOP proposals, including AHCA, address none of these problems. By rolling back Medicaid expansions, Republicans will force poor Americans to seek health insurance on the exchanges — if they still exist — further weakening the enrollee pool. And for those on the exchanges, the increase in premiums will be felt acutely since the GOP plan drastically reduces government subsidies, especially for younger enrollees.

The real source of the ACA’s problems is its underlying creed, its pledge to provide aid to the poorest and sickest of Americans. The ACA exchanges have been dominated by new enrollees that look a lot like the Medicaid population due to stipulations in the ACA that prevent insurers from discriminating against customers with pre-existing conditions and mandate a robust set of essential benefits. These flaws could be addressed by increasing the fine on Americans who don’t purchase insurance, which would force younger, healthier people onto the exchanges. The ban on discriminating against those with pre-existing conditions could be lifted or the essential benefits could be reduced, but this move would be seen as inhumane within either party.

There is another solution, one neither party is willing to consider. Currently — as every college student knows — the ACA allows young adults to remain on their parent’s insurance plan until the age of 26. The provision is supported by 85 percent of Americans, and a number of Senate Republicans have already pledged to include it in any ACA replacement plan. It’s understandable why this clause is so popular. After all, it allows children to benefit from their parent’s employer-sponsored health insurance, which often provides more robust coverage at a cheaper price. It eliminates an extra hassle for many young people trying to get a college degree or start their career.

However, this provision is regressive and aiding to the ACA’s problems. By allowing young adults to remain on their parent’s plan until 26, it is contributing to the dearth of young, healthy people on the ACA exchanges. Unless they can find a job that provides insurance to recent employees, these people would have to find insurance on the general markets, which would offset the costs of sicker, poorer enrollees. And because the provision largely applies to children of parents with employer-based insurance — parents with consistent, quality employment — these children could likely afford to purchase insurance. This means that richer children are riding on their parent’s insurance benefits while children of unemployed parents — or parents without a job that provides insurance — must pay for their own coverage on the exchanges or face a fine.

This provision is incredibly popular, and unlikely to be repealed by either party. But if we ever elect a government that is serious about fixing the ACA rather than repealing it, we should think critically about whether this is a policy we really want to keep, and who is benefitting from it.