My Apothecary colleague Avik Roy claims that “Donald Trump Is Right: You Can Repeal Obamacare And Still Cover Everyone With Pre-Existing Conditions.”
He’s absolutely right – and here’s how to do it.
The main problem – and indeed, this is what one of the primary causes of skyrocketing premiums and ACA Exchanges collapses – is that sicker patients pay the same premiums as everybody else, but cost more for insurers to cover. This makes ACA coverage a great deal for people with expensive pre-existing conditions, but a lousy deal for healthy people, who can pay the penalty (or use one of the many loopholes), pocket the savings, and enroll when (if) they ever get sick. The result is higher average costs to cover those who sign up, and therefore higher premiums, and therefore fewer people signing up. (It’s called an “adverse selection death spiral.”)
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The ACA subsidizes coverage for people in lower-income brackets, mandates identical premiums regardless of health staus, and assumes that the rest will take care of itself. Clearly, that isn’t happening.
Here’s the solution: restructrure the subsidies so that they apply to health status, not (just) income. In other words, pay a subsidy to an insurance company when they enroll a person with pre-existing conditions (or equivalently, an above-average percentage of such people), to offset the additional cost, and keep premiums low for everyone else.
It won't happen.
The insurers want Uncle Sam's money while keeping premiums sky-high at the same time (more money for them).
The GOP is trying to get rid of the ACA altogether. Why is this even an issue?