ACA “Fix” is in the Eye of the Beholder

Posted on November 15, 2013 by Kathy Hoekstra

Short-Term Fix Could Cause Long-Term Problems

The “fix” is supposedly in for the Affordable Care Act.

This move came quickly on the heels of abysmal enrollment numbers showing around 100,000 Americans have signed up for the ACA governed exchanges (only a quarter of those on the federal government website), and five million saw their insurance plans cancelled.

In response, the White House stepped in and said insurance companies can continue to sell plans that don’t yet “meet the minimum standards set” by the new healthcare law.

Many experts say this short-term band-aid will make things worse down the road. Reason.com predicts this move will cause premiums to rise and plans to possibly withdraw from the market:

“Allowing healthy people to stay on their current low-cost health plans will mean that the pool of people who get insurance through Obamacare’s exchanges will be sicker and more expensive. This year’s premiums were set on the expectation that noncompliant plans would be cancelled, and that the cancellations, in combination with the mandate to purchase coverage, would create a market for plans sold in the exchanges.”

Policymakers should instead consider a long-term fix that will address the underlying problem that the ACA does not – rein in out of control healthcare costs that are so high, many  Americans can’t afford health insurance.

This can be done by empowering Americans to be customers of health coverage, which will keep quality and cost in check.

Here is what such a fix might look like, as suggested in this Wall Street Journal op-ed (subscription needed):

“The first step of a plan to replace ObamaCare should be a flat and universal tax benefit for coverage. Today’s tax exclusion for employer-provided health coverage should be capped so that people would not get a bigger tax break by buying more extensive and expensive insurance. The result would be to make employees more cost-conscious; and competition for their favor would make insurance cheaper.”

For more about a customer-based approach to health care, please read our Kitchen Table Economics lesson, “Putting Patients in Charge: Medical Savings Accounts.”