President Trump is standing with congressional republicans after the House of Representatives has approved the US Health Law, May 4, 2017 (Carlos Barria / Reuters)
A new White House report highlights the benefits of recent GOP policy changes.
In a recent piece for the printed magazine, I wrote that the Republican party, however much awkward and unintentional, may have ended up in a health policy that actually works. Obamacare still exists for everyone who wants it: the subsidies from the law ensure that the poor and middle class can take out insurance for a reasonable percentage of their income, and the exchanges have proper protection for people with pre-existing conditions. The individual mandate is dead this year, so people who do not want insurance do not have to buy it. Through executive action, Trump's board has extended access to non-Obamacare-compliant forms of insurance that are much cheaper than anything available through the exchanges. And every state that does not like the new arrangement is free to implement its own laws and to restore the old ones.
This is not a free lunch. Killing the individual mandate means that many healthy people will leave the Obamacare grants, making the premiums on the stock market higher than they would otherwise be, at least for those whose premiums are not topped up via subsidies. Some of the cheap new plans do not offer good coverage and are not available to people with pre-existing conditions. But both individuals and states are now free to choose the schemes they want: to take their own risks and to absorb their consequences.
The Board of Economic Advisers of the White House has a new report in which a similar case is made much more detailed, complete with a formal cost-benefit analysis. Since this is a White House report that defends the White House policy that has only been in force recently, it must be viewed skeptically – and its methodology attaches great importance to consumer choice, something that is right for me But that liberals could say the risks of the new rules. In a briefing with reporters on Friday morning, a senior official made a remark that nicely reflects the conservative side of the gap: "If you offer the same subsidies on the exchanges and people choose not to take them, tell you something about what they appreciate . "
The result is that these changes will create $ 450 billion worth of value in ten years, which is roughly equivalent to $ 350 a year for every household in the country. Because they move people from the scholarships to a non-subsidized coverage, the changes reduce the federal deficit by a cumulative $ 185 billion. They will also "benefit from low or middle income consumers … but will impose costs on some medium and higher income consumers who pay higher insurance premiums."
In a rough summary, here is how these benefits break down, as calculated using "standard measures in welfare economics":
The individual mandate. The authors combine the different effects, good and bad, to eliminate the most controversial provision of Obamacare. Consumers can exchange a product they do not want for something that they want more without paying a fine (even if that means you are not insured and buy extra chips and cigarettes); taxpayers pay considerably less subsidies; premiums rise by 10 percent for those who have stayed on the stock exchanges; hospitals eat some extra costs for the uninsured. In 2021 alone, this amounts to $ 12.6 billion in benefits.
Health plans for associations. The administration has made it easier for small businesses to offer joint plans through associations such as local chambers of commerce, which significantly reduce administrative costs, give employees more boarding options and cover a number of people who would otherwise be subsidized at the fairs. Badda-bing, badda-boom: $ 7.4 billion in net benefits in 2021.
Short-term, limited insurance. These are plans that are exempt from the Obamacare regulations, and the administration has recently taken over the reins – they can now run for three years at the same time and often cost less than half of the exchange cover. As you can probably guess at this point, this increases the choice while the subsidies decrease. This corresponds to $ 7.3 billion in 2021.
This is of course at odds with uncertainty. These changes are new and we can not be sure which effects they will have years later; the executive actions in particular could die in court. And there must be no doubt that another, more left-wing group of economists, using different methods, would paint a very different picture. A simple way to do that is by focusing on the number of people who no longer have plans that are good enough to meet the Obamacare criteria, and to ignore the question whether they have chosen skim-free plans or are not insured because that's what they wanted. But even within the scope of the CEA report it would be simple enough to quote different sources to justify different numbers in countless places in the maze of calculations, or to come up with new costs to deduct the benefits that the CEA finds.
The aim of this report, however, is to use ballpark numbers for benefits that critics of republican health policy have almost ignored. There is a lot more to healthcare than the number of people we manage to push into very regulated insurance plans.
Nobody would call the current system elegant. It is a mishmash of 2009-vintage democratic policy preferences, ridiculous editorial errors, a dramatic intervention by the Supreme Court and Republican sabotage & # 39; who sometimes deserves the name and sometimes not. But it gets better than what we had a few years ago.