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Monday, November 14, 2016

How I would fix Obamacare, part 1

I'm convinced part of the late surge in Trump voting over Clinton voting was the large increases in Obamacare coverage costs. This is a real pocketbook issue for people who have to buy on the exchanges.

Not helping at all were the Jonathan Gruber interviews (he's the economist who had a strong hand in drafting Obamacare).  He minimized the problems with the increases (fine for an academic with paid healthcare to say) and said the solution was to substantially increase the penalty for not buying insurance.  In other words, penalize those who feel they can't afford to be insured.  This is fine economic theory, but sounds bloodless to those actually in the situation of buying unsubsidized policies on the exchanges.

Side note: I had to buy a policy on the Obamacare exchange for a few months between the end of my COBRA coverage and the beginning of Medicare.  This was over a year after they had supposedly fixed the site after the initial problems.  The site was still very difficult to use, slow, and used terminology that only a bureaucrat could love.  Worse yet, when I became eligible for Medicare I had a lot of trouble cancelling the policy -- it couldn't be done via the website, and after calling for help I sat on hold for a long time, then when I got a human they hung up on me as soon as I described my problem.  Luckily, I was paying by check and could just not pay until the insurer cancelled me. (The insurer explained that they couldn't cancel the policy themselves, because it had been purchased through the exchange.)  I kept comparing this to my experience shopping on Amazon.

So, what would I do?

1. I would get employers out of the picture entirely. Involving employers means there is a huge incentive to hire part-time workers, who do not get health care benefits.  In retirement, I'm still working 20% at my old employer, and teaching one course a semester at a local university. In neither case do I get any of the health care benefits that full time employees get.

Part time work is fine if you're a retiree who doesn't need the money, but not good if you are trying to raise a family or move forward in a career.  Yet, current government policy encourages it. Also, since many employers self-insure, there is pressure not to hire older, potentially sicker employees or get rid of them. Yes, there are laws against this, but unless there's a blatant violation there won't be any repercussions.

We could easily replace this system by requiring an employer to pay into a fund so much per hour. If this was $2, then a full time worker would get $80 a week into the fund. Someone working 8 hours a week would get $16 a week put into the fund.

2. I would require only catastrophic coverage. This is a less expensive mandate, and also is what people most fear -- being bankrupted by suddenly having a catastrophic accident or illness.

This has the side effect of being less controversial than the broader coverage that led to the Hobby Lobby case.

This doesn't mean you couldn't buy a more expensive plan, just that you wouldn't need to.

To be continued ...