None of the health care reform plans currently under discussion in Washington address the critical issue of paying for coverage for sick people, according to an MIT economist who had a hand in crafting the federal Affordable Care Act.
“You don’t like the mandate? That’s cool,” said Jonathan Gruber, who worked as a consultant on the law also known as Obamacare. “How are we going to (subsidize the sick?) What’s your answer for that? Current alternative plans have no answer for that.”
Gruber was also an architect of the Massachusetts health care law signed in 2006 by Governor Mitt Romney, which served as a model for the federal plan. Both the state and national health care laws include a mandate that individuals must obtain health insurance or pay a fine. Many Republicans reject that idea as government overreach.
President Donald Trump and congressional leaders have vowed to replace President Obama’s health care law, which they blame for driving up health care costs. But Republicans have not rallied around a new plan or said when it might take effect, although Trump said it likely wouldn’t be before 2018. Gruber and other health care experts who spoke at forum at the Harvard Kennedy School on Monday said a new plan will take several months, at least, to get through Congress and years to fully implement. Their discussion was streamed live online.
Gruber said health coverage could be expanded without an individual mandate if there was a reinsurance program instead that paid insurers for covering sick people. “That could work, if you spend enough money,” Gruber said, “But we’re going to have to increase the deficit to do that.”
The math of insurance, he noted, doesn’t work unless lower-cost healthy people subsidize coverage for sicker people whose care is more costly.
While Obamacare expanded Medicaid to cover millions of additional low-income families and individuals, Avik Roy, president of the Austin-based Foundation for Research on Equal Opportunity, said a better alternative is to give low-income people tax credits to buy coverage on insurance exchanges. He said health savings accounts, or HSAs, also could help families pay for health care, an idea supported by many conservatives. HSAs are tax-exempt accounts that can be used to pay medical costs.
But Gruber argued that HSAs would be of little use to poor families because they don’t have much money to set aside. Roy, a past adviser to Republican politicians, said families are savvy enough to make good use of these accounts. “The idea of somehow there’s no way an HSA could work, that’s not true...We routinely underestimate the sophistication of people for whom dollars really matter.”
While repealing Obamacare was a central theme of Trump’s campaign, there’s still little consensus among congressional leaders and the White House about how to replace the current law.
“It is hard to imagine a major overhaul being in place anytime very soon,” said Katherine Baicker, a health economist at the Harvard T.H. Chan School of Public Health.
Economist Gail R. Wilensky said the effects of any new health care law wouldn’t be immediate. President Obama’s law passed in 2010 but didn’t take full effect until 2014.
“It’s going to be a several-year transition to the new world, because it takes that long to put in place institutional changes,” said Wilensky, senior fellow at the foundation Project HOPE, and a former director of Medicare and Medicaid.
By expanding Medicaid eligibility and establishing new insurance exchanges, the Affordable Care Act extended health coverage to about 20 million more Americans. It also required coverage for people with pre-existing conditions and allowed young adults to stay on their parents’ plans until age 26. Supporters of the law worry that many could lose their insurance if Republicans don’t pass a comprehensive replacement plan.
Yet many people on Obamacare plans saw their premiums rise at double-digit rates this year. Republicans say they’re working on more affordable alternatives.