The Administration’s thinking is that these arrangements will be most attractive to small firms that lack the economies of scale that make offering insurance affordable. About 30% of workers at firms with three to 24 employees are covered by employer health benefits, down from 44% in 2010, according to Kaiser Family Foundation data. Eight in 10 companies with fewer than 200 employees offer only one plan.
Health reimbursements would be a cheap and easy option for, say, startups. This is also a way to offer more individuals the tax break on health care that employer insurance receives. Ending this economic distortion for everyone would be preferable, but equal treatment is a step forward.
The reflexive response from Democrats is that this is another effort to undermine the Affordable Care Act, but they need a new script. The rule will draw more young and healthy workers into the individual market, which currently skews toward the sick or those poor enough to be eligible for tax-credit subsidies. Reimbursements should make the ObamaCare exchanges more stable, which is what Democrats claim to want.
The rule includes guardrails to prevent employers from dumping sick employees onto the exchanges, and to prevent a person from getting both employer contributions and public subsidies. The Administration expects that some 800,000 employers will provide reimbursement arrangements to more than 10 million employees. Some three million will have been buying coverage on the individual market, meaning the rule should save the fisc money on increasingly expensive tax credits.
By failing to repeal ObamaCare, Republicans can’t address all of its dysfunctions. But at the margin by expanding choices they are making the individual market better, not worse, even as Democrats accuse them of sabotaging ObamaCare. Other new Trump options include short-term plans and association health plans. And unlike ObamaCare, the government isn’t coercing you to buy these products.
Speaking of association plans, the returns are coming in on the Democratic claim that allowing employers to band together to offer coverage is “junk insurance.” The plans are still nascent, but look at what the Las Vegas Metro Chamber of Commerce is offering: nine plan choices; dental, vision and life coverage available; pre-existing conditions covered; and more, with premium rates locked in for two years.
This is no surprise. The selling point of association plans is that businesses can pool risk and cut overhead costs. Businesses want to offer generous coverage that helps to attract workers in a tight labor market.
There may also be more relief ahead with the recent announcement that Health and Human Services rescinded a 2015 guidance for Section 1332 waivers. This is the Affordable Care Act’s waiver process for states to opt out of parts of the law. But Democrats designed the waivers to ensure that only progressive fantasies like single payer in Vermont could win approval. The Obama crowd then restricted the statute further in regulation.
The law stipulates that waivers must show the state plan provides coverage that is at least comprehensive and at least as affordable to comparable number of residents. Oh, and make it budget neutral.
The Trump Administration will interpret this in more rational ways, versus Obama guidance that applied the standards down to how plans would affect subpopulations in the state. The guidance was so prescriptive that most states didn’t bother coming up with ideas. The question now is how many enterprising Governors will decide they can do better than the status quo even within the restrictions.
You haven’t heard about all this because Democrats want to define the election as a choice between them and Republicans who supposedly want to deny insurance to people with lung cancer. But political control of health insurance is not the only way to care for the sick. The GOP tends to favor block grants for high-risk pools that subsidize those who need help paying for expensive treatments.
ObamaCare set up an interim high-risk pool to cover anyone with pre-existing conditions who had been denied coverage, at least until the exchanges went live. Peak enrollment: 115,000, even as Democrats claim now that 130 million people have pre-existing conditions and are at risk from Republican policy.
The GOP’s incremental progress on health-care freedom would have been hard to imagine a year ago when it failed to repeal and replace ObamaCare. Repeal is still desirable given the law’s fundamental flaws. But the Administration is working within the law’s limits to allow as much freedom as possible. If these products prove to be popular, Democrats may find it harder to eliminate the choices to stand up single payer.