Trying to fix Obamacare

Republicans in Congress aren’t just griping about Obamacare now. They’ve begun the complicated and difficult process of trying to replace it with something that works better and, supposedly, will be less expensive to both the insured and the taxpayers.

Easier said than done.

One of the huge challenges this rewrite faces is trying to keep those parts of Obamacare that are popular while doing away with those that aren’t.

A best example of that tension is barring insurance companies from denying coverage to people with pre-existing conditions or charging them an exorbitant premium that would make it impossible for them to buy in.

As a trade-off for that desirable provision, Obamacare instituted its less desirable insurance mandate. To keep Americans from waiting until they were sick to purchase insurance, Obamacare required everyone of means to buy insurance or pay increasingly large penalties.

That mandate also was designed to force the young and healthy to subsidize the care for the older and sicker. But the mandate, besides being unpopular, didn’t work so well as a higher percentage than expected of young adults opted to pay the penalties instead of purchasing insurance.

The House Republican majority’s approach, the first details of which were released last week, would try to use a carrot instead of a stick to get Americans who are holding out to purchase insurance. It would drop the insurance mandate. Instead of the subsidies provided by Obamacare that reduced the cost of insurance purchased on the federal or approved state exchanges, it would give tax credits, adjusted for age and income. Also, to discourage people from waiting until they were sick to buy coverage, it would allow insurers to jack up the premiums by 30 percent on anyone who dropped their insurance and then later came back.

There are a lot of unknowns, though, with this approach. Will the threat of a 30 percent rate difference be any more of an enticement than Obamacare’s annual penalties? Will tax credits work any better than subsidies to get the young to buy? And if they still balk, will the tax credits for the growing elderly population become untenably large on the federal budget?

This GOP approach could create the same dilemma the nation faces with Medicare: too few young workers paying in to support too many retirees drawing out.

Obamacare needs fixing, but the initially proposed alternative could have just as many flaws.

 

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