Tax reform is all the rage right now, just as it should be. We have a complex web called the tax code that is nearly 75,000 pages long, including all the guidelines. At 39.1%, our corporate tax rate – combining federal and state – is the highest in the industrialized world. And our individual tax system is punitive and burdensome. This structure cries out for change.
After Republican lawmakers released the Tax Cuts and Jobs Act, a predictable flurry of attempts came about to discredit the legislation and its push to eliminate numerous special-interest deductions and loopholes currently consuming the tax code. One of the prime expressions of fearmongering is on student loans and higher-education costs.
It’s refreshing to see solutions to complex problems plaguing this country come out of the “laboratories of democracy,” the states. On the surface, that is precisely what Colorado’s own Gov. John Hickenlooper and Ohio Gov. John Kasich did in presenting a health care plan to congressional leaders last week: They shared ideas straight from the states.
On one hand, this is a good thing. State governors ought to take a proactive interest in major congressional efforts over national policy issues with direct state implications.
But the founding fathers didn’t intend for governors to share ideas for federal overlords to then carry out. They intended for state governors to implement ideas in their own states, as individual laboratories across the land, and to experiment with new solutions to pressing challenges. The beauty of this model of federalism is that it protects the entire nation from falling prey to a failed, one-sized-fits-all approach to a substantial issue.
Unfortunately, in their proposed plan to address Obamacare’s collapse, Govs. Hickenlooper and Kasich essentially cede their laboratory power to the feds by presenting ideas almost exclusively for greater federal actions — not by advocating for more authority to the states. If they favored the latter, then they might advocate for the repeal-and-replace legislation put forward by Senators Bill Cassidy (Louisiana) and Lindsey Graham (South Carolina).
In a new analysis of the Hickenlooper-Kasich plan for the Millennial Policy Center (MPC), my health care reform colleagues and I argue that the plan is well-intentioned and offers some ideas worthy of debate and consideration, but it’s like placing a Band-Aid over a gushing wound. You hope it will stop the bleeding but are sure to be sorely disappointed.
The governors’ plan essentially boosts subsidies for individuals and insurance companies, appropriates additional funding for cost-sharing subsidies and creates a $15 billion reinsurance fund to help states aid insurers in offsetting the expense of sicker patients. It also suggests a $100 million advertising campaign to get young people to sign up for Obamacare.
Regrettably, Hickenlooper and Kasich essentially propose throwing more money at the problem, hoping that something sticks, while notably ignoring the primary cost-drivers of health insurance and leaving both the individual mandate and Medicaid expansion intact.
Health insurance regulations are the primary stimulus for skyrocketing costs. As reported in the MPC analysis, a comprehensive review finds that Obamacare’s mandated “essential health benefits” raise the cost of insurance by 9%, and another analysis shows its various mandates — EHBs, community rating, age rating, etc. — increase health insurance costs by up to 68%. The governors do suggest offering states a bit more flexibility when it comes to EHBs, but it’s not enough to bend the cost curve.
If the goal is to bring down costs, then we must address the main cost drivers in the first place. How many young, healthy Millennials who are not currently insured are going to buy it because someone on TV tells them to? If the costs still outweigh the benefits, one won’t purchase insurance no matter how many commercials they see.
It is good to see Gov. Hickenlooper weigh in on the health care debate. Coloradans on the individual market are bracing for premium increases of 27% next year, an overwhelming amount on top of already-staggering premiums and rising deductibles. It makes sense that our elected governor would take a position on such a decisive issue. Unfortunately, he seems to have taken the wrong tack.
The best solutions come about when the states implement their own visions. The proposal put forward by Sens. Cassidy and Graham — which is still on the table in Congress before the reconciliation time window runs out on September 30 — would return power to the states by permitting each to customize their health care systems to the unique needs of their residents, with federal support, and by block granting Medicaid.
As my MPC healthcare team wrote in our recent analysis of Cassidy-Graham, “Offering states the flexibility to develop their own solutions and innovative strategies to lower costs, improve access, and expand coverage will produce a variety of best practices rather than forcing a failed or untested one-size-fits-all approach on the entire country.”
Govs. Hickenlooper and Kasich should be commended for taking a leadership role from the states on this crucial issue. With individual insurance markets in a death spiral, the challenges of healthcare costs and access cannot be ignored. However, we need much more than a top-down, federally-placed Band-Aid over this gushing wound called Obamacare. We need to return genuine power to the laboratories of democracy.
Fifty Senate Republicans and Vice President Mike Pence on Tuesday voted in favor of opening up 20 hours of debate on repealing and replacing the Affordable Care Act (ACA). Colorado’s own Sen. Cory Gardner, an advocate for healthcare reform, was among those who voted to move ahead. He subsequently cast votes in favor of repeal and replace, “straight repeal” and “skinny repeal” of Obamacare. With each of these votes, Senator Gardner unquestionably made the right decisions.
Coloradans on the individual market are bracing for premium increases of 27% next year, a staggering amount on top of already-staggering premiums. Top that with outrageous deductibles, and Obamacare yet again has doomed many Coloradans to “health insurance” in name only – not access to the care they need. That is, if they (unlike me) can even afford insurance.
Similarly, the Department of Health and Human Services reported that premiums have shot up $2,784, or 105%, on average nationally since 2013 – one year before the ACA regulations went into full implementation. This is not only expensive – it is reprehensibly so. Americans throughout the country are suffering under the ACA, and we deserve better.
Judging from past radio interviews I’ve conducted with Sen. Gardner, he seems to recognize that now is the opportunity for the Senate to take decisive action to resolve this crisis for his constituents in Colorado and Americans everywhere.
Coloradans like me who are hurt by or suffering under the boot of Obamacare deserve to have our voices heard in Congress. We deserve a shot at meaningful reform. Had Sen. Gardner not voted to simply take up debate, struggling Coloradans would have ultimately been denied the opportunity for real, vigorous debate on the Senate floor on conservative solutions to address premiums, deductibles and tightening access to care.
While the U.S. Senate has hit a serious roadblock on this issue, it is essential that Republicans continue to strive for solutions to the health care crisis. It will take a renewed and open process of debate and amendments on the Senate floor to get there, but it is crucial that Sen. Gardner and his colleagues in the majority work together to revive this pivotal effort and follow through on their promise to the American people.
Now, this does not mean that Republicans cannot, should not and must not take any steps to work with Democrats. Quite the contrary: there are initiatives that will require collaboration with Democrats for 60 votes, but only after the most foundational components of Obamacare are torn from the lawbooks.
Writing for The Colorado Springs Gazette back in April, Dr. Michael T. Parra, a Fellow at the Millennial Policy Center, and I proposed a piecemeal approach to repealing and replacing the ACA. We suggested that Congress should repeal and replace a significant chunk of the law and then work alongside Democrats on necessary supplemental reforms.
More than four months later, with deep-seated divisions among Republicans remaining, I still see that something along the lines of the strategy we proposed in April is the right one. The Senate should indeed pass one large-scale bill which accomplishes as many key reform objectives as possible within the constraints of reconciliation. (Reconciliation is a procedure requiring only 51 votes for approval of legislation that meets certain budgetary standards.)
Such a bill should, among other steps, eliminate the Obamacare taxes and the employer and individual mandates; offer expansive relief from the essential health benefits that are jacking up costs so high; rein in Medicaid with block grants and work requirements, and unleash health savings accounts (HSAs) so that they can be applied toward premiums and all medications.
While the Congress works to pass this “large-scale bill” first, there are several other steps that it should take to chip away at other parts of Obamacare and implement reforms that should bring Democrats into the fold on individual legislation.
One piece of legislation would permit insurance sales across state lines while a second would support invisible high-risk pools for those individuals who have expensive, pre-existing conditions. Another bill would permit Association Health Plans, which allow community organizations and small businesses to pool resources together to insure members and employees.
Senate Republicans like Senator Gardner would do well to make use of a strategic, piecemeal approach like this to accomplish the repeal and replacement of the ACA with serious, much-needed reforms that will bring down costs and boost access to healthcare.
Not a day goes by where we opponents of Republican-led healthcare reform aren’t crying out that Americans will “suffer” if the ACA is repealed – that it will “cost 22 million people access to healthcare” (Denver Post) or cause “around 200,000 preventable deaths” (Paul Krugman).
Yet millions of Americans, including millennials, are suffering today under the heavy boot of Obamacare — largely due to outrageous premiums and deductibles.
My own personal situation is an example of this and why the ACA should be repealed — and replaced with an approach that lowers the cost of care and insurance and therefore boosts access. At age 26, I am one of those young millennials that the health insurance pools need to help keep costs down for older, sicker patients. Because I am an independent contractor as a radio host and run a small nonprofit that doesn’t provide health insurance, I am forced to go onto the individual market.
The cheapest bronze plan would cost me over $200 a month, with a deductible of up to $6,500 — meaning my costs could be nearly $8,000 annually without insurance kicking in. Despite this, I don’t qualify for premium support tax credits because of my income level and being a single, 26-year-old male. Consequently, under the ACA, I’ve found myself forced to make the decision not to purchase insurance — to stay out of the pool — and instead pay out of pocket for my healthcare costs.
This is a case of prohibitive costs under Obamacare getting in the way of access to health insurance and minimizing access to healthcare. And I’m not alone.
While it’s true that the percentage of uninsured in Colorado has declined noticeably — down from 14.3 percent in 2013 to 6.7 percent in 2016, according to the Colorado Health Institute — this by no means necessitates access to care. As noted above, even if I purchased a policy on the Colorado Exchange, I would essentially be out nearly $8,000 a year before any support would begin. This means I’d do what I’m doing now – ration my own care, only with a sizable monthly premium on top of it.
In 2015, Gallup found that 31 percent of Americans with private insurance avoided getting care because of cost, hardly changed since before the ACA. In 2016, the Transamerica Center for Health Studies surveyed millennials ages 18-36. Twenty-one percent reported they couldn’t afford routine healthcare costs, while 26 percent said they could afford care “with difficulty.” Moreover, “nearly half of millennials have minimized healthcare costs by skipping, delaying or stopping care.” Hence, having insurance with high premiums and high deductibles can impede meaningful access to care.
One of the major cost drivers for millennials is the ACA requirement that insurance companies only charge a 3:1 difference in premiums for the oldest and youngest customers. The average 64-year-old costs 4.8 times more than a 26-year-old to insure. Insurance companies used to be able to charge that 5:1 ratio.
The 3:1 “age band” mandate is one of the primary reasons premiums have dramatically increased in the individual market since Obamacare. Young, healthy individuals are forced to overly subsidize their older, sicker counterparts. The inflated premiums serve as a disincentive for young and healthy individuals to buy insurance, leaving an unbalanced risk pool. Premium prices should be aligned with healthcare costs, not arbitrarily mandated by government.
This is just one of many recommendations we present for policymakers in a recent paper for the Millennial Policy Center. There is certainly no shortage of good ideas for replacing the ACA and reforming the healthcare system, many of which are advocated by Republicans.
The one-sided claims that moral virtues and good policy are strictly on the side of Obamacare and government-driven healthcare are both tiresome and untrue. The facts demonstrate that Obamacare is on a collision course, and it’s time for a consumer-driven, patient-centered system. Congressional Republicans must not cave in and let Obamacare collapse around us.
The “Colorado Secure Savings Plan” (CSSP) — which passed the state House and then died in the Senate “kill committee” last week — would have established a government-run retirement savings fund, paid for by “automatic payroll deductions” and managed by an unelected board of trustees.
Although the bill did not make it past the Senate’s State, Veteran and Military Affairs Committee, it is worth discussing the proposal given its potential resurrection in a future session. HB 1290 was an ill-guided attempt to expand our state’s safety net based on poor assumptions about personal savings. It would have created undue risk to taxpayers and limited worker freedom and choice.