In today’s Wall Street Journal, Holman Jenkins offers an idea for improving the ACA.
[L]et’s permit insurers to design their policies free of ObamaCare’s mandated benefit levels and free of state regulation. Let’s let these policies be purchasable with pre-tax dollars and allow them to satisfy ObamaCare’s mandate requiring individuals to have insurance and employers to provide it. […]
What’s the first thing the new nationally-chartered insurers would do? Rush out cheap, high-deductible policies, allaying some of the resentment that the mandate provokes among the young, healthy and footloose affluent. […]
[T]hese folks could buy the minimalist coverage that (for various reasons) actually makes sense for them. They wouldn’t be forced to buy gold-plated coverage they don’t need so the money can subsidize the old and sick (the hidden tax logic of ObamaCare).
This goes the wrong way in two respects and borrows ideas already in the ACA. First, the tax deductibility of health insurance is not a good idea. The employer-sponsored insurance tax subsidy is costly, leads to inefficient health spending, and distorts the labor market. We need less, not more tax subsidization. (We do have a debt problem and high health care spending, do we not?)
Second, what is it that people think they’re buying when they purchase insurance? If it’s not a vehicle for the healthy to subsidize the sick, then what’s the point?
Now, I recognize that it may not seem “fair” or “right” for the young and healthy to fully subsidize the old and sick, but they need not do so under the ACA either. Limited to a 3:1 ratio, age-based rating will be allowed for plans offered in the exchanges.
Finally, high-deductible plans for “young invincibles” and others of low means are permissible within the ACA’s requirements, as I wrote in a prior post:
Individuals under 30 can satisfy the individual mandate with a low-cost, high-deductible (~$6,000) plan, whose premiums have been estimated to be about $138/month. Those who qualify for the hardship exemption to the mandate are also eligible to purchase this plan even if they’re over 30.
What’s left in Jenkins’ proposal that makes sense and for whom? Various arguments could be made, but one thing is clear. Insurance companies would love it!