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The Big Obamacare Repeal—What to Expect

This has been a big part of the Trump platform, and given the chance, he likely would repeal Obamacare completely. That chance is very slim. The entirety of Obamacare can only be eliminated with a Senate supermajority.

Republicans are unlikely to get those 60 votes, so instead the focus will be on changes they can push with the current majority. These points will mostly revolve around taxation, border restrictions and cost management. The parts that won’t change mostly apply to coverage eligibility. So, let’s start by looking at tax changes.

Tax Restructure

The most likely change of all will be eliminating the tax penalty for being uninsured. Many speculate that this might hurt participation, but the general idea is to make participation optional rather than mandatory. We’ll go into more depth later, but this change more than any other will lower healthcare costs across the board.

Other major tax changes involve premiums and health savings accounts (HSAs). The Trump plan will call for all insurance premiums to be fully tax-deductible. Whether some compromise on that point will be necessary is up in the air, but in general you can expect more tax deductions in this regard.

The other big change would be to make HSAs completely tax-free. This is the first step to making HSAs a major part of reform.

Health Savings Accounts

The plan at this point is to help the young and healthy transition into more affordable and reasonable HSAs. Republicans will push to remove as many qualifying restrictions as they can, so individuals will have better access to participate.

The other big changes will come from incentives. Trump wants to make HSAs tax free and part of inheritable estate. He also wants more freedom with the accounts, so the savings can be used to pay for procedures and expenses for any family member. This would likely boost participation through inheritance, and it would offset overall healthcare costs nationwide.

The biggest medical related debts occur when an individual requires care beyond their coverage. With reformed HSAs, many of these individuals can survive with pooled coverage from their families, covering expenses without incurring excessive debt. Of course, that can only work if Americans participate in health insurance.

Participation Rates

The biggest criticism against Trump’s proposals so far is a fear that participation rates will drop. There are two ways to respond to this. First, if participation rates do decline, it will ultimately lead to health care costing less on average. At this juncture, Obamacare has artificially increased demand, and the market has responded with rising costs.

But, even though reduced participation does have a potentially positive effect, the goal is still to give all Americans access to quality health care.

That leads to the second major point. Even though the goal is to make participation optional, several major changes reduce the minimal insurance costs to make participation more attainable. HSAs are a big part of that, enabling healthy Americans to seek out low-premium, high-deductible plans that fit their budgets better. The other, and more important, method of lowering rates comes from opening state borders.

State Borders

This has been perhaps the biggest push coming from the Trump Campaign. The idea is simple: open all state borders so individuals can pick from any of the 200 plus policies on the market.

In general, more competition leads to better options for consumers, and there is no reason to think health insurance won’t follow suite. Naturally, this is a complicated market, so it’s worth taking a moment to understand the criticism and potential fallout from this decision.

The primary reason state borders exist in regards to health insurance is because minimum requirements are legislated at the state level. Baseline insurance in California is very different from policies in North Dakota. Critics will warn that eliminating the borders prevents people from receiving the level of coverage they need.

The argument against this is pretty easy. If people can’t afford the minimum coverage in one state, they’re still much better off with a smaller plan from another state than with no coverage at all.

Bringing down borders is the key to revitalizing competition. Many states only have one or two participating insurers currently. If the goal is to make insurance affordable, this is the most important change.

Whatever change President Trump does enact unfortunately can’t fix the healthcare mess overnight. The first step is to stem the ridiculous rate of premium hikes. From there, affordable health care might be attainable.

~Conservative Zone


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