Keep Guaranteed Issue – Are You Kidding?

Obamacare is Dead, Long Live Obamacare!

President-elect Trump has signaled that he may propose keeping guaranteed issue for people with preexisting conditions and the Obamacare provision allowing ‘adult children’ to stay on their parents’ plan to age 26.  This is in line with his previous statements and, also, existing Republican replacement proposals.

While these are the most popular parts of Obamacare, keeping them would be a very bad idea – very bad – for several reasons:

  • The retention of coverage mandates prevents the return of true catastrophic insurance, a common sense solution to rising insurance costs.  If this happens, the movement for nullification of federal law to legalize catastrophic insurance will continue.
  • Further, the retention keeps the federal government in the business of regulating insurance, a business it first entered in Obamacare with disastrous results.
  • What insurance company is going to write a policy covering preexisting conditions on its own? Keeping guaranteed issue would require subsidies and mandates, just like Obamacare.  Some type of subsidy would be required.  Several previous Republican and think tank proposals are built around a ‘universal tax credit’ which would amount to a subsidy, a federal guarantee that would continue to fuel the government-healthcare industrial complex, distort market pricing, and push costs up.  Wrong direction.  If a subsidy of preexisting conditions is desired, state high-risk pools – of the kind that existed in some 35 states before Obamacare – would be a much better way to go.
  • The individual mandate was added to Obamacare to convince insurers they would be receiving millions of government-guaranteed customers to spread the cost of preexisting conditions among a pool large enough to handle it.  The individual mandate or some coercive substitute would have to stay if guaranteed issue is preserved.
  • Guaranteed issue – an idea that failed in several states and is blowing up before our very eyes in Obamacare – would set up Trump’s new system for all the problems of Obamacare – adverse selection and the potential for an insurance death spiral.
  • Further, we are concerned that Trump’s proposal to block-grant Medicaid to the states will fold in the costly and disastrous Medicaid expansion under Obamacare.  Seven out of 10 people subsidized by Obamacare have come in through Medicaid expansion.  Trump’s interview on ’60 Minutes’ a year or so ago indicated he wanted to ‘take care of everybody’.  Trump is not a conservative on this issue; more social spending doesn’t bother him in the least.  His remarks on that occasion gave hope to the single-payer crowd.

Things are starting to look like the new government will ‘repeal’ Obamacare pro forma, only to bring most of it back under another name.  Such rebranding efforts have taken place in several states that purported to ‘get rid of Common Core’ in the education arena.

Who’s kidding who?  We don’t like the way things are shaping up.

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