The Wall Street Journal’s Holman Jenkins offers some really bizarre ideas for how the newly-elected Republican majority in the House can fix the health care law:
Happily, a path back to the future exists that just might be politically actionable in a divided Washington. It involves not repealing ObamaCare but adding something to it—an optional federal charter for health insurers.
Under this charter, let’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. At the same time, these policies would quickly re-revolutionize ObamaCare from within. Here’s why:
First, these 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).
Secondly, this relatively healthy cohort would be covered for a rare major injury or illness. The rest of us wouldn’t have to pick up the tab.
Thirdly, and when paired with a health savings account—as would happen as employers large and small rush to take advantage of a better option than ObamaCare now affords them—it would provide a much-needed kick of consumer discipline to the medical complex’s pants, which has always been the conservative alternative to a creeping government takeover of medicine.
Unfortunately, this idea, just like the GOP’s efforts to repeal the individual mandate will spell doom to the entirety of the health care law, which of course, is its intention. First, the existing legislation already gives younger individuals the option of enrolling in high deductible plans that cover less services at cheaper rates. Insurers will also be able to price their policies based on age and charge young people rates that are three-times lower than what older (and presumably sicker) applicants will be paying.
But the larger problem with Jenkins’ charter concept is that it it would only further fragment the risk pool and create a death spiral in the exchanges. If younger people have an incentive to take their premium dollars out of the exchanges and go elsewhere for cheaper high-deductible coverage, the exchanges will be left with sicker individuals who need comprehensive coverage and use it frequently. Without healthy individuals to offset the costs of this care, premiums will have to increase, pushing out everyone but the sickest and neediest applicants. As a result, the exchanges will become cost prohibitive for most Americans.
Meanwhile, the younger people who are enrolled in the cheaper high deductible policies will find their coverage inadequate once they — as we all inevitably are — fall ill. As The Incidental Economist’s Aaron Carroll points out, “Cheap plans are bad plans. There’s no magic to this. To a limited extent, you get what you pay for. The reason McDonald’s plans were low price was they they offered almost nothing in the way of benefits.”
The law’s mandated benefit levels are designed to get rid of these policies so that everyone has adequate coverage whether they need it now or later.