by Mitch Kokai
Senior Political Analyst, John Locke Foundation
President-elect Donald Trump has repeatedly said that he wants to replace Obamacare while keeping its protections for people with pre-existing conditions. I agree with Trump that Obamacare should be repealed and that people with pre-existing conditions should be protected. …
… The key, in my view, is to alter an Obamacare regulation that prevents insurers from charging the sick more than the healthy. That regulation gives healthy people an incentive not to buy insurance: They can always buy it when they get sick. But insurance markets won’t work if only sick people buy insurance. That’s the reason the Obamacare legislation coupled this regulation with the infamous “individual mandate” requiring most people to buy health insurance.
Many Republicans have suggested a different regulation: Insurers could be required to charge people with pre-existing conditions the same as healthy people so long as those people had maintained their insurance coverage. That regulation would not create an incentive to forgo coverage; it would add to the incentive to get it. And so the mandate would no longer be needed.
At the same time, I suggested, the government should give people who do not have access to employer-based coverage a tax credit that would allow them to purchase catastrophic health insurance (or more extensive coverage if they supplement that credit with their own money). This coverage would no longer be subject to Obamacare’s definition of essential benefits; the states would return to being the primary regulator of benefits, as they were before Obamacare. But individuals would be free to buy insurance from other states, which would be particularly helpful if their own states’ regulations were too costly.