Middle road on Obamacare – eliminate red tape and penalties to start, not the health coverage

Wow. Trump won the election and stunned everyone. First up on his chopping block seems to be Obamacare (the Affordable Care Act). Mitch McConnell has already said bringing the repeal vote to the Senate floor will be his first item of business. In their meeting on Capitol Hill this week, Paul Ryan and Trump both stressed it will be a “repeal and replace” plan, not just a repeal.

paul-ryan-better-way

But when you begin to consider how entrenched the ACA is in the American Healthcare system, as well as all the individuals and families that are currently covered on the plans, I offer that an immediate repeal and replace strategy would create too much turmoil in these early days of a Trump administration. However, a good middle road would be to rollback or eliminate all of the red tape and penalties that accompany the law.

Currently individuals who choose not to have coverage, as well as businesses and organizations who don’t offer employer-sponsored coverage that is deemed “affordable” by the crazy formulas outlined in the law, face steep financial penalties. Let’s make those fees more forgiving, or eliminate them all together, first.

Eliminating these penalties would also have the natural result of rendering moot all of the painstaking tracking and reporting requirements that companies (and school districts) now face with tracking “offers of coverage” to all of their full-time employees, and subsequent reporting on Form 1095-C that each employee is required to receive at the end of each tax year. As the law stands now, even if an employee crosses into “full-time status” for only one month (works 130 hours), that employee is required to receive an “offer of coverage” for that month (and each subsequent month they meet the threshold), and the organization has to track these offers in order to report them to the IRS at year’s end. Along with the high administrative overhead of such tasks, this results in organizations purposely keeping employees at part-time so they don’t have to offer insurance as a way to avoid the ACA penalties.

So, bottom line, the Trump administration and Congress should focus first on scaling back the obtrusiveness of the law through elimination of red tape before scrapping people’s health plans all together. This will also have the effect of encouraging job growth (more full-time employees) or employees being allowed once again to work more hours — as the organization or business would no longer worry about employees exceeding the 130 hour threshold that requires an offer of health coverage.

Clear as mud?

As far as dealing with the issue of adverse selection in health insurance, that will need to be addressed with whatever long-term solution Congress and Trump’s team come up with — the ultimate “replace” part of the “repeal and replace” promise. What I propose here is temporary idea to allow people currently on their Obamacare plans to keep them, and those not on one to stop being penalized. So a “freeze” if you will on who currently has coverage on Obamacare. This would give a short window of time for Congress to work together on a more affordable and free-market driven solution.