Newt Gingrich: Repeal the ObamaCare mandate, but do it smart

As President Trump and Congressional Republicans move toward passing a critical tax cut and reform package to boost the economy, they also have the opportunity to start repealing and replacing the Affordable Care Act. Repealing the individual mandate in the tax bill is a good first step toward a better market for health insurance that would give Americans what they really need — the freedom to buy the insurance they want to serve their own needs and not those of the federal government.

In doing so, however, Republicans must proceed with caution. They must not shrug off the issue of market instability. Their goal should be giving Americans more health care choices and lowering premiums, not cratering the system.

Congress must put in place stabilizing measures to avoid increased premiums and the loss of coverage for millions of Americans as its members continue to unwind the ACA and develop a better plan.

{mosads}Repealing the individual mandate without stabilizing measures would only serve to further increase premiums in an already fragile individual market, something no one wants to do.

The current individual market has attracted many people with serious medical conditions. As part of the effort to help find a better long-term alternative to ObamaCare, Congress must also provide states with money to set up high-risk pool programs to help pay for care for this ill population. That’s the only way to prevent drastically higher premiums and more uninsured Americans. Already, middle-class families who are not eligible for tax credits are being hit hard by the costs of ObamaCare’s government-mandated benefits — and its convoluted structure. These people would be hurt even more by continued increases in premiums if the mandate is repealed in isolation.

Experience shows that a $15 billion per year program to help with the cost of high-risk individuals can be funded for about $5 billion per year. The costs of the Alaska reinsurance program, for example, are expected to be offset 80 percent through savings due to reduced premium tax credit expenditures — the subsidies that are at the core of ObamaCare and which escalate right along with premiums. Because the reinsurance funding would reduce average premiums in the individual market, the cost of tax credits would drop, too, freeing funds to care for those who are the sickest.

The solution is simple, and in fact, Republicans already are on record as supporting funding for high-risk individuals. House Republicans voted for this funding in the American Health Care Act (AHCA), which passed earlier this year. They should combine this idea with the best elements of what the Senate is offering and include this solution in the upcoming December 22 budget package.

The AHCA established a separate Federal Invisible Risk Sharing Program to help with high-cost medical claims, allocating $15 billion for the program each year for the first two years, followed by block grant funding to states. It offered states the flexibility to develop their own high-risk pool, defaulting to a federal program only if state action isn’t possible.

In the Senate, the Alexander-Murray plan gives states more flexibility to waive federal requirements and allows Congress to fund the cost-sharing reductions for lower-income families, which President Obama was illegally paying for through executive action. And Senator Susan Collins’s (R-Maine) reinsurance proposal provides $5 billion a year for states to set up programs similar to Alaska’s, which has already reduced premiums.

Actuarial firm Oliver Wyman estimates that with this $5 billion in risk-pool funding, states collectively could provide more than $15 billion in reinsurance coverage and that this combined with Alexander-Murray would result in premium reductions of more than 20 percent and another 700,000 people with coverage.

If President Trump and Congressional Republicans take these steps, by the end of the year they will not only have passed a historic tax cut and reform package, they will have moved forward in rolling back ObamaCare and lowering health care premiums for 2019, which voters would see during open enrollment in September. Combined with job creation and increased take-home pay from the tax cut, this would give Republicans an impressive record of accomplishment to run on in the midterms.

Newt Gingrich is a former Speaker of the U.S. House of Representatives, chairman of the board at Gingrich Productions and a Gallup senior scientist. He also is a consultant on health care issues to Blue Cross Blue Shield Association and other health care companies