NCPA - National Center for Policy Analysis

Repeal and Replace: 10 Necessary Changes

January 18, 2011

The National Center for Policy Analysis and four other think tanks are conducting a Capitol Hill briefing today to discuss 10 structural flaws in the Affordable Care Act (ACA).  The briefing will be shown live on C-SPAN at noon Eastern.  Below are five of the 10 flaws and solutions.

An impossible mandate.

  • The ACA requires individuals to buy a health insurance plan whose cost will grow at twice the rate of growth of their incomes.
  • Solution: Repeal the individual and employer mandates and offer a generous tax subsidy to people to obtain insurance.

A bizarre system of subsidies.

  • The ACA offers radically different subsidies to people at the same income level, depending on where they obtain their health insurance.
  • Solution: Offer people the same tax relief for health insurance, regardless of where it is obtained or purchased.

Perverse incentives for insurers.

  • The ACA creates perverse incentives for insurers and employers to attract the healthy and avoid the sick, and to overprovide to the healthy and underprovide to the sick (to encourage them to leave).
  • Solution: Instead of requiring insurers to ignore the fact that some people are sicker and more costly to insure than others, adopt a system that compensates them for the higher expected costs.

Impossible benefit cuts for seniors.

  • By 2020, Medicare nationwide will pay doctors and hospitals less than what Medicaid pays.
  • Solution: Medicare cost increases can be slowed by empowering patients and doctors to find efficiencies and eliminate waste.

Lack of portability.

  • The single biggest health insurance problem for most Americans is the lack of portability.
  • Solution: 1) Allow employers to do something they are now barred from doing: purchase personally-owned, portable health insurance for their employees; 2) Give retirees the same tax relief now available only to employees; and 3) Allow employers and employees to save for postretirement care in tax-free accounts.

Source: John C. Goodman, "What Most Needs Repealing and Replacing," National Center for Policy Analysis, January 17, 2011.

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