Obamacare’s Teachable Moment

On Monday, House Republicans promised a plan to repeal and replace Obamacare within a month. It’s not a moment too soon.

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Obamacare is collapsing. UnitedHealth will abandon most Obamacare markets, it said Tuesday. Giant insurers such as Aetna and the BlueCross Blue Shield Association are next. They warned last week that losses trying to sell Obamacare plans are “unsustainable”– $3 billion a year, S&P says — and they’ll either stop selling the plans or significantly raise premiums. That’s a scary prospect. Even Hillary Clinton’s campaign admits the cost of Obamacare plans is already “crushing.”

As for the GOP alternative, the devil will be in the details. But six years of Obamacare have taught the nation lessons that Republicans should not ignore.

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Keep it short. Don’t give us another 2,572-page “comprehensive” health bill that lawmakers vote on without reading first.

What Congress passes, Congress must live by. Under the Affordable Care Act, members of Congress and their staffs get lavish subsidies — as much as $12,000 a year — to pay their Obamacare premiums. Nobody else in America earning close to $174,000 a year (a member’s base pay) qualifies for a subsidy.

Don’t try to sell health plans to chronically ill people and healthy people for the same price. That’s like trying to feed a Chihuahua and a Great Dane on the same budget. Five percent of the population with chronic illnesses consume roughly 50 percent of health care. When plans are priced the same for everyone, the sick rush to buy and the healthy refuse, because it’s a bad deal. That’s what drove healthy people out of insurance markets in New York and other states that tried uniform pricing two decades ago, and it’s doing the same thing nationwide now.

No wonder insurers are bleeding red ink trying to sell the plans. “Premiums were just too low,” said Larry Levitt of the Kaiser Family Foundation, meaning too low to care for the chronically ill, but far higher than what’s needed to cover people with normal health problems.

Any GOP plan should help the chronically ill with separate risk pools of their own (35 states had them before Obamacare forced them to close). That’s fairer than making insurance unaffordable for healthy people.

Make insurance premiums fully tax deductible, whether you get your plan at work or buy it yourself. Donald Trump’s health proposal is the best of any candidate’s because it would allow individuals — not just employers — to deduct the full cost of coverage. Other GOP plans cap the dollar amount that can be deducted. Obamacare goes even farther, penalizing benefit-rich plans with a “Cadillac” tax (a provision so unpopular it will never be allowed to take effect.) The absurd presumption behind limiting deductibility is that Washington knows best how much each of us should pay for coverage. Trump avoids that mistake.

Continue allowing young adults to stay on parents’ plans until age 26. Though this Obamacare provision pushed up family premiums, it also reduced the number of uninsured by 1.2 million.

Don’t pay for health reform on the backs of seniors. The Affordable Care Act robbed $716 billion from Medicare to subsidize new entitlements for other groups. Like robbing Grandma to spread the wealth. It’s making it harder for seniors to find doctors who take Medicare, limiting hip and knee replacements, and sticking seniors with surprise ER bills for “observation care.”

Skip the middle class entitlements. Most GOP proposals subsidize middle class health plan buyers with more than deductions, offering payments to people who owe no taxes. Just like Obamacare. Far better to reduce insurance costs with market reforms. The nation can’t afford these entitlements.

There’s no doubt that a GOP proposal will also include liability reform, purchasing insurance across state lines and repealing Obamacare’s freedom-killing mandates on individuals and employers. But the painful lessons of the last six years should not be lost on GOP reformers. As our pedantic president would say, this is a teachable moment.

Betsy McCaughey is a senior fellow at the London Center for Policy Research and author of “Government by Choice: Inventing the United States Constitution.”

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