The Trump Administration’s broad policy agenda is to deregulate markets and expand choice and competition to keep costs down for consumers and taxpayers. This report considers three changes that have the effect of expanding consumers’ health insurance options: (1) reducing, through The Tax Cuts and Jobs Act of 2017, the individual mandate penalty to zero owed by consumers who did not have federally approved coverage or an exemption; (2) permitting, via a June 2018 rule, more small businesses to form Association Health Plans (AHPs) to provide lower-cost group health insurance to their employees; and (3) expanding, through an August 2018 rule, short-term, limited-duration insurance (STLDI) plans.
Previous assessments of the Affordable Care Act (ACA) have relied on ad hoc metrics and rationales that are related to but do not directly measure or address the impact of regulations on market participants. To overcome this problem, we use standard methods of welfare economics to assess the potential efficiency gains to the consumers and taxpayers affected by the deregulatory reforms. We rely on estimates from the Congressional Budget Office and other reliable statistical sources for the basic inputs into this welfare analysis.
Our overall finding is that these changes, including the Trump Administration’s deregulatory reforms to expand health coverage options, will generate benefits to Americans that are worth an estimated $450 billion over the next 10 years. The reduction of the individual mandate penalty to zero accounts for $14 billion per year; the AHP rule accounts for $8 billion per year; the STLDI reform accounts for $8 billion per year; and the reduction in the excess burdens of labor taxation accounts for $15 billion per year. We estimate that the reforms will benefit lower and middle-income consumers and all taxpayers but will impose costs on some middle- and higher-income consumers, who will pay higher insurance premiums. The benefits of giving a large set of consumers more insurance options will far outweigh the projected costs imposed on the smaller set who will pay higher premiums. We provide estimates that these reforms do not “sabotage” the ACA but rather provide a more efficient focus of tax-funded care to those in need.
Comments
Replacing Obamacare with Deregulation is needed to allow Health Insurers to return to “medically necessary” coverage and allow companies to return to using Medical Plan Trusts to fund their employees’ healthcare.
Medical technology continues to develop improvements in treatment and testing to reduce costs. These improvements are being developed by medical devise companies. Big Pharma continues to spend its money on TV ads.
Norb Leahy, Dunwoody GA Tea
Party Leader
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