Shikha Dalmia:”Republicans Should Convert Obamacare Into a Free-Market System”

Many liberals have been not-so-secretly hoping to use Obamacare as a Trojan horse for implementing a Canadian-style single-payer health care system. But Republicans could slip in market-based reforms that they’ve always wanted into this horse if they’d stop playing hotheaded rebels—a la Sen. Ted Cruz—and wasting time on futile budget battles.

The very fact that Presidents Obama and Clinton last week thought it fit to have an hour-long tete-a-tete on TV to put a happy face on the law suggests that it might be in trouble.

The latest evidence is Health and Human Services figures showing that, thanks to all the onerous new regulations on insurers, young people—whose participation is crucial for the law’s success—will face massive premium increases when the much anticipated insurance exchanges are rolled out across the country today.

Men under 27 would see their premiums rise nearly 100 percent on average and women 62 percent. Manhattan Institute’s Avik Roy notes that even Obamacare’s generous subsidies won’t be enough to cover these added costs.

The upshot will be that many young people—who are two-thirds of the roughly 40 million uninsured—will prefer to pay the penalty ($96 in the first year) rather than buy coverage, especially since they can always do so when they fall sick. That’s because Obamacare bans insurance companies from turning away patients with pre-existing condition or charging them rates much above what others pay—the so-called community rating mandate.

After pointing out problems with the new healthcare system, Ms Dalmia proposes a reform strategy:

However, if Republicans play smart, they can use the moment of Obamacare’s reckoning to erect a market-based, patient-centered system that they’ve long advocated. How?

One big obstacle to this goal has been the lack of options for individuals to purchase coverage independently of their employers. Obamacare’s insurance exchanges, essentially on-line shopping malls where consumers can compare plans and prices, could overcome that, if they were properly constructed. But currently they are not.

They are larded with excessive mandates and regulations that’ll inflate premiums and limit coverage options for individuals. Republicans should start focusing on deregulating the exchanges so that insurers can offer more customized packages that genuinely serve customer needs at affordable prices.

Full column by Shikha Dalmia @ Reason

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