Rolling back Obamacare will hurt

The year ahead looks to be dangerous for health-care security in the U.S., as Donald Trump’s administration continues to sabotage the law that Congress couldn’t repeal. New proposals would let many more healthy Americans drop their Obamacare coverage — raising costs for the unhealthy and risks for everyone, sick or well.

It will fall to state governments to resist this renewed assault on universal access to adequate health insurance. Their goal should be to keep their health-care systems stable, maintain access to affordable coverage, and protect their citizens from scams.

First, the administration intends to widely expand and deregulate so-called association health plans. Under current law, such plans, sold to groups such as trade and professional associations, must cover “essential health benefits” such as hospitalization, maternity care and prescription drugs. The Trump administration wants to expand enrollment in association health plans and end the restriction on benefits. This would let insurers create cheap, weak-coverage plans and market them to people who expect no big health-care expenses.

Second, the administration wants to lengthen the permitted duration of unregulated short-term insurance policies from three months to as much as a year. This too will enable some healthy people to pay smaller premiums for minimal insurance.

Third, employers will be allowed to offer workers tax-favored “health reimbursement” accounts that aren’t paired with a health-insurance plan. Again, this would draw healthy people out of the insurance market.

Why is it wrong to let healthy people opt out? Partly because, as experience before the Affordable Care Act proved, weak-coverage plans have often served their buyers badly. Insurers misled consumers about the benefits, leaving them with astronomical unpaid bills.

But the more fundamental reason is that opting out defeats the basic principle of health insurance, which is to spread risk. Premiums paid by everyone — young and old, healthy and sick — collectively pay for health care. People in good health today gain the security of knowing they’ll be taken care of when the need arises. Keeping this system running well requires that the healthy and not-so-healthy all pay into the same pool, and that their insurance covers any care that may be needed.

By further segmenting the insurance market, the Trump administration is attacking this core idea. And the split-market problem will be compounded in 2019 by the loss of the “individual mandate” penalty for going without insurance, a change Congress enacted in its recent tax bill. Facing no penalty, some healthy people can be expected to gamble on going without coverage, keeping their premiums out of the pool.

States should do what they can to push back — for instance, by creating their own individual mandates, as Massachusetts did long ago and as Maryland is now proposing to do. They ought also to place their own limits on association health plans and short-term plans.

Unfortunately, it’s safe to assume that not all states will do so. Thanks to Trump and a Congress that is failing the country, many more Americans will soon be left where they were before the Affordable Care Act was passed — unable to afford decent health care.

Bloomberg View

CREDIT: BLOOMBERG VIEW