What type of products will the Republican-led solution offer?
Boston, November 15, 2016 – Aite Group Health Insurance senior analyst Michael Trilli explains potential replacement options to the Affordable Care Act (ACA) under a Trump administration.
President-elect Trump’s agenda has ACA repeal in its cross-hairs, but what should the ACA be replaced with? It is highly likely the ACA’s replacement will remove penalties and instead use incentives such as tax credits, but those are simply mechanics. The biggest question is, what type of products will the Republican-led solution offer? This is where the Obama administration erred. To the Obama administration’s credit, its marketplace provided crucial market intelligence to consumers, taxpayers, and insurers, which the incoming administration should take note of and learn from.
Republicans would be making a gross miscalculation to assume Paul Ryan’s plan outlined in June would be a suitable replacement to the ACA, given that the electorate that voted Tuesday does not fit the description of the Republican electorate Speaker Ryan had in mind when he drew up his plan.
HSA: A Bi-Partisan Force?
Health saving accounts (HSAs) can be a bipartisan force that drives better outcomes for all. Repeal and replacement of ACA will take time, but the employer Cadillac Tax could be abolished immediately and will propel HSAs. HSAs thrive in the group market because they incentivize and subsidize account holders, but they struggle in the individual market sans subsidies. Of course, subsidies in the group world are provided by employers, and a key tenant of the Trump health plan is expanding HSAs into the individual market.
If insurance premium subsidies are removed, an area of potential compromise across the aisle is thinking about government subsidies for individual HSA accounts, akin to those of an employer, to get consumers to start contributing their own funds, gain the tax incentives, and, hopefully, incrementally save for the future.
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