President-elect Donald Trump famously stated he has “concepts of a plan” for healthcare reform. Now, those concepts may soon become reality.
Here are five ways Trump and a Republican Congress can reduce health costs and expand access to affordable healthcare.
1. Scrap Biden’s enhanced Obamacare subsidies
These subsidies allow people who earn between 100% and 150% of the federal poverty line, between $31,200 and $46,800 for a family of four, and who don’t qualify for Medicaid to obtain zero-premium taxpayer-funded health coverage through the exchanges.
As a person’s income rises, he has to cover an increasing share of his premium, until he reaches 400% of the federal poverty level, $124,800 for a four-person household, at which point his contributions are capped at 8.5% of income. Making these subsidies permanent would cost taxpayers $383 billion over the next decade. Republicans would do well to let the subsidies expire, as scheduled, at the end of 2025.
2. Implement work requirements for Medicaid
During his first administration, Trump approved 13 state waivers requiring Medicaid enrollees to work, attend school, or volunteer. States typically exempted pregnant women and other vulnerable people.
President Joe Biden revoked those waivers. Some states should look to restore them.
Federal work requirements could save the government $109 billion over 10 years. And they could have the added benefit of nudging people off government dependence and eventually onto private coverage, possibly through their new workplaces.
3. Equalize Medicaid matching funds
The federal government covers a greater share of Medicaid costs for those earning up to 138% of the poverty level, who became eligible under Obamacare, than for the program’s legacy enrollees, which include pregnant women and disabled people.
That discrepancy gives states an incentive to prioritize enrolling able-bodied people over the truly indigent. That’s wrong. The federal match for the Medicaid expansion population should be lowered to the rate for the legacy population.
4. Boost access to short-term health plans
Short-term health plans don’t have to comply with Obamacare’s cost-inflating mandates. Premiums are often lower as a result.
In 2018, Trump expanded short-term health plans to last up to 364 days and let insurers extend them for up to three years. Roughly 3 million people signed up for the plans in 2019.
But Democrats undid the Trump-era rules when they took back power and limited short-term plans to no more than three months, with an option for a one-month renewal. Now, Trump can reinstate his own policy and offer people more affordable alternatives to exchange coverage.
5. Expand access to health savings accounts
HSAs allow people to set aside money for future health needs. Deposits are untaxed, the principal grows tax-free, and withdrawals are untaxed, provided they cover qualifying health expenses.
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Right now, only people with high-deductible health plans can contribute to HSAs. Next year, individuals will be able to contribute up to $4,300 and families up to $8,550. The Trump administration and Congress should work to give everyone, including those on Medicare, the ability to contribute to an HSA, and it should raise those contribution limits.
Trump just won an opportunity to make healthcare freer and more affordable. Let’s hope he takes it.
Sally C. Pipes is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on X, formerly Twitter, @sallypipes.