With New York congressional candidate Alexandria Ocasio-Cortez’s stunning upset of the fourth-ranking House Democrat and the unassuming popularity of Vermont Sen. Bernie Sanders in the 2016 election, it appears socialist ideas are gaining popularity among a large portion of the electorate.
Like high school students who have just discovered Karl Marx, voters are running to leftist politicians for free college tuition, housing and health care.
The narrative of a downtrodden populace writes itself when it comes to health care. Annual premiums have skyrocketed past $18,000 for families and $6,400 for individuals. Half of all American workers have deductibles of $1,000 or more, up from 22 percent in 2009.
That number is all the more dire when you consider four in 10 Americans are unable to cover even $400 in unexpected medical bills.
As such, Gallup polling shows the percent of Americans without health insurance is increasing in all 50 states. These individuals are demanding change.
Even ignoring Obamacare’s role in the price fluctuations, our untenable health care system is one of the most significant factors pushing struggling Americans toward governmental systems that promise a free lunch.
But if voters on either side of the aisle value the economic freedom that underpins the American way of life, we must turn to free-market alternatives to plug the worst holes in our health care system — immediately.
Consider the potential impact of two changes implemented by the Trump administration: Expanding short-term health plans and expanding association health plans.
As their name suggests, short-term health plans are designed to bridge gaps in coverage. They cover only a select subset of care, often foregoing coverage for procedures that cost insurance companies the most, such as maternity care and chronic disease management. Consequently, short-term health plans are far less expensive than those currently offered on Affordable Care Act exchanges.
Premiums for people age 30-50 are $352 less per month, on average, than a Bronze ACA plan, for example.
As average annual premium costs nearly doubled over a decade, many Americans elected to switch to cheaper short-term plans. In response, the Obama administration capped short-term plan length at three months in order to force consumers onto the ACA exchanges. Those who were least able to pay had to make a choice: Purchase high-cost individual insurance, or renew their health coverage four times a year.
Since many short term plans don’t accept patients with pre-existing conditions, the change was dire for those who received a diagnosis rendering them ineligible to renew their coverage in the middle of the year.
President Donald Trump’s proposed rule, which is expected to be finalized soon, removes the three-month cap to allow short-term plans to last for 364 days. In the 1,356 counties served by only one ACA insurer, the policy will inject much-needed alternatives into otherwise monopolized markets. In the rest of the country, greater choice means consumers are allowed to purchase plans they can actually afford.
Similarly, the federal government’s new rule on association health plans also invites greater consumer choice.
According to the U.S. Small Business Administration, small businesses employ 57.9 million Americans — almost half the domestic workforce. Under the current regulatory framework, individual businesses are prohibited from joining together to purchase group health plans in bulk at the same cost offered to large corporations. The artificial barrier to low-cost insurance virtually guarantees that small business owners and the individuals who work for them cannot get the best rates on their health plans.
Additionally, suppressed bargaining power meant premiums rose faster for individuals and small groups than it did for corporations. In fact, fewer than half of the domestic businesses employing between 10 and 24 people offered health insurance to their employees in 2015, down from 66 percent when President Barack Obama took office. In comparison, more than 99 percent of large corporations offered health insurance in both years.
Understandably, the cost of health care is consistently the number one concern for small business owners, topping even the fears brought on by competition from online retailers or bringing in more customers.
Association health plans allow small employers to band together to purchase the type of low-cost group health plans previously available only to large employers. By pooling the risk that any one worker will wind up sick, AHPs reduce the risk (and therefore, the cost) to insurers. It’s a free-market solution that results in a tangible benefit for close to 60 million Americans, and it comes without a dime of taxpayer support.
Warding off democratic socialism — or any ideology promoting fiscally unsustainable benefits on the taxpayers’ dime — should be a priority for all who value economic freedom. These free-market solutions poised to address the greatest weaknesses in our expensive health care system are a good start.
Will Coggin is the Director of Research for the Center for Consumer Freedom in Washington, D.C.
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