Crapo Bill Helps Smaller Banks, Highlights Problems With Bank Holding Companies
By Norbert Michel, Director, Center for Data Analysis at The Heritage Foundation.
The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) is heading toward Senate passage, possibly as early as this week. The bill will surely make many small bankers happy, but it’s a stretch to say it would undo Dodd-Frank.
That’s what makes headlines like these so ludicrous:
- Republicans are about to deregulate banks — with Democratic support–
- Elizabeth Warren: Bill to Deregulate Big Banks Bad News.
The Senate bill does not deregulate a single bank.
*This article originally appeared in Forbes.
Military Spouse Says Education Savings Accounts Would Create ‘Phenomenal’ Freedom for Those Who Serve
By Rachel del Guidice, Reporter for The Daily Signal.
The spouse of a retired Air Force colonel says a bill creating federally funded savings accounts for military families would provide more school choices and flexibility in educating the children of those in the armed forces.
“It absolutely would give them the freedom to make the educational choices that they need to make for their particular family members,” Melinda Bargery, a mother of four and wife of Col. Chris Bargery, who served in the Air Force for more than 28 years, told The Daily Signal in a phone interview.
The bill, introduced Wednesday by Rep. Jim Banks, R-Ind., would create a new kind of education savings account that military families could use to increase their school choice options by paying for certain costs.
Options covered would include private school tuition, private online learning programs, individual classes and extracurriculars at public schools, computer hardware, textbooks, curriculum, and other instructional materials, according to a report from The Heritage Foundation, which has championed the idea.
“Thirty-five percent of service members have considered leaving the military because of the limited education options available, and 40 percent have either declined or would decline a career-advancing opportunity at a different installation if it meant their child would have to leave a high-performing school,” Banks wrote in an op-ed that appeared Wednesday in The Wall Street Journal.
Sens. Ben Sasse, R-Neb., and Tim Scott, R-S.C., introduced a companion bill Wednesday in the Senate.
Bargery, a resident of Mount Vernon, Virginia, says she homeschooled each of the couple’s four children “at one point along the way.”
She said she knows from experience that military education savings accounts would provide needed flexibility for military families, which often are on the move.
“If we had had an educational savings account where we could have drawn from that to pay for our homeschool supplies, or extracurricular classes, or tutoring for our kids, that would have been phenomenal,” Bargery said.
The family made 21 moves during her husband’s 14 different assignments, she said.
The Bargerys’ four children are Sarah, now 28; Haley, 27; Jackson, 24; and Mary Margaret, 15.
During son Jackson’s senior year at Ramstein High School, a Department of Defense school in Germany, school officials said he would not be able to graduate since he had not met all of the school’s requirements.
“They wanted him to take all these classes that were not going to help him in any sort of way, but just to fulfill their requirements,” Bargery said. “And eventually, after much, much discussion and frustration, we found out that he could be allowed to graduate essentially from the school that he had previously been in, with their requirements.”
Had the family been able to use a program such as education savings accounts, Bargery said, they might not have had the issue to begin with.
“It just took so much of our time, and we thought we were going to have to put him in classes like ‘Dress for Success’ rather than an AP [Advanced Placement] psych class or something like that,” she said. “So you just run up against situations like that over and over.”
Bargery said military families would be able to give their children more consistency if they were able to access “great online academies” and other choices through education savings accounts.
The quality of education also would increase if military families had the funds and ability to choose a school for their children, rather than being confined to a school on base.
“Oftentimes the schools that are zoned for military bases are subpar, or don’t offer the services that your kids might need,” Bargery said. “Having that money given straight to us, instead of going to the school district, would be amazing because we could just choose how we wanted to do that along the way.”
Sometimes military families decide not to live on a base because of the quality of the school or schools there.
“I have noticed over the years that people less and less chose to live on base, and oftentimes it was because the school that was zoned for the base was so poor,” Bargery said, adding: “They wanted better for their children, so they would be willing to live further out, away from the base, just to give their kids a better education.”
“I hope it passes,” she said of the legislation.
*To read this article on The Daily Signal website, click here.
Your Tax Money Makes Planned Parenthood a Political Kingmaker
By Tony Perkins, President of the Family Research Council.
You might never support a pro-abortion candidate, but what if your tax dollars are?
There’s more than a little evidence suggesting that’s exactly what’s happening with government-funded groups like Planned Parenthood.
Of course, some would argue that the money is spent on services, but let’s be honest. Those tax dollars are also used to expand their brand—making it easier for outgoing Planned Parenthood President Cecile Richards to raise the cash she needs to elect pro-abortion legislators who, in turn, keep the federal funds flowing.
Now that America’s biggest abortion provider has announced a $20 million midterm election strategy, most taxpayers can’t help but wonder where federal funds end and campaign checks begin.
“March. Vote. Win.” is the tagline of this latest offensive, which is setting its sights on key governor and senate races in places like Arizona, Florida, Michigan, Minnesota, Nevada, Ohio, Pennsylvania, and Wisconsin.
The organization’s spokespeople, who have been careful to call the $20 million the first installment of many, say the move is meant to counter the White House’s wave of pro-life policies.
“This past year, the Trump-Pence administration and Congress waged a war,” Planned Parenthood’s Kelley Robinson insisted. Now, Robinson promises, Planned Parenthood is fighting back.
And, thanks to the forced contributions of taxpayers—more than a half-billion dollars’ worth—Richards has all the flexibility she needs to free up money for the fight.
For groups like Planned Parenthood, it’s always been a delicate dance. As everyone knows, it’s illegal for Richards to use even a penny of federal funds on the group’s political activities. And while her accountants perform all the necessary tricks to keep the monies separate, there’s no denying that Planned Parenthood has room to spend more politically because Congress rewards it financially.
Of course, this you-scratch-my-back approach has been the group’s playbook since President Barack Obama. That’s when the organization first launched a political action committee aimed at keeping pro-lifers off Capitol Hill.
When Obama was elected, Planned Parenthood got quite a return on its investment—hundreds of millions of dollars in abortion-friendly extortion. Eight years later, Richards’ group was one of the first to endorse Hillary Clinton—and she returned the favor by promising to force taxpayers to bankroll abortion on demand.
Unfortunately for Clinton (who was all too happy to take the money tainted by baby body part sales), Americans lost their stomach for the kind of rabid agenda she was pushing.
This November, despite a noticeable shift in public opinion, the group is trying again.
“We’re sending a clear message to the politicians who made careers of undermining our freedom and rights,” said the group’s political arm. “We’re voting you out in 2018.” And it’s flush with cash to do so.
“Planned Parenthood’s PAC is among the most powerful lobbying groups in American politics,” writes Alexandra Desanctis in National Review, “shelling out $40 million last year for ‘public policy’ and investing upward of $175 million in such nebulous categories as ‘movement building,’ ‘strengthening and securing Planned Parenthood,’ and ‘engaging communities.’”
Obviously, an organization sitting on a billion dollars in assets doesn’t need taxpayers’ help to begin with. But there’s also a relevant public policy question of fairness, which is: Should an organization that gets direct taxpayer dollars be able to lobby for more?
Most taxpayers would probably agree: There’s a real problem when “nonprofit” organizations receive direct taxpayer funding, and then turn around with a related entity and indirectly use those dollars to impact the political process.
In my opinion, that’s fundamentally un-American. If an organization wants to shape public policy, it should have to raise the funds like we do—not use the government to supplant the dollars it needs.
This was originally published in Tony Perkins’ Washington Update, which is written with the aid of Family Research Council senior writers.
*To read this commentary on The Daily Signal website, click here.
How Congress Can Provide Relief From Looming Obamacare Mandates
By Whitney Jones, Research Assistant, Domestic Policy Studies, Institute for Family, Community, and Opportunity at The Heritage Foundation.
President Donald Trump’s historic tax reform legislation repealed, among other things, Obamacare’s individual mandate tax penalty. Effective in 2019, the IRS will no longer penalize Americans for not purchasing a federally approved health insurance plan.
Unfortunately, Congress failed to repeal the even more economically disruptive employer mandate that forces businesses to pay tax penalties for not offering their employees Obamacare’s required level of health benefits.
The Obamacare mandate requires employers with 50 or more full-time employees to provide proof of insurance coverage to the IRS. Businesses face the risk of tax penalties if they do not provide government-stipulated “minimum essential coverage” to employees who work at least 30 hours a week.
Obamacare’s employer mandate has some unpleasant consequences for both employers and employees. It results in businesses paying their workers lower wages in order to afford the government’s mandatory level of health insurance coverage. It also creates incentives for employers to scale back workers’ hours in order to come under the law’s arbitrary compliance standards for full-time employment.
Among policy analysts, both liberal and conservative, there is a growing consensus that the employer mandate should be repealed.
For example, analysts at the Urban Institute, a prominent liberal think tank based in Washington, argue that the employer mandate negatively affects the labor market and harms low-wage workers. The Urban Institute analysts find that “[e]liminating the employer mandate would eliminate labor market distortions in the law, lessen opposition to the law from employers, and have little effect on coverage.”
Late last year, American businesses received their first Obamacare bills from the IRS. Some businesses are facing thousands, if not millions, of dollars in unexpected penalties.
Under the statute, the employer mandate was supposed to take effect in 2015. The IRS, however, was not prepared to enforce the penalties on businesses and delayed imposing the penalties and the reporting requirements for three years.
Now, however, the IRS is ready to collect the penalties from American businesses.
Employer groups are rightly concerned that the imposition of the mandate and its penalties will wreak financial havoc and disrupt their business operations. The Congressional Budget Office estimates that employers who have not complied with the Obamacare mandate will pay out a total of $12 billion in tax penalties for 2018, and a total of $139 billion over the 2015-2024 period.
The pending enforcement of Obamacare’s employer mandate both undermines the success of tax reform and contradicts repeated efforts to repeal and replace Obamacare. Rather than using their new tax savings to expand their businesses and create jobs, some employers may be forced to hand over money that could be much better used for productive purposes back to the IRS.
Individual taxpayers may also have cause for concern. While the individual mandate penalty was repealed as part of tax reform, as noted, it is still on the books until 2019. The IRS has already declared its intention to assess the Obamacare mandate penalties on individuals.
Under current law, the IRS can continue enforcing the individual mandate for the next two years—meaning Americans will face tax penalties for not purchasing and maintaining Washington’s specified level of health coverage.
Congress should eliminate the Obamacare penalties for both individuals and employers right away. Congress can do this by including the repeal of both mandates and accompanying penalties through the omnibus spending bill that will provide funding for the federal government after March 23.
If that effort should fail, the only other avenue for relief for individuals and businesses is through a more cumbersome state application for a federal waiver from these mandates and their penalties.
Congress should not delay. A repeal of Obamacare’s burdensome mandates is integral to the broader agenda of creating a truly competitive and open marketplace for Americans to secure the affordable health plans of their choice, rather than being forced into the coverage that Washington requires.
Repealing the employer mandate and its tax penalties is just one important step in the ongoing process to reform American health care in a comprehensive fashion, reverse the government-centric policies of the status quo, and give American citizens the right to choose the health care coverage of their choice at a price they wish to pay.
*To read this commentary on The Daily Signal website, click here.
New Health Secretary Offers Bold Vision for Reform. But the Devil’s in the Details.
By Robert E. Moffit, Senior Fellow, Health Policy Studies at The Heritage Foundation.
Alex Azar, the new secretary of the Department of Health and Human Services, outlined an ambitious health policy agenda this week in a major address to the national meeting of the Federation of American Hospitals.
That agenda is promising, but it is far short of the major legislative changes that will be necessary to reform American health care.
The central theme of the secretary’s address was patient empowerment. He promised broad systemic changes, and warned the assembled hospital executives and other stakeholders that “change is coming,” whether they like it or not.
Specifically, Azar unveiled four major initiatives.
First was patient ownership and control of health information technology records, giving patients greater control and access over their own medical records.
“Too often, doctors and hospitals have been resistant to giving up control of records, and make patients jump through hoops to get something as basic as an image of a CT scan,” he said. “The health care consumer, not the provider, ought to be in charge of this information.”
Azar is absolutely right. In virtually all of the policy discussions on health IT, at both the federal and state levels, that many of us in the policy community have engaged in, the question that is rarely asked or answered with any clarity is this: Who actually owns the medical record? Who has a property right in the medical record? Is it property shared between the doctor and the patient? Or is it primarily the patient’s information, or the patient’s alone?
While these are the right questions, the Trump administration’s answers will, hopefully, secure the right answers.
Second, Azar declared his intention to adopt an ambitious program of price transparency.
In his address, he recounted his own experience in getting a “routine echo-cardio stress test.” When inquiring how much the test was going to cost, he said, he was told by the hospital personnel that the information wasn’t available, and persisting, found out that this routine test was listed for a stunning $5,500, with $3,500 paid for out of insurance.
Further persisting in his quest for the truth, he discovered that the test could be delivered outside of the hospital in a doctor’s office for just $550. Of course, as Azar points out, this is simply absurd, aside from being disgracefully wasteful.
The root problem is that health care “prices” are not really prices, in the conventional economic sense, reflecting the direct collision between the forces of consumer demand and provider supply in anything resembling a real market.
They are complex, negotiated payment agreements that take place within a sector of the economy, dominated by third-party, corporate, and government pricing arrangements.
Health care is an aberrant sector of the economy, where consumer control is virtually nonexistent and competition is routinely thwarted by law and regulation.
The secretary is asking medical professionals and drug companies themselves to volunteer and become “more transparent” in their pricing and their medical outcomes, but warning that, if they fail, “… we have plenty of levers to pull that would help drive this change.”
It’s not yet clear what those administrative “levers” are, and how Health and Human Services would, or could, legitimately use them to influence commercial sectors of the health care economy, rather than just Medicare, Medicaid, and the Obamacare health insurance exchanges.
Health care pricing and payment reflect radically different conditions from state to state. The secretary should be careful, therefore, not to disrupt price transparency initiatives that are already underway in several states, such as Maryland.
Maryland, after carefully building a sophisticated database, is spotlighting price and performance for common hospital procedures for the state’s consumers.
Third, Azar reaffirmed the administration’s commitment to payment reform, using the Medicare and Medicaid programs as platforms to drive payment for “value rather than volume.”
We should pardon the public if this increasingly tiresome, overused phrase elicits a yawn, especially in light of the “lackluster” performance of Obamacare’s Accountable Care Organizations and other delivery reforms.
Azar, in effect, asks us to have faith and pledges to enlist his department’s “tremendous power to experiment with new payment models.”
Obviously, we have no idea yet what these payment models are, or how Health and Human Services will create them with its “tremendous power.” That power is narrowly administrative, and the Medicare and Medicaid systems are rigid systems of congressionally created administrative pricing.
Government is no match for markets. Markets, responding to consumer demand, are excellent in delivering value to consumers, and markets are ruthlessly efficient in controlling costs. How manipulations of administrative pricing will secure anything comparable remains unclear.
Finally, Azar promises to eliminate bureaucratic and regulatory barriers to innovation. In this connection, he cites the existing compliance and reporting burdens that are now undercutting medical professionals’ time with patients.
“Nobody benefits when our outcomes measures create burden instead of value,” he said.
Deregulation is a long-overdue and welcome development, and fully within the scope of the secretary’s vast administrative authority.
Hopefully, Azar’s promised administrative actions will prove consequential. With a new administration, they can be quickly undone. And, even if they are fully successful, they would still fall short of comprehensive health care reform.
Congress needs to take responsibility for necessary legislative action, sooner rather than later.
The first action is to provide direct relief to millions of middle-class Americans from Obamacare’s excessive federal regulation. That federal system of rigid control is discouraging anything close to meaningful competition and driving up costs in the badly damaged individual and small-group health insurance markets.
The best short-term option is to enact regulatory reforms, enabling states to expand the personal choices of their residents to affordable coverage. It is a prescription endorsed by a wide range of conservative health policy analysts.
The next congressional step is to address the underlying perverse incentives that restrict insurance portability, drive up costs, and frustrate consumer choice and competition in the health care sector of the economy.
That means finally fixing the broken federal tax treatment of health insurance and providing Americans individual tax relief for the purchase of the health insurance of their choice.
To empower consumers, Washington must empower consumers. That means, in short, giving them direct control over their health care dollars and decisions.
In and of themselves, short-term administrative or regulatory initiatives can never accomplish that ultimate goal.
*To read this commentary on The Daily Signal website, click here.
EVENT: Eliminating Fannie Mae and Freddie Mac without legislation – AEI
Tuesday, February 27, 2018 | 9:00 am – 11:30 am
1789 Massachusetts Avenue NW
Washington, DC 20036
On Tuesday morning at AEI, seven housing experts rolled out their plan to eliminate the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac without legislation. This proposal counters the housing lobby’s view that a government guarantee is necessary for an effective housing finance system. The plan can be accomplished by administrative action alone. This is important since Congress has been unable to develop or agree on a workable housing finance system since the financial crisis nine and a half years ago.
This unique plan would create a safer and more stable housing market, take the taxpayer off the hook, and help the Treasury reduce the deficit by billions of dollars annually. The plan works by gradually winding down the GSEs through a reduction in the conforming loan limits, which are the maximum loan limits eligible for purchase by GSEs, and an elimination of other GSE products that do not promote home ownership.
*This event, featuring Norbert Michel, Director, Center for Data Analysis at The Heritage Foundation, can be viewed on the American Enterprise Institute website here or below.
Mike Needham on Fox News Sunday
In wake of the school shooting in Parkland, Florida, pressure has been mounting for Congress to act on mental health, background checks, and other gun-related measures. Heritage Action for America CEO Michael Needham joins Fox News Sunday with Chris Wallace to discuss related developments.
*Originally uploaded to YouTube.
This Committee Could Try to Bail Out Private Pensions With Taxpayer Funds
By Rachel Greszler, Research Fellow in Economics, Budget and Entitlements at The Heritage Foundation.
The Bipartisan Budget Act made headlines earlier this month for raising federal spending caps by $300 billion over just two years.
What is less well known is that it created a committee that could potentially bail out private union pensions with taxpayer funds to the tune of half a trillion dollars.
That figure, $500 billion, is the shortfall between what multiemployer (or union-run) pensions have promised their workers and what they’ve actually set aside to pay them.
The newly established committee is called the Joint Select Committee on Solvency of Multiemployer Pension Plans.
Originally, unions and employers who hold those $500 billion in unfunded promises tried to include a bailout for private pensions in the budget bill. Instead, they got a joint committee tasked with addressing the problem, as well as the Pension Benefit Guaranty Corp.’s looming insolvency.
The joint committee consists of 16 lawmakers, with four appointees named by the speaker of the House, the House minority leader, the Senate majority leader, and the Senate minority leader, respectively.
The House members sitting on the committee include Reps. Virginia Foxx, R-N.C.; Phil Roe, R-Tenn.; Vern Buchanan, R-Fla.; David Schweikert, R-Ariz.; Richard Neal, D-Mass.; Bobby Scott, D-Va.; Donald Norcross, D-N.J.; and Debbie Dingell, D-Mich. A Senate staffer said that the names of senators to sit on the committee are not yet confirmed.
The joint committee’s marching orders include producing a report and legislative recommendations that will improve the solvency of both multiemployer pensions and the Pension Benefit Guaranty Corp. (specifically, it’s multiemployer program) by Nov. 30.
The multiemployer system consists of about 1,300 private union pension plans that, collectively, have promised $500 billion more in pension benefits than they have set aside to pay.
The Pension Benefit Guaranty Corp.’s multiemployer program is a government entity that provides mandatory but limited pension insurance to all multiemployer pension plans. It has a $65 billion to $101 billion deficit and is on track to run out of funds by 2025.
The $500 billion multiemployer pension shortfall did not crop up overnight. Reckless mismanagement and failures to confront growing gaps between promises and reality have been decades in the making.
Certain industry declines and periods of lower-than-expected investment returns quickened many pension plans’ demise, but only because they were already broken.
The root cause of pension plan shortfalls is plan managers’ failure to align current contributions with promised benefits, and to adjust those terms appropriately over time when plans’ assumptions don’t match economic realities.
With equal representation from union representatives who want to deliver deluxe pension benefits and employer representatives who want to minimize contribution costs, it’s no wonder many plans didn’t cut benefits or increase contributions as needed.
Consequently, a million or more workers and retirees now stand to lose a significant portion of their promised pension benefits.
Congress’ new joint committee on multiemployer pensions can change this by proposing legislation that will minimize pension losses and that will prevent the same problems that contributed to current shortfalls from continuing in the future. That includes protecting taxpayers from bearing the cost of private union pensions’ broken promises.
The committee’s task includes producing a report and legislative proposal that—if it gains the approval of a majority of both Democrat and Republican members of the commission—will receive an expedited process for a Senate vote by the end of 2018.
Committee members have relatively few existing proposals to draw from in crafting their own recommendation, and the few proposals that do exist are massive taxpayer bailouts that would exacerbate, rather than improve, the root problem.
The Butch Lewis Act, for example, would provide both taxpayer loans (including the option of loan forgiveness) and direct cash bailouts to multiemployer pension plans. And it would convert the Pension Benefit Guaranty Corp. into a taxpayer-financed entity.
This would cost hundreds of billions of dollars—perhaps even closer to a trillion dollars—at the end of the day. That’s because it would not only bail out all of multiemployer pensions’ broken promises to date, but it would encourage private union pension plans—including responsible ones that haven’t broken their promises—to continue promising more than they can afford to pay, raising taxpayers’ tab even higher down the line.
Committee members and all lawmakers should reject any form of taxpayer bailout—whether by loans or direct cash assistance—for private pensions.
Instead of passing the buck to taxpayers, committee members should contain costs within the system that created cost overruns. A combination of benefit reductions and contribution increases for troubled plans, as well as higher, risk-based premiums for the Pension Benefit Guaranty Corp., would accomplish this goal.
Additionally, the committee should not set a precedent that would exacerbate future underfunding and set the stage for a $6 trillion bailout of unfunded state and local government pensions.
Avoiding these outcomes requires denying any form of pension bailout, subjecting union pensions to the same funding rules as non-union pensions, and holding pension trustees accountable to make sound financial decisions.
*To read this commentary on The Daily Signal, click here.
Debunking the Corporate Stock Buyback Boogeyman
By Adam Michel, Policy Analyst, Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, and Skomantas Pocius, Member, Young Leaders Program at The Heritage Foundation.
Americans are now experiencing the benefits of tax reform. Employers are sending less of our paychecks to Washington, millions have received unexpected bonuses, and businesses of all sizes have increased investment in the U.S. economy.
Despite the good economic news and significant tax cuts for more than 80 percent of Americans, some wish to focus exclusively on a number of corporate stock buybacks that have been announced since tax reform was signed into law.
If you are looking for corporate greed, it is easy to see why stock buybacks and increased dividend payments are such a good boogeyman.
When businesses don’t have suitable investment options for all their profits, they give part of them back to their investors so that those individuals can instead reinvest in other endeavors.
That’s the purpose of a buyback or dividend payment. Some businesses are essentially giving their tax cut back to their shareholders. It is easy to stop the analysis there and conclude that executives and rich owners of companies are making out like bandits.
These claims fit a convenient political narrative; namely, that only the rich will benefit from business tax cuts. An honest accounting requires a deeper look.
Whenever a company buys back some of its shares, owners of those shares gain money. In the U.S., shareholders are ordinary people, with more than half of all families owning stock, directly or indirectly. We are talking about your retirement savings or your kids’ college fund.
The rate of stock ownership is increasing, with some of the biggest gains coming from lower-income households. The notion that only the wealthy benefit when businesses return profits to their investors is based on a mistaken view of stock ownership that may have been true in the 19th century, but certainly isn’t so today.
What’s more, the profit that investors gain can then be reinvested in another enterprise or spent on goods and services. Both of these activities benefit the economy, whether by increasing business investments and job opportunities, or by increasing consumer demand.
Seldom does an investor take a return and stuff it under the proverbial mattress.
There is also something even bigger at work.
Central to the corporate-buyback complaint is that businesses are spending their money on stock buybacks, rather than increased wages. But businesses don’t just raise wages owing to a sense of corporate benevolence. Rather, wages rise when the economy grows and the demand for workers increases.
This forces businesses to increase wages out of self-interest, to keep their employees from being hired away by competitors.
That’s exactly what’s happening. Higher returns on investment because of tax cuts mean that investors are building new and expanded businesses here in the U.S.
Demand for workers is driving wages up. Unemployment is at a 17-year low, and wages are rising faster than they have since 2009. Indeed, more than 300 companies announced raises and bonuses for their employees in the first month of the reform.
All in all, stock buybacks are common and a signal of a healthy economy. Over a similar period last year, buybacks totaled close to $140 billion.
They may be an easy target to vilify, but we should base our attitude toward them on sound economic thinking, rather than political agitation.
*To view this commentary on The Daily Signal website, click here.
New Trump Health Policy Would Make Coverage Options More Affordable
By Whitney Jones, Research Assistant, Domestic Policy Studies, Institute for Family, Community, and Opportunity at The Heritage Foundation, and Doug Badger, Senior Fellow at Galen Institute and Visiting Fellow at The Heritage Foundation.
The Trump administration moved on Tuesday to deliver affordable health care to millions of Americans with a proposed rule that would expand the availability of short-term, limited duration plans to one year.
The rule comes as a result of the president’s executive order calling on federal agencies to take the necessary measures to scale back Obamacare’s burdensome regulations.
Three weeks before leaving office, President Barack Obama reduced short-term limited duration coverage to less than 90 days, making it very risky for individuals to purchase these cost-effective alternatives to Obamacare plans. Prior to the Obama administration’s rule, Americans could maintain these plans for almost a year.
The Trump administration’s rule would allow these policies to last a year, returning to the rules that were in place prior to the Obama administration’s restrictions.
For consumers who do not have access to employer-based coverage and do not qualify for federal subsidies in the individual market, these short-term plans provide a cost-effective alternative to Obamacare plans. They are typically cheaper than the plans offered on the exchange, as they are exempt from Obamacare’s burdensome regulations and provide less benefits.
While the Trump administration is making an important move to increase choice and access to affordable health insurance, the proposal leaves open the question of whether short-term limited duration plans are renewable. This means Americans trapped in the broken Obamacare insurance market will still have to cross their fingers and hope they can secure coverage when their short-term plan ends.
Before issuing a final rule, the administration is taking comments on how it might allow for the renewability of short-term limited duration coverage. Officials hope to make these plans available to consumers later this year.
This is the right course of action: Consumers and insurers should be able to decide whether to renew these policies as well as purchase them. Government should get out of the business of micromanaging products and instead leave that to the private market.
Since the implementation of Obamacare, average premiums in the individual market have more than doubled and in some areas, tripled. This year, half the counties and 10 states have only one insurer offering coverage on the exchanges—meaning roughly 10 percent of exchange enrollees effectively have no choice in the market.
Americans continue to find that the plans offered on the exchanges do not provide the coverage they need at a price they can afford.
Rightly, the Trump administration has prioritized expanding the length of time individuals can maintain short-term limited duration plans. The rule proposed by the administration Tuesday would provide relief to people who have been stuck with unaffordable coverage options and limited access to care.
But the administration can only do so much to expand choices and offer Americans access to affordable, individualized care. Congress must take the next steps and pursue legislative reform.
Congress cannot stop with the repeal of the individual mandate—that was just the first step. There is more work to be done to bring relief to Americans being hamstringed by Obamacare.
In 2018, Congress should make every effort to pursue consensus solutions that empower individuals to control their health care dollars and decisions.
Americans in need of health care reform deserve nothing less.
*To view this commentary on The Daily Signal website, click here.