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The American Health Care Act Is A Good Start
Douglas Holtz-Eakin
Washington Post
March 9, 2017

Some broad themes are clear. The ACA was a one-size-fits-all, top-down approach to policymaking. In contrast, the AHCA moves decision-making to the grass roots by providing funding, but permitting states flexibility in how to deal with costly preexisting conditions, provide reinsurance and other stop-loss protections that permit insurers to function effectively, and trusting state insurance regulators to run their markets. Even the significant Medicaid reform needed to ensure the program’s long-term sustainability carries enormous freedom for states to tailor their programs to their populations.

The ACA dictated insurance choices to individuals and families with its bronze, silver, gold and other levels. It required that they shop in government-run exchanges to get subsidies, and it levied a fee on those who were uninsured. The AHCA places trust in the decisions of individuals and families by making greater use of health savings accounts (which hone the market incentives for higher-value care) and respecting their ability to follow incentives to be continuously insured. Its refundable tax credit will be available to all low- to moderate-income individuals and will tend to equalize the tax treatment of employer and individual insurance.

Finally, the AHCA gets rid of most of the ACA’s many ill-conceived tax policies including the medical-device tax, the health insurer fee and the investment surtax. The remaining big-ticket item — the “Cadillac tax” — is put off until 2025.

There will also necessarily be a host of rulemaking and administrative guidance forthcoming from the Trump administration. And additional legislative fixes and changes to the health-care system that can’t be undertaken through reconciliation are already underway. But the bottom line is simple: Early criticism notwithstanding, the AHCA is a good start to reform the federal government’s role in the health sector.

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