The health insurance system in the United States is in crisis. The Affordable Care Act (ACA) reduced the number of Americans without health insurance coverage but still left many households without coverage or substantially underinsured. The number of uninsured started increasing as soon as President Trump replaced President Obama and more recently skyrocketed due to the economic showdown caused by the COVID epidemic. The number of people with insurance who are underinsured and face substantial financial exposure is larger than ever and problems associated with inadequate health insurance coverage were largely unaffected by the enactment of the ACA.

This memo describes problems impacting health insurance coverage in the United States. Its purpose is to lay the groundwork for a health care reform addressing these problems. …

The 2017 Tax Reconciliation Act repealed fines for violating the individual mandate and created a set of legal and economic problems impacting health insurance markets. These issues must be dealt with by the new Administration and new Congress.

The ACA guaranteed access to health insurance for people with pre-existing conditions and mandated that health insurance companies not consider health status when setting health insurance rates. The individual mandate discouraged healthy people from opting out of insurance coverage and quickly purchasing health insurance should their health status change.

In the absence of the individual mandate, fewer healthy people would obtain health insurance and more people would take out short-term health plans leaving themselves underinsured. The decision of healthy people to forego continuous comprehensive health insurance coverage increases insurance premiums and impacts the viability of state-exchange health insurance markets. …

Is it time to merge employer-based and state-exchange insurance markets?

The Affordable Care Act (ACA) created state-exchange health insurance markets to allow access to health insurance for people with pre-existing conditions, link premiums to age instead of health status, and provide subsidies for low-income households. The ACA also maintained long standing tax preferences provided to employer-based insurance and includes rules favoring employer-based coverage over state exchange coverage. Currently around 11 million Americans obtain health insurance from state exchanges compared to around 157 million who obtain health insurance from their employer.

The continued dominance of employer-based health insurance has resulted in several problems leaving many Americans uninsured or underinsured. Many of these problems could be fixed by changes to regulations and tax laws which have employers subsidize the purchase of health insurance on state exchanges and have the government, through a tax credit, share part of the cost of premium payments. …

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The Trump Administration presented an amicus brief before the Supreme Court arguing the entire ACA is now unconstitutional because Congress in a 2017 tax law eliminated fines for violating the individual mandate. This note summarizes the brief, evaluates the likelihood the argument that the ACA is unconstitutional will prevail, and discusses potential actions Democrats can take to protect health insurance.


The brief makes four arguments

  • Plaintiffs have the right to sue,
  • Eliminating the fines for the individual mandate means the law is no longer a tax law and is instead an unconstitutional mandate,
  • The individual mandate is inseverable from the guarantee-issue provision and the community-rating provision of the…

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Many problems with health insurance markets in the United States are associated with aspects of the tax code.

  • A large tax preference for employer-based insurance often results in discontinuities in insurance coverage during job transitions and periods of unemployment.
  • The preferential treatment of employer-based insurance reduces competition and adversely impacts insurance outcomes in state exchange markets.
  • The reliance on tax preferences for employer-based insurance favors workers at large profitable firms over workers at small less profitable firms.
  • Tax rules prevent low-income workers at firms with an offer of affordable health insurance from claiming the premium tax credit for purchase of health insurance on state exchanges even when the state exchange plan is superior to the employer-based insurance. …

Health care reform and the future of the Affordable Care Act are on the ballot in 2020, just as in 2018. This memo contains several comments and links to research on the Trump Administration health care record along with an implicit discussion of implications of the impact a second Trump term.

Comment One: The actual number of people without health insurance has grown under the Trump Administration. According to the Census Department, the number of people without health insurance increased from 25.6 million in 2017 to 27.5 million in 2018. These increases in the number of uninsured occurred during years where the unemployment rate actually fell slightly and prior to the repeal of fines for the individual mandate and the COVID pandemic. …

There are two distinct lanes in the Democratic party. The progressive lane gravitates towards big ideas, which if implemented would transform society and the economy. The centrist land proposes modest changes to existing programs, which often would not substantially change the status quo. Most of the focus of the political discussion centers on the big proposals offered by participants in the progressive lane often leading to their rejection. Proposals offered in the centrist lane receive much less scrutiny. Problems and limitations of centrist proposals are often ignored.

The debate among candidates on student debt closely follows this pattern. The progressive lane advocates for free college and for immediate and substantial debt forgiveness for all or almost all people currently with student debt. The centrist lane advocates additional assistance for community college, and expansion of existing programs including Pell grants, Income Driven Loans, and Public Service Loans. The discussion centers on the economic and political feasibility of proposals offered by the progressive lane and does not consider the adequacy or potential problems with solutions offered by centrists. …

Bernie Sanders may get virtually all of the delegates in California and a very large proportion in Texas on Super Tuesday with around 30 percent of the popular vote because of the 15 percent delegate allocation rule and the large number of candidates still in the race. The movement of the California primary from June to Super Tuesday has accelerated the nominating contest and may result in selection of a candidate opposed by 60 percent of the party.

Statistical Analysis of Likely Super Tuesday Outcomes

Under rules governing the allocation of delegates to the Democratic convention, candidates who receive less than 15 percent of the vote in a geographic area are not awarded any delegates. A candidate with less than 15 percent of the statewide vote but more than 15 percent of the vote in a particular district can receive a delegate from the district. However, a good first-cut estimate of delegate totals can be obtained by assuming all candidates with less than 15 percent of the statewide vote receive no delegates and total delegates are allocated among all candidates with vote totals over the threshold. …

The individual mandate of the Affordable Care Act required people to have health insurance and fined people who did not comply. A provision of the 2017 tax reconciliation bill, discussed here, maintained the original mandate but abolished fines for its violation starting with the 2019 tax year. The repeal of fines for lack of health insurance impacts the number of people with health insurance coverage, the price of insurance, the number of people with inadequate health coverage, the viability of state exchange health insurance markets, and the legal status of the ACA itself.

A recent study authored by Treasury economists found enforcement of the individual mandate increased coverage and reduced mortality rates for people who were persuaded to purchase insurance. In the absence of an effective mandate, younger and healthier individuals will more likely eschew insurance coverage than older and sicker households; thereby, increasing average health expenditures and premiums for people who continue to purchase health insurance. A U.S. appeals court has ruled the individual mandate without a fine is unconstitutional and courts are now considering the constitutionality of the ACA without the mandate. …

The current generation of students is entering the workforce with more debt than any previous cohort of students and despite a strong economy recent borrowers continue to default at record numbers. There are also an increased number of borrowers who make partial payments, which allows them to stay out of default but increases the amount they owe on their student loan. The number of seniors entering retirement with outstanding student debt increased four-fold from 2005 to 2015.

Democratic candidates are vigorously debating different proposals to reduce student debt burdens. Less attention has been focused on policies being implemented and proposed by the Trump Administration. …

David Bernstein

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