In the week since the election, we have suggested six areas advisers should be focused on now more than ever in relation to the Affordable Care Act and its impact on business. Advisers must be forward-thinkers about how President-elect Trump’s plans for healthcare, TrumpCare, are going to affect the market.
However, no matter what comes through, there will still be issues under TrumpCare. The following are six elements of reform that we feel should be included in any new legislation under the Trump administration:
1) Provide the same tax deductions on both the federal and state levels for health insurance.
Individuals and employers should get the same tax deduction. Don’t remove or reduce the current employer-provided tax deductions. But would any employer honestly consider providing housing, clothing and food on a pre-tax basis for their employees? So why is healthcare allowed to be on a pre-tax basis just for employers? It should be a tax deduction for both employers and for individuals.
2) Fix Social Security and Medicare so they are more efficient.
The answer is to offer part of these payroll taxes into employer health savings accounts and into individual retirement savings accounts like a Roth IRA. But make it pre-tax. In 2015, more than 9% of GDP was for Social Security, Medicare and Medicaid. Just taking 50% of those funds and investing them in individual Accounts like an RSA would cause tremendous growth to the economy.
Why? Because these accounts could be invested in stocks, bonds, mutual funds, real estate, etc. These accounts could be even better than a Roth IRA if the contributions could made pre-tax, the investments would grow pre-tax, and the withdrawals would be pre-tax.
3) Remove state-mandated limits and coverage only available by each state for those who live there.
If we allowed freedom of choice of healthcare across state lines competition would increase. If we removed the many state limits and mandates then the cost of such plans would be dramatically less. If we allowed association-type plans that could be offered across state lines people could pick and choose which plans they wanted to join.
Also remove any mandates (with their corresponding penalties) imposed by the states or federal government requiring coverage.
4) Streamline the Food & Drug Administration drug approval process.
We need to get drugs approved and in the marketplace faster. Have the FDA focus solely on the approval of new drugs based on safety. Let the testing of efficiency and efficacy of drugs be provided on a voluntary basis by the drug companies and outside monitoring groups.
Let the marketplace determine if a drug will be successful or not. If a drug is not effective or causes problems then the marketplace will determine the value of the drug and the value of the damages due to the drug.
5) Price transparency on all medical procedures and quality ratings on care.
If you give people information and rank the quality of care then you will have increased competition and eventually lower costs. Just like shopping for cars, car insurance, homeowners insurance, life insurance, etc., price transparency only leads to better decisions about healthcare.
6) Pass meaningful tort reform.
No meaningless lawsuits or tort issues about healthcare.
Many benefits professionals hope TrumpCare might reduce healthcare costs. But there could be unintended consequences. Broker, consultants and administrators need to closely monitor these six key issues detailed above.
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