About 20 million Americans rely on the individual and small-group market for health insurance, but that small fraction of our nation has been forced to bear the burden of caring for people with costly pre-existing conditions. That unfair burden of cost-shifting is the main reason premiums and deductibles have been rising so rapidly.
Although some low-income people have received credits to help pay those rising premiums, millions of self-employed and other middle-class people are not eligible for any subsidy. About 8 million Americans have been hit with Obamacare penalties despite the lack of affordable insurance.
The unaffordability of Obamacare has not affected the 155 million Americans with employer-based health insurance, which continues to benefit from a loophole dating back to World War II. Not only do employer plans receive a $260 billion-a-year tax break, which is by far the largest so-called “tax expenditure,” but large and medium-sized employers can also opt out from many of the regulations that increase the cost of individual policies.
The employer-based tax break can be changed only by Congress, but President Trump is doing what he can to alleviate the unfair discrimination against individual and small group insurance. In the second part of his October health care order, Trump ordered the U.S. Department of Labor to consider how associations of small employers (including self-employed individuals) can qualify for the same privileges as large employers.
The Labor Department is already authorized by Congress to enforce a 1974 federal law called ERISA, which regulates employer health plans. For decades, large employers have exploited ERISA to exempt themselves from the regulations that drive up the cost of individual and small group health insurance.
The goal of association health plans is to create a level playing field so that small employer groups and self-employed individuals can obtain the same type of health insurance as large employers who currently enjoy an unfair advantage.
While the Labor Department goes through the process of changing its regulations under Trump’s direction, Congress should pick up on this idea and extend to individuals, whether employed or not, the right to buy health insurance across state lines.