How Donald Trump Is Radically Reforming Obamacare

In the face of congressional inaction, the Trump administration has set out to reform Obamacare by executive order. The reforms stretch the boundaries of what many thought was possible without an act of Congress. Although some changes are still in the comment period (before the rules become formalized), the Trump reforms in some ways are more radical than Obamacare itself.Personal and portable health insurance. The United States has a long history of encouraging health insurance at the place of work. Premiums paid by employers avoid federal and state income taxes as well as the Social Security (FICA) payroll tax. By contrast, unless they get Obamacare subsidies, most Americans receive no tax relief if they buy health insurance on their own.Unfortunately, group insurance is not portable. When people leave their job, many must turn to individually purchased health insurance instead. This is the primary source of the “pre-existing condition” problem. Before Obamacare, insurers in the individual market could and did deny coverage to people with expensive health conditions, although Wharton health economist Mark Pauly finds that the instances of this were rare.So why not let employees have insurance they can take with them from job to job and in and out of the labor market? This idea is highly popular in public opinion polls. But under the Obama administration, employers who did this could be fined as much as $100 per employee per day, or $36,500 per employee per year – the largest fine in all of Obamacare.The Trump administration is proposing to get rid of those fines and actually encourage the purchase of individually owned insurance, using employer funds, through something called a Health Reimbursement Arrangement (HRA). Small businesses are allowed to do this as a result of the 21st Century Cures Act, passed in 2016. Trump is now proposing to allow employers of any size the same opportunity.

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