A New Trump Health Plan Could Offer Catastrophic Coverage

The American Health Care Act, the bill House Republicans introduced to replace Obamacare, has faced severe criticism, even as it survives close committee votes on Capitol Hill.

Several Senate Republicans say that the bill will never pass the upper house. President Donald Trump has supported the bill, but has also talked about changing it.

A new Trump bill that hearkens back to Trump’s campaign promises could explicitly repeal Obamacare — and offer catastrophic coverage instead.

A recent Ph. D. dissertation by Jodi L. Liu of the RAND Corporation describes a system in which the federal government offers catastrophic coverage — i.e. insurance for the massive, often unforeseen expenses Americans fear most — to all legal residents, and the market provides insurance for everything else.

Liu suggests catastrophic coverage would be cheaper for the poor than Obamacare, while cutting federal expenditures by $40 billion and overall health spending by $211 billion. (In contrast, the comprehensive system Democrats favor would cost the federal government $1 trillion more than Obamacare.)

Kip Hagopian and Dana Goldman described a similar idea in Forbes recently, proposing a plan “to provide a catastrophic insurance policy to 100% of the approximately 200 million Americans not covered by Medicare and Medicaid.” The system works by limiting the coverage offered on the one hand, but creating a huge risk pool. That would, in turn, lower the cost for covering the most expensive treatments and patients with pre-existing conditions. The plan would also lower federal deficits.

Universal catastrophic coverage might not satisfy conservatives, for whom the primary ideological objection to Obamacare is that it makes the individual dependent on the state. A solution to that objection might be for the federal government to pull out of health insurance (aside from Medicare) but provide states grants equal to the cost of catastrophic insurance. The states could then decide whether to offer that to residents, to adopt another coverage plan, or to let the market cover everything.

Trump campaigned on a promise to repeal Obamacare and replace it with a system in which Americans were not forced to buy health insurance from the government. And yet on the campaign trail in 2015, Trump also said: “I am going to take care of everybody. I don’t care if it costs me votes or not.”

A plan for the federal government to provide, or underwrite, catastrophic health insurance while leaving the rest to the markets and the states could potentially satisfy both of those objectives. And given the struggles of the current legislation, Congressional Republicans may be ready to consider a new policy approach.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. He was named one of the “most influential” people in news media in 2016. His new book, How Trump Won: The Inside Story of a Revolution, is available from Regnery. Follow him on Twitter at @joelpollak.