Will the Senate proceed to a vote for a partial repeal of Obamacare? That’s still up in the air. The Senate shot down a “clean repeal” (no replace) bill on the table 44-55 on Wednesday. Meanwhile, lawmakers who want to “fix” the Affordable Care Act are still waiting in the wings.
Call them the “repair not repeal” caucus. Their mission: Keep a bad thing going.
Congressional liberals are strongly motivated by a government-centric vision on health policy. They want either a.) a system that is heavily regulated—actually micromanaged—by Washington (the complex and dysfunctional Obamacare status quo), or b.) an administratively streamlined, taxpayer-financed and budgeted program run directly (and ruthlessly) by federal officials: “a single-payer” system. Translation: a government monopoly over health care. Check out the VA.
When it comes to “fixing” Obamacare—a preferred policy on the winding road to government monopoly—liberals generally offer three big “fixes.” First, they want taxpayers to bail out failing insurance companies, many of which are losing hundreds of millions of dollars providing coverage to older and sicker pools on the Obamacare exchanges. Second, they want larger and more expansive taxpayer subsidies for people in the individual and group health insurance markets, especially to assist them with the explosive increases in deductibles and out-of-pocket costs. Third, they want to create yet another government-sponsored health plan—a.k.a., the “robust public option.” This plan would compete—ideally, in the Left’s view, on an un-level playing field—against the battered private health plans that somehow remain in the deteriorating individual insurance markets. Think of this initiative as “single payer” on the installment plan.
The bottom line: liberals are pushing to “fix” Obamacare by issuing more rules, doubling down on coercion, and throwing more taxpayers’ money at Washington’s health policy failures.
For conservatives, it’s hard to discern exactly what a “fix” to Obamacare would actually mean. A combination of further bailouts, tinkering around the edges, and nipping and tucking the big regulatory apparatus that governs the individual and small group markets falls well short of the “Vision Thing.” Nor are such feckless remedies likely to provide anything close to permanent relief for enrollees in the individual or small group markets.
Republicans, especially those tempted to repair and preserve the leftist health policy agenda, should face a basic fact: There are no federal “fixes” to any of the particular problems generated by Obamacare that do not require a repeal and replacement of specific statutory provisions.
For millions of Americans, particularly those stranded in the individual and small group markets, insurance cost is the number one problem. This year health insurance premiums increased by a stunning 25 percent on average.
This is the latest episode in a pattern of rate shocks. In the 39 states where the federal government has been running the Obamacare health insurance exchanges, health insurance premiums increased 105 percent over the period 2013 to 2017.
Likewise, exchange enrollees face skyrocketing deductibles. In “silver” plans—the standard plan offered on Obamacare exchanges—deductibles this year average $3,572 for individual coverage and $7,474 for family coverage. In “bronze” plans—the “low premium” plans— deductibles average $6,092 for single coverage and $12,383 for family coverage. For middle class people who are ineligible for any subsidies or tax relief for health insurance, buying Obamacare coverage in the individual market is like taking out a second mortgage.
Consumer choice has also declined. Before Congress enacted Obamacare in 2013, 395 insurers were offering coverage in the individual health insurance markets throughout the United States. This year, just 218 insurers sold plans in the Obamacare exchanges, and the number is likely to be lower for 2018.
Many factors have helped drive up the cost of premiums. But the major drivers are the disproportionately high number of older and sicker enrollees in the insurance pools, and insufficient participation among younger, healthier Americans. Younger, healthier people apparently don’t think that the Obamacare products are worth the money, nor do they find the individual mandate, with its paltry and largely unenforced penalties, to be a major deterrent to remaining uninsured. The Congressional Budget Office (CBO), which stubbornly insists on getting their coverage estimates off by a country mile, doesn’t seem to grasp this fact, but the folks not buying the Obamacare coverage get it.
Obamacare’s regulations also have played a big role in the premium increases. For example, the age-rating rule, which stipulates that insurers can charge people in their 60s no more than three times what they charge people in their 20s, has artificially increased premiums for the latter. A Heritage Foundation analysis estimates this rule alone has raised premiums for younger people by about 33 percent. Likewise, the Obamacare health benefit mandates—requiring all plans to offer 10 categories of benefits—has added another 9 percent to the cost of coverage. And the “actuarial value” mandate, which specifies coverage levels that must be offered, has added an estimated 8 percent to the cost of coverage.
Obamacare imposes a uniform system of standardized federal rules on radically diverse state health insurance markets. These rules constitute the fundamental federal architecture of the health law. The right policy is to restore to the states the authority to make their own rules governing their own health insurance markets, making whatever adjustments they think best for their own citizens.
States will differ on the nature and scope of insurance regulation, as should be the case in a federal system; but at least it will be their decision, and citizens can hold their state legislators directly accountable for the decisions they make.
Both the House and Senate bills do provide regulatory relief. Both bills would repeal the federal individual mandate and the employer mandates to buy Obamacare coverage, and both would repeal the costly age-rating rule that discourages enrollment of younger and healthier persons in the insurance markets. The House bill would repeal the “actuarial value” mandate, while the Senate bill would repeal the “medical loss ratio” mandate, a federal requirement on insurers to allocate revenues for claims and administrative expenses.
Both bills would also provide the states the right to seek waivers, or exemptions, from federal insurance rules. The House bill would provide waivers from federal benefit and rating rules. The Senate bill would provide an even broader waiver authority from federal rules. The exemptions would cover health plans and benefits, the structure of state individual markets, cost-sharing and premium rules.
Both bills would also get rid of Obamacare’s numerous taxes, while refocusing federal Medicaid spending on the blind, the elderly, the disabled, and poor pregnant women, rather than maintaining Obamacare’s expansion for able-bodied adults, who are capable of working and would be eligible for premium assistance to purchase private coverage.
Health reform will require more than one legislative vehicle. The Heritage Foundation’s comprehensive assessment of all of the reconciliation bills to repeal Obamacare found that even if one passed, Congress would still need to take additional steps to provide Americans relief from Obamacare. The necessary additional steps requires at least a first step. The Senate should take it.
Robert Moffit is a senior fellow in The Heritage Foundation’s Center for Health Policy Studies.