With President Trump and Congress gearing up to repeal the Affordable Care Act and replace it with a more market-driven alternative, we thought it’d be useful to revisit all the reasons why the law has failed — and how these problems can be fixed with better, conservative, market friendly, and consumer driven options.
1. It sent premiums through the roof.
Here’s are the percentage increases in the price of insurance coverage on the individual market across the country in the year Obamacare was implemented (the few rate decreases are in blue):
(Those numbers come from health care expert Avik Roy.)
By contrast, one conservative Obamacare alternative that harnesses market forces has been projected to cut premiums by more than 20 percent versus current law over the next decade.
2. It’s crushing small businesses.
Small businesses are the main engine of the American economy, and Obamacare has put them in a tough spot. On top of all the burdens they already face, they now have to contend with skyrocketing costs to cover new health insurance and mandates requiring what services they have to offer.
There are few good options for small business owners: Obamacare means lower pay for their employees, less health care coverage, or fewer new jobs.
One report found that the law has resulted in $19 billion in lost wages for small-business employees, 10,000 small business closures, and almost 300,000 lost jobs.
Read about one of those small business closures — a deli in Nashville, Tenn. — here.
3. It forced Americans into health plans they don’t want.
Before Obamacare, people who bought insurance on their own could choose whatever plan insurers offered in their state. Some states had strict regulations on those plans could look like, but now Obamacare has forced that model on the whole country, with no way out.
Here’s a sample from National Review of what that looked like when the law went into effect in 2013:
This week, 106,000 New Jersey residents became the latest Americans to find out that, contra President Obama’s promises, whether they like their health plan or not, they can’t keep it. They’re holders of New Jersey’s “basic and essential” health-care plans, which make up 71 percent of the state’s individual market in health insurance. The president’s health-care law imposes a number of regulations nationally that will effectively ban such plans, by making them ineligible to be offered on the health-insurance exchanges where individual plans will now be sold. . . .
New Jersey’s problem is emblematic of what Obamacare will do in all 50 states: impose a highly regulated, extremely expensive model of health insurance that a number of states have already mandated — to the regret of many of their residents, who have demanded an escape hatch — and prevent any state from permitting such alternatives down the road.
All of that, of course, is before we get to discussing the individual mandate, which forces Americans who just don’t want or can’t afford insurance to buy it or pay a substantial penalty.
4. It’s fallen far short of the targets set out for it.
There’s no doubt some people have gained insurance thanks to Obamacare, but the results are far, far short of what the Obama administration hoped for.
Here’s one piece of analysis from Hudson Institute fellow Jeffrey Anderson, about how many Americans have gained private insurance:
Three years ago, on the eve of Obamacare’s implementation, the Congressional Budget Office (CBO) projected that President Obama’s centerpiece legislation would result in an average of 201 million people having private health insurance in any given month of 2016.
Now that 2016 is here, the CBO says that just 177 million people, on average, will have private health insurance in any given month of this year—a shortfall of 24 million people.
5. It’s providing insurance through a dysfunctional entitlement.
Only a small slice of the people who’ve gained health insurance under Obamacare received it through the private insurance health exchange market . In fact, more than 80 percent of those who are newly insured have been enrolled in Medicaid, meaning we have millions of able-bodied adults now on a government insurance program intended to help mothers, children, and disabled Americans.
Watch this video for an explanation of why that’s a problem:
6. It hits the middle class especially hard another way, too.
Many Americans enrolled in Obamacare have been partly shielded from its premium hikes by subsidies. But many haven’t been, because they make too much money to get those subsidies — and yet they’re far from rich. Americans making more than 400 percent of the federal poverty line who buy insurance on their own have to deal with all of the downsides of Obamacare, with no government assistance to blunt the cost.
Take this hypothetical scenario from Jeffrey Anderson, and check out how the situation changes under an Obamacare replacement:
Joe and Lisa Jackson, a 40-year-old married couple living in San Francisco and making $65,000
The Jacksons’ neighbors who get health insurance through their jobs get it tax-free, but the Jacksons not only don’t get a tax break for buying their own health insurance, they get $0 in Obamacare subsidies. Under Obamacare, they bought the 2nd-cheapest “silver” plan, which costs them $10,652, about a fifth of their after-tax income. . . .
Under the [Obamacare alternative proposed by Anderson], the Jacksons would get a $4,200 tax credit ($2,100 apiece) to use to buy insurance of their choice. Since they pay more than $5,500 in federal income taxes (and about $12,000 including payroll and state income taxes), this tax credit would be a $4,200 tax cut—giving them about an 8 percent boost in their after-tax income (the rough equivalent of an extra month’s pay).
7. It’s driving insurers from the individual market.
Consumers trying to buy insurance on their own have extremely limited options in many places: One-third of America’s counties have just one insurer offering Obamacare plans. One big county in Arizona had no insurers planning to sell plans in 2017, in fact, as of September 2016 (Blue Cross Blue Shield came to the rescue).
Without a choice of insurers, it’s hard for Americans to get the choices they need, and hospitals and insurers alike can use monopoly power to push up prices.
Check out this graphic about how many counties have just one or two insurers offering Obamacare plans:
8. It could mean a big bailout of insurance companies.
Thanks to Obamacare’s dysfunctional design, insurance companies are finding it really hard to make a profit on the market for individual insurance these days — even as they keep hiking premiums.
Since almost all of them are losing money on Obamacare, a provision in the law that’s meant to use some insurers’ profits to cover others’ losses is deep in the red. So the Obama administration tried to take taxpayer money to cover the difference.
The efforts of Sen. Marco Rubio (R-Fla.) and other conservatives in Congress stopped that from happening for a couple years, but insurers are still suing to get their hands on a taxpayer bailout.
9. It’s an innovation-killer.
Obamacare’s new taxes, mandates, and regulations threaten the ability of American doctors, drug companies, insurers, hospitals, and researchers to come up with new ways to save lives.
It’s not just things like the huge tax Obamacare slaps on medical-device companies, which is already forcing them to cut jobs and move operations overseas.
It’s also the way Obamacare protects existing providers of services and existing models of health care, as Reihan Salam has written:
While some provisions of the law will make it easier for entrepreneurs to introduce disruptive innovation in medical care, others will make it much harder. . . . Obamacare includes many . . . incumbent-friendly provisions, which lock healthcare providers into existing business models. That’s a shame, as there is nothing about the goal of achieving universal coverage that necessitates making it harder for innovative new business models to take hold. Even if the new health insurance exchanges work without a hitch, they will do precious little to reduce the underlying cost of high-quality medical care.
It doesn’t help that the Obama administration blocked states from experimenting with new ways of providing health insurance, too.
10. Doctors — like most Americans — don’t like it.
If you’re going to try to transform the American health care system, getting the buy-in of America’s doctors might be a good place to start.
And yet about half of physicians, according to one report, rate the law a “D” or an “F.” Less than 4 percent give it an “A” grade.
The frustrations are everywhere, from Obamacare’s seriously troubled attempt to transition to electronic health care records to new, unpopular payment models that aim to cut doctors’ pay.
11. Sixteen taxpayer-supported insurance co-ops have failed.
Obamacare offered taxpayer-backed loans to certain kinds of nonprofit insurers called “co-ops,” in the hopes that the government could identify some winning ideas for ways to offer insurance more cheaply.
As top-down planning usually does, the effort has failed miserably, costing taxpayers more than a billion dollars and leaving thousands of Americans having to find a new insurance provider. Just 7 out of the 23 original co-ops are still operating.
A conservative alternative to Obamacare would allow insurers and civil society groups to experiment with new ways of organizing health insurance plans, not force them into one failed, overpriced model.