Obamacare: The Democrats’ Gift to Republicans
Stop Obamacare!
(c) Can Stock Photo
Whatever Powers rule the Universe have blest the Republicans. How else can one explain why the Democratic Party would be so foolish as to enact the Affordable Care Act, aka Obamacare? Passed through Congress without a single Republican vote, the Democrats have unwittingly programmed it to self-destruct with maximum pain delivered to the electorate and to the economy.
Obamacare Death-Spiral
When I first commented on Obamacare in The Debilitating Effects of Obamacare, I concentrated on the increased healthcare costs the new government program was inflicting on the public and on companies. Since then we have seen the first big piece of evidence Obamacare has entered its much-anticipated death-spiral. The largest health insurance company in the U.S., UnitedHealth Group, has told its investors it might quit the Obamacare exchanges because of increasing costs mandated by the program.
What is meant by a “death-spiral” in this context? Obamacare was designed to finance many new mandated services and expanded coverage for poor people by requiring the young and healthy to buy Obamacare and therefore contribute to the costs of the old and sick. In fact one very accurate way of viewing Obamacare is as a massive wealth transfer from the young and healthy to the older and sicker. One should not be surprised then if the young and healthy revolt. If the government can not persuade enough young people to sign up, then the health insurance companies will have losses requiring them to charge higher premiums and to oblige higher co-pays. If this in turn causes even more to drop out, the needed premiums and co-pays for the year after that will have to increase even more, which will cause more healthy people to drop out, which … That is Obamacare’s death-spiral.
The government has tried to prevent this death-spiral by using a very big stick to chastise the young and healthy should they prove uncooperative. This year, individuals not enrolled in a health insurance program in 2014 and not covered by subsidies will face fines of $95 or 1% of their income per individual, whichever is greater; next year, the fines for noncompliance this year will jump to $325 or 2% of their income, whichever is greater. Unfortunately for the government, it appears that the young and healthy are opting overwhelmingly for the fines over enrollment in Obamacare. A February 24, 2015 poll by McKinsey & Co.’s Center for U.S. Health System Reform indicated only about 12% of the uninsured would buy the Obamacare policies if informed of the fines. As it turns out, it is cheaper for most of the young and healthy to pay the fines and to pay for healthcare out-of-pocket than to enroll. Also, read Confirmed: Americans Can Actually Do the Math! One question government policy makers should earnestly be asking themselves: what happens to the economy if they should bleed un-compliant individuals of 2% of their income? All that money they “tax” away from people is money those un-compliant individuals can not use to demand goods from the economy.
Worsening Obamacare Problems
In the meantime Obamacare costs and roadblocks to health care are becoming worse. I have already covered the problems of growing costs for individuals, families, and companies in The Debilitating Effects of Obamacare, and the death-spiral problems in the last section. Just as great however is a growing problem in access to healthcare. Just because you have government guaranteed health insurance does not mean you have access to the care itself. John R. Graham, posting on the National Center for Policy Analysis’ Health Policy Blog, found
Further, this increase in government dependency has not lead to a change in access to health care. The proportion of people of all ages with a “usual place to go for medical care” was 87.8 percent last year, the same as it was in 2002-2003. Further, 5.7 percent reported that they failed to obtain needed medical care due to cost last year, the same as it was in 2003-2004.
According to this source, all Obamacare’s economic pain has not yielded us any real improvement in health care access. Unfortunately, it appears that the whole story is somewhat worse than that. The cheapest Obamacare plan in the year 2016 in Atlanta, Georgia for a 40 year old non-smoker is $250 per month with a $6,500 deductible; the very same plan in Charleston, West Virginia costs $381 per month with a $3,500 deductible. Plans with such high deductibles cease being an all-around health plan and function only as catastrophic health insurance. How could such a development be good for the health of the country? With many people skipping doctor visits because of high deductibles, we could expect the health of the country to decline.
In fact a two-tier health care system is rapidly developing because of the economic pressures of Obamacare. In the higher tier outside of Obamacare, patients will be able to schedule an appointment in one or two days, while those in the lower, Obamacare tier will have problems scheduling appointments similar to those in Canada, with waits spanning weeks or even months. In the higher tier, often called the “concierge service tier”, both doctors and patients will have removed themselves from the Obamacare system. With fewer doctors Obamacare will give worse service; with fewer patients, Obamacare will increase in cost.
Problems for Doctors and Hospitals
As one would expect, doctors and other health professionals will be greatly impacted. Because government has begun to take over healthcare, physicians and their colleagues will have to endure more government regulation and oversight. This sad situation reminds me of the old joke that an elephant is a horse designed by a committee. Who knows how healthcare will turn out after being redesigned by government bureaucrats?
One very severe impact on both physicians and their patients will be the network of doctors and hospitals accessible to clients of the particular health insurance they have bought. There is absolutely nothing in the Affordable Care Act that says if you like your doctor, you can keep him. In fact, there is nothing in the law that requires insurance companies to accept any particular network of doctors and hospitals. For this reason, given the extra costs from all the new benefits they must offer, every participating health insurance company will be attempting to narrow their health provider network, from which they will accept charges, to the absolutely cheapest.
In addition Obamacare is attempting to enroll millions of new low-income patients at the same time that economic incentives are driving doctors out of Obamacare’s general health system to the private concierge system. To the extent that Obamacare succeeds in increasing covered patients, compensation for doctors remaining in Obamacare must increase, or many more doctors will leave the system, some to the concierge system, some to new careers, and some to early retirement.
How Republicans Can Address the Problem
This essay has already grown to a length at which I try to limit an individual post. Yet there is still a great amount we must cover to encompass some of the many ways in which free-market solutions can replace Obamacare. Therefore, I will take up some of the ways Republicans can attack and replace Obamacare in my next post.
Views: 1,968