Ken Berwitz
Democrats gained the political muscle to push the AffordableCare Act (ACA) through Congress on three basic arguments.
First, they arguedthat the United States had too many uninsured people, with estimates rangingfrom 30 million to 45 million.
Second, the rise incosts for health care outstripped inflation, and the market required an interventionthat would bend the cost curve downward.
Third, Democratsclaimed that insurance companies made too much profit and shorted mostconsumers on care, while those with generous health plans – so-called “Cadillacplans” – drove up utilization rates and costs for everyone else.
The only solutionfor these ills was a massive government intervention, complete with mandatesfor all participants in the market, including providers, insurers, andconsumers. Once government ran this market, Democrats promised, consumers wouldsee their premiums decrease (by $2,500 a year, according to Barack Obama),insurers would gain access to vast numbers of new consumers who couldn\’t getinsurance before, and the lifting of cost burdens would spark a job-creationsurge that would lift the economy.
Such were thepromises of Obamacare five years ago. The reality began looking much differentin the fall of 2013, when the first open-enrollment period turned into adisaster. Millions of insurance policies were canceled even though the healthcare exchanges failed to work properly.
In 2014, premiumsspiked, and then in 2015 they exploded again along with deductibles so highthat many decided not to be insured at all. Over half of Obamacare\’s co-opscollapsed this year, most of them this fall, and now the providers who tooktheir clients may end up stuck with the bills.
“Health careproviders could get stuck with unpaid bills in a half dozen states where co-opplans have collapsed,” reports PoliticoPro\’s PaulDemko. “That\’s because there\’s no financial backstop in those states if thefailed nonprofit startups backed by Obamacare loans run out of money beforepaying off all of their medical claims.” The failure of the co-op HealthRepublic Insurance of New York left $165 million in unpaid bills, and a survey showed64 percent of New York providers waiting for payment. Had a private-sectorinsurer defaulted in a similar manner, these providers would have beencompensated from a guaranty fund set up by the industry.
Obamacare co-ops hadno such backstop, and more than 600,000 Americans will have to find insurancethat is more expensive or do without.
Still, as bad as thenews has been over the past five years, the remaining illusions were shatteredby the CBO and the White House itself this week. Obamacare didn\’t make much ofa dent in the uninsured rate, it has forced costs to rise faster than before,and it will kill millions of jobs that otherwise would be created.
“The labor force isprojected to be about 2 million full-time-equivalent workers smaller in 2025under the ACA than it would have been otherwise,” the CBO concludes inthe latest analysis of Obamacare\’s impact on the economy. Much of the reason – the CBO puts it at 75 percent – comes from the net increase of effectivetax rates on labor, which will incentivize potential workers to stay out of thework force. Democrats claim that this is a feature rather than a bug, as peoplecan choose not to work. However, even with that rose-colored glasses view, itmeans that the rest of the taxpayers will have to subsidize the health care ofthose who opt out, whether happily or unhappily.
