The hugely contentious and controversial Patient Protection and Affordable Care Act, otherwise known as Obamacare, was a major issue in the last election and continues to be so. Many national polls show that far more people want the law repealed outright than support it or want it significantly modified.
In any event, the new Republican majority in the House of Representatives last week voted to repeal it as a budget-busting and liberty-depriving monstrosity. The Democrats who passed the legislation continue to insist it will improve our health care, improve access and lower costs. So, who’s right? The long-term implications for our country cannot be overstated.
The early results suggest the people who want it repealed have the basic economics on their side. The primary reason given by President Barack Obama for needing to do major reform was that the cost of health care was consuming too much of our gross-domestic product and it was growing faster than inflation.
He had a point. Unfortunately, the law that was passed did nothing to address that core problem and instead focused on providing more access to insurance coverage. The resulting 2,000-plus pages of the law have already resulted in insurance premiums rising dramatically for many — 30 percent in my company’s case — and the truly expensive provisions of the law have yet to take effect. Stand by for even larger future premium increases as well as significant tax increases to pay for the program.
We have a cost problem, not a care problem and this law has made the cost problem worse and will degrade the level of care through uneconomic regulation, mandates, taxes on medical equipment and drugs, and cost shifting, while retaining the primary structural defect in our current system: the third-party payer system. If a law is passed and it does exactly the opposite of what was its stated intention, why keep it in place? The law marginally improves access to health insurance but at an absolutely enormous cost not commensurate with the benefits.
Let’s examine some of the common arguments being offered for retaining the law:
» “The Congressional Budget Office says it will reduce the deficit over 10 years.” This is a real whopper. If the people in Congress making this argument really believe that taxing people for 10 years while only offering six years of benefits and pretending to cut $500 billion out of Medicare, while greatly expanding the Medicaid roles with an open-ended entitlement is somehow going to cut the deficit, we are in more trouble than I thought. The fact is that adding more people and more unfunded liabilities to an already fundamentally bankrupt entitlement system is not going to lower the deficit and debt; it will increase it. Budgetary games can’t avoid that simple reality. Recent deficit estimates due to the law are in excess of $700 billion over 10 years. If history is any guide, the $700 billion deficit is closer to the truth.
» “The legislation allows children up to age 26 to remain on their parents’ policies.” First off, according to government estimates, that provision is projected to cost those families about $3,380 per child annually; it’s not free. Second, set aside the notion that perhaps “children” of age 26 should maybe have a job and their own policies, and instead let us consider the term “allows.” My question is, who is the federal government to “allow” us to enter into voluntary private contracts in the first place? If one thinks about this for a minute, why are they telling us, their bosses, who we can insure if we choose to or not? It is none of their business. It is our money, our decisions and our families. Butt out. This speaks volumes as to how the tentacles of big government have intruded into our lives on a breathtaking level. It is time to revisit and re-evaluate our relationship with the federal government. They are taking too much, spending too much and are involved in too many things they have no business being involved in.
» “Obamacare makes it illegal to deny insurance coverage.” This is a highly emotional issue and this provision sounds nice on the surface, but ask yourself what insurance would cost if you could insure your car after an accident, or insure your house while it is on fire, or have your loved ones buy you life insurance after you die? Answer: It would cost a lot more. Insurance is about spreading potential future risk, it can’t work if the risk is already materialized. In fact, in the four states that have a guaranteed-issue provision in force, upon implementation their rates all immediately rose about 30 percent across the board and continue to rise more rapidly than everyone else for obvious reasons. Why buy insurance if you can just get it when you are already sick or injured and drop it again when you’re better? Like it or not, that is what actually happens. There are much more economically rational ways to help people with pre-existing conditions, such as special risk pooling and market-share formulas without upending the entire market with this incredibly expensive provision. For those who think this is why we need a single-payer, government-run system, that has even more downside and I welcome that discussion.
We could go on but space is limited. The bottom line of this new law is that it is completely unaffordable, makes our cost problems worse, will unfairly burden states with new Medicaid expenditures (California spends about 30 percent of its budget on Medi-Cal already and can hardly afford new burdens), and is quite possibly unconstitutional as lawsuits moving through the court system assert. There is nothing in our Constitution that allows the federal government to compel citizens to engage in economic activity, i.e. forcing them to buy insurance as a condition of merely existing. In addition, it will degrade the quality of care with more government interference and reduce medical innovations because of punitive new taxes on drug and medical-device companies. By definition, when you tax an activity you get less of it. How does that help anyone?
When we distill this issue down to its essence, Obamacare has upended the entire health-care industry to solve a problem that only about 5 percent of the population has: being uninsurable. This is the tail wagging the dog. In the process of solving this problem, the law makes insurance much more expensive for everyone else and the rising premiums are putting it out of reach for even more people than it was previously. This makes zero practical sense. The problem of pre-existing conditions can be solved without destroying the rest of the system. If this is such a great law, why have more than 200 large companies and unions already applied for — and received — waivers from complying with many provisions in the new law and the “Patient’s Bill of Rights”? Since when do people want a waiver from great laws and a Bill of Rights?
Obamacare deserves to be repealed for two fundamental reasons: 1) It is a destructive, expensive, unaffordable and poorly thought through law that is making the current problems we have worse, will degrade the level of care and will hurt job creation and economic growth and 2) the manner in which it was passed is not how our republic is supposed to operate. In this country, we don’t ram through major legislation the people clearly don’t want using parliamentary maneuvers. They work for us, not the other way around.
If you value your economic and personal liberty, if you want actual reform that can address the core problems we have with our health-care system, if you want to see medical innovation continue apace, if you want control of your health care and the decisions made about your care, then you should want to see this law repealed, and soon. There are numerous, sensible, economically viable and free changes to the system that have been proposed that would re-introduce competition and market forces into the system that will help contain cost growth without inserting more big government distortions into an already over-regulated, economically distorted and overburdened system. Alternative recommendations are the subject of another essay, but first things first, let’s stop the damage.