The Affordable Care Act has made health insurance even more unaffordable than before Obamacare was enacted. Many insurers have lost hundreds of millions of dollars selling Obamacare insurance and have exited the market. The remaining insurance sellers are charging prices many cannot afford and are planning to raise rates an average of 19 percent.
To make the situation worse, payment schedules to doctors continue to go down, making care even less accessible.
Washington has two drastically different answers to these problems. Congress wants to "stabilize" the insurance market with billions in cost-sharing subsidies. The White House wants to "hurt" insurance carriers by cutting off insurance subsidies. Both actions will further hurt Americans by reducing access to care.
The cause of instability in the health insurance market is the ACA itself, which imposed huge costs to insurance carriers via federal mandates and by expanding the administrative and regulatory apparatus. Insurance companies had to pass these costs on to consumers by raising premiums, or else accept losses of hundreds of millions of dollars, as UnitedHealth, Aetna, and Humana did.
Faced with that undesirable choice, they are engaging in rent-seeking instead. Insurers are demanding that Washington pay the costs that Obamacare forced on them, or else they will not sell insurance on its exchanges. But if Congress concedes and continues or increases insurance subsidies, where will that money go?
The one place it assuredly will not go is to pay physicians to provide care. At present, 43 percent of U.S. doctors cannot afford to see new Medicaid patients. Average wait time to see a family practice physician has risen with Obamacare to 122 days. As healthcare dollars continue to be taken from care to pay for federal bureaucracy, Americans will continue to die waiting in line for life-saving treatments, as 752 Illinoisans and 304,000 veterans already have.
Rather than controlling the market by stabilization, Congress should fix the cause of instability: Obamacare mandates. Skinny repeal won't work. Total repeal of Obamacare is the only way to reduce the size and expense of bureaucracy, which makes more dollars available for care.
President Trump threatened to defund insurance carriers by cutting off subsidies. But without these payments, some insurance companies have promised to raise premiums even higher. Others will stop selling insurance altogether. Whether defunding creates prohibitively expensive policies or means there are no policies available at any price, either way, more people will be denied access to care.
In addition to medical concerns, there are constitutional issues. In the ACA, Congress specifically provided for annual appropriation by Congress of cost-sharing subsidies to insurance companies. In 2014, Congress voted to stop the subsidies. President Obama then issued an executive order to continue the subsidies, even though appropriations are constitutionally and by ACA law reserved to Congress, not the White House.
The House of Representatives sued President Obama for exceeding his authority. Federal Judge Rosemary Collyer, District Court of the District of Columbia, ruled in favor of the House. The case is under appeal and could end up in the Supreme Court. Instead of cutting off the subsidies unilaterally, President Trump should reverse President Obama's executive order and return appropriation authority where it belongs: Congress.
Federal attempts to control the insurance market rather than liberate it has produced a smokescreen that obscures the big picture. The U.S. is spending more on healthcare, and Americans are getting less care. Why is that?
As Washington keeps expanding the federal bureaucracy, more healthcare dollars are diverted from care to administration and regulatory compliance. Under Obamacare, more than $1.5 trillion per year goes to the healthcare bureaucracy — including insurance subsidies. Those $1.5 trillion cannot be used to pay for actual care.
Between 2010 and 2016, 454,000 new administrative positions were created just to manage Obamacare. The average federal bureaucrat is paid $84,153 per year. This translates to $38.2 billion per year from taxpayers just to pay for new healthcare workers who provide no care.
If you calculate the cost of salaries plus benefits for all healthcare actuaries, accountants, billers and coders, compliance officers, consultants, insurance agents, lawyers, navigators, regulators, and rule-writers, then add the costs for hardware, software, and capital expenditures, you see how growth of the federal bureaucracy is why Americans can't get healthcare: There's not enough money for providers.
There is a glimmer of hope amid all the chaos. Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., have a bill that would convert all ACA funds into block grants to the states. States could then use these fixed sums to establish their own healthcare systems.
We've learned from trial and error that Washington's one-size-fits-all clearly doesn't work. States are better positioned to address the specific medical needs of patients in their area.
The cure for a sick healthcare system does not involve more Washington controls. It requires putting control of healthcare where it belongs — in the hands of patients and, where necessary, the states.
Dr. Deane Waldman, MD, MBA, is a retired pediatric cardiologist and director of the Center for Health Care Policy at the Texas Public Policy Foundation. Dr. Deane can be reached at email@example.com or follow him on Twitter at @SystemMD. Jennifer Minjarez is a staff analyst in the Center for Health Care Policy at Texas Public Policy Foundation. She can be reached at firstname.lastname@example.org.
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