When the Senate Judiciary Committee gathered to consider Amy Coney Barrett for the Supreme Court, the big takeaway was her strong performance that left Democrats grasping at straws to try and discredit her. But another storyline was the extent to which Democrats turned the hearings into a pep rally for Obamacare.
Many speakers, including Democratic vice presidential candidate Sen. Kamala Harris, ignored Barrett for long stretches of their question time, instead choosing to give speeches in front of poster-sized photos of children who have battled severe illnesses. When they boycotted the committee vote on Barrett, those photos took their places behind the dais. Democrats touted Obamacare’s requirement that insurers cover those with preexisting conditions and warned that a successful bid to have the courts strike it down would put the lives of such children at risk.
The ostensible reason for all the emphasis on healthcare at a judicial confirmation hearing was that a week after the election, the Supreme Court is expected to hear a case, Texas v. California, that is challenging the constitutionality of Obamacare. Though the suit rests on a weak foundation and few expect it to prevail, the fact that the Trump administration is supporting the suit gave Democrats an opening to use the hearing to hammer the healthcare issue in the weeks leading up to the election.
What’s interesting is that Democrats now believe Obamacare is a winning issue for them. In the four elections from 2010 to 2016, its unpopularity made it a millstone. Backlash against its passage and its implementation problems helped usher in a Republican House and Senate — and contributed to President Trump’s victory in 2016.
A Gallup poll taken days after Trump was elected found that 53% of people disapproved of Obamacare, compared to just 42% who approved of it. Only a few months later, in April 2017, the numbers more than reversed, with 55% saying they approved of the law and 41% saying they disapproved.
What changed? In the intervening months, Republicans had charged toward repealing Obamacare while scrambling desperately to come up with an alternative that they could agree on. The public, which tends to have a strong status quo bias, rallied around Obamacare in part because it did not want the medical system to go through yet another major upheaval.
In 2018, for the first time in a decade, Democrats were able to go on the offense on healthcare policy. The specific issue of protecting those with preexisting conditions, the most popular part of the law, became crucial for Democrats in swing districts, and thus potentially decisive in their taking over the House of Representatives. By February of this year, just before the pandemic hit, approval of Obamacare had settled to a slight majority, 52%-47%.
Democrats thus decided that highlighting the healthcare issue was more politically savvy than launching a scorched earth battle against an impressive Supreme Court nominee who has been polling quite well.
But that strategy required a lot of revisionism. The recovery in Obamacare’s political fortunes as a result of the GOP’s botched repeal effort should not distract from the significant problems the law created and exacerbated, which are just as apparent today as they were the day it was signed in March 2010.
Before Obamacare became law, the U.S. healthcare system was admittedly already a convoluted web of state and local rules, with an intersecting role for the government as well as private companies. There was an opening to improve the system by breaking down regulatory barriers and driving down costs by allowing for more choice and fostering competition.
Instead, Democrats put together a law that dramatically increased the role of the federal government through a top-down system of taxes, regulations, and subsidies. Despised by conservatives, it wasn’t necessarily loved by those on the Left either, as liberals would have preferred a fully government-run system. New York Times columnist Paul Krugman, writing in defense of the law, once described it this way: “The Affordable Care Act, aka Obamacare, is a policy Rube Goldberg device — instead of doing the simple, obvious thing, which would just be to insure everyone, it basically relies on a combination of regulations and subsidies to rope, coddle, and nudge us into a rough approximation of a single-payer system.”
The problem is that despite its official name, Obamacare did not make U.S. healthcare more “affordable,” at least for the majority of people who do not benefit from its subsidies or Medicaid expansion.
Though the ban on denying coverage to those with preexisting conditions has been popular, it has also imposed trade-offs that have proved much less so.
To ensure that those with higher medical costs could get coverage they could afford, the law’s authors made a rule that said insurers could not charge somebody more based on his or her health status. Also, it meant that the government had to dictate the range of benefits that plans have to offer.
While this seems like a great deal for those who are struggling with chronic conditions that would have made them uninsurable in the pre-Obamacare days, it also means that those who are younger and healthier have been left with fewer options. Instead of being given the choice of a basic plan that covers them in the event of some sort of accident or emergency, under Obamacare, this population has been forced to purchase insurance that is much more comprehensive than what they require, and thus significantly more expensive. The solution for getting those with preexisting conditions covered has been to force younger and healthier individuals to pay more for a product that was not suited to their medical needs. And before Republicans repealed the mandate penalties in 2017, those who decided to forgo insurance because it was a bad deal were slapped with a tax.
The rise in premiums since Obamacare passed has been dramatic. The average “silver” plan, which is the benchmark against which the program’s subsidies are determined, has gone from $273 per month in 2014 to $462 in 2020 — a jump of 69%. But even this understates the rise in premiums because by 2014, Obamacare’s regulations were already in place.
A better measure of what this has meant for younger people is to look at the costs of coverage for somebody young and healthy in 2013, the last year before Obamacare’s major regulations went into effect. A Government Accountability Office report from that year looked at a sampling of prevailing insurance rates at the time. As an example, it found that in Ohio, a 30-year-old male nonsmoker could get coverage for as low as $492 a year, or $41 per month. Yet under Obamacare, the cheaper “bronze” plan would cost a 30-year-old nonsmoker in Columbus, Ohio, $269 per month, or $3,233 per year, according to the Kaiser Family Foundation premium calculator. And somebody earning $50,000 would not likely qualify for any financial assistance.
Premiums are not the only way that insurers have shifted the costs of covering sicker individuals. They have also migrated toward higher-deductible health insurance. In 2020, high-deductible plans allowed for yearly out-of-pocket expenses (including copayments) of $6,900 for individuals and $13,500 for families.
To be clear, higher-deductible health insurance is not in and of itself a bad thing. In a free market system, it might make sense for those with lower healthcare costs to look at insurance more as something that will protect against financial ruin should they get sick, rather than as a payment plan that offers first-dollar coverage on every doctor’s visit. But such plans only make sense if the higher deductibles come with lower premiums.
For instance, in the example above from the pre-Obamacare days, the cheapest plan available to a theoretical 30-year-old male nonsmoker in Ohio carried a $7,500 annual deductible. While high, again, the premiums were just $41 per month. In a market-based system, that person could have socked away money being saved on premiums in a tax-free health savings account to cover routine expenses. Under Obamacare, people are getting the worst of both worlds: higher deductibles and higher premiums. They are stretching to pay their monthly insurance bill and then still saddled with exorbitant out-of-pocket costs.
On top of high premiums and deductibles, another way insurers have sought to contain costs is to reduce choices dramatically. What they’ve done is offer less compensation to doctors, hospitals, and other medical providers — leading many of those providers to stop taking as many insurance plans. This has resulted in so-called narrow networks in which people, after paying so much for insurance and still being on the hook for high out-of-pocket costs, are finding that they have fewer choices of doctors and hospitals than they once did. This is one of the ways in which President Barack Obama’s promise that those who liked their plans and doctors could keep them turned out to be a lie.
The truth is that for all the talk of Obamacare’s rising popularity, a deeper look into the polling numbers suggests that it hasn’t really been successful in its primary stated goal, which was to relieve the broader anxiety that people feel about healthcare costs.
In November 2008, when Obama was elected, 79% told Gallup that they were “dissatisfied” with the total cost of healthcare in the country. Eight years later, after the adoption of the national healthcare law and just before he left office, 80% said they were “dissatisfied.” Asked, “Within the last twelve months, have you or a member of your family put off any sort of medical treatment because of the cost you would have to pay?” — 29% said “yes” in 2008, and 31% said “yes” in 2016.
There is a reason the Democratic primary was dominated by debates over whether to expand Obamacare dramatically or to ditch it in favor of a fully socialized health insurance system: The law has not accomplished its stated purpose. It expanded coverage, undoubtedly. But it has not made healthcare more affordable.
Republicans won’t be able to win on the healthcare issue in the long term if they only get animated about the subject when it comes to combating Democratic policy initiatives. They need to be able to agree on an alternative and articulate their vision to the public.
Due to Republican failures, the public has been given the impression that the only way to cover those with preexisting conditions is to support Obamacare.
If Republicans decide they want to cover those with preexisting conditions, however, there are alternatives. As we have seen, the big problem with Obamacare’s approach is that it passes on the exorbitant costs of covering those with high medical needs on to a few million young and healthy people who don’t have insurance through their employers and instead have to purchase coverage on the smaller individual market.
An alternative approach would be to redirect federal spending so that the population as a whole bears the added cost of covering those with preexisting conditions. Removing the costliest patients from the general insurance pool would allow the market to function well for everybody else. Younger people would have the choice of cheaper plans that meet their medical needs because they would no longer be used to offset the cost of covering older and sicker individuals. There are, of course, many other ideas to address the problem of escalating healthcare costs.
A closer look at the state of the current healthcare system makes it difficult to square Obamacare’s many failures with the great success story being presented by Democrats.
Philip Klein is the Washington Examiner commentary editor.
