Long before House Republicans voted on Thursday to repeal and replace Obamacare, the law was falling to pieces.
After forcing millions of middle-class people to find new health plans and health providers, and to pay higher premiums for insurance plans that cover less of their healthcare expenses, Obamacare is now in its fourth year of full operation.
Its drafters and supporters made countless empty and disingenuous promises in 2009 and 2010, but back then had the honesty to admit it had kinks that would take a few years to work out.
By 2017, insurers were supposed to have figured out what to charge to compete in Obamacare’s government-run subsidized marketplaces. After all, the program’s main safety net for insurers, the risk corridor program, was scheduled to disappear at the end of 2016.
Many insurers have figured it out. They cannot afford to sell health insurance under Obamacare at all. Republicans’ repeal vote must be understood in this light. They are not simply repealing a bill whose ideological underpinning they reject. They are tearing down a building that is structurally unsound. They might retail President Obama’s refrain from 2009 that the status quo is not an option because the status quo is a broken healthcare system. Thanks, Obama.
Just 24 hours before Thursday’s vote, the last Obamacare insurer in 94 of Iowa’s 99 counties announced it would probably stop selling insurance on the Obamacare exchange in the state next year. Another major insurer, Aetna, announced it would drop out of Virginia’s exchange. Like many other insurers who have bolted for the Obamacare exits, both of these insurers explained their decision by pointing to massive continued financial losses.
As of last year, 2 percent of the 3,144 counties in the United States had only one insurer available through the Obamacare exchanges. This year, that number rose to 32 percent, including a fifth of counties with big cities. And the number of counties with three or more insurers competing slipped in that time from 85 percent to just 57 percent. Both numbers will likely look worse next year.
The insurers’ retreat is not some minor problem for Obamacare. It is its refutation.
The law’s promises of greater competition and choice in health insurance were unrealistic. This isn’t a matter of “overregulation.” These regulations don’t allow insurers to do business without losing hundreds of millions of dollars a year (and where even non-profit insurers cannot stay in business).
Democrats are hard-pressed to explain away the law’s obvious problems. Their excuse, that it is the victim of Republican sabotage, does not account for its collapse in so many states where implementation has been handled differently.
In some states where insurers have fled the exchanges, Democrats have offered the excuse that it is somehow related to Republicans’ failure to expand Medicaid. They cannot offer that excuse in Iowa, where Obamacare is collapsing after Medicaid was expanded. Nor does their explanation wash in the many other states that are now left with only one or two insurers, which are as politically diverse as Mississippi and Hawaii, New Jersey and Alabama.
The root problem isn’t one that legislators can “fix,” because the root problem is the core of the bill, it’s most popular provision, the bar on excluding coverage (or charging more for coverage) of people who buy insurance when they are already ailing and need treatment.
Obamacare forbids medical underwriting, forcing insurers to charge people the same price whatever their health. This funneled hundreds of thousands of previously uninsured and very sick people into one small corner of the insurance market, so the entire cost of treating them would fall on the 5 percent of people who must buy insurance in the individual market. This is why premiums have been rising by double-digit amounts in many states, year after year. It’s also why insurers keep jumping ship.
The American Health Care Act, which the House passed Thursday, is not perfect, and we hope to see it improved by the Senate. But it at least starts to solve this critical problem. Contrary to Democratic rhetoric, it does not betray those with pre-existing conditions. Rather, it spreads the cost of their care more widely by using taxpayer funds to subsidize their coverage in high-risk pools. This will help make individual market insurance policies affordable again, as they used to be, for most people who buy insurance outside of work. But it will also guarantee that no one is “uninsurable.”
The bill gives states the flexibility, if they choose, to make less comprehensive insurance policies legal again. This is another important step to making insurance cost less than the family mortgage.
As the situation in Iowa and many other states demonstrates, Obamacare is already unsound and in the process of prolonged and painful implosion. Both Bill and Hillary Clinton had to admit during the 2016 election campaign that it was having serious problems because to pretend otherwise is to demonstrate obvious dishonesty. The reform, repeal, re-work — whatever word you want to use — of Obamacare is not a vanity project by Republicans desperate for a win. Congress doesn’t have the luxury of doing nothing, and we hope it follows through in sending something workable to President Trump’s desk.
