President Trump has a new strategy for healthcare reform: let Obamacare crash.
It’s the right approach. Obamacare is a failed policy incongruent with economic reality.
The Affordable Care Act, as Obamacare is officially known, forces younger consumers to buy coverage that is both unaffordable and unappealing. It mandates health plans that lack flexibility and personal concern. It prejudices against the young and healthy in order to provide massive subsidies for older and more unhealthy Americans. And it has led to a massive and unsustainable expansion in the number of Medicaid recipients.
None of these things are in the national interest.
At present, Democrats believe Obamacare is secure. With Republicans having failed to repeal and replace President Obama’s landmark law, Democrats are in no mood to come to the table. They are content to keep pumping money into Obamacare forever.
Still, Trump has cards with which to counter this disastrous status quo. Most notably, statistics.
After all, assessing state projections for 2018 premium costs, the Avalere data analysis firm found that 41 percent of U.S. counties will have only one insurance company offering plans in 2018. Of course, premiums are also expected to rise by around 20 percent. And that’s assuming President Trump provides insurers with federal subsidies to mitigate their costs. These are bills that will bite the wallets of millions of American families.
Then there’s the Medicaid issue. As the Oregon study into healthcare usage by patients has proved, individuals do not act with regard to saving money when someone else is paying the bills. More specifically, the Oregon study showed that Medicaid recipients did not reduce but increased their visits to the Emergency Room.
This is just a metaphor for the broader systemic failing that Medicaid expansion represents. As Chris Conover notes at Forbes, Obamacare’s Medicaid expansion acts as a money spigot with which states have simply bucketed cash from government. Absent incentives for cost reducing reforms, such as the Republican proposal to block grant Medicaid payments to states, too many healthy, working age individuals are using the program instead of paying for their own care. This spending free-for-all is fueling the catastrophic national deficit and destroying the imperative of personal responsibility.
To address these issues, Trump should simply cut the $7 billion in annual Federal subsidies that insurers receive, and then wait for Obamacare to burn. If Democrats are convinced Obamacare is working, let them own the premium increases that (even with subsidies) are coming. At that point, as the public mood sours on the Affordable Care Act, Democrats might be more willing to entertain compromise with the White House. And then, we might just get a health care law that delivers true reform: bending the cost curve, and delivering individual, personally responsible care.
The morality of this issue is uncomplicated.
Today, Obamacare has three outsized negative effects. First, those who are self-employed and without employer provided health plans are hit by a marginal tax that is far higher than anything other workers pay. These individuals, remember, are already paying the full rate of Social Security and Medicare taxes. Second, Obamacare destroys jobs by raising the marginal cost of an employer taking on a new member of staff. Third, Obamacare uses a failed economic model to provide an ever expanding cost curve. Taxpayers are thus left to pick up the pieces.
Trump must let this law crash and burn.
