Lessons of ObamaCare for Republicans

 

The Affordable Care Act, better known as ObamaCare, has been a learning experience. The question now is whether or not Republicans will heed what we have learned?

Lessons Learned

Certainly one of the lessons learned is that entitlements are hard to remove, even when they are unaffordable and driving the country into bankruptcy. Phil Gramm, former Senator from Texas and an economist, makes this point in a recent op-ed for the Wall Street Journal:

            So powerful is the political appeal of entitlement programs that modern democracies routinely choose bankruptcy over curtailing them. That’s even true of ObamaCare. Despite surging premiums, lagging enrollment, the growing burden on the economy, and the enduring opposition of most voters, the debate is about replacing rather than simply repealing it.”

 

Gramm says the lesson that needs to be learned is that government should never be in the business of selling health insurance. To learn that lesson best, he says we should simply pass a law allowing people to buy insurance outside the ObamaCare system and soon ObamaCare would die of its own weight. Deprived of many enrollees who chose lower cost policies outside the system, those within the system would face much higher cost policies that soon would become too expensive even for those with subsidies. The ObamaCare insurance market would implode.

A similar situation existed in 1989, a year after passage of the Medicare Catastrophic Act. When President Reagan insisted that those who benefited from the program must pay the actual cost there was no interest by consumers and it was quickly repealed. Democrats were eager to get rid of such an unpopular program.

In fact, that process may have already begun with the recent Trump administration executive orders that have stopped anything in the law that creates “a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden.” This means insurance companies will no longer be subject to the onerous portion of ObamaCare that stipulates $100/day penalties on insurance companies that sell non-compliant ObamaCare policies. However, insurance companies may be reluctant to market such policies until this order is codified by Congressional legislation.

Government subsidies are an expensive and inefficient means to increasing insurance coverage. ObamaCare spent $67 billion to subsidize the purchase of private insurance in 2016 alone. From its adoption in 2010 through 2016, according to the Centers for Disease Control, the number of Americans with private health insurance has risen by 14.6 million, or 8.9 percent.

That’s less impressive than you might think. Gramm points out that from 1992 to 1998, the number of Americans with private insurance rose 7.5 percent – even though HillaryCare was defeated! This increase was attributable to wage and job growth alone. He says that the same would have happened during the Obama administration years without ObamaCare if we had comparable economic growth. Compared with what a strong recovery would have been expected to produce without subsidies, ObamaCare actually added only 2.3 million people to the private insurance rolls at a cost of $29,130 per person.

Gramm says there are two important lessons to learn here:

  • First – subsidies are a poor substitute for economic growth, even in providing health insurance.
  • Second – the exorbitant cost of ObamaCare shows how inefficient government subsides are in helping people meet even basic needs.

 

Gramm believes Republicans should limit their objectives to three:

  • Finding a cost-efficient way to deal with pre-existing medical conditions
  • Strengthening Americans’ ability to keep their insurance when they get sick or change jobs
  • Block-granting Medicaid to the states

 

Gramm cautions Republicans: “If they try to do more, they will be in danger of only changing the name of ObamaCare. They would then own a program that is detrimental to freedom, fiscal responsibility and economic growth.”

 

Kimberley Strassel, columnist for The Wall Street Journal, reminds Republicans that ObamaCare failed in the court of public opinion largely due to the way it began. Republicans should not repeat these Democratic mistakes:

  • ObamaCare was crafted in secrecy in lobbyist-filled backrooms without public hearings and without Republican input.
  • ObamaCare was never sold to the public – in fact even Congress didn’t understand it since most didn’t read its 2700 pages of legislation.
  • ObamaCare was passed without bi-partisan support – not even one Republican voted for it.

 

It will be very important for Republicans to market their new healthcare legislation with plenty of personal-interest stories – actual people whose lives will be improved by their new legislation. Statistics are only useful up to a point – personal stories of how people will benefit go a long way toward convincing the public this change is for the better.

If these lessons are learned and applied by Republicans there is hope for an improved healthcare system that will stand the test of time. But if they fail to learn the lessons of ObamaCare, they will repeat its sorry history.

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