“This is what the start of a death spiral looks like.”
– Catherine Rampell, May 14, 2018
Rampell, a columnist for in the Washington Post, is not wrong. Obamacare is in big trouble.
As her article details, three states—Vermont, Virginia, and Maryland—recently announced anticipated “premium-rate requests” for Obamacare health insurance policies. And the numbers don’t look promising.
In Maryland, for example, rates for one plan are projected to nearly double. On average, plans are expected to rise nearly one-third. These are preliminary numbers, but they are a sign of what’s to come. Rampell knows it. And she knows who to blame.
“It is not hard to see why prices might spike,” she writes. “Thanks to Republican efforts to sabotage Obamacare, the pool of individual-market enrollees is getting smaller and sicker — and, as a result, much more expensive.”
She might have a point. After all, Republicans spent the better part of a decade campaigning against Obamacare, a law they called “downright evil” (Sarah Palin) and the “most dangerous piece of legislation ever passed in Congress” (Rep. John Fleming). It was never a secret the GOP wanted Obamacare to fail.
The Affordable Care Act clearly was a law Republicans wanted dead, but when the time came—surprise, surprise—they couldn’t bring themselves to actually kill it. So it’s hardly inconceivable that Republicans might be “sabotaging” Obamacare.
But it invites an important question: What does this “sabotage” actually look like? Here is what Rampell described as the GOP’s “demolition project”:
“Perhaps most significant, the GOP tax law passed in December repealed the individual mandate. This freed healthy people to drop their insurance plans without penalty. The Congressional Budget Office has projected that eliminating the mandate alone will increase individual-market premiums by about 10 percent in most years over the next decade, relative to prices with the mandate in place.
Meanwhile, the Trump administration has been working to make it easier for people to buy insurance that doesn’t comply with Obamacare’s consumer protections, such as required coverage of prescription drugs and mental-health care, or no bar to people with preexisting conditions.”
By Rampell’s own admission, the legislation “freed” healthy people from penalties and “[made] it easier” for Americans to purchase insurance they actually want, versus plans they are required to buy.
This reminded me of something Jeffrey Tucker wrote about President Trump’s executive order last year. He pointed to a USA Today article which noted the action permitted a greater range of choice “allowing more consumers to buy health insurance through association health plans across state lines.”
“The key word here is ‘allowing’– not forcing, not compelling, not coercing. Allowing,” Tucker wrote. “Why would this be a problem? Because allowing choice defeats the core feature of Obamacare, which is about forcing risk pools to exist that the market would otherwise never have chosen. If you were to summarize the change in a phrase it is this: it allows more freedom.”
This gets to the fundamental problem with Obamacare. It was a system built on coercion. It was a redistribution program masked as health insurance. It forced young, heathy people into risk pools to buy insurance they either did not want, or could not afford, to subsidize insurance for the sick who were not quite poor enough to qualify for Medicaid.
Republicans may have been moral cowards to fail to repeal a law they campaigned against, but if their tweaks to slightly liberalize the law by giving consumers more choice leads to the collapse of the whole rotten system, we should not weep for it. At least not if one believes in prudent government.
Obamacare was never a system built on choice, and systems that are not built on choice are the nemesis of free societies.