Sometimes a few words can mean a lot. Take the debate surrounding an extension of health insurance subsidies — one of the reasons why Democrats have shut down the federal government. Here’s what retiring Sen. Thom Tillis, R-N.C., said about the issue in June: “[W]ith the ACA subsidies and other things, we should start thinking about a stream of bipartisan bills that we can work on.”
Tillis’ terminology has two problems — one of politics, one of substance. On the politics, Jimmy Kimmel (of all people) repeatedly showed how voters view “Obamacare” one way and the “Affordable Care Act” another. That Tillis used the latter term rather than the former, thereby embracing Democrats’ political framing, might have something to do with his departure from the Senate next year.
More importantly, Tillis’ phraseology brings up a bigger question: If the law is so “affordable,” why are Democrats demanding Congress pass a bailout costing $350 billion plus interest and shutting down the federal government until it does so?
To state what should be obvious but isn’t to most members of Congress, an Obamacare bailout wouldn’t make anything more “affordable.” It would merely steal money from most Americans — because that’s what taxation is: legalized theft — to give to the roughly 6 percent of the population with subsidized Exchange policies.
Better Solutions
Rather than throwing more money at a broken system, Congress should instead look to reform that system, to lower, or at least slow the growth of, health care costs and skyrocketing insurance premiums. I detailed some of these reforms in the last chapter of my 2019 book, The Case Against Single Payer. A short summary follows.
First, Washington should look to make health insurance portable, so it follows people from job to job. If people have coverage that they — rather than their employers — own, and that they purchased while young and (relatively) healthy, they would be protected before they ever develop a preexisting condition.
Regulations finalized by the first Trump administration surrounding Health Reimbursement Arrangements (HRAs) should help in this regard. These accounts allow employers to contribute a defined amount each month to help fund a worker’s health insurance premiums. Unlike other forms of employer-based coverage, with HRAs, the worker, not the employer, owns the policy, so the worker can select the coverage that works best for him. And when a worker leaves his job, he can take the policy funded by the HRA with him.
An even better alternative would allow Health Savings Account (HSA) dollars to pay for health insurance premiums. Unlike funds in an HRA, which are controlled by an employer, the individual always owns HSA dollars. If HSA funds could pay for health insurance premiums, then employers could contribute directly to workers’ accounts, and workers would own both their Health Savings Account and the insurance policy connected to it.
There are other types of solutions for the problem of preexisting conditions, many of which try to increase access to portable coverage before people develop a costly medical condition. All of these solutions would represent a better alternative than the regulations that more than doubled individual market premiums in Obamacare’s first four years and have kept premiums climbing steadily since.
Change Incentives to Reduce Costs
Other types of reforms would focus on reducing underlying health care costs by altering consumers’ incentives. Health care costs so much in part because people do a great job of spending other people’s money. Case in point: the massive amounts of fraud on the Obamacare Exchanges once the enhanced subsidies — the ones Democrats have shut down the government to extend — made coverage “free” for many enrollees.
An expansion of HSAs would help improve incentives by letting people roll over funds in their accounts from year to year if they serve as smart health care shoppers. A heart attack victim obviously can’t “shop” for care while in an ambulance on the way to the ER. But with chronic conditions comprising a large share of American health care costs, more treatments are potentially “shoppable” than one might first believe.
Of course, shopping around for care only works if patients have the right tools to do so. While price and transparency data have improved, recent personal experiences illustrate that many patients remain in the dark about what health care treatments cost. Better enforcement of transparency requirements by regulatory bodies, and smart financial incentives (e.g., insurers lowering cost-sharing for treatments performed at “high-performing” facilities), will encourage patients to seek more efficient care.
A Better Way
Recall that Barack Obama claimed his health care plan would lower premiums for the average American family by as much as $2,500 per year. To say that hasn’t happened would be the understatement of the century. Rather than lowering costs, Obamacare has encouraged a sprawling oligopoly of Big Insurance, Big Hospitals, and Big Medicine that has driven up costs, such that even Sen. Elizabeth Warren, D-Mass., has admitted care has become less rather than more affordable.
Fifteen years of Democrat-led policy failure shouldn’t prompt Republicans to throw in the towel and concede the need for an Obamacare bailout. Instead, they must have the vision to plot a better pathway forward. Patients and taxpayers alike deserve better. Here’s hoping Congress can give it to them.