In 2010, the backlash to the Affordable Care Act helped give Republicans the largest midterm election gains in 72 years. The catastrophic launch of the ACA’s exchanges in 2014 handed them control of the Senate, and with premiums soaring 105 percent during the reform’s first three years of operation, outrage over health care contributed to the election of President Trump. Yet, while GOP attempts to enact equally-sweeping legislation to “repeal and replace” the ACA have failed, Republicans nonetheless can claim credit for freeing Americans from its most painful, counter-productive and unpopular features.
Although ACA plans offer an important safety net for individuals with pre-existing conditions, they represent appallingly bad value for those who wish to purchase insurance before they get sick. Whereas working-age Americans incur annual median health care costs of $709, ACA plans have annual average premiums of $4,700 and deductibles typically over $3,900.
By repealing the individual mandate tax on individuals who failed to purchase ACA-compliant plans, Congress made it possible for Americans to seek more affordable alternatives. Executive action by the Trump administration then expanded consumer protections for short-term insurance, to make available plans similar to those that were popular prior to the Obama administration. These options, which will be available in all but a few blue states, have average premiums of $124 per month, in contrast to ObamaCare plans (whose monthly premiums average $393).
A study by the Urban Institute estimated that this deregulatory reform would allow 1.7 million previously uninsured Americans to receive insurance coverage, while enabling 2.5 million more to benefit from much lower premiums.
When the ACA sought to guarantee affordable health insurance to individuals with pre-existing conditions by requiring insurers to cover enrollees at the same price regardless of their likely medical needs, Mark Pauly of the University of Pennsylvania declared that it was the “worst possible way to do a good thing.” By forcing healthier individuals to purchase overpriced insurance to cross-subsidize the coverage of those with major chronic conditions, the ACA established a dysfunctional arrangement in which unsubsidized individuals would avoid purchasing insurance, and insurers often were not able to afford covering those who did.
Democrats have accused Republicans of seeking to sabotage ACA plans, by allowing people to seek better arrangements. But subsidies to ACA plans automatically expand to guarantee coverage of individuals with pre-existing conditions at premiums capped as a percentage of their incomes. Eliminating affordable health insurance alternatives for healthier individuals who find themselves suddenly without employer-sponsored insurance has imposed burdens unfairly and acutely, without being necessary to assure the core objectives of the exchange.
The Congressional Budget Office has estimated that the flight of healthier enrollees from the exchange resulting from short-term insurance deregulation would only cause premiums for unsubsidiized wealthier enrollees with pre-existing conditions to increase by 2 to 3 percent. That impact essentially has been canceled out by the recent suspension of the ACA’s Health Insurance Tax. By better focusing subsidies on the small pool of individuals with pre-existing conditions, allowing those who can to seek cheaper unsubsidized insurance elsewhere likely may have saved taxpayers money, too.
Accusations of a broader campaign of sabotage are wildly inaccurate. When the industry group representing ObamaCare plans, led by Obama’s former health insurance chief Marilyn Tavenner, requested reforms to open enrollment periods to strengthen ACA plans, the Trump administration took their advice. When a federal court forced the suspension of risk-adjustment payments to plans, the administration made revisions to keep them flowing. When Congress failed to agree to appropriations for cost-sharing subsidies, the administration helped states “silver-load” so that exchange plans could be supported by premiums subsidies instead.
As a result, as the repeal of the mandate and deregulation of short-term plans go into effect in 2019, unsubsidized ACA premiums are expected to rise by only 3.1 percent — a huge stabilization from the 30 percent increase in 2018, and the only single-digit increase since the ACA was enacted.
Although the Texas attorney general is doing his best to justify the Democrats’ distortions with a far-fetched attempt to strike down the ACA altogether, Republicans could justifiably claim to be doing a better job than President Obama of upholding promises he made in 2008. In his campaign for the presidency, proposing to subsidize the health insurance coverage of individuals with pre-existing conditions, he opposed an individual mandate and famously promised, “If you like your health care plan, you can keep it.”
The GOP attempt at sweeping health care reform legislation may have failed, but they can go to the voters having made affordable health insurance available again, while being able to also say to those with pre-existing conditions: “If you like your ObamaCare plan, you can keep it.”
– Chris Pope is a senior fellow at the Manhattan Institute.