When last we left off in the late spring, the administration was goosing up the enrollment figures without ever telling us how many had paid and how many were newly insured Americans. But the “affordable” part of the Affordable Care Act has always been its Achilles heel. By heavily subsidizing health-care insurance and insisting on very expensive coverage plans, the administration is almost certainly encouraging demand (i.e. overuse) — thereby moving the price of health-care insurance in the wrong direction.
Sure enough, the Wall Street Journal reports:
Hundreds of thousands of consumers nationwide who bought insurance plans under the Affordable Care Act will face a choice this fall: swallow higher premiums to stay in their plan, or save money by switching.That is the picture emerging from proposed 2015 insurance rates in the 10 states that have completed their filings, which stretch from Rhode Island to Washington state. In all but one of them, the largest health insurer in the state is proposing to increase premiums between 8.5% and 22.8% for next year, according to a Wall Street Journal review of the filings. That percentage represents the average rate increases for all individual health plans offered by that carrier.
Oops. Not only can you not keep your plan, but you can’t keep the plan that replaced the plan you couldn’t keep.
Once again, the president is a victim of his own excessive promises. (“Opponents say the health law was sold on the premise that it would lower rates, and that increases are evidence the law is falling short. ‘There’s going to be an uproar over premiums right before the election,’ said Douglas Holtz-Eakin, a top adviser to the 2008 presidential campaign of Sen. John McCain (R., Ariz.).”) You wonder what chicanery is in store to prevent the pre-election premium bump. (Another unilateral delay? A subsidy/bailout to keep premium increases down?)
This news only serves to highlight the failure to address the principal complaint that gave rise to health-care reform — rising costs. And it is there that Republicans should begin to craft their own alternative. It seems that any viable alternative should allow people to buy low-cost (Obama says “crappy”) plans. They may be entirely appropriate for some consumers.
Reform conservatives such as James Capretta argue, “The Obama administration claims that Obamacare is a marketplace, but the reality is that it is a top-down, bureaucratic solution, with all of the critical decisions made in Washington. HHS strictly defines the insurance product and then compels insurers to sell it while the IRS compels consumers to buy it. That is not a market. The conservative alternative must employ a decentralized approach, with consumers driving the system.” That means allowing a consumer choice in the sort of plan Americans want and also agreeing to “place an upper limit on the amount of employer-paid premiums that would enjoy tax-preferred status. This approach would allow these plans to continue operating as they do today, just with a greater incentive for cost discipline.”
For those without employer-provided health care, the better alternative is to provide “a tax credit that is roughly equivalent to the value of the tax subsidy afforded to employer-sponsored plans. . . . The credits would also be entirely under the control of the households to which they are provided, and could be used only to secure insurance (or, if the credit exceeded the premium for coverage, to deposit into a health savings account). A tax credit of this kind would help generate intense price competition in the marketplace.”
In other words, Obamacare has turned insurers into highly regulated utilities. We should be doing just the opposite — opening up competition, giving incentives for households to cut costs and reforming entitlements such as Medicare (with a premium support plan akin to Rep. Paul Ryan’s plan) and Medicaid (where innovative GOP governors such as Indiana’s Mike Pence can cover more people, more cheaply than traditional Medicaid if allowed to control health care for the poor). If Republicans can offer that, the replace part of “repeal and replace” can get underway.