Thursday, November 8, 2018

What Neither the Republicans Nor the Democrats Understand About Obamacare

The 2018 Elections Were Not About Obamacare--They Were About Health Insurance Security 


The 2018 midterm elections weren't a tsunami for Democrats--more like a blue wave hitting a red wall.  


Democrats are claiming the election vindicated Obamacare because they were successful in gaining control of the House of Representatives by criticizing losing Republicans for their votes to repeal the Affordable Care Act--including its key consumer protections.


My sense is that both Democrats and Republicans have missed the critical point.

Both sides don't understand that this was not about Obamacare. It was about health insurance security.

Obamacare guaranteed people that they would never again be turned down for health insurance because of a preexisting condition. It assured those who couldn't afford to buy health insurance they would be given financial assistance. And, it offered the expansion of Medicaid to the poorest.

Obamacare offered health insurance security--at least, it turned out, to those with the lowest incomes.

But Obamacare also devastated the individual health insurance market with its prohibitively high prices and out-of-pocket costs for the middle-class.

Let me suggest that what happened in Virginia's 10th Congressional District tells the story.

Like the Virginia 10th, all across the nation one Democrat after another ran effective ads promising to protect Obamacare and its preexisting condition reforms from those Republicans who had voted to repeal the law.

The ads resonated even though Obamacare has continued to devastate the individual health insurance market:
  • In March of 2016, there were 20.2 million people covered in the individual health insurance market according to a hard count of state insurance department filings done by Mark Farrah and Associates.
  • In March of 2017 that count was down to 17.7 million.
  • In March of 2018 the count was 15.7 million--a 22% drop in two years.
This means 4.5 million people lost their individual health insurance in just two years.

Hardest hit are the 40% of middle class individual market consumers who are not eligible for a subsidy.
  • In March of 2016 there were 7,520,939 people covered in the off-exchange individual health insurance market where subsidies are not available.
  • In March of 2017 5,361,451 were covered.
  • In March of 2018 4,004,522 were covered--a 47% drop in two years.
And, the Obamacare subsidies paid to consumers are hardly sustainable.

According to the CBO, the average Medicaid outlay for a non-disabled adult is $4,230--a program that virtually has no premiums and co-pays. But because the risk pool is so bad and therefore expensive in the Obamacare exchanges, the average subsidy cost for taxpayers is $6,300--and that doesn't include what the consumer pays in premiums and out-of-pocket expenses for Obamacare coverage.

Why has the Obamacare individual market melted-down in these last two years? Because its premiums and deductibles are sky high--for all but the lowest income participants.

In Northern Virginia, for example, the cheapest 2019 Obamacare individual market Silver plan for a family of four (mom and dad age-40) making a subsidy eligible $65,000 a year costs $4,514. That plan has a $6,500 deductible meaning the family would have to spend $11,014 on eligible health care costs before collecting other than nominal first dollar benefits.

That same family, but making too much for a subsidy, as 40% of families do, and a typical family in the affluent Virginia 10th, would have to spend $19,484 in premiums plus a $6,500 deductible, for a total of $25,984 in eligible costs before they would collect any meaningful benefits.

Democrats are now arguing that Obamacare was the big winner in the midterms. Why would a law that has so devastated the individual market be a winner? And, why would it be a winner in the Virginia 10th?

Because the Republican incumbent voted for the Republican House bill to repeal and replace Obamacare.

In passing the House bill, Republicans were health care tone deaf. The bill would have:
  • Arguably allowed states to repeal the pre-existing condition reforms.
  • Made significant cuts to the individual market insurance subsidies.
  • Made huge cuts to the Medicaid expansion.
Republican House members voted for these things because they never understood what made voters upset about Obamacare. It was not the things that provided insurance security--the pre-existing protections, the subsidies, or the Medicaid expansion--it was the things that undermined health insurance security--the few lousy choices of unaffordable health plans consumers were left with in the Obamacare era.

And, Democrats to this day tout the "stability" of the Obamacare insurance market--a stability that so far has only paid off for insurance companies that have raised the rates so high only they are among the relatively few doing well in the program.

I will suggest that both Democrats and Republicans--five years into this--still don't understand what has worked and not worked for consumers.

Republicans have seemingly never understood that Obamacare has worked well for low-income people who get the biggest premium and out-of-pocket subsidies. It has worked well for those eligible for Medicaid in the states that have expanded it. And, it has been critically important for those with preexisting conditions. And, that three deep red states--Nebraska, Utah, and Idaho--voted last week to expand Medicaid clearly says that even in the reddest states what people want is health insurance security not only for themselves but for their neighbors.

But what Democrats have never been willing to admit is that the program has been devastating for the middle class--those who get no subsidy, or a relatively small subsidy--for the way it has wrecked their individual health insurance market.

The Republicans tried to take away these health insurance security benefits and it cost them dearly in 2018.

Just like the Democrats so ham-handedly tried to reform the system in the first place only to see it cost them dearly in prior elections.

It's not about Obamacare guys, it's about health insurance security--for everybody.


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