The Golden Obama Legacy added 20 million new Americans to health insurance. Because of this, Obamacare is an obvious and sweeping success, and if it is repealed, those 20 million Americans will no longer be insured.
That’s what you’re being told almost incessantly. It’s also a gross perversion of the truth.
Technically speaking, there are 20 million more insured Americans than before Obamacare (or the ACA). While getting affordable healthcare to the masses would be cause for celebration, this statistic hides the truth, which is somewhere between terrifying and enraging. Let’s look at what those 20 million Americans have actually received, and at what cost.
Obamacare added heavy regulations to health insurance, and it is the sole reason why the 20 million Americans can now afford insurance. What does that insurance look like?
As of 2017, the bottom insurance tier costs an average of $80 a month per person. Those plans offer $0 of coverage for any treatments, preventative care, medication or anything else until a deductible is met, and that deductible averages $6,000 for individuals and $12,393 for families.
Moreover, those plans come with a coverage cap that averages $5,429 per person. That means 20 million Americans are now making monthly payments for insurance that literally does nothing for them. Even if they do run into a catastrophe that exceeds their outrageous deductibles, they’re covered for less than that total.
Based on these numbers alone the ACA has become a net financial burden on the lowest income class, but it’s really so much worse.
ACA regulations made it virtually impossible for insurers to deny coverage. That means no matter what medical conditions may exist, the insurance company has to offer them a plan. While this sounds nice on the surface, it utterly destroys the very model around which insurance is built.
Let’s do a quick thought experiment. Imagine a small community of 100 people that has a community garden. The garden isn’t large enough to fully feed anyone. Instead it’s home to spices and herbs that supplement and flavor meals. Now imagine the government suddenly adds 20 new people to that community, and all 20 of them have stringent dietary needs that will have them consume more than half the garden by themselves.
This is a rough metaphor that fails to empathize with how difficult chronic illness can be, but it explains why insurance premiums have skyrocketed under Obamacare.
You may have heard about a single study that says premiums are dropping, but it has been thoroughly debunked. Dozens of other studies show that that the average premium rose by 24.4 percent from 2010 to 2013, 69 percent from 2013 to 2015 and will rise by over 100 percent from 2015 to 2017 (this rise does not factor subsidies as those numbers aren’t reported yet). That means that on average, Americans are paying roughly three times as much for insurance as they did before. Still, the bad news gets worse.
Anyone who knows the basics of supply and demand can tell you that government subsidies exist for the purpose of making goods more expensive. While this is obviously true for insurance, it is also true for health care in total.
Increased insurance coverage has caused a lot more people to receive medical treatment, and that demand increase has skyrocketed the cost of medicine overall. This means insurance companies are suddenly on the hook for more people who make claims more often in an environment where claims costs are rising. It’s no wonder health insurance companies have been dropping out of ACA with total abandon (which also increases costs).
We’ve discussed before how unlikely it is that Obamacare will be completely repealed. The Trump group is going to attack, but there are enough Democrats in power, and the ACA is protected enough that a total repeal is close to impossible. Instead, reform is the more likely answer.
What changes can help the runaway train of costs? The first thing is targeted deregulation. Right now, every state gets to set its own standards for health care. This reduces competition and drives up prices. At minimum, you can expect that to change, and with it companies will be able to offer a wider range of plans that can more appropriately match needs.
That’s nice, but the most important reform will actually be targeted at Medicare and Medicaid. While the left will cry that Trump wants to get rid of these programs, his real intent is to shift some of the financial burden from private insurers back to these programs. It reduces the subsidy problem and enables insurance companies to cut out the primary source of their revenue losses.
If even these minimum changes can be made, insurance costs have a hope of returning to affordable states.