Making Good on the Promise to Repeal Obamacare

ObamaCareby Jon N. Hall1/2/17
One thing Democrats think they know is this: Once the federal government has “given” an entitlement to the citizenry, it can never be taken back. Dems think the arc of history goes in one direction only: toward bigger and bigger government. It makes no difference how unaffordable a government benefit is nor does it make any difference whether there are better solutions, if the Democrats enact it, it’s set in stone until the End of Time, and perhaps even thereafter.

On Dec. 5, Bloomberg View ran “The Allure of ‘Repeal and Delay’ for Obamacare’s Critics” by Megan McArdle. “Repeal and delay” calls for immediate passage of a repeal bill, but with a delay of its implementation for perhaps three years. McArdle seems to think the delay part presents dangers for Republicans; they need to be aware of the threat of “regime uncertainty.”

On Dec. 13, The Federalist ran “How To Repeal Obamacare: Repeal Obamacare” by Robert Tracinski, who begins his article with a nice irony, and then segues into the delay dilemma. He offers two ideas for repeal. The first is to use the power of the purse to defund Obamacare; a de facto repeal using budget reconciliation. That’s coupled with a version of “repeal and delay,” but with a very short delay. Conservatives will lap up Tracinski’s reasoning for his repeal bill, and he makes the medicine go down with a goodly dollop of humor. He also compellingly dilates on the politics of Obamacare.

Republicans have vowed not only to repeal Obamacare, but to replace it. But what would a replacement look like? On Dec. 2 at the New York Times, Paul Krugman wrote: “Obamacare looks the way it does because it has to: You can’t cover Americans with pre-existing conditions without requiring healthy people to sign up, and you can’t do that without subsidies to make insurance affordable.”

Krugman is merely repeating what we hear from all Obamacare defenders: you can’t cover pre-existing conditions without the mandates to buy health insurance. But that’s not the way the insurance business works. Try getting automobile insurance for a car whose “pre-existing condition” is that it’s been totaled in a wreck. You’re not gonna get it. If an insurance company were to insure a totaled car, the first month’s premium would need to be at least as much as the cost of replacing that wrecked car. What would be the point of such insurance?

Obamacare defenders do hit (probably by accident) on a central truth: for health insurance to have any chance of working, the risk pool must contain healthy folks along with unhealthy folks. But that’s just a description of how normal insurance operates. In any type of insurance there must be many more policyholders who don’t make claims than there are who do make claims. Otherwise, an insurance company must raise the price of premiums or go out of business. The only thing remarkable about Obamacare in regard to this principle of the insurance business is the mandates: the use of force.

Does a replacement for Obamacare need to work just like Obamacare? There are certain Republicans who want to retain “guaranteed issue,” i.e. the requirement to cover pre-existing conditions. But that feature depends on the mandates, and Americans hate the mandates, they’re so, uh, un-American.

Does a replacement for Obamacare need to provide everything that Obamacare provides? Does it really need to provide free birth control pills; the pills only cost about $10 a month. (Incidentally, if Obamacare is going to provide birth control, then why doesn’t it provide free eyeglasses? Isn’t vision more important than subsidizing the sex lives of the indigent?) What we need in a replacement is a multiplicity of plans … and of prices, which Obamacare forbids.

Pete Rose was banned from MLB for gambling, but he never bet against himself. Before Obamacare, when an individual bought health insurance he was making a bet against himself. The only way he could win his bet is if he lost his health. He was betting that he’d get sick and he didn’t want to pay the full cost of modern medicine. Why not have a system where folks could bet on themselves. In other words, if you stay healthy you get paid. That’s what health-savings accounts (HSAs) are about. Stay healthy and you have all this money mounting up in an account that you own. HSAs would appeal to a lot of Americans, and they could be backed up with cheap bare-bones “catastrophic” insurance policies.

But it’s the health insurance industry that needs “catastrophic” insurance. They need “risk corridor” bailouts, but they’ve been denied to them. So companies have been bailing out of the exchanges, leaving some states with only one insurer. Obamacare is swirling around the drain in its death spiral.

What the defenders of the system need to get straight is this: Obamacare isn’t insurance. The ACA doesn’t operate the way insurance operates; actuarial considerations of risk aren’t taken into account. This is the case even if one pays the full price oneself at an Obamacare exchange, because the pricing mechanism of a normal insurance business has been subverted. But Obamacare was never aimed at fixing the health insurance business. It wasn’t about lowering premium prices. It was about creating dependency, expanding the welfare state, and consolidating the power of the central government.

The hated mandates are not the only source of funding for Obamacare. There are numerous taxes that the ACA levies. There’s the device tax, the Cadillac tax, there’s even a tax on selling some real estate, etc., etc. But where does all this tax revenue go? Does it go into a separate account or fund to pay for the subsidies and the expansion of Medicaid? I found one answer to this question at Obamacare Facts: “Where Does Tax Penalty Money Go?” The answer consisted of two short paragraphs that beg the question. The question should have been framed more like this: Do Obamacare taxes go into the Treasury’s “general fund,” or do they go into their own separate “trust fund”?

If Obamacare taxes get mixed into the general fund along with income taxes and other revenue, then Obamacare taxes are just like the payroll tax surpluses that Congress has spent. But with Medicare and Social Security there is at least a fig leaf of fiscal respectability, for when their fictional trust funds “run out money,” benefits will be cut. That’s not the case with Obamacare; the benefits just keep coming. And that’s one of the big problems with Obamacare, (and with all the unfunded systems, like Medicaid). They create an unlimited claim on future revenue; a demand that the feds must provide a benefit.

Obamacare defenders can’t claim that the system is self-funding unless it has its own account, its own “trust fund,” into which all ACA revenue is put and out of which all ACA benefits are paid.

Obamacare is the newest of our Big Government entitlements. It’s been completely operational for three years. So if Republicans can’t repeal this latest addition to the welfare state, then they ought to throw in the towel and go over to the Dark Side. Even though premiums and deductibles are soaring and the only people who like Obamacare are the ones not paying for it, Democrats say it would be heartless to take it away from folks. But we don’t have the money.

Despite the electoral calamities Obamacare has caused them, Democrats will likely resist any change to their system. On Nov. 9 at Forbes, healthcare guru Avik Roy wrote that using reconciliation, which requires only 51 votes in the Senate, would allow for only a partial repeal: ending the “tax hikes, Medicaid expansion, and insurance exchange subsidies.” Without Democrat votes, Republicans have the power to repeal only the things that the Democrats care about, but not the things that animate the GOP, like the mandates and regulations.

It would save Republicans some grief if Obamacare completed its “death spiral” before the new government takes office. Such exquisite timing is probably not in the cards. But Republicans shouldn’t worry about their replacement duplicating every feature of Obamacare, especially the “pre-existing conditions” feature. We can’t expect insurance companies to continue insuring the uninsurable.

If Republicans really want to revive the economy, they will repeal Obamacare as soon as they can; Obamacare is a drag on the economy. A full repeal would take us back to the status quo ante just three years ago. Even back in that distant dark past, America was not some vast Calcutta.

Happy New Year!

Jon N. Hall is a programmer/analyst from Kansas City. • (987 views)

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12 Responses to Making Good on the Promise to Repeal Obamacare

  1. Timothy Lane says:

    Some sort of delay is desirable, with a gradual reduction of the subsidies. This not only provides time to (hopefully) come up with an acceptable replacement, it also allows for those who receive the subsidies to adjust better to not receiving them.

    • Brad Nelson Brad Nelson says:

      The language of reality has been pretty much scrubbed from civic engagement, Timothy. It’s therefore hard for me to believe that any “reform” of Obamacare isn’t going to just be more smoke and mirrors.

      The need for “gradualism” in regards to reform shows just why the field is titled toward non-gradual “free stuff.” It’s easy to give away other people’s money instantly but much harder to take it away in an instant. That is the nature of the magic of “free stuff” engendering the feeling of being entitled.

    • David Ray says:

      Simple observation: I never had any “time to delay” – only adjust.
      I’ve simply never had a gov’t job. (Marine Corps services doesn’t count . . . unless one’s a flaming liberal.)

      I, at times, wish I were a gov’t employee. Then I could sleep in after cocktail partys, bask in job security, sit on my ass, have the Dan Rather type people love me, retire early with a giant package . . .

      • Timothy Lane says:

        When John Glenn challenged newly appointed Howard Metzenbaum for the Senate in 1974, the latter said Glenn had never held a real job. Glenn suggested he say that to the patients in a military hospital.

      • Brad Nelson Brad Nelson says:

        There are government jobs and then there are government jobs. For some, their worst day is a paper cut. They may run for “safe spaces” when disagreement arises. Marines run to the front when lead arises. It’s a government job but not all government jobs are equal.

        • Timothy Lane says:

          And Glenn was a test pilot, which is a VERY risky job. Of the 7 Mercury astronauts, 3 were Air Force, 3 were Navy, and Glenn came from the Marines.

          • Brad Nelson Brad Nelson says:

            Such men are hard to understand in today’s Snowflake culture. Good god, yes. They took some risks and many found their death due to testing some cutting edge bit of aero-technology. That Yeager lasted is an anomaly.

            But these were hot-shots, what we now call “adrenaline junkies.” Risk takers these days (in any areas of life, but particularly the captains of industry) tend to be denounced as exploiters of one kind or another. Our true brave heroes now are those men who boldly wear a dress and break the good-sense barrier.

  2. Brad Nelson Brad Nelson says:

    Thanks, Jon. I think you bring a number of good perspectives to this.

    If we must have top-down control of “health care,” then you could do worse than mandating health savings accounts.

    However, the politics of this, along with an electorate for whom “free stuff” is the main thing, will likely lead only to a clusterf**k. What I expect to happen is the name to be changed on a few things. But I don’t expect prices to go down or choices to go up or actual health care to get better.

    Because of their appetite for “free stuff,” people willingly believed the lies of Obama. And few now are willing to face the reality that Obamacare is simply about redistributing wealth. Will Trump face this down? I really doubt it.

    We all want a clear-thinking, straight-shooting president who will give us the unvarnished truth and come up with real, if sometimes unpopular, solutions. I think this issue will be the test of Trump. And I think it will be the first on his list of total failures.

  3. Gordon says:

    I like HSAs very much, and hope they are part of the mix. As to pre-existing conditions, why not allow insurance carriers to price in that added risk to the patient’s premium, much like they price in a history of bad driving habits and casualty losses for auto and homeowner’s premiums? The government could provide premium support subsidies for those unable to completely afford their premiums at carefully structured (and indexed) income levels. What’s so hard about that? (Full disclosure: Before retiring, I was a health care attorney representing large multi-site health care organizations in the areas of finance and compliance for over 30 years).

    • Brad Nelson Brad Nelson says:

      Several years ago — before I had to drop my health insurance due to costs — I asked my insurance agent what could be done. He seemed to have his finger on the pulse and rattled off a number of things (forgotten now) that seemed to make sense.

      One of the problems with regulating health insurance so that everyone has it is that it’s like being a little bit pregnant. Once you start regulating it beyond concerns of fraud or monopolistic practices, it is difficult to make a reasoned argument for why a lot of socialism instead of a little bit.

      When the basic assumption is that no one should have better care than another, you’re screwed. And that’s where we are now. As others have pointed out before Obamacare was enacted, if the point was to cover the uninsured (and not including those uninsured by choice…such as young adults), you could have covered that easily. As Jon has somewhat noted, the point of Obamacare never was to bring costs down. It was, I believe, little more than a Marxist-based grievance bill aimed at taking from the oppressors (“the rich,” and most people found out that they were in that category) to “the poor.”

      Does Trump or anyone else have the brass ones to understand this entire situation and strike at the core premises that have led to Obamacare? Probably not. But if we must have a top-down solution, I’ve certainly read good things about health savings accounts.

      But if this issue was ever about doing what was best, we would have had plenty of answers decades ago. Unfortunately mixed into this is the duality of greed, from both politicians (who lick their chops at being able to buy constituencies with “free stuff” and hold a professed grievance against “the rich” and a professed sympathy for “the poor”) and the mob (formerly known as United States citizens) who will let Rome burn if they can get a piece of “free stuff” — no matter that their rates continue to climb, as well as their deductibles.

      I wonder if the American public has it in them to think beyond the tantalizing image of “free stuff” or what is often laundered as “social justice.” I don’t see it at the moment. I expect Trump and others to provide solutions that aren’t really solutions but just moving the deck chairs on the Titanic.

  4. Kung Fu Zu Kung Fu Zu says:

    This article describes how Trump’s early executive order will have immediate effect on the destruction of Obama Care. The IRS will no longer be used as an attack dog for the program.

    • Timothy Lane says:

      Note the point that the move is of uncertain legality. Of course, the same thing can be said of so many changes Obama unilaterally made in his signature law in order to enable it to work. Conservatives should consider how something is done as well as the desirability of the result, but in this case there’s an awful lot of precedent for semi-ignoring the words of the law.

      Incidentally, the Secretary of HHS has a lot of discretion in the law — far more than should have been constitutional (this was an important aspect of the unanimous SCOTUS decision in the Schechter Brothers case). But now that power is in the hands of Tom Price rather than an Obama Gangster.

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