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With one to two weeks left before most schools begin their fall semester, there’s still time left to squeeze in a bit more summer reading. So if health care policy is your idea of a beach read, grab a copy of “Why Obamacare is Wrong for America.”
Authored by former OMB associate director Jim Capretta, American Enterprise Institute resident fellow Tom Miller, Heritage Foundation senior fellow Bob Moffit, and Galen Institute president Grace-Marie Turner, the book makes nuances of the debate over the Affordable Care Act (ACA) palatable to a lay audience by breaking down the law into eight pillars. This book nicely elaborates on the government takeover concerns I voiced in my earlier column.
The first two pillars are mandates on individuals (to obtain) and employers (to provide) health coverage. These are unprecedented. Most people can go without healthcare longer than they can make it without food. Yet, even for a necessity such as food, lawmakers do not impose any remotely equivalent restrictions on freedom of choice.
Even recognizing that free people sometimes may make very misguided choices about what they eat, with adverse consequences to both their health and to society, America has historically respected the rights of individuals to choose what, when and how they eat. But in the case of health care, ACA revokes those kinds of rights-saying government knows best and penalizing citizens and employers who disagree.
Expanded federal entitlements comprise the third pillar outlined by Capretta et al. These come in the form of Medicaid (which, after the Supreme Court decision in June, now is expected to account for slightly more than one third of the 30 million individuals who will be newly covered under the law) and subsidized coverage available through state-based health exchanges. The Supreme Court fortunately forestalled the law’s efforts to coercively extort states into accepting a massive expansion in Medicaid coverage. Even so, the Congressional Budget Office (CBO) still projects more than a one-third increase in non-elderly Medicaid eligible by the year 2022.
More worrisome still, over the next 75 years the CBO’s latest long-term spending projections show even with ACA (which, remember, was supposed to “bend the cost curve”), the federal government will increase in size by 48 percent relative to the economy. Fully 100 percent of that increase can be attributed to growth in federally funded health care entitlements, i.e., Medicare, Medicaid and exchange subsidies. There are very real and legitimate questions about the ability of the federal government to finance these entitlements over the long term.
As more than 100,000 Medicaid recipients who were suddenly tossed off of TennCare discovered a few years ago, things can turn ugly quickly when governments discover they no longer can afford their generous health promises.
The fourth pillar is “squeezing funds out of Medicare and choking off private plan choices.” These funds include a combination of reductions in spending as well as new Medicare-related taxes. As Medicare’s public trustee Charles Blahous has demonstrated, the half trillion in resources diverted from Medicare either can be used to shore up Medicare or they can be used to bankroll the new Medicaid and Exchange entitlements. They cannot be used to do both.
Because these “Medicare funds” instead will have been spent on the new entitlements, the government will have to borrow additional funds to keep Medicare afloat. An estimated $136 billion of those savings will come in the form of cuts to Medicare Advantage plans, resulting in half the seniors who would have joined such plans by 2017 being forced back into the inefficient and fragmented fee-for-service Medicare system. Instead of giving seniors genuine choices that would reward plans that provide coordinated and effective care (and produce sizable savings to Medicare to boot), ACA has stacked the decks in favor of a badly outdated fee-for-service model that decades of research has shown costs more than it should even while producing worse outcomes.
The fifth pillar detailed by the authors is the more than one half trillion in new federal taxes. (For the adverse consequences of these levies, see this earlier post.)
The exchanges make up pillar number six. Exchanges are a sensible idea advocated by free-market analysts, but unfortunately “Obamacare took these market-based ideas and twisted them beyond recognition into a bureaucratic knot. The exchanges are weighed down with rules, regulations, and government restrictions and crushed under a mountain of bureaucracy.” The law gives extraordinary discretion to the Secretary of Health and Human Services to determine which plans are permitted to participate in the exchange. The federal government also will require exchanges to perform at least a dozen “minimum functions” such as checking (every month!) the incomes of people who qualify for subsidies.
The seventh pillar is federal government-sponsored health plans. At least two national plans created by the U.S. Office of Personnel Management must be offered in each state exchange even if the state has no interest in them. These plans will compete on a playing field stacked in their favor, since the OPM has the discretion to use less rigid rules than those faced by private insurers (e.g., how much to spend on administration).
Federal control over private health insurance makes up the eighth and last pillar. Plans must take all comers even if they wait until they are sick to buy coverage (given the modest penalties for failing to obtain health insurance, the law actually will create perverse incentives for consumers to buy their coverage later than sooner). ACA imposes restrictions on pricing as well as extensive rules about benefits. As the recent dust-up about contraceptive coverage demonstrated, the government will require you to purchase certain benefits even if you have no interest in them or moral or religious objections to paying for them.
Once again, government experts are displacing the individual judgment of patients about what is best for them. This is unprecedented. The federal government does not do this in automobile, homeowners, or life insurance. But for some reason, in health insurance, the federal experts presume to know best.
Going back to food, which arguably is more of day-to-day “necessity” of life than medical care, the federal government does not tell you what you must purchase or tell grocery stores how to price what they sell (or how fast their prices can rise). The contrast between the extraordinary freedom of choice we allow for food and the greatly restricted choices ACA will impose in medical care could not be more stark.
America’s Founders fought for a limited government that presupposed free citizens capable of making responsible choices. It is unimaginable that they pledged their lives, fortunes and sacred honor to create a government as intrusive on the lives of ordinary citizens as the vision embodied in ACA.
 This is based on official CBO projections using the alternative fiscal scenario, which provides the most realistic projection of ACA revenues and expenditures. It only includes non-interest federal spending, which will rise from 22.0 percent of GDP in 2012 to 32.6 percent by 2087-an increase of 10.6 percentage points. During that same period, gross Medicare spending will grow from 3.7 to 13.3 percent of GDP and spending on Medicaid, CHIP and Exchange subsidies will grow from 1.7 to 5.0 percent of GDP, for a combined increase of 12.9 percentage points for health entitlements.
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Why ObamaCare Is Wrong for America
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© 2016 American Enterprise Institute for Public Policy Research