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Perhaps the most common question I’m asked about ObamaCare is: “Will I be able to buy my way out of it?” The answer is: “Not unless you’re very rich.”
The plan before the Senate creates a set of 50 state-based insurance “exchanges” that are established as markets for health plans. Consumers must buy policies from their employers or through the exchanges–but, either way, their choice of coverage is limited to one of four basic insurance plans that the government sanctions.
Private insurers will still compete to offer policies but must model their coverage on one of these four templates. In short, the Senate bill explicitly standardizes health benefits and then establishes elaborate mechanisms (including subsidies and penalties) to pay for them.
Here’s the rub: While these four plans vary from low- to high-cost options, the benefits offered under them are pretty much the same. The difference between the cheaper and pricier plans is mostly the amount of cost sharing (e.g., you pay less for insurance if your co-pays are higher).
In effect, the plan creates a single national health-insurance policy. Consumers’ only real option is to trade higher co-pays for lower premiums. But we’ll all get the same package of benefits established by a series of new agencies and an “insurance czar” seated in Washington.
Once the exchanges are in place, the individual market–the ability to go directly to an insurer and buy a health-care policy–will disappear. You’ll have only two places to buy insurance, in the exchanges or through your workplace.
As for health plans offered by employers, “no health-insurance policies could be issued (other than grandfathered plans) that don’t meet the actuarial standards set for these plans” sold in the exchanges. The government will “define the essential health benefits” that all plans must eventually offer, not only those sold in the exchanges but also plans offered by employers. But like other elements of today’s private coverage, the grandfathered plans also disappear in short time. While the bill allows some employer plans to continue as they are today, that’s only so long as the policy doesn’t change–and natural market forces will ensure that most such policies must change within a few years after the bill becomes law.
All of which brings us to the question of whether you’ll be able to spend extra money to add benefits that exceed the government’s basic package or opt out of that plan entirely. The bill doesn’t address this question directly–yet I can say with great confidence that it will be costly and in some cases impossible.
The bill leaves these issues in the hands of the bureaucracies that will write the law’s enabling regulations. And it’s clear both what the spirit of the Obama plan and the habits of these bureaucracies will produce.
The overriding goal of this reform is to turn health insurance into a more “egalitarian” benefit that’s the same for everyone, regardless of income, personal preference or need. So rules written under President Obama to implement the Obama plan are a sure bet to intentionally curtail anyone’s ability to wrap around this national coverage with a supplemental policy or to contract privately with doctors to pay your way out of its limitations.
This is exactly what the bureaucracy’s done with Medicare. Doctors accepting Medicare can’t contract privately with Medicare patients to bill for services that Medicare doesn’t cover. Nor can patients buy added coverage to help plug Medicare’s gaps. (The “Medigap” that many seniors now buy are tightly regulated by the government to limit how much they expand on Medicare’s basic benefits; they mostly just help defray co-pays.)
In short, beneficiaries are trapped inside the Medicare insurance scheme, just as they’ll soon be trapped inside the ObamaCare exchanges. Doctors can’t offer benefits not covered by the government plans, and patients can’t buy extra insurance to make up for many gaps.
These restrictions were designed into Medicare for a reason: Progressives don’t want it to be easy for rich seniors to buy their out; they fear that if the well-off can leave the federal plan, it will become a lower-end benefit. That is, it will wind up like Medicaid, whose enormous problems are largely ignored by politicians because poor Americans don’t have the political power to force improvements.
The very rich, of course, will be able to buy their way out of ObamaCare. Many of the best doctors will go cash only, opting entirely out of the Obama program, to cater to a wealthy clientele. But only the truly affluent will have the cash to escape.
The vast rest of us will be locked inside the new system–stuck with the same collection of government-decreed medical benefits.
Scott Gottlieb, M.D., is a resident fellow at AEI.
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