Most Democratic presidential candidates are supporting some version of Medicare for All, a radical proposal to put Washington in complete control of the health-care system. Joe Biden, however, promises to “protect and build on the Affordable Care Act,” the last Washington health-care experiment, which is better known as ObamaCare.
Yet ObamaCare largely failed in its primary goal—to create a better market for individual health insurance. The ObamaCare exchanges are performing much worse than expected when they were launched in 2014. And this has nothing to do with the Trump administration. Rather, the law failed because of its perverse construction.
Most damaging were regulations that mandated a long list of expensive benefits while fixing rates. Premiums must be identical for people of the same age regardless of their health; young people pay inflated premiums; and older couples are forced to purchase pediatric dental coverage, for example. Result: Premiums more than doubled by 2017.
The Congressional Budget Office estimated in 2014 that there would be 25 million enrollees covered in the exchanges in 2019. The actual figure is about 10 million. People who don’t qualify for huge subsidies or who aren’t sick don’t find value from the products. Exchange enrollment has stabilized, but only because of the subsidies. The number of unsubsidized enrollees in the individual market dropped from 9.4 million to 5.2 million between 2015 and 2018.
The exchanges have become a high-risk pool for lower-income people with a limited selection of plans, most of which exclude top doctors and facilities. From 2017 to 2018, families making more than three times the poverty line (around $75,000) were the only income group with a significant overall coverage loss.
The left has accused the Trump administration of sabotaging ObamaCare. In reality it took steps to stop the bleeding. First, a market-stability rule limited enrollees’ ability to game ObamaCare’s rules by waiting until they need care to buy coverage. Second, the administration approved state programs to subsidize high-cost patients without spending additional federal money. States implementing these programs have seen premiums drop by more than 10%.
The Trump administration also took action to improve options for those left behind. It reversed a late-2016 Obama administration regulation that restricted the ability of families to obtain affordable short-term plans that don’t comply with all the ObamaCare mandates. Another Trump rule, now under court review, expanded businesses’ ability to form association health plans. In total, these expanded options, along with the elimination of the individual mandate penalty, provide Americans an annual net economic benefit of $45 billion per year.
In contrast, ObamaCare’s cost-benefit analysis disappoints. Overall individual market enrollment is up only three million people since ObamaCare took effect despite more than $50 billion a year in new subsidies.
Compare the $17,000 per additional covered life from ObamaCare to a new June 2019 rule by the Trump administration that is expected to add more than seven million people to the individual market—all without any new mandates or federal spending. This new rule permits employers to give employees tax-free contributions through health reimbursement arrangements so they can purchase coverage in the individual market. This policy change could lead to more secure, portable and personalized health insurance—especially if it’s bolstered by additional reforms to federal regulation of the individual market.
ObamaCare’s changes failed in other ways, too. They further entrenched a broken third-party payment system. They transfer tens of billions of dollars more each year to the health-care industrial complex. This isn’t what Americans were sold, and perhaps it’s why many leading Democrats have moved on to Medicare for All.