After Midterms, Democrats Inch Toward Government-Run Health Care

The midterm elections were good to Democrats. They took the majority in the U.S. House and captured several state legislatures.

Public frustration with health care was a big reason why. Just before the election, seven in 10 voters said that the issue was “very important” when deciding whom to vote for.  And more people trusted Democrats on the issue than Republicans.

But that trust may fade if Democrats return to the government-centric brand of health reform that got many of them kicked out of office back in 2010, as the public revolted against Obamacare.

At the state level, Democrats are trying to resurrect one of Obamacare’s least popular features, the individual mandate. Americans hated the mandate in part because it forced them to buy expensive plans on Obamacare’s exchanges or pay a fine of the greater of $695 or 2.5 percent of income. From 2013 to 2017, average premiums doubled, according to the Department of Health and Human Services.

Last year, Congress effectively repealed the mandate by zeroing out the fine for non-compliance. But as soon as the ink was dry, New Jersey and Washington, D.C., created their own state-level mandates. Recently, Vermont passed a law to impose a mandate of its own in 2020. Minnesota,

Maryland, Connecticut, Hawaii, and Rhode Island are looking at similar policies. The Democratic super-majority in California’s legislature will likely have no problem enacting an individual mandate this year.

Massachusetts has had an individual mandate on the books since 2006; without a superseding federal mandate, it will come back into force.

State governments controlled by Democrats are also trying to block President Trump’s effort to bring more affordable short-term health plans to the insurance market.

Late in its tenure, the Obama administration limited the duration of such plans, which are not subject to Obamacare’s cost-inflating mandates, to three months. This year, the Trump administration promulgated a new rule allowing insurers to sell short-term policies that last up to a year — and permitting them to renew the plans for up to three years.

Democrat-led legislatures in some states — including Massachusetts, New Jersey, New York, and California — have responded by banning the plans. Illinois recently set the maximum duration for a short-term plan at six months.

They’re depriving their constituents of affordable coverage. Consider a recent analysis of plans purchased during the first week of this year’s open enrollment conducted by eHealth, an insurance broker. The average individual monthly premium for a short-term plan was only $110 — less than one-fifth as much as the $574 average for an Obamacare-compliant plan.

Fourteen largely blue states are also considering further expansion of Medicaid, the joint federal-state healthcare program for the poor, by allowing people to “buy into” it.

That could harm insurance markets and patients’ ability to access care.

Medicaid pays doctors and hospitals much less than private insurance does. In some cases, providers lose money on every Medicaid patient they treat. In the aggregate, hospitals receive 88 cents for every dollar of care they provide Medicaid beneficiaries.

If Medicaid offers cut-rate coverage to everyone, private insurers will go out of business, unable to match the government’s artificially low rates. Providers, meanwhile, will have to limit the number of Medicaid patients they see. After all, they can’t afford to treat a pool of patients whose costs are higher than the revenues they bring in.

Consequently, a Medicaid buy-in could make it harder for everyone in the program — especially the poor — to get the care they need.

At the federal level, Democrats can’t do too much damage. While they control the House, they lost seats in the Senate. Any bill they manage to push through would likely die in the upper chamber.

That won’t stop them from trying. This fall, Sen. Bernie Sanders introduced a bill that would require drug makers to hold their prices down to the median price for prescription drugs in five other countries — Canada, the United Kingdom, France, Germany, and Japan.

These five countries levy strict price controls on drugs. So Sen. Sanders’s plan would import those price controls here.

The problem is that those countries are free-riding off U.S. research and development. It already takes ten years and $2.6 billion to bring a new drug to market. And we fund about half of the world’s medical R&D.

If drug prices were capped, companies would no longer be able to bring in the revenue needed to sustain robust research programs. Drug firms would similarly lose access to investor capital; investors won’t underwrite drug development if government price controls essentially guarantee they won’t see a return on their investment.

Democrats seem to believe that the cure for every healthcare problem is a bigger dose of government. But the American people have rejected that approach before — and they may do so again.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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