Biden’s health care agenda entrenches a status quo that isn’t working
Health care reform is back on the agenda in Washington. At the end of January, President Biden signed two executive orders that aim to make it easier for people to sign up for coverage. On Saturday, the House passed a $1.9 trillion covid-19 relief package that includes billions in new health insurance subsidies.
The president and his allies in Congress are ignoring why the uninsured are foregoing coverage in the first place. Simply put, Obamacare has made it too expensive. Giving people another three months to enroll, or paying them to sign up for coverage, only masks that fact.
Consider the most high-profile component of Biden’s executive orders, which creates a “special enrollment period” on the federally run HealthCare.gov exchange from Feb. 15 to May 15. People without insurance in the three dozen states that use HealthCare.gov have another chance to purchase individual-market coverage. States that run their own exchanges will likely follow suit.
Of course, people without coverage could’ve signed up during open enrollment last fall, which ran from Nov. 1 to Dec. 15 on HealthCare.gov. In some states, they had even more time. Open enrollment on Covered California ran through Jan. 31.
If these folks declined to purchase coverage two months ago, why would they sign up now?
The president’s defenders claim that a special enrollment period is necessary because many people lost job-based insurance or other coverage during the pandemic. But under the terms of Obamacare, people who experience certain life events, “including losing health coverage, moving, getting married, having a baby or adopting a child” have always been eligible for special enrollment.
In other words, Biden’s new special enrollment period is “solving” a problem that existing law already addresses.
People aren’t uninsured because they forgot to sign up last fall. They’re choosing not to purchase insurance because it’s too expensive, the deductibles are too high and the network of providers is too narrow.
This year, the average benchmark exchange premium for a family of four is just shy of $1,500 a month. That’s up from $794 in 2014, the year the HealthCare.gov marketplaces opened. Meanwhile, the typical deductible for an individual bronze plan, the least comprehensive on the exchanges, is nearly $7,000 this year.
People who don’t receive taxpayer help with those costs have increasingly been opting to go without coverage. Between 2016 and 2019, 2.8 million people who did not qualify for subsidies left the exchanges. That’s a drop in unsubsidized enrollment of 45%.
Democrats are aware of these numbers. That’s why their covid-19 relief package would extend subsidies to many more people — and make them more generous. It would lower the percentage of income that people have to contribute toward their premiums, up to a maximum of 8.5%. Under current law, only those with incomes between 100%and 400% of the poverty level can get federal help with premiums, and their premium contribution can reach nearly 10%.
The president has also issued a number of vague directives that HHS “reexamine” policies that make it harder to enroll in Medicaid.
Medicaid was created to be an insurer of last resort for the truly needy. But it’s now the largest health insurer in the United States, covering more than 70 million people. That’s more than one in five Americans, many of whom are able-bodied and perfectly capable of providing for themselves.
Covering all those people is incredibly expensive for taxpayers. Medicaid consumed nearly one-third of state budgets in 2018, according to research from the Foundation for Government Accountability. And that was long before covid-19 threw many states’ finances into disarray.
All that spending buys poor-quality care. The most rigorous investigation of Medicaid’s effectiveness to date — a randomized controlled study of Oregon’s Medicaid program between 2008 and 2010 — concluded that Medicaid “generated no significant improvements in measured physical health outcomes” among beneficiaries, relative to patients who had no coverage whatsoever.
A lack of high-quality, affordable coverage and an ineffective public insurance system — these are the fundamental problems with American health care. Biden’s executive orders aim to further entrench this failing status quo.
Sally Pipes is president, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute.