Five years and nine months after its passage, the federal government has issued more than 10,000 pages of regulations related to the implementation of Obamacare.
Get ready for several thousand more pages if Hillary Clinton takes the White House. She’s proposing a raft of new government mandates to “protect the Affordable Care Act — and build on it.”
Obamacare’s many mandates have caused health costs to shoot up nationwide. By doubling down on this mandate-heavy approach, Clinton will only make American health care less accessible and more expensive.
To see the impact of government mandates on the cost of health care, consider a few of Obamacare’s most onerous ones — “guaranteed issue” and “community rating.” The former requires insurers to accept all comers regardless of their health status or history; the latter forbids insurers from charging one person any more than three times what they charge any other person, regardless of age or health status.
All exchange policies must also cover a host of services and treatments that many patients may not want or need, like speech therapy or pediatric vision care.
Thanks largely to these excessive requirements, premiums have skyrocketed. Leading insurers in Maryland and Tennessee are set to raise prices for plans on their exchanges — which opened on November 1 — by an average of more than 30 percent next year. Many New Mexicans will see rates rise by more than 50 percent, on average.
Clinton proposes that we take on these mandate-induced price hikes — with more mandates. Her plan would allow states to reject “unreasonable health insurance rate increases.” She also wants to prohibit insurers from charging any more than $250 a month in copayments for prescription drugs.
In other words, her solution to rising insurance costs is simply to ban them. If insurers can’t comply with these mandates without raising rates, they’re free to go out of business.
Clinton would also use the government’s power to intervene in the drug industry.
Under her plan, federal officials would negotiate drug prices directly with manufacturers through Medicare Part D, the federal prescription benefit plan for seniors.
Never mind that Part D is the rare government program that has actually cost less than projected. The entitlement currently costs some 45 percent less than what the non-partisan Congressional Budget Office estimated it would when the program began in 2006.
Part D’s price tag has come in below government forecasts because the program relies on market forces. Seniors choose between competing plans administered by private insurers. Plan providers negotiate prices with drug companies; that allows insurers to offer an array of plans. Beneficiaries then pick the plan that best suits their needs and budget.
Clinton’s proposal would only disrupt this arrangement, which is working well.
Price controls can lead to cost savings in the short run. But they invariably reduce the number of new treatments that make it to market, not to mention create shortages and rationing in the long term. Seniors subject to Hillarycare 2.0 could find themselves stuck with older, cheaper therapies — or unable to get the drugs they need.
She’s looking to needle drug companies in other ways, too. Clinton would prohibit them from deducting spending on consumer advertisements as a legitimate business expense. On top of that, she’d require drug makers to dedicate a minimum amount of revenue to research and development. Those that fail to meet her arbitrary research-funding threshold would forfeit tax incentives and other federal support for R&D.
Yet four of the world’s ten biggest R&D spenders were pharmaceutical companies in 2013. These firms spent between 11.5 percent and 19 percent of their revenues on research.
Price controls on their products, government meddling in their research, and the importation of drugs from Canada could cause them to scale back R&D — or spend money on unpromising research pursuits, just to comply with the law. Neither path would be positive for patients and their long-term health.
Behind all Clinton’s health reform proposals is the same mistaken premise that gave rise to the Affordable Care Act — that the best way to improve health care is through more federal rules, regulations, and mandates.
Obamacare has shown that such an approach yields higher costs for patients. Under Hillarycare, they’d be higher still.