Forging A Post-Obamacare Health Policy Debate

The end of Obamacare is near. But while Republican lawmakers plan on repealing the law early in 2017, they may take as long as three years to finalize Obamacare’s replacement.

In other words, the debate over the future of America’s health system is just beginning. Democrats are certain to use every opportunity to defend Obamacare as a success. So what better time to debunk some of the biggest misperceptions about health policy that liberals have been pushing for decades?

Ridding our healthcare debate of these fallacies is vital to building a successful health sector from the ruins of Obamacare.

Myth #1: Universal coverage should be the ultimate goal.This idea makes for a great, crowd-pleasing sound bite. “We are the only industrialized nation that doesn’t provide universal health insurance coverage,” goes the cliché.

But furnishing everyone with health insurance is pointless if that coverage doesn’t actually secure care.

Citizens of my native Canada have “universal coverage” — and yet face astounding delays when seeking treatment. The inevitable rationing of care that comes with a single-payer system has led to median wait times of 20 weeks between referral from a general practitioner to actual treatment by a specialist, according to a new analysis by the Fraser Institute.

Obamacare’s insurance expansion further demonstrates the folly of “universal coverage.” The administration brags that 20 million Americans gained insurance under the health law. Yet many of these patients are still unable to actually get care.

Those who signed up for an individual bronze exchange plan for 2017 face average deductibles — the amount they must pay out of their own pockets before their insurance kicks in — of over $6,000. Average deductibles for family bronze plans are over $12,000. Exchange customers who don’t qualify for federal subsidies have had to deal with average monthly premium hikes of 22 percent.

It’s no wonder, then, that half of Obamacare customers say they’ve cut back on care to manage health costs, according to research by the consulting firm GfK. The Commonwealth Fund, which is generally supportive of Obamacare, recently found that 43 percent of low-income families report forgoing care because of costs.

Myth #2: Health care and health insurance are the same thing. The mindless focus on expanding coverage also distracts from another essential metric for evaluating health policy — actual health outcomes.

Obamacare’s supporters tout the law’s Medicaid expansion as a historic accomplishment. The law allows individuals with incomes up to 138 percent of the federal poverty level, or $11,880 in 2016, to sign up for the program. But these newly eligible Americans aren’t likely to see their health improve, as a massive study of Medicaid patients in Oregon makes clear.

Oregon provided a perfect testing ground to evaluate the impact of government-provided insurance. The state enrolled beneficiaries in Medicaid by lottery in 2008 — an arrangement that allowed researchers to compare the 6,387 who got into the program with the 5,842 who applied but were left uninsured.

What the researchers discovered was shocking. “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years” compared with those who were uninsured. The study found, for example, no difference in the use of medications to treat hypertension or high cholesterol. That same investigation revealed a 40 percent increase in emergency-room use among Medicaid patients for the 15 months after they gained coverage.

Myth #3: No one should ever have to pay out of pocket for health care. Since 1960, the share of national spending on health care paid by patients themselves, out of pocket, has plunged from nearly half to just 11 percent.

This trend has been driven almost entirely by the misguided notion that health insurance should cover all medical expenses, large or small.
For years, the government has encouraged third parties to cover the cost of patients’ health care by excluding employer-provided insurance from income tax but refusing to do the same for individually purchased coverage.

The result has been decades of demand-driven healthcare inflation, opaque and confusing pricing, and a marketplace that’s utterly unsuited to consumers. A better approach would give consumers control over their own healthcare dollars. If they were spending their own money, they’d be far more likely to shop around for the best deal — and far less likely to waste money on care they may not need.

This was the thinking behind tax-advantaged Health Savings Accounts. When combined with high-deductible insurance policies, these accounts empower individuals to put aside money tax free to cover routine health expenses. The insurance plan, meanwhile, protects the patient from financial ruin if there is a major medical emergency.

After all, that’s what insurance is supposed to do. Before Obamacare’s excessive coverage mandates took effect, catastrophic plans were widely available on the individual insurance market, and they were cheap. We should aim to restore this state of affairs — and return insurance to its proper role.

4) The pre-existing condition problem puts tens of millions of people at risk. Before Obamacare became law, the administration claimed that roughly half the country could be at risk of being denied coverage because of pre-existing conditions. That was an exaggeration of epic proportions.

First, the claim ignores the fact that well over half of insured Americans — about 177 million people — get coverage through their employers, and federal law has long protected them from coverage denials.

Second, it ignores the fact that more than 37 percent of insured Americans get coverage from Medicare, Medicaid, or other government programs that don’t impose pre-existing condition limitations.

Of those who currently purchase insurance on the individual market — and were thus vulnerable to coverage denials prior to Obamacare — over 58 percent have some other form of insurance, according to the most recent data from the Census Bureau.
Obamacare made pre-existing conditions a central issue — to disastrous effect. The law forced marketplace insurers to accept all comers, without regard for their health status. This reform effectively removed the incentive for healthy individuals to get covered, since they could easily wait until they needed care before purchasing a policy.

Consequently, the exchanges have been flooded with mostly high-cost patients. That’s driven premiums up and forced insurers to either accept massive financial losses or exit the exchanges entirely.

If the GOP does take three years to replace Obamacare, the outcome could be disastrous. Lawmakers seeking re-election in two years may prove unwilling to stand up for the reforms needed to bring affordable, quality care to all Americans. The best way to avoid that fate is to shift the terms of our health policy debate right now by consigning these misconceptions to history’s dustbin, where they belong.

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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