Kasich-Hickenlooper Plan Rescues Obamacare, Abandons Patients – Pacific Research Institute

Kasich-Hickenlooper Plan Rescues Obamacare, Abandons Patients

Two of the nation’s highest-profile governors, frustrated by congressional inaction on health care, have offered up a proposal of their own.

Democrat John Hickenlooper, D-Colo., and Republican John Kasich, R-Ohio, hope that their plan will get a serious look, in part because they hail from different parties — and so think they can attract support from across the political spectrum.

In reality, their bipartisan strategy for “stabilizing” the nation’s health insurance markets would simply preserve Obamacare by doubling down on some of the law’s most destructive and costly provisions.

The governors argue that, despite the partisan gridlock of the last few months, there is a legislative goal “all sides can agree upon: restoring stability to our individual health insurance markets.”

Obamacare itself is to blame for the instability in insurance markets. It made coverage unaffordable, unattractive, or both for many Americans.

This year, premiums on the marketplaces were more than double the average individual market rates from 2013, before the exchanges opened for business.

Premiums rose because of Obamacare’s regulations, especially guaranteed issue and community rating. The former requires insurers to sell to all comers, regardless of health status or history. So people can wait until they get sick — and incur costly medical bills — to sign up.

The latter, broadly, forces insurers to charge every one of the same age the same price — and sets the maximum premium for the old at three times what the young pay. Insurers don’t respond by simply reducing premiums for the old and sick. They raise them for the young and healthy, too.

These premium hikes led to an exodus from the insurance markets by many younger, healthier Americans. Insurers were counting on their premiums to subsidize the claims costs of sicker exchange customers. This, in turn, has forced insurers to raise rates yet further — and driven even more people out of the insurance pool.

Kasich and Hickenlooper propose to solve this problem by essentially hoping that Obamacare’s individual mandate, which fines patients who go without insurance the greater of 2.5 percent of income or $695, works better. The governors say, despite years of evidence to the contrary, that the mandate is “a major factor in encouraging healthy young people to get coverage and avoiding a collapse in the marketplace.”

If that were the case, then exchange enrollment wouldn’t have fallen from 12.7 million in 2016 to 12.2 million this year. Many patients see the penalty as a small price to pay for avoiding Obamacare’s exorbitant premiums.

Kasich and Hickenlooper are also requesting that President Trump continue Obamacare’s cost-sharing reduction, or CSR, subsidies. These government payments reimburse insurers for covering certain out-of-pocket costs for low-income patients and will cost $10 billion next year.

Essentially, the subsidies obscure the cost of care for patients and pay off insurers for participating in the scheme. Only taxpayers lose.

That’s one of the reasons why Congress never appropriated funds for the program. The Obama administration didn’t let that stop them from making the payments anyway, in violation of the Constitution. The Trump administration has done the same, albeit with frequent threats to discontinue them at a moment’s notice.

Kasich and Hickenlooper want to keep picking the pockets of taxpayers — though they would prefer that Congress bless the move by appropriating money for the CSR subsidies.

On the bright side, the governors propose “to allow states greater flexibility in pursuing innovative strategies to preserve coverage” by seeking waivers from Obamacare’s rules.

But repeal-by-waiver will only ensure that Obamacare lives on indefinitely in left-leaning states that refuse to transition to a more market-based system. Worse, it’s up to the executive branch to distribute waivers, so there’s nothing to stop a future Democratic administration from invalidating waivers and restoring Obamacare from coast to coast.

Kasich and Hickenlooper’s plan is noticeably silent on Medicaid, but this is no surprise. The governors lead two of the 32 states that adopted Obamacare’s expansion of Medicaid to those making up to 138 percent of the poverty level. They’ve been among the budget-busting program’s chief cheerleaders.

The federal government currently picks up 95 percent of the cost for those newly eligible for the program under Obamacare. This is on top of the open-ended funding that all states receive for traditional Medicaid enrollees — contributions which cover between 50 and 75 percent of the costs for this group.

The more money states spend on Medicaid, the more they receive in federal funding. The governors are no doubt happy with this arrangement, as it prevents them from having to use Medicaid dollars effectively or keep costs in check.

Kasich and Hickenlooper have little interest in rescuing our health sector from Obamacare. Their bipartisan proposal would simply patch up the status quo — and allow the law to continue to lay waste to our healthcare system.

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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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