In what could be described as a campaign-rally speech last week in Michigan, President Trump declared Obamacare dead. “Essentially, we are getting rid of Obamacare… . Some people would say, essentially, we have gotten rid of it.”
Well not exactly, Mr. President. The Affordable Care Act is still with us, explains Michael Tanner at the Cato Institute. Moreover, the problems are getting worse.
In many ways, Obamacare’s original sin is its requirement that insurers cover people with pre-existing conditions without charging them premiums commensurate with their costs. By trying to shoehorn people who are almost by definition uninsurable into the traditional insurance markets, Obamacare undermined and destabilized those markets — risking what actuaries call an adverse-selection death spiral, in which the sick are increasingly likely to purchase insurance, while the healthy drop out of the market. The individual mandate was a costly and ineffective attempt to deal with this problem by forcing young and healthy people to buy overpriced insurance, thereby offsetting the losses insurers were suffering on covering the old and sick. Other troublesome aspects of Obamacare, from subsidies to the government-designed standard benefits package, flow naturally from this point.
Repealing the individual mandate was, on the whole, a good thing, because mandating that Americans buy a specific government-designed product is deeply antithetical to the concept of individual liberty that is the heart and soul of the American experiment. But by repealing the mandate without reforming or repealing the rest of the health-care law, Republicans have probably sped up the law’s downward actuarial spiral.
Taxpayers will have to cough up more than $40 billion in insurance-exchange subsidies this year, as well as another $33 billion or so in higher costs for an “expanded but still unreformed Medicaid program that already costs roughly $600 billion.”
“Unfortunately,” notes Mr. Tanner, “Obamacare is likely to be with us for some time to come. The president and congressional Republicans failed to repeal and replace the Affordable Care Act. And no amount of sugar coating can disguise the fact that Americans will continue to pay the price for that failure.”
Read more here.