The wrong way to repeal ObamaCare

As President-elect Donald Trump prepares to enter the oval office, Sen. Mike Enzi (R-Wyo.) hopes to weaken ObamaCare through a process known as budget reconciliation. This will repeal most of ObamaCare but leave the law’s onerous insurance regulations in place and potentially worsen our already dysfunctional healthcare system.

Budget reconciliation is a parliamentary maneuver that allows Congress to pass budget-related bills with only 51 votes. Enzi plans to use this process to override a potential filibuster from Democrats and repeal ObamaCare’s tax and spending provisions, such as the individual mandate, employer mandate, health insurance subsidies, and Medicaid expansion.

{mosads}“Congress already passed a repeal of ObamaCare in early 2016 using the same process, but President Obama vetoed the legislation,” said Enzi’s spokesman, Max D’Onofrio. “With a new president incoming who favors ObamaCare repeal, Congress has made it a priority to repeal and replace ObamaCare. This will provide relief to Americans whose premiums have risen wildly and who no longer have the healthcare options they had in the past.”

However, repealing ObamaCare’s subsidies and taxes without also scrapping its insurance regulations could make health coverage even more expensive.

Prior to ObamaCare, states like New York, Washington, and Massachusetts established insurance regulations nearly identical to ObamaCare. They mandated that insurers cover sick people and charge them the same premiums as healthy people. They also forced insurers to charge older individuals no more than two or three times the premiums of younger individuals, even though their healthcare is six times more expensive.

While these states wanted to make health coverage more affordable for sick people, they ended up ruining health insurance for everyone. These regulations forced insurance carriers to raise premiums on young and healthy individuals in order to subsidize the health care of sicker and older customers. Many healthy people soon realized it made no sense to buy artificially expensive health insurance and cancelled their plans. This pressed insurers to raise premiums even further on remaining customers in order to stay viable. In turn, more young and healthy customers dropped coverage, which raised premiums even higher, pricing out even more healthy people, and the cycle continued.  

This phenomenon, known as a health insurance death spiral, virtually destroyed these states’ individual health insurance markets. After Washington State implemented insurance regulations, premiums spiked 78 percent and 25 percent of enrollees in the individual market cancelled their policies.

ObamaCare’s insurance regulations have created a similar death spiral nationwide. Insurers are leaving the insurance market because too many sick people and too few healthy people are enrolling. After Aetna announced it was dropping coverage in 11 states, their CEO, Mark Bertolini said: “[ObamaCare’s] rates rise and the healthier people pull out because the out-of-pocket costs aren’t worth it. The population gets sicker and sicker and sicker and sicker, the rates get higher to try and catch it, it’s a fruitless chase, and ultimately you end up with a very bad pool of risk.”

But so far, ObamaCare has averted the sort of collapse that many states experienced prior to the healthcare law. That’s because Obamacare spends billions on subsidies to shield many individuals from the cost of its unaffordable premiums. In addition, it strong-arms the uninsured to buy coverage through the individual mandate’s tax penalties.

If Congress and President-elect Trump eliminate ObamaCare’s penalties and subsidies, but maintain its insurance regulations, healthy individuals will likely stampede out of the individual market like they did in states that pioneered these ruinous regulations. The Congressional Budget Office estimates that ending the individual mandate would “cause a substantial reduction in the number of [healthy] people with health insurance” and increase premiums by 20 percent. Partial repeal could effectively accelerate our slow-motion death spiral into hyper-drive.

This is not to say that ObamaCare should not be repealed. But Enzi and his fellow Congressional Republicans should also repeal ObamaCare’s insurance mandates and allow a more affordable, patient-centered healthcare system to flourish.   

Charlie Katebi is an advocate at Young Voices and a Health Policy Analyst based out of Cheyenne, Wyo.

The views expressed by authors are their own and not the views of The Hill.