In Washington, the healthcare debate isn’t about rescuing the people in the individual insurance market from ObamaCare’s high premiums and poor coverage. Nor is it about improving patient welfare, or reducing medical costs. It’s about using the “coverage for all” mantra to suck huge sums of money out of the private sector with ObamaCare taxes, premiums, and regulations.
ObamaCare forces the purchase of health insurance without regard to its price, quality, or value. Federal policies that increase coverage increase the amount of money flowing to special interests. Federal policies that decrease coverage mean more money for private households. No wonder both ObamaCare supporters and Obamacare reformers evaluate proposed changes on whether they increase or decrease coverage.
Americans had plenty of “stable” health coverage before ObamaCare. From 1987 to 2012 the percentage of people with coverage fluctuated between 83.7 and 87.1 percent. Twenty to 30 percent of the uninsured were not U.S. citizens. Many of them had coverage in their home country. Roughly 30 percent of the uninsured were eligible for Medicaid but did not sign up because they didn’t think they needed medical care.
{mosads}People who didn’t sign up until they needed care saved taxpayers big bucks. By 2014, 77 percent of Medicaid enrollees were in some type of managed care plan. Unlike traditional fee-for-service Medicaid which generates payments only if someone seeks medical care, Medicaid managed care providers get paid for every person enrolled whether he gets medical care or not. Fueled by the ObamaCare expansion to able-bodied people with small medical care needs, 2016 Medicaid managed care spending was over $236 billion. Payment for no services rendered generates big money. It gives the Medicaid establishment plenty of reason to protect expansion.
It also channels money from other uses into the pockets of various health service providers. The Oregon Health Experiment showed that Medicaid coverage for able-bodied people increases health spending by 35 percent without improving common clinical measures of health.
Were people uninsured because they wanted coverage but couldn’t afford it? In 2005, economists Kate Bundorf and Mark Pauly estimated that between one-quarter and three-quarters of the uninsured could afford coverage but didn’t buy it. Coverage is the most expensive way to pay for medical care. Most people have modest medical expenses. Some prefer to save money by paying cash. Actuaries at Milliman found that only 0.2 percent of the commercially insured had conditions costing more than $100,000 in a year.
In 2013, an estimated 40 percent of the uninsured had family incomes of more than $50,000 a year. Most could afford to pay cash, and they did. Researchers Jack Hadley and John Holahan estimated the uninsured paid for 60 to 65 percent of their medical care. Total uncompensated care was less than 3 percent of total personal health care spending, a rate lower than the current delinquency rate on single family home mortgages.
A 2013 Health Affairs study estimated that 42 million uninsured Americans generated $85 billion in uncompensated care. By 2018, the Congressional Budget Office estimates that ObamaCare will spend $63 billion on insurance subsidies for 10 million people. As Edmund Haislmaier and Drew Gonshorowski calculate, ObamaCare increased the number of privately insured people by just 1.7 million through 2016. This means ObamaCare is spending 75 percent of the amount spent on all uncompensated care to subsidize coverage for about eight million people who already had coverage.
Americans without coverage would have broad access to medical care even if ObamaCare were repealed. In most states, adults unable to work receive automatic Medicaid benefits through Supplemental Security Income. At least 80 percent of U.S. adults under 65 who become unable to work qualify for Medicare through Social Security Disability Insurance. Workers’ compensation covers work injuries. The State Children’s Health Insurance Program covers children. Many auto policies cover medical costs from auto accidents. The federal Emergency Medical Treatment and Labor Act and its state counterparts require hospitals to stabilize and treat anyone with a serious acute condition.
State programs for the medically indigent help low income people pay for acute care. Free clinics and federally qualified health centers provide free primary care. The federal government provides free childhood vaccines. Medicare covers the uninsured with end-stage renal disease. Physicians, hospitals, and private sector charities provide free medical care, financial help, discounted drug prices, and travel and lodging assistance.
The problems of the relatively small number of people unable to get needed medical care could have been solved by selectively increasing subsidies the groups in the best position to serve those who need it, safety net providers and insurers of last resort. Instead, ObamaCare subsidizes coverage for people who previously paid for their own and benefits those who get paid for no services when Medicaid enrolls healthy people in their plan.
Elected officials refusing to change ObamaCare’s taxes, mandates, guaranteed issue, and Medicaid expansion support ObamaCare’s absurd, irresponsible, and reckless spending. Remember that the next time some politician defending ObamaCare provisions spouts platitudes about pre-existing conditions and the poor.
Linda Gorman is director of the Health Care Policy Center at the Independence Institute (@i2idotorg), a free market think tank in Denver.
The views expressed by contributors are their own and are not the views of The Hill.