Rich Lowry: Obamacare stumbles on
For years, Obamacare supporters have been telling critics of the law to shut up and fall in line. Now, they are urging them to come to its rescue.
A key part of President Barack Obama’s domestic legacy is sputtering so badly that even the law’s boosters are admitting that the federal government needs to do more to prop it up. The Obamacare exchanges were supposed to enhance choices and hold down costs — and are doing neither.
Abandoned by more and more insurers, the exchanges — once billed as robust “marketplaces” — are becoming pitiful shadows of themselves.
In most or all of states like Alaska, Alabama, Arizona, Florida, Missouri, Oklahoma, North Carolina and Tennessee, probably only one insurer will offer insurance through the exchanges next year, reports The Wall Street Journal. One large county in Arizona may have no exchange insurer at all. An analysis by the Kaiser Family Foundation finds that 31 percent of counties in the U.S. will have one insurer, and another 31 percent will have just two.
It isn’t Republicans who are hobbling the law. It isn’t the greedy insurance companies, which were overoptimistic about the exchanges at the outset and are now paying the price. It is fundamental economic forces that the law’s architects blithely ignored. But economic incentives will not be mocked.
Obamacare regulations make health insurance more expensive and keep insurers from conducting their business on a rational basis. This means the exchanges are less attractive to younger and healthier people and therefore less economical for insurers. The mandate was supposed to force healthier people to buy insurance anyway, but it has proven too weak, and subsidies were supposed to cover the higher costs for poorer people, but they are only a Band-Aid on spiraling costs.
The exchanges have created perverse insurance products that feature the worst of all worlds: they have high premiums, and high deductibles and copays, and limited networks of doctors. No wonder the exchanges have attracted half as many people as they were expected to. Leave it to the federal government to create a market so unappealing that it is borderline unsustainable.
When Aetna announced it was exiting all but four state exchanges about two weeks ago, liberals charged that the company was exacting revenge on the Obama administration for blocking its hoped-for merger with Humana. But what accounts for UnitedHealthcare pulling back, and all the other exoduses? All these insurers made a go of it on the exchanges before reality slapped them in the face.
Insurance companies may be as malevolent as their fiercest critics depict them, but one can’t really begrudge them needing to make some money. If the Department of Health and Human Services can spin and obfuscate, these companies can’t ignore the bottom line. Analysts expect the insurers remaining in the exchanges to ask for big premium hikes next year.
The answer to this turbulence, the law’s supporters say, is yet more subsidies. They are paying an inadvertent obeisance to the old Ronald Reagan quip that the government’s view of the economy is: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” Obamacare’s boosters are loath to admit that there might be something wrong with the structure of a law that they have celebrated as a glorious success from the day it passed. Instead, they will now argue that Republicans are sabotaging it by declining to double down on its subsidies.
But it obviously makes no sense for the government to make a product more expensive with one hand and then to subsidize its cost with the other. This was pointed out at the time the law was being debated. But the Obama administration and its allies were too transfixed with “making history.” And so they did — by passing an Affordable Care Act that is one of the great misnomers in the history of major American legislation.