Undo Obamacare's Damage. This reform is required as a first step toward larger reforms. The law created significant problems. Despite its advocates' repeated promises to the contrary, the law resulted in millions of Americans losing the private coverage they once had, paying higher premiums, and having fewer choices. In the process, it also saddled Americans with higher taxes.
Coverage gains were due primarily to adding able-bodied adults who can work to Medicaid, a government-run health care program once intended for the nation's most vulnerable—children, the disabled, and elderly Americans in poverty. Costly insurance mandates and regulations drove up the cost of coverage both inside and outside the government-run exchanges. The level of choice and competition within the government-run exchanges is worse than before Obamacare was implemented. Moreover, the government's increased role in the delivery of care through rules, regulations, and red tape further frustrated health care providers, undermined the doctorpatient relationship, and trampled personal and religious freedoms.
Obamacare policies should be repealed and replaced with free-market policies that move toward greater consumer control of their health care. Policies that should be repealed are those that caused the most damage including (1) tax increases (such as the tax on insurance premiums—which directly adds about 3 percent to the cost of coverage); (2) excessive federal regulatory mandates (such as the individual mandate to buy coverage, the employer mandate to provide coverage, and the insurance mandates to specify the kinds of products that can be sold); and (3) the large expansion of Medicaid beyond its original focus of helping vulnerable, disabled, or elderly Americans in poverty.
These essential steps to undo Obamacare's damage are only the first phase in realizing the broader conservative vision and addressing the wide range of challenges facing the health care system. Achieving that goal will require broader reforms across the health system, such as removing regulatory mandates that discourage choice and competition, reforming the tax treatment of health care, providing better solutions for low-income Americans than the Medicaid status quo, and modernizing Medicare.
Remove Regulatory Mandates that Discourage Choice and Competition. Health care is one of the most over-regulated sectors of the U.S. economy. Government often imposes regulations that are overly detailed or tilt the playing field to favor some competitors over others. Too often regulations governing the delivery and financing of medical care by doctors, hospitals, and insurers block innovations that might disrupt the long-standing business models with which the incumbent players are comfortable. Thus, the government exceeds its proper role and enacts restrictions that limit the incentives to innovate, leaving in place a system that is often outdated, inefficient, and unnecessarily costly.
Modernize Medicare to Meet Demographic, Fiscal, and Structural Challenges. Established in 1965, Medicare is a government health care program for those ages 65 and above, and some disabled. Medicare faces major challenges. It generates trillions of dollars in long-term debt. It must cope with an enormous demographic shift as America's aging population is growing steadily; it is funded by a workforce that is shrinking relative to the size of the rapidly growing population of retirees. It is saddled with an outdated design, based on price controls and central planning, which contributes to its inflexibility and sluggishness. Incredibly, traditional Medicare still fails to meet the most ba
sic test of insurance: the protection of patients from the financial devastation of catastrophic illness.
Facts and Figures
FACT: America is home to some of the best medical care in the world, but its financing and delivery are marred by significant weaknesses.
* The U.S. health care system is too costly, complex, confusing, inefficient, and uneven in its quality and results.
* Far too many people are without access to adequate, patient-centered care.
* These long-standing problems were made far worse by Obamacare, which was built on a model of centralized, top-down federal government management that is unworkable, unaffordable, and unfair.
* Moreover, under President Obama, pressing problems—such as Medicare's growing insolvency that threatens its ability to pay for seniors' care—were ignored.
FACT: Obamacare's damaging policies, such as tax increases, insurance mandates, and the Medicaid expansion, increased the cost of health insurance and hurt those who are most dependent on Medicaid.
* The health insurance premium tax adds about 3 percent to the cost of a policy, and the 2.3 percent excise tax on medical devices and annual "fees" on prescription drug manufacturers (totaling $4 billion in 2017) is passed on to the patient and consumer by way of higher medical bills and insurance premiums.
* Regulatory mandates also increased the cost of health insurance. The essential benefits mandates increased premiums by an average of 9 percent; the minimum actuarial value mandate increased premiums for the least expensive plans by an average of 8 percent; and the limitations on age-rating increased premiums for young adults by around one-third.
* The Medicaid expansion moved the program away from serving its original, core population of vulnerable Americans—the disabled, elderly, and children in poverty—to providing health insurance to able-bodied adults without dependents. This change increases the cost of the program and diverts resources away from those who need them most.
FACT: Health care spending is extremely high, and is a major driver in the growth of government spending.
* Health care spending accounts for nearly one-fifth of the national economy.
* Federal spending on Medicare, Medicaid, and subsidized Obamacare coverage will reach 6.1 percent of gross domestic product by 2025, up from 3.1 percent in 2000.
FACT: Obamacare imposed burdensome, costly federal mandates on individual insurance markets, which historically were regulated by states—driving up costs and driving out insurers from the markets.
* Obamacare's major insurance mandates and regulations increased premiums for young adults by as much as 44 percent, and by about 7 percent for pre-retirement-age adults.
* Under Obamacare, competition has fallen. The lack of insurer participation leaves exchange customers in 70 percent of U.S. counties with either no insurer choice, or a choice between only two insurers. The number of counties with insurer monopolies on the exchange increased dramatically from about 7 percent in 2016 to nearly 33 percent in 2017. There has also been a significant increase in the number of counties with a duopoly—from 29 percent in 2016 to 37 percent in 2017.
FACT: Obamacare put millions of able-bodied Americans on government Medicaid instead of mainstream private insurance, diverting the program from its original focus of helping vulnerable Americans—the elderly and disabled in poverty.
* The vast majority of gains in coverage since Obamacare took effect were due to dramatic expansions of Medicaid.
* Of the 15.7 million who gained coverage during 2014, 2015, and 2016, 14 million were the result of increased Medicaid enrollment with 11.7 million from states that expanded Medicaid.
* Private coverage saw a net increase in enrollment of just 1.7 million people.
* Total federal and state spending on Medicaid was $455.6 billion in 2013, and is expected to increase by more than 86 percent over the subsequent decade, reaching $850.1 billion by 2023, according to the Centers for Medicare and Medicaid Services (CMS) Actuaries. A large part of this increase is due to the effects of Obamacare and its Medicaid expansion.
* Medicaid tends to provide less patient access to providers, and poorer quality of care, than private insurance. Because low-income able-bodied adults cycle on and off Medicaid as their employment and incomes fluctuate, it causes disruption in their health care coverage. Enabling them to instead buy private insurance coverage (such as through an employer plan) would improve continuity of coverage and access to higher quality care.
* Congress should convert existing Medicaid funding for able-bodied adults and children into a premium support program for mainstream insurance plans. That would ensure that these populations are able to obtain the same basic coverage and care that more affluent people can afford, while also augmenting efforts to create more stable insurance markets.
FACT: Medicare must be reformed or it will consume more and more tax dollars and place seniors' access to health care at risk.
* Medicare has been running deficits since 2008.
* Based on the most recent 75-year projection, the CMS estimates that Medicare's unfunded liability—the dollar value of promised benefits that are not paid for—is between $32 trillion and $44 trillion for 2016. Medicare is the largest unfunded obligation of all federal entitlements.
* Total Medicare spending will jump from $683.2 billion in 2016 to $716.8 billion in 2017, and to more than $1.3 trillion by 2025, according to the Medicare Trustees Report. Medicare is a leading driver of federal spending and debt. Over the next 30 years, Medicare will make up more than three-quarters of the increase in spending for major health care programs.