Five Reasons Obamacare is a Failure
Twelve years ago, Democrats unloaded the Affordable Care Act (ACA), also known as Obamacare, onto the American people. Since then, the costs of health care and insurance have skyrocketed. Here are five reasons why Obamacare has been an utter failure:
1. Obamacare has increased the cost of health care and health insurance.
The ACA’s federal mandates and spending, including Medicaid expansion and subsidized individual plans, have drastically increased the cost of health care and health insurance. In 2020, health care spending was 19.7 percent of U.S. Gross Domestic Product: a 48 percent increase from twenty years prior. As Dr. Brian Blase of the Paragon Health Institute explained in his testimony before the Education and Labor Committee, “Subsidies increase demand, raise prices, and thus increase total spending in that area.”
Despite this, the Biden administration’s so-called American Rescue Plan Act (ARPA) increased subsidies for the ACA exchanges, ensuring the price of health care coverage will continue to rise for anyone not receiving a government subsidy. The more the government has gotten involved in health care, the more expensive it has become.
Consolidation in the health care market, driven by Obamacare, is increasing prices and making it difficult for middle-income Americans to afford household necessities. Obamacare’s architects, who once heralded provider consolidation as the key to lowering costs, now admit their policy creates “a barrier to better care.” Over the past twenty years, premiums for individuals have increased 213 percent and family coverage premiums have increased 245 percent. A 2021 Heritage Foundation report estimates that Obamacare has doubled the cost of individual health insurance. Heritage also cites costly new mandates and regulations on the individual market imposed by the ACA as a reason for this rise in costs.
Even those on the ACA exchange are facing difficulties because unsubsidized plans are plagued with extremely high deductibles. An average family of four receiving unsubsidized coverage through the ACA exchange must spend $25,000 out-of-pocket and on premiums before insurance kicks in. This is unaffordable for many families, particularly during an inflation crisis.
Additionally, many Obamacare plans have narrow networks that tend to exclude the best hospitals and doctors in certain areas. Conversely, employer-based plans typically provide richer and more comprehensive coverage than plans offered on Obamacare exchanges. In simple terms, more options mean better coverage.
2. Obamacare increases Americans’ reliance on the federal government.
Over 155 million Americans rely on — and are satisfied with — their employer sponsored insurance (ESI). In fact, 75 percent of Americans say that coverage played a role in their decision to accept their current job. The ability to offer health insurance is an extraordinarily powerful tool for employers to use while recruiting, especially during a labor shortage.
Yet, Democrats are attempting to destroy this powerful benefit for employees and increase workers’ reliance on the federal government by moving them to exchange plans with higher deductibles, lower actuarial value, and narrower networks. Now that Obamacare is considered “the law of the land,” multiple Democrats have called for its expansion by siphoning Americans from employer-sponsored coverage. They are accomplishing this by weakening the firewall between ESI plans and ACA plans. The firewall currently keeps workers in their employer-sponsored plans, which keeps ESI risk pools healthy and premiums low. The Democrats’ Build Back Better Act would weaken the firewall by lowering the ESI affordability threshold from 10 percent to 8.5 percent, forcing taxpayers to spend $10.8 billion on individuals, most of whom already receive health care coverage from their employer. This is a purposeful attempt to push Americans off their employers’ insurance plan and onto ACA exchanges.
3. On a per person basis, Obamacare is far more expensive than anticipated for taxpayers.
Employer-sponsored insurance provides better coverage and a better bargain for taxpayers compared to government-run health care programs. In 2016, employers provided $4.45 worth of benefits for every $1.00 of tax expenditure. According to the Congressional Budget Office, employer-based coverage is the least expensive type of coverage for the taxpayer, costing just $2,000 per recipient annually. The highest cost of coverage is Medicare at $15,840 per recipient, and the second most expensive coverage is through the ACA exchanges at $6,630 per recipient. In 2020, ACA subsidies totaled almost $53 billion. By contrast, in 2020, employers contributed $15,754 on average for family coverage.
Now Democrats are attempting to increase the cost of Obamacare plans by extending ARPA’s enhanced Advance Premium Tax Credit for Obamacare enrollees. This extension of the enhanced tax credit, originally created to help mitigate the effects of the COVID-19 pandemic, pushes Americans off their commercial health insurance plans and increases government control of health care at the taxpayer’s expense. If Biden’s Build Back Better legislation had not died in the Senate, 2.8 million Americans would have been removed from their employer-based plans and pushed onto government run health care. Moving these Americans onto the exchanges would have cost taxpayers an average of $14,200 per person.
4. Obamacare’s “expansion” is due in large part to improper Medicaid enrollments
Prior to the expansion of Obamacare’s tax credits, enrollment in Obamacare had been stuck around 10 million people since 2015, a significantly smaller amount than expected. Temporary changes in policy, enacted in response to the COVID-19 pandemic, created a new increase in enrollment. Recently Democrats have been attributing low uninsured numbers to the success of the ACA, but this is misleading. A significant amount of newly insured Americans enrolled in Medicaid, not Obamacare.
After the passage of the 2020 Families First Coronavirus Response Act, more Americans joined Medicaid due to temporary rules that prohibited states from terminating enrollment for people “not validly enrolled.” Not surprisingly, this led to a number of ineligible enrollees.
In 2020, improper Medicaid payments totaled $86 billion, an increase of 21.4 percent. Most of these improper payments were due to eligibility errors. According to Dr. Blase, anywhere from 2.3 million to 3.3. million people are on Medicaid who do not actually qualify. Democrats are now warning that millions of Americans may lose Medicaid coverage when temporary pandemic measures end. What they fail to note is that these individuals are not eligible for Medicaid and are improperly receiving payments. This is a manufactured crisis created by Democrats’ desire to expand government health programs in any way possible even if it means haphazardly removing program integrity measures and creating a new coverage cliff. Improper Medicaid payments now hamper states’ resources and keeps those truly in need from getting support.
5. Obamacare is one step closer to socialized health care.
Democrats are chipping away at our free-market health care system inch by inch. They knew that increasing eligibility for Obamacare subsidies under ARPA could destabilize ESI, but they did it anyway. As subsidies grow and the ESI firewall is weakened, we will eventually end up with the equivalent of a public option on the Obamacare exchange. From there it is a slippery slope to ending ESI altogether and moving to a single-payer, socialized health care system like Medicare-for-All.
Government-controlled health care will mean less choice, less competition, and lower quality. Socialized health care puts bureaucrats in charge of Americans’ medical decisions and will severely curtail medical innovation. This is not the right direction for our country. We have the best health care in the world; socialized medicine puts that at risk.
