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Wednesday, August 9, 2017

ANALYSIS/OPINION:

President Trump’s threat to withhold subsidies from insurance companies and congressional staff to purchase insurance will not likely result in Republicans agreeing on a plan to replace Obamacare. That sets the table for Democrats to further socialize American medicine.

By requiring most Americans to obtain health insurance — either through employers or on government-run exchanges — the Affordable Care Act (ACA) promised to bring more healthy people into insurers’ risk pools and substantially lower premiums.


By expanding Medicaid, the ACA sought to ensure access for low-income and unemployed individuals — including those who refuse to look for work.

According to the Kaiser Family Foundation, only 13 million additional individuals obtained coverage, while 28.5 million remained without insurance. Even with generous subsidies, 57 percent said insurance cost too much or could not obtain coverage.

Many healthy young people chose to pay fines rather than hefty premiums on policies imposing high deductibles, and many added to the insurance rolls were sicker and needed more care than anticipated.

Insurance companies lost considerable sums, raised premiums by an average of 25 percent for 2017 and similar increases are anticipated for next year. Many withdrew from the program, leaving one-third of all counties with only one carrier in 2017, and at least some counties in several states will have no company offering insurance in 2018.

Had Hillary Clinton been elected, the ACA still would have faced formidable challenges. More young people would have opted to pay a fine rather than bear annual double-digit rate increases.

President Trump has issued an executive order instructing federal agencies to “waive, defer, grant exemptions from or delay implementation of any provision or requirement” of the ACA that imposes a burden “to the maximum extent permitted by law.” If faithfully implemented, this would encourage more employers to quit offering coverage, more individuals to drop out of the system and send the government-run exchanges into a death spiral.

The House bill and various Senate proposals failed to muster enough public support to compel congressional passage because, like the ACA, those failed to address the core issue. Americans pay too much for health care — everything from drugs to our terribly expensive tort system.

Lacking genuine cost controls and tort reform, no Republican plan could offer to substantially lower premiums.

Germany has a private insurance system but spends about 11 percent of gross domestic product on health care whereas the United States spends 17 percent. The difference is not quality or access to care but price controls — for example, new drugs are priced according to how much they improve treatment.

Republicans in Congress are ideologically opposed to regulating prices, and led by Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan, they failed to properly frame the Medicaid reform issue.

No conservative was talking about pushing the disabled, mothers and poor children off Medicaid, as Senate Minority Leader Charles Schumer implied. Instead, by imposing work requirements for the able-bodied, they would force off the rolls those who refuse to help pull the wagon like the rest of us.

The Democrats were able to play on the fears that Republicans were bent on victimizing helpless citizens. Sens. Shelley Moore Capito, Lisa Murkowski and Susan Collins of welfare-dependent states West Virginia, Alaska and Maine led the charge to protect the rights of the indolent to mooch off the rest of us.

Democrats are now offering to work on a bipartisan fix for Obamacare, but an effective solution would require dramatically increased subsidies for insurance sold on government-run exchanges, and increased federal outlays for Medicaid as many of the 19 states yet to opt into Medicaid expansion do so.

Entitlements already account for 60 percent of the federal budget, and Republicans are likely to balk at the funding necessary to make the ACA palatable to most Americans for the long term.

When the system ultimately collapses, the Republicans, holding control of the White House and Congress, will take the blame.

Look for the Democrats to take control of the government by 2020 and impose price controls through a British-style single-payer system.

Essentially, they will impose Medicaid for all. Doctors, hospitals, and drug and health insurance companies will take a hair cut. Americans will get their health care with the same speed and reliability of the Post Office.

Most of us will long for the good old days before Obamacare.

• Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.


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