Opinion: Daily Journal

A Bumpy Ride for Obamacare

Health care is likely to be the second-biggest issue in next year’s midterm elections (the condition of the economy will be #1). But while North Carolina Democrats and liberal activists would like the management of the state Department of Health and Human Services to define the health care issue, that’s unlikely. Both in North Carolina and beyond, when people vote on health care, they’ll be thinking about Obamacare.

That’s not good news for Democrats, and they know it. The president’s signature domestic policy achievement is more unpopular today than when it was passed, raucously, in early 2010. While voters may not know all the details of the bill, they know about and dislike its main provision — using federal tax hikes to coerce individuals into buying federally approved health insurance.

Here’s what we have learned in the past few weeks about the implementation of Obamacare:

• The insurance options that Blue Cross Blue Shield has submitted for North Carolina’s Obamacare exchange are significantly more expensive than the plans currently sold in the individual market. For both young and middle-aged consumers, the sticker price for the lowest-cost comprehensive plans on the health exchange will be about 80 percent higher than current rates. Many of these consumers will, of course, be eligible for federal tax subsidies to offset some or much of that higher cost, but those tax subsidies aren’t free money. They represent current or future tax increases imposed on other taxpayers. Rising cost is rising cost, regardless of its incidence, and contrary to the notion that the so-called Affordable Care Act would bend the cost curve of medical care downward.

Even so, Blue Cross estimates that about a third of its existing consumer base will see net-of-subsidy premium hikes well in excess of what they would otherwise have experienced in 2014. What the net effect will be for new entrants to the insurance market, and for all consumers in future years, is not currently estimable.

• North Carolina was hardly alone in rejecting the expansion of the current Medicaid program as a viable strategy for extending health insurance to the uninsured. Nearly half the states have declined to expand Medicaid at this point, including Virginia, Florida, and Ohio. Arkansas said no to straight Medicaid expansion and yes to an alternative model that will use the federal Medicaid funds to subsidize private health plans for the low-income uninsured. Five other states — Indiana, Iowa, Michigan, Oklahoma, and Pennsylvania — are in the process of designing or seeking federal approval for something similar to the Arkansas model.

• The Obama administration has delayed implementation of many provisions, including eligibility determination on the exchanges and the mandate on businesses to pay or play. There is bipartisan support for delaying the individual mandate — well, technically speaking, the tax on individuals who don’t play along — although Capitol Hill Democrats are trying not to be too vocal about it for fear of embarrassing the president further. Some Republicans are trying to use federal budget negotiations as leverage to defund Obamacare’s implementation entirely. That won’t happen, but a delay is conceivable.

Where do we go from here? As I have argued on many occasions, the Affordable Care Act is a ramshackle amalgam of legislative junk. It is destined to collapse. I think that whoever the next president and leaders of Congress may be, they will have to rewrite the entire law within the next few years. A reasonable and potentially bipartisan alternative would contain these elements: 1) block grants and flexibility for states to reform their Medicaid programs to fund coverage or services for the truly poor, 2) a premium-support model for reforming Medicare, 3) universal tax credits for families and individuals to buy the health plans they want from private insurers and market exchanges, 4) high-risk pools for those with expensive preexisting medical conditions, and 5) encouragement of rather than new limitations on consumer-driven health care, including health savings accounts, health reimbursement arrangements, and low-cost, high-deductible insurance products that are actually insurance against catastrophic loss, not prepaid health care.

That’s where America should go, and perhaps will go. In the meantime, however, a bumpy ride awaits.

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Hood is president of the John Locke Foundation.