We live in a world in which health reform has been widely misunderstood by partisans on both sides. The Patient Protection and Affordable Care Act has been demonized as promoting euthanasia and a government takeover, while it’s been lionized as a solution to rising costs and promoting universal access. Actually, PPACA centers around a very simple idea: that insurance companies must offer the same policies — with the same services and premiums — to anybody regardless of their health status. While they may charge different rates for age, they cannot charge different rates to, say, diabetics or cancer patients. Nor may they exclude those conditions. Of course, this suggests the obvious problem: Why wouldn’t you wait until becoming ill before buying health insurance?
The attempted solution is the mandate. Every American must buy health insurance or pay 2.5 percent of their income to the Internal Revenue Service as a fine.
Here’s the problem: Health insurance premiums are about to spike dramatically. The Democrat-controlled Congressional Budget Office has been giving generally rosy projections, but even they estimate that premiums will more than double, rising from around $6,000 to more than $12,000. And that’s just a so-called “bronze” plan — so Americans will pay double the price for worse coverage. This estimate can be confirmed several ways — such as comparing it to the states that have previously imposed similar legislation — and all the estimates are in rough agreement.
America must realize that PPACA is simply not a cost-control bill; it is a wealth-redistribution bill. Right now, just 5 percent of Americans are responsible for 50 percent of our nation’s health care budget. PPACA doesn’t do anything to change that spending. It simply shuffles that spending around. It does extend insurance, but that’s not enough to actually help people lead healthier lives. Contrary to what Democrats are promising, health finance experts agree that more preventive care won’t dramatically reduce costs, that emergency rooms are not a major driver of health expenditure and that insurance by itself doesn’t actually provide preventive care anyway — just look at the dental access crisis among Medicaid patients. Besides a few small “pilot programs,” the bill has no serious cost-control measures.
Worst of all, this massive redistributive entitlement is not being done directly or transparently. PPACA attempts to force private industry to carry out the work that Washington is apparently unwilling to do. Shunting the largest social spending program in history through the premiums paid by small businesses and average Americans isn’t just counterproductive; it’s unfair and deceptive.
So when premiums rise by $6,000 a year, what will happen? Most Americans will realize that 2.5 percent of their incomes is much less than $6,000, and many of them will drop insurance coverage. They’ll simply wait until they become sick and purchase insurance then. Insurers will have to raise premiums — which simply starts the whole cycle over again. Economists have a word for this; they call it the adverse selection “death spiral.”
The question before us, then, is, what should we do about the looming collapse? Many Republican campaign offices are arguing that the House should unilaterally defund the bill — a move that, apparently, would not require the consent of either the Senate or the White House.
I am no supporter of PPACA, but in my view this would be tremendously destructive. Much of PPACA actually doesn’t require funding. Insurers would still have to redistribute wealth, so prices still go up. The mandate would still be in force and would be more unaffordable than ever. And defunding would cut out the cost-control pilots — pitiful as they are, they’re better than nothing. It would remove the exchanges, the only pro-market piece of the bill. In other words, it takes the time bomb that is Democratic health reform and converts it into Republican shrapnel. Republicans win a “signature achievement” for a couple of months, but health care now becomes their problem. Nancy Pelosi will argue: “Our plan would have worked.”
Instead of a counterproductive and politically damaging defunding, Republicans ought to be planning for the future by crafting a plan which addresses cost control and the real problems: chronic illness, failures of disease management and overutilization.
Let’s be ready with a real solution when this whole thing comes apart.
Michael Lee is a third-year student at the Law School and a student at the Washington University School of Medicine in St. Louis.