March 10, 2020

A Decade of Repairing Damage Done by Obamacare


KEY TAKEAWAYS

  • March 23 marks the 10th anniversary of Obamacare. For 10 years the law has failed to live up to its promise of reducing health care costs and has limited patients’ choice and access.  
  • Republicans in Congress have successfully repealed several of Obamacare’s worst and most expensive provisions. The Trump administration has taken numerous steps to provide more affordable health care options for Americans.  
  • Instead of fixing the broken health care system, Democrats have taken every opportunity to control more of Americans’ health care and now want to take away private insurance from nearly 180 million Americans. 

Ten years after Obamacare was signed into law, it has failed to live up to its promises to reduce health care costs, increase access, and improve health care quality. With its dramatic premium increases, decreased access, and reduced choice in insurer markets, Obamacare has done the exact opposite. Republicans in Congress and the Trump administration have made great strides in repairing some of the damage done by the health care law, but more work remains. Democrats in Congress are taking the opposite approach, rallying behind “Medicare for All,” a terrible plan that would see the federal government take complete control of Americans’ health care options.

Successes in Rolling back obamacare provisions

Obamacare included an individual mandate that every American purchase Washington-approved health insurance or pay a tax penalty. This requirement was the core of the law: it required healthy and young people to purchase expensive health coverage they would not ordinarily buy in order to subsidize and stabilize the insurance market. The scheme did not work. Premiums went up each year, and millions of Americans fled the individual market. In the 2017 Tax Cuts and Jobs Act, Republicans zeroed out the mandate penalty. As of 2019, Americans are once again in charge of deciding what is best for their families and what insurance coverage is the best value for them.

Congress repealed three burdensome Obamacare taxes in 2019: the “Cadillac” tax; the medical device tax; and the health insurance tax. The Cadillac tax would have imposed a 40% excise tax on employer-sponsored health insurance plans with premiums above $11,200 for individuals and $30,150 for families in 2022, when it was set to take effect. The tax would have caused employers offering health coverage to shift more of the cost to workers to pay for it. Congress also eliminated Obamacare’s 2.3% medical device tax, an excise tax that originally took effect in 2013. Congress delayed the tax multiple times. For the short while the tax was in effect, it was assessed on the gross sales of device manufacturers, threatening innovation, and raising costs to consumers. The health insurance tax, paid by consumers in the form of higher premiums, was also repealed.

Another Obamacare failure was the creation of the Independent Payment Advisory Board. IPAB was supposed to recommend ways to cut costs in Medicare without harming the care of seniors who rely on the program. The board would have taken health care options from Medicare enrollees and their doctors and given it to 15 people appointed by the government. President Obama never named members to the board, and Republicans and Democrats in Congress repealed IPAB as part of the Bipartisan Budget Act of 2018.

Republican Successes

Obamacare 10 Year Anniversary

trump administration eased obamacare’s burden

The Trump administration also has taken steps to provide Americans with more affordable options and better choices to select health coverage that fits their needs:

Short-Term Limited Duration Plans: The Department of Health and Human Services improved upon regulations to exempt short-term health plans from Obamacare’s most burdensome regulations for up to 36 months, as opposed to just 90 days. 

Association Health Plans: The Labor Department issued a regulation that allows small businesses to band together to provide better and more affordable health coverage for employees by avoiding expensive Obamacare mandates.

1332 Waivers: Trump administration guidance allows states to experiment with coverage options tailored to their residents’ needs, while maintaining protections for people with pre-existing conditions.

Health Reimbursement Accounts: The Trump administration issued a rule that expands employer access to HRAs, which allow people to pay for health care with pre-tax dollars.

government-run health care disaster    

President Obama attempted a complete overhaul of the American health care system, and it did not work. Today, Democrats are repeating past mistakes and once again suggesting more government as the solution to fix Obamacare’s many flaws. Their ideas would not fix Americans’ health care; they would merely build on the many mistakes of Obamacare.

Despite the wishes of some Democrats, Obamacare did not include the creation of a “public option” that would have put the government in charge of plans on Obamacare exchanges. Instead, Democrats used taxpayer dollars to set up 23 nonprofit health insurance co-ops. They promised that the co-ops would provide competition and choice in the insurance market. These co-ops were financed with low-interest loans totaling $2.4 billion. Nineteen of the 23 collapsed, leaving millions of Americans scrambling to find new coverage. Instead of learning from these failures, Democrats are doubling down on them by promoting a one-size-fits-all government-run health care system.

With Obamacare’s individual mandate gone, Democrats now want to make it illegal for Americans to maintain their private health care plans and are proposing even more drastic changes to Americans’ health care. Their Medicare for All plan would make private and employer-sponsored health care plans illegal. Every American would be required to shift to the government health care plan. Within two years, everyone benefiting from Medicare, Medicaid, TRICARE, and CHIP would be moved into a single government-run program.

IPAB never went into effect because of bipartisan recognition that the health care of millions of American seniors should not be placed in the hands of 15 unaccountable bureaucrats. Today, Democrats are proposing to place the health care choices of every American in the hands of the federal government. Under Medicare for All, Americans would only have one plan, with the government deciding which services are covered and how they are paid for.

As we’ve seen in other countries with government-run health care systems, such a takeover will result in longer wait times, higher costs, and less choice for all Americans. Every taxpayer will pay more under Medicare for All, not just the wealthy. One analysis noted that the proposal would require payroll and income taxes to more than double. Another examination found that in addition to the taxes most workers already pay for Social Security and Medicare, the new Democratic health plan would require “broad-based taxes” adding up to a 36.5% payroll tax for most American workers. Not surprisingly the study also found that as a result, nearly two-thirds of American households would be worse off financially. Democrats financed Obamacare with hefty tax increases that pale in comparison to the tax hikes on middle-class families and overall reorganization of the economy that would be needed to finance and implement Medicare for All.

Issue Tag: Health Care