Obamacare opponents insist they do not want to pay the health care costs of the uninsured. Unfortunately, they have been for decades.
Doctors take an oath to treat people. Consequently, uninsured people get treatment and pay about 35% of their treatment costs. Doctors and hospitals pass on most of the remaining 65% to people with health insurance, raising their annual premiums 8%. Since 2013’s average annual family’s employer-covered health insurance cost is $16,351, 8% works out to $1,308. On average, employers cover 71% of health insurance premiums or $930. The Affordable Care Act eliminates most of this cost shifting.
For employers, the extra $930 per employee per year they pay to subsidize uninsured people puts them at a competitive disadvantage internationally and domestically. What is really painful for these organizations is that they are sometimes subsidizing their competitors. The company owners Fox News trots out complaining they can’t afford Obamacare insurance coverage for their employees are bottom feeders who know if their employees have catastrophic health care problems, they will get treated. Those with good health insurance will pay costs their employees can’t pay. This market distortion is neither fair nor rational. I have yet to hear a Obamacare critic offer a solution to this problem.
Without Obamacare, costs borne by people with health insurance will become more onerous. For individuals, the logical decision for a young, healthy person is to not buy health insurance. Odds are, they won’t need to use it. If something catastrophic happens, they’ll get treatment and if worse comes to worse, they’ll declare bankruptcy. This raises insurance premiums even higher and the next year more healthy young people opt to take their chances without health insurance.
How big a problem is this? An Employment Policies Institute study found 43% of the uninsured – about 20 million people – earn more than 2.5 times the federal poverty level, or $55,125 for a family of four. The authors – who include June O’Neill, the GOP-appointed head of the Congressional Budget Office from 1995 to 1999 – write “because most people at that income level are able to get insurance, (they) thus may be classified as ‘voluntarily’ uninsured.”
The 80% increase in health insurance premiums in the last ten years is certainly not all attributable to this vicious cycle. However, it is a major factor contributing to the disproportionate number of older people with high health costs in the health insurance pool. As this continues, at some point, the health insurance system implodes. I have yet to find a Obamacare critic with a solution to this problem.
For the current private health insurance system’s survival, if all people are going to draw money out one way or another, all people must pay into it. Consequently, this is one of the few times where a government incursion into the private sector is not only justified, but necessary.
Arguments against Obamacare
One of the silliest arguments against the Affordable Care Act is that requiring people to buy health insurance is big government socialism. Yet, almost all states require drivers to have auto insurance. Can you imagine a system where only people who expect to have accidents buy insurance?
Tea Party types also take it as a given that Obamacare is a job killer. Every government intervention in the marketplace creates winners and losers. This one is essentially a resource shift. Obamacare winners are employers offering good health insurance, their employees, self-insured and the health care industry where new jobs will be created. Losers are the aforementioned bottom feeders that don’t offer health insurance or stripped down policies and finally have to work on a level playing field.
Employees at these companies who will have to pay into the insurance pool may think of themselves initially as losers. However, accessing preventive health care and not having the financial stress of a catastrophic illness makes them winners in the long haul.
Republicans claim we can’t afford Obamacare while at the same time they are working to repeal the Medical Device Tax that makes the Affordable Care Act budget neutral. These are the same Republicans who a few years ago were falling all over themselves to finance President George W. Bush’s trillion-dollar Iraq War. This is also the party that supported President Ronald Reagan while he almost doubled government spending in his eight years in office. Republicans need to prioritize what we can’t afford.
Obamacare is certainly not perfect. Wisconsin residents will pay hundreds and sometimes thousands of dollars more annually for private health insurance than Minnesotans. This is because Minnesota’s enlightened governor and legislature opted to accept the Medicaid Expansion and Wisconsin’s didn’t.
While these problems will get worked out, there is no denying the Affordable Care Act adds healthy young people into the insurance pool, thereby preserving our health insurance industry’s future viability. It also forces companies that shuffled their employee’s health care costs on to the rest of us to finally pay their share. That is impressive and fair legislation.