The Affordable Care Act, better known as ObamaCare, was passed in 2010. Thirteen years later we have a much better perspective to judge its effectiveness in achieving its goals. What is the ObamaCare reality in 2023?
John C. Goodman is a healthcare economist and public health policy consultant. Beverly Gossage is a Kansas state senator and insurance broker. Here’s what they write in his blog at independent.org, which was also published in The Wall Street Journal on September 12, 2023. “When Democrats passed the Affordable Care Act of 2010, President Obama and lawmakers made the same claim over and over: The act would make good, affordable health insurance available to people with pre-existing conditions. The actual result has been the opposite. ObamaCare makes health insurance as good as possible for the healthy and as bad as possible for the sick.”
The Progressive spin on ObamaCare has not let up under the Biden Administration. According to President Biden, health insurance in America is free or almost free (“as little as $10 a month or less” after subsidies) for about 80% of people who acquire it in an ObamaCare exchange. Most preventive care – the only kind of care healthy people require—is also free.
But this is much like the fact that banks are always eager to lend you money when you don’t need it – but very reluctant when you do! If you are sick, things are different. Consider a hypothetical middle-aged couple in Dallas earning $70,000 a year. Suppose they have two children, both of whom have serious birth defects. Although this family will pay no premium for a Blue Cross bronze plan in the ObamaCare exchange, they will face a $9,100 deductible for each child. Their total out-of-pocket exposure is $18,200 a year.
It gets worse. Patients with serious diseases often require the care of highly trained specialists who usually work at centers of excellence. But that family in Dallas will discover that their Blue Cross plan isn’t accepted at leading cancer providers nearby, including Baylor University Medical Center and the University of Texas Health Science Center, or MD Anderson Cancer Center in Houston.
Goodman describes the situation in Texas, because that’s where he lives. But the problem isn’t unique to Texas. ObamaCare plans have very skinny networks in every state. They tend to pay providers Medicaid rates or close to them. As a result, ObamaCare looks like Medicaid with a high deductible. A great many providers, including prestigious medical institutions, won’t accept Medicaid managed care—the version of Medicaid most recipients receive—or ObamaCare. When a patient with ObamaCare coverage goes out of network, the plan usually pays nothing and the patient’s payment doesn’t apply to his deductible or out-of-pocket maximum.
In addition to ObamaCare’s high medical expenses for the sick, there is an implicit tax on their earned income. Suppose our Dallas family earned only $60,000. According to Healthcare.gov, their children could qualify for CHIP, (the Children’s Health Insurance Program) or Medicaid, and they wouldn’t be allowed into a subsidized private exchange plan. Given their lower income, the best exchange plan the family would qualify for would now be the Blue Cross silver plan, which carries zero premium. This means that if the parents stay healthy, they would have no out-of-pocket medical expenses.
But things quickly change if they rose to $70,000 household income again. The penalty would be an $18,200 increase in maximum medical costs—a marginal tax rate of 182%. Even with the children on CHIP, the parents could have serious medical problems of their own and an accompanying implicit tax on income. At an income, say, of $30,000, the best option is a silver plan with a small premium combined with a small deductible. But if their income doubles to $60,000, the out-of-pocket exposure will increase by $14,200. That’s an implicit marginal tax increase of 47%.
The plain truth is that ObamaCare was designed to save the government money! It works great for the healthy, but not for the sick. But Goodman says this design wasn’t really done by Obama or even Democratic lawmakers. It was done by special interest groups – those that are profiting from the system. ObamaCare is pouring about $60 billion a year of new money into the healthcare system. The beneficiaries of this government largess are the hospitals, insurance companies, and some doctors – though there is no evidence of any overall increase in the amount of healthcare delivered.
The lesson learned from this real-life story is simple – stay healthy. The Affordable Care Act is only affordable for the healthy.
