Democrats have been trying to make the presidential election about health care. At the first presidential debate, former Vice President Joe Biden repeatedly attacked President Trump on the issue, claiming that both new Trump Supreme Court Justice Amy Coney Barrett and Trump want to strike down Obamacare, jeopardizing the coverage of 100 million Americans with pre-existing conditions.
Put aside for a moment the obvious hypocrisy of a man who avoided more than $121,000 in Obamacare taxes suddenly portraying himself as Obamacare’s defender. Do Biden’s claims have merit—and how should conservatives address this issue?
The Real Problem
In an editorial following the first debate, the Wall Street Journal unpacked the questionable assumptions behind Biden’s claims. Most notably, Obamacare included a transitional insurance plan for individuals with pre-existing conditions, designed to help sick individuals prior to the insurance exchanges and the rest of the law taking effect. Enrollment in this transitional program topped out at 114,959 individuals in March 2013—99,885,041 persons below Biden’s claim of 100 million Americans with pre-existing conditions.
More importantly, the Democratic attacks not only overstate the extent of the problem, they mis-state the real problem. The roughly 180 million Americans with employer-provided insurance haven’t faced pre-existing condition difficulties for nearly a quarter-century. Federal law has prohibited employers from considering pre-existing conditions since 1996, well before Obamacare.
But this policy comes with a big downside: People with employer-provided insurance by definition don’t own their own health coverage. When people try to switch jobs, or decide to work for themselves, they lose their existing health coverage. Worst of all, the person who must give up working to battle a disease must also give up her health coverage at the worst possible time.
If people could own and control their coverage throughout their working lives, most people wouldn’t face concerns about pre-existing conditions—because they would have purchased coverage well before they developed chronic diseases later in life. Of course, some individuals face pre-existing conditions from birth, or that develop during childhood. But if Americans had portable coverage that they owned and controlled, and would protect them whenever they develop a pre-existing condition, it would turn the issues faced by those born with chronic conditions into a smaller and much more discrete problem.
Poor Policy Solutions
Rather than solving the portability problem, or at least providing a pathway to solving it over the longer term, Democrats all but ignored it while crafting Obamacare. They required all insurers to accept all applicants, and charge all applicants the same premiums, regardless of health status. As a result of these regulations, and other requirements associated with them, premiums more than doubled on the individual health insurance market (i.e., the exchanges) between 2013 and 2017.
Having jacked up premiums, Democrats then tried to make coverage “affordable” by creating a new system of subsidies (paid for by higher taxes) to offset the cost of premiums. In essence, Obamacare echoed its namesake’s mantra of “spreading the wealth around” by forcing healthy individuals (who faced a mandate to purchase coverage) to subsidize the sick via higher premiums, and forcing other individuals to subsidize those higher premiums via higher taxes.
But for people who didn’t qualify for subsidies, Obamacare has become the Unaffordable Care Act. From 2015 through 2019, more than 5 million individuals left the individual insurance market, as premiums continued to rise. Because at least some of these individuals now have no coverage, they have no protections should they develop a pre-existing condition—an inconvenient truth Democrats rarely care to acknowledge.
Republicans as Cheap Liberals
After initially highlighting the harmful effects of these premium increases as Obamacare went into effect, in recent years some Republicans have decided to crawl into something approaching the fetal position over the pre-existing condition issue. Some officials now say they support the regulations that have jacked up premiums for millions (myself included) and priced millions more out of coverage.
Others have tried to split the difference, with little political or policy success. In response to a recent move by Senate Democrats forcing a vote on legislation objecting to the Obamacare lawsuit currently before the Supreme Court, Senate Majority Leader Mitch McConnell, R-Ky., forced a vote on legislation offered by Sen. Thom Tillis, R-N.C.
The Tillis legislation, for which all but three Senate Republicans voted, would reinstate the requirements that insurers accept all applicants, and charge all applicants the same premiums, regardless of health status. But Democrats highlighted the fact that it would allow insurers to charge higher premiums by sex, and omitted some of Obamacare’s other regulations. In other words, Republicans have ended up in a policy no man’s land—surrendering on the principle, while allowing Democrats to continue to attack them regarding the details.
The Better Solution
Rather than focusing on the Democratic “solution”—allowing people to buy “insurance” after they have developed a pre-existing condition—conservatives should try to solve the underlying problem, namely lack of portable coverage. Good conservative solutions would focus on allowing people to buy quality, affordable coverage that they own and can keep before they develop a pre-existing condition.
On that front, the Trump administration’s Health Reimbursement Arrangement regulations will advance the cause of portability substantially. These regulations, finalized last year, will allow employers to contribute money in tax-free accounts that employees can use to buy their own health insurance—coverage they own and control, and can take with them from job to job.
This measure helps to solve the portability problem, and could in time solve the pre-existing condition problem. It also does so while maximizing the use of private-sector resources (i.e., employers’ existing contributions towards health insurance). By contrast, Joe Biden’s proposal allowing individuals with employer coverage to receive exchange subsidies would cost trillions of taxpayer dollars, because it would replace current spending by employers with new spending by the federal government.
Biden’s plan would represent a giant leap towards a single-payer health system. If conservatives want to arrest this slide towards socialism, they should stop falling into the trap provided by cheap versions of the “Me too” strategy, and start promoting solutions that actually work.