The reason why Republicans are able to perpetuate the lie that they are repealing Obamacare is because they have obfuscated the definition of Obamacare.
The regulations are everything
At its core, Obamacare is the imposition of actuarially insolvent regulations, which spike the cost of premiums and chase out choice, competition, and innovation (which further raises costs). This, in turn, engenders a need for mass subsidization, which in itself is not only costly to the government (taxpayers), but further distorts the insurance market.
That is because insurers now negotiate with government within the confines of regulations and subsidies to box out competition rather than working directly with market demand of consumers, unencumbered by price-hiking regulations and artificially inflated demand from subsidies.
This is also why the customer service of insurance companies has been horrible; there is no ability or incentive to work with consumers. Either way they are regulated. Either way they get subsidized.
That is the definition of Obamacare’s most destructive element. That is the part of Obamacare that is not repealed at all before 2020 and only tweaked after 2020 in the GOP leadership plan. Prices will not come down. Worse, the subsidies — which will be geared more toward middle-income and upper-middle income families — will create an even greater market distortion than Obamacare’s subsidies primarily for lower-income groups already have.
Thus, when Republicans say they are repealing Obamacare, but then proceed to talk about the repeal of the individual and employer mandates and tax increases, they are lying to you. The mandates and the taxes are not Obamacare — they are the funding mechanisms for Obamacare. By repealing the mandates and taxes without repealing the regulations, exchanges, and subsidies will cause adverse selection whereby younger, healthier individuals will leave the system.
Republicans will own a more precipitous Obamacare death spiral than the existing turmoil under current law. Ironically, it will be blamed on the “repeal and replace” bill, even though it is in fact the non-repealed version (regulations and subsidies) exacerbated by the repeal of the funding mechanism (mandates and taxes) that will cause the system to collapse.
The result will be either single-payer or a massive insurance bailout, even before the “reforms” are put in place in 2020. The number of people flooding the Medicaid expansion before the partial freeze in 2020 will further blow a hole in the system, and at a higher price.
Taxes and mandates are bad, but are not the source of the problem
Don’t get me wrong — I hate tax hikes and mandates as much as anyone else. But they are not the source of the destruction in the insurance market. In fact, the individual and employer mandates are necessary once you agree to the premise of regulated and subsidized health care (a doctrine enshrined by this RINOcare legislation). Otherwise, there aren’t enough people paying into the system to keep the Ponzi scheme afloat for even a few years.
Tax hikes are always bad for economic growth, but they were not responsible for the skyrocketing premiums, lack of choice and competition, limited physician networks, and horrible customer service. Most of the tax revenue comes from a 3.8 percent surtax on investment income and an increase in payroll taxes on upper-income earners.
Those are onerous and anti-growth taxes, but are not the source of the health care problems. The few tax hikes directly levied on health insurance are either small in scope, have only been implemented recently, or, in the case of the “Cadillac” tax, has been indefinitely delayed.
The magical reason the insurance market, which was never fully free market, suddenly became like Venezuela after Obamacare was passed is not due to the tax increases.
It’s the regulations, stupid.
The Congressional Research Service lists 24 Obamacare regulations that are almost solely responsible for the high prices and lack of competition. Refusal to repeal the regulations, along with the self-fulfilling subsidies, is the full retention of Obamacare. Anyone telling you otherwise is lying to you.
Not only are the regulations the culprit of higher premiums, they are responsible for an estimated $19 billion in lost wages, 10,000-plus fewer business establishments, nearly 300,000 lost jobs, and $51 billion in costs and more than 172 million hours of paperwork compliance, according to the American Action Forum.
The only way to bring down costs is to repeal the regulations. As Charles Blahous, a former Social Security trustee, pointed out, the CBO has already hinted to the fact that repealing the regulations would not only dramatically reduce prices, but also cover many more people than what the GOP “American Health Care Act” plans to do.
Simply put — you can’t offer lower prices and offer people better coverage without repealing Obamacare.