Cost-Sharing Subsidies Won’t Save Obamacare
It’s been three weeks since the House passed an amended version of the American Health Care Act shifting the responsibility to improve the bill over to Senate Republicans. Meanwhile, Obamacare markets continue to implode.
Almost every week news breaks of another insurer dropping out. The common justification for insurers jumping ship on the failing exchanges-unsustainable losses. With far more older and sicker patients enrolling in in Obamacare plans than expected, premiums skyrocketed, pricing younger and healthier patients out of the market. Couple the adverse selection with the Obamacare Title 1 regulations, and you’ve got the perfect storm leaving insurers paying more out in claims than premium revenue could ever sustain.
Despite the fact the Obamacare framework continues to collapse on itself, the American Medical Association (AMA) continues its push to prop up a fatally flawed system through illegal subsidies.
Obamacare set up cost-sharing subsidies to bailout insurers for costs incurred participating on the insurances exchanges, but Congress never included language to actually fund the subsidies. When the Obama administration paid out the subsidies with unauthorized taxpayer dollars, the House filed a lawsuit and won.
Since the Trump administration hasn’t dropped the Obama administration appeal to the ruling, the future of the insurer bailouts remains unclear. Given the painfully obvious structural problems with Obamacare itself, it’s puzzling groups like the AMA persist that insurer payments will stabilize the insurance market.
In reality, perpetuating these subsidies is like sticking a band-aid on a patient dying from multi-organ failure. Insurance markets need freedom from onerous regulations to lower premiums and bring healthy consumers back in to the market.
A recent study from the Department of Health and Human Services shows that since the rollout of Obamacare, individual market premiums have gone up 105%. That increase isn’t primarily driven by insurers uncertainty over whether the government will cut them a bailout check or the failure of the free market, but the flawed premise that a government can successfully take over the healthcare industry.
It’s unprecedented losses driven by a failed regulatory regime forcing insurers to cancel plans left and right. If the AMA wants to lower costs and expand access to affordable health care, their focus should shift towards the root of Obamacare’s dysfunction-the regulations that continue to raise premiums.