Halfway through Sunday’s presidential debate, an undecided voter asked a question about an actual issue — the Affordable Care Act, which everyone calls Obamacare.
Obamacare isn’t working, the voter suggested. What can be done to bring costs down and improve coverage?
Hillary Clinton offered just one solution, helping small businesses pay for insurance. But she said repealing the law in its entirety, as Republicans have proposed, would mean no insurance for millions of Americans with pre-existing medical conditions.
Donald Trump’s answer? Allow insurance companies to sell across state lines:
“You’re going to have plans that are so good, because we’re going to have so much competition in the insurance industry,” he said. “We will be able to keep pre-existing.”
The answer bordered on incoherence.
He’s correct that more insurance competition would drive premiums down. But no insurance company will “compete” for patients with pre-existing conditions — those patients are too expensive. That’s exactly why insurance companies are leaving the Obamacare exchanges: too many sick people are signing up for coverage, while too many healthy people aren’t.
The only way insurance works is if healthy people subsidize sick people. It’s that simple.
Obamacare tries to solve this problem by forcing everyone to buy health insurance. That’s turned out to be a difficult sell, particularly as companies raise premiums and cut benefits to stay profitable. Healthy people prefer to take their chances, and risk a tax penalty, rather than buy something they think they don’t need.
The mandate goes away if Obamacare is repealed, which would come as a relief to healthy patients. But repeal makes it much less likely private companies will compete for patients with pre-existing conditions, even across state lines. There isn’t enough money.
Some Republicans have suggested the way to cover those sicker people is through taxpayer-subsidized “high risk pools.” That’s just a fancy name for government insurance for the already sick.
Interestingly, we already have some experience with a government system that provides insurance coverage for people with pre-existing conditions. More than 50 years ago, growing old was considered a pre-existing condition: the elderly are sicker, and therefore more difficult to insure, than younger people.
Premiums for the elderly were astronomical, if they could get coverage at all. So the government invented Medicare, a taxpayer-subsidized single-payer system to cover Americans aged 65 and over. Medicare didn’t force young healthy people to buy insurance, but it forced them to pay taxes for health care for the elderly. It was that simple.
Medicare has worked spectacularly, providing coverage for the elderly in a simple, understandable way. Of course, Medicare has cost hundreds of billions of dollars more than predicted as well.
But that isn’t entirely Medicare’s fault. Health care providers have raised prices relentlessly for decades, knowing Medicare and Medicaid (and private insurers) would pick up part of the cost. The other day a hospital charged a new mom $40 to hold her baby. A life-saving medicine that costs $1 to make costs $1,000 to buy.
Obamacare did very little to reduce the actual cost of health care, which is one reason the insurance portion is failing now. Clinton never mentioned that in the debate.
The next president and Congress will have to wrestle with health care because the real problem has yet to be addressed: in America, it costs too much to be sick. No insurance program — and no president, or presidential candidate — has yet addressed that reality.