Morici: How Democrats stole healthcare

Democrats have managed to steal the healthcare issue from the Republicans and with it, likely win control of the House.

The Affordable Care Act promised to cover virtually all Americans, lower healthcare costs and let folks keep their doctors and insurance policies – all proved false.

By the end of the Obama presidency, 13 million additional Americans obtained insurance but more than 20 million remained without coverage. As importantly, premiums rocketed – it now costs employers about $20,000 to purchase a family policy and that is after factoring in ever rising deductibles and co-pays for employees.

As part of the 2018 tax reform, the GOP managed to repeal the individual mandate and the pace of premium increases for individual policies sold on government exchanges is now moderating. However, the mandate that large employers must provide insurance still stands.

Americans now pay even more for hospital stays, doctor services and drugs, because the ACA permitted hospitals and drug companies to monopolize markets. And doctors and other providers increasingly find it necessary to work for hospitals instead of independently.

Primary care physicians who have managed to maintain private practices find themselves bargaining for fees with the uninsured working poor and barely covering overhead on what they accept. Millions of Americans are still one illness away from bankruptcy – just like before the ACA.

By requiring insurance policies purchased by employers, and individuals through government exchanges, to meet inflexible criteria – and by forcing insurers to accept all applicants without charging older Americans and those with pre-existing conditions appropriately higher rates – many insurers across the country left local markets. They simply could not adequately spread the risk of getting stuck with too many older or sick folks in their pools of subscribers.

This encouraged insurers to merge – larger companies can more easily manage the risks of higher cost subscribers – and bargain effectively with hospitals, doctors and drug companies. However, the hospitals one upped them by merging to form what are effectively regional monopolies. And have persuaded doctors to work directly for them as employees.

Groups like New York-Presbyterian and Johns Hopkins Medicine in Maryland now enjoy significant market power, and have jacked up fees for everything from MRIs to outpatient visits.

As importantly, they have forced even large insurers like Cigna into restrictive contracts that prohibit them from creating less expensive policies that require patients to use other more reasonable hospitals. And they deter large employers like Walmart from finding similar solutions. Similarly, drug prices can keep raising prices, because Medicare insures so many Americans and is generally restricted by law from bargaining effectively on drug prices.

Americans now spend about 20 percent of GDP on healthcare and that is at least 50 percent more than in other industrialized countries. Whether through mandatory private insurance as in Germany or single state-run providers as in the U.K. everything is a lot less expensive – a knee replacement, a visit to an allergist, devices and medicines – because other industrialized country governments regulate prices.

The 2017 Republican plan that passed the House but could not muster a majority in the Senate would have rearranged subsidies a bit. It would have given the states more latitude in administering Medicaid, which is now the principle mechanism for helping the working poor, and eased requirements on insurers to cover pre-existing conditions by creating risk pools at the state level.

Democrats have demagogued the latter – they fashion themselves protectors of those with pre-existing conditions when the GOP has no intention of abandoning those folks. More importantly, though, the Republican bill would have done little to genuinely reform healthcare markets – break up hospital and drug monopolies through tough antitrust enforcement and regulate prices.

Since the 2016 election, public sentiment has flipped form 44 percent and 47 percent viewing the ACA favorably vs. unfavorably to 50 percent and 40 percent.

Democrats are running campaign ads lauding the ACA twice as frequently as Republicans run ads attacking it. These are the largest share of the Democrats ad budgets overall. In 2010, the opposite was true when the GOP won the house by attacking the ACA.

The Democrats may not offer a credible plan for fixing the high prices Americans pay. It does not matter, because the GOP did not deliver.

All Democrats really need is to show up, wave the healthcare flag and win.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist. © 2018, The Washington Times, LLC.