PHP: You wrote a book, Why Obamacare is Wrong for America, and I am curious to hear you describe the crux of your argument.
Bob Moffit: Obamacare did not deliver the essential promises the President made about it. What the President originally said, repeatedly actually, is that typical American families would see a decline in health insurance costs. The reality was that in 2014, the very first year that the law went into effect, there was a tremendous spike in premiums–they increased by about 54%. At the same time, to keep the premiums under control, insurers expanded deductibles. For an individual, the deductible grew to well over $4,000. And for a family, you’re talking about $8,000. So from the standpoint of health insurance costs, particularly in the individual and the small group markets, you had really an explosion of costs.
Why do you think costs increased so dramatically? Some argue that health insurance companies underestimated how many sick–and thus, costly–individuals would join the market, especially those that were previously excluded for having pre-existing conditions.
Well, I think both the supporters of the law and critics of the law made inaccurate predictions about what would happen. With regard to the administration, I think their biggest mistake was the assumption that something like 40% of the enrollees would be between the ages of 18 and 34–a relatively healthy population. What you actually saw was a much lower take up among this age cohort. I think the first year it was something like 26%. You had a situation where there was not robust participation of younger and healthier people in the market. Rather, you had a very strong participation of older people, especially people who were sick.
Which is why the individual mandate was so important, right? Because the idea was that it would ensure that young, healthy people join the market to balance out the cost of the sick. What happened there?
I think the Obama administration and the insurance companies had this idea that the individual mandate would actually be an effective driver of coverage enrollment. But the reality was, it was not the driver of coverage. The penalty associated with the individual mandate actually increased in 2016, and around that time you started to see a decline in enrollment. In my view, one of the great victims of the whole controversy with regards to the success of the ACA was the Congressional Budget Office (CBO), whose coverage estimates turned out to be fantastically wrong. But to their credit, CBO always had a great big paragraph in their reports, which of course everybody overlooked, saying in effect that their predictions about health care costs were in fact burdened by a profound uncertainty, and they were right about that. The serious difficulty we have now, based on the most recent numbers, is that under current conditions, the people who are uninsured and being priced out of the market are primarily in the middle class. For example, an individual who is making more than $50,000 a year who’s not eligible for any kind of a premium subsidy is stuck with a $4,000 deductible, plus whatever the premium is.
Do you think there are any points around which we can find consensus?
I think where there’s a profound consensus, certainly among my colleagues, is that you’ve got to assist low-income people who do not have access to health insurance coverage. At least in my world, that’s not a debate. None of my colleagues feel that the federal government should simply not take care of people who need help. And I don’t know anybody who thinks that people should not be protected because of pre-existing medical conditions.
Photo courtesy of Bob Moffit