Author: Michael Bove
Just a few days ago, on May 4, 2017, House Republicans passed the American Health Care Act (AHCA). In the six days that have followed the passing of the AHCA, many on the political left have jumped into the debate and absolutely vilified the Republicans who passed the bill. The left has called those Republicans “heartless”, “inhumane”, and “evil” for their own misleading reasons, such as, the AHCA supposedly taking away coverage for individuals with pre-existing conditions. Despite the false information campaign led by the Democrats, the AHCA does not take away coverage for pre-existing conditions. Instead, protection for the coverage of pre-existing coverage is affirmed in the new bill. Rich Lowry, from the National Review, summarizes it best, “the legislation maintains a federal baseline of protection in such cases, and says only that states can apply for a waiver from it, provided that they abide by certain conditions meant to ensure that no one is left out in the cold”. If you actually read the bill, it becomes quite clear that the AHCA protects those who need help the most while also giving the states enough freedom to manage their own healthcare systems rather than the federal government.
To further understand why the left’s harsh accusations are wrong and why the AHCA is a step in the right direction, we need to first recognize what exists now. I’m referring to the Affordable Care Act (ACA), also known as Obamacare. In their quest to provide access to healthcare for everyone, the Democrats constructed a flawed entitlement program that has seriously damaged the country and is currently collapsing-in on itself. To provide healthcare for nearly every citizen in the country, sweeping changes were made in our healthcare system. In order to (attempt to) fund the ACA, an individual mandate and an employer mandate were created. The individual mandate imposed a fine on people who either were not insured or not adequately insured. On the other hand, the employer mandate forced businesses that employed 50 or more people to offer health insurance to all full-time employees or they would face a fine. These mandates force people to purchase a certain level of insurance. They were also barely constitutional (with the Supreme Court deciding the mandates could be interpreted as taxes) but even so, the freedom for citizens to choose their insurance plan is severely limited.
These two mandates have been devastating for many Americans and many small businesses. I am fortunate that my family owns and operates a small business but have been unfortunate to see and experience, first hand, the damage caused by Obamacare. Furthermore, because of my background in business, I’ve had the pleasure of meeting and speaking with scores of small business owners. They all say that the ACA has been one of the worst regulations to impact their businesses in years (and I come from New York State, so that’s saying a lot). Like many of individuals have experienced, those business owners lamented the fact that they, due to the implementation of the ACA, have had to pay significantly more for insurance that covers less than they had before. The architects of the ACA seem to be fine with this situation, but for millions of Americans, this is a substantial problem.
It is a combination of these factors, among others, which makes Obamacare such a colossal failure. Our government got bigger and bureaucrats (not doctors or health care professionals) were put in charge. Costs rose and the quality of coverage declined for millions of Americans. President Obama and the Democrats were so eager to give “free” healthcare to people that they created a monstrous government program that made American health care so much worse. The AHCA, although certainly not perfect, begins to undo the terrible features of the ACA. The new bill is a step in the right direction because it puts the consumer back in the driver seat in controlling the insurance that they will purchase. Insurers will now have to more strongly compete against other insurers and this competition will drive down prices in the market. Furthermore, the AHCA will erase the employer mandate and the individual mandate. As a result, this will ease the burden on consumers and hopefully, stimulate this severely lagging economy.
Now, those on the left will argue that the AHCA is a terrible bill because many Americans will lose health care coverage. They cite a report from the Congressional Budget Office which states, “the increase in the number of uninsured people relative to the number under current law would rise…to 24 million in 2026”. Certainly, it doesn’t seem like a good idea to pass a bill that will cause a large number of people to lose their healthcare coverage however, we need to continue reading the CBO report. The CBO report further states, “starting in 2020, the increase in average premiums from repealing the individual mandate penalties would be more than offset by the combination of several factors that would decrease those premiums…”. In other words, as the healthcare market readjusts to the new economic conditions, premiums would initially increase but then substantially decline. Further regulatory reforms in the healthcare industry, mentioned by the Trump administration, should continue to decrease healthcare premiums.
This idea of deregulation positively impacting consumers is not a new phenomenon. An article, “Why Computers Are Less Expensive Than Health Care” published by the Foundation for Economic Education sums up this idea quite nicely. The author, Devin Cooper, states, “tech enthusiasts and consumers have experienced higher quality products at a less expensive cost. Computer parts have gotten faster while prices have either fallen or remained about the same”. Anyone who has been alive for the past decade can see those changes. So why hasn’t the healthcare industry experienced similar declines or stabilization in prices? It all comes down to government interference. Cooper reflects on the differences in regulation of both the healthcare industry and the tech sector. He writes, “while the free market has been allowed to bring competition to the tech industry, government intervention in the health insurance markets have brought monopolies and heavy distortions to the market that no longer reflect real consumer demand”. These distortions that Cooper is referring to translate to more expensive coverage being of lower quality insurance.
Obamacare is not only a terrible law, it is one of the biggest entitlement programs that the U.S has ever seen. This creates a dilemma for the Republicans who worked to repeal the bill as it is extremely difficult to take away an entitlement program once it is implemented in the system. Sure, by repealing Obamacare they are doing something that will benefit the nation in due time, but it will come at a cost of near-term political support. The AHCA isn’t perfect, but, it does work to fix some of the issues with our broken healthcare system and it strives to return power to the consumers. In the long run, the only way that we can have affordable, high quality health care in the U.S is to allow the innovation and power of the free market to transform the industry, not by allowing outdated and antiquated government offices to control it.