ObamaCare is Affordable, So Long as it’s Outside ObamaCare

by Benjamin Domenech

Source: Heartland.org Consumer Power Report #409

So it turns out that there are cheap and plentiful insurance options available to the American people… if only they are looking for them outside the Obamacare exchanges. Here’s the Washington Examiner’s report:

A new and comprehensive comparison of health insurance options offered by Obamacare versus private websites finds that President Obama’s program offers less choice and higher prices than promised by the White House and leading Democrats.

Adding to the list of broken health care promises, the study from the National Center for Public Policy Research found that there were more and cheaper options available on websites outside the health insurance exchange in 2013 than on healthcare.gov and state Obamacare exchanges.

The report, “Obamacare Exchanges: Less Choice, Higher Prices,” looked at options available for a 27-year-old single person and a 57-year-old couple in metropolitan areas across 45 states.

The report found that a 27-year-old male had about 10 more policies to choose from on eHealthinsurance.com and finder.healthcare versus the exchange. The older couple had about nine more policy choices.

Ditto for the cost findings, with the 27-year-old male having access to 32 policies that cost less than the cheapest Obamacare offering, and the 57-year-old couple access to 29 cheaper policies.

“In general, consumers had substantially more policies to choose from on private websites such as eHealthinsurance.com and Finder.healthcare.gov than they presently have on the exchanges,” said the study.

The study is available here. What’s really telling about this assessment is how it puts into perspective the Obama administration’s latest unlawful alteration of the ACA, which takes the form of allowing tax subsidies to be available outside the exchanges. Seth Chandler weighs in on why this time, insurers may have standing to sue:

The Obama administration has made a habit in its implementation of the Affordable Care Act to exploit the law of “standing.” … With the latest lawless action, however, the Obama administration may have gone too far. Insurers who sold off Exchange will be hurt by the cost sharing reductions. The reason is “moral hazard.” The idea of moral hazard is that the more generous an insurance policy is the greater the frequency with which insureds encounter covered events. In the health insurance arena, people with lower co-pays and deductibles go to the doctor more. Indeed, the major reason for co-pays and deductibles is precisely to induce insureds to be judicious in their use of expensive medical services. Moral hazard is one of the major reasons that platinum policies cost more than bronze ones.

When cost sharing reductions imposed on off-Exchange insurers effectively convert their silver policies into silver-plus, gold-plus and platinum-plus policies, those insurers end up paying more in claims. And, while insurers selling policies on the Exchanges could have taken the induced demand created by cost sharing reductions into account in pricing their policies, there may well be insurers who sold only off the Exchange who, of course, did not take this additional moral hazard into account. Those insurers never dreamed that the government would reduce the amount its insureds would owe in cost sharing. Such insurers should have a strong case for standing in bringing a declaratory judgments to challenge the new guidance or, perhaps, in refusing to honor the demand for cost sharing reductions. Such insurers will, of course, need to be willing to take the political heat that may come from taking on an Executive Branch that more than ever is regulating their products.

Michael Cannon has more:

President Obama’s crimes are not victimless. Just as offering unauthorized subsidies through federal Exchanges will trigger illegal penalties against employers, offering unauthorized subsidies to people who purchase coverage outside their state-established Exchanges will likewise trigger illegal taxes against employers. Employers in Maryland, Oregon, and other affected states may want to lawyer up.

The point of the administration’s activity is obvious: subsidize as many people as possible to create as much difficulty for repeal in 2017. They had the exchanges for that – but now that they’ve failed, they’ll drive those subsidies further before scaling back to the coverage they prefer.

-- Benjamin Domenech


Moreover, on the eve of the president’s latest State of the Union Address, three Senate Republicans released an Obamacare alternative proposal. The Patient Choice, Affordability, Responsibility, and Empowerment Act (CARE) sponsored by Republican Senators Richard Burr (NC), Tom Coburn (OK), and Orrin Hatch (UT) seeks to execute the same goals as Obamacare: lower health care costs, fix the pre-existing condition dilemma, and reduce the number of uninsured Americans. A key difference, however, is that the CARE Act operates on incentives, not mandates. Carrots, not sticks. It does this by injecting consumer-driven principles and patient choice into the health care delivery system…

[I]f the ideas outlined above cannot disabuse the liberal claim that Republicans have no Obamacare alternatives, an entire conference devoted to Obamacare alternatives was held last week in Washington, D.C. A multitude of consumer-driven alternatives were presented, each with their own nuances.

For instance, John Goodman, president of the National Center for Policy Analysis, suggests that everyone receive a universal tax credit for the purchase of health insurance. Any tax credits not used for health coverage will be funneled to local safety net institutions providing services for which the uninsured cannot pay on their own.

Moreover, the 2017 Project would not auto-enroll anyone in a plan and would not limit the tax-exclusion for employer-sponsored insurance as the CARE Act would. The 2017 project would offer an age-adjusted tax-credit to individuals interested in purchasing health insurance through the individual market. A $900 tax credit would be available to every child, as well. And, for those who do not use the full tax-credit amount, the remaining portion could be deposited into a health savings account (HSA). Furthermore, this proposal enables states to allocate annual funds to run high-risk pools for individuals with costly, chronic medical conditions.