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LeMieux: Another signal Obamacare is failing

 
In 2012, Republican presidential candidate Mitt Romney campaigned against Obamacare, calling it an “unfolding disaster” for the economy. Four years later, strains in the law are evident and premiums are rising.
In 2012, Republican presidential candidate Mitt Romney campaigned against Obamacare, calling it an “unfolding disaster” for the economy. Four years later, strains in the law are evident and premiums are rising.
Published Aug. 17, 2016

Obamacare is beginning to fall under its own weight.

State-run "exchanges," the signature element of the Affordable Care Act, were meant to allow the working uninsured to purchase subsidized insurance from private companies at affordable rates. This week, America's third-largest health insurer, Aetna, announced it will drastically reduce its participation in the Affordable Care Act. Starting next year, Aetna will drop its participation from 15 states to just four.

United Health Group and Humana have forecast similar pullbacks. Why did Aetna slash its participation going forward? Because it posted a $200 million loss last quarter, due in part to higher than expected costs incurred in the exchanges. As participation by insurance companies dwindles, the marketplace will become less competitive and prices will go up. But higher costs are nothing new. Health care costs have soared in recent decades and will continue to increase even in the employer market at a pace far greater than inflation.

Democrats hoped that forcing healthy young people to purchase insurance would spread costs in a larger pool and subsidize coverage of older and sicker Americans. The math has not worked. As Aetna's CEO commented in announcing the company's plan to withdraw participation, there are not enough healthy people to offset the costs of those with major health problems. Customers in the exchange are sicker than those in employer-based insurance plans — by one estimate, 22 percent sicker. It was a great selling point for Obamacare to provide that pre-existing conditions would not be a bar to coverage, but not surprisingly it has increased costs.

When Americans in the exchange start the renewal process in November, they will likely see, at a minimum, 10 percent premium increases. The average premium increase requested nationwide is 24 percent. In some states the increases will be much more. In Arizona, the two largest plans are seeking increases of a staggering 60 percent. The same is true in Tennessee, and the insurer who controls 70 percent of the Illinois market is asking for a 50 percent premium hike.

The solution offered by Democrats, including Hillary Clinton, is to offer a public insurance option like Medicare. That means the losses now suffered by insurance companies will be shifted to the federal government and our exploding $18 trillion national debt will explode even faster. Today, health care spending by the federal government amounts to roughly a trillion dollars a year. That is more than we spend on Social Security ($900 billion) and defense ($600 billion).

Worse still, a recent survey of the New York Federal Reserve found that 20 percent of service sector and manufacturing company executives said they are reducing workers in response to provisions in Obamacare. Rising health care costs due to mandates imposed by the law cut into company revenues, and CEOs are forced to cut workers to make ends meet.

President Barack Obama promised that enactment of the his signature health care proposal would lower the cost of health insurance for all Americans and, if we liked our current health care plans, we could keep them. The exact opposite has been true, and some are even losing their jobs.

Doubling down on this madness by expanding Medicare and Medicaid to make government-run health care available to everyone is an even worse idea. As it stands, the pro rata share of the national debt for every man, woman and child in this country is more than $56,000. The interest payment on the debt alone is $223 billion a year.

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The rising cost of health care is attributable to our third-party payer system. With Medicare, Medicaid and insurance companies paying the overwhelming majority of all health care bills, we the consumers are distanced from the cost of health care at the point of delivery, and accordingly the normal give and take of the market place does not work.

Until we put the decisionmaking power for health care back into the hands of consumers, including giving government dollars directly to consumers to purchase their own health care, costs will continue to soar.

Lasik surgery is a great example of free market health care working to reduce costs. When it was first offered, a patient might pay $10,000 for the procedure. Today, providers compete on price and the procedure is offered for as low as $600.

Albert Einstein is often quoted as saying the definition of insanity is doing the same thing over and over and expecting a different result. Expanding one federally run health care program to replace another would be no less absurd.

George LeMieux served as a Republican U.S. senator, governor's chief of staff and deputy attorney general.