What, you don’t think 20,000,000 people losing their health insurance is funny? | Image from Chip Somodevilla via Getty Images
Late yesterday, a federal judge in Texas issued a ruling striking down the entire Patient Protection and Affordable Care Act (ACA), aka Obamacare. It’s hard to know where to start with this one, but let’s first note that this lawsuit will immediately be appealed, so if you rely on the ACA for your health insurance you won’t see consequences yet.
The importance of the entire Obamacare story cannot be overstated. To know the story, though, it helps to know what Obamacare is, and not everyone does. So, what is it?
The Obamacare “Three-Legged Stool”
Obamacare has been likened to a three-legged stool because, like the legs of a stool, it is built on three main supports that need each other to work. Kick out one of these three things, and the other two might not hold up.
Obamacare lowered the uninsured rate sharply and immediately, and it is now at risk. | Data from Gallup via CNBC.
Leg #1: Guaranteed issue
There were major problems in American healthcare before 2010. Chief among them was that health insurers could deny coverage to anyone at any time. If you were born with a “pre-existing condition” (basically any health issue you could have prior to obtaining insurance) to parents without health insurance, for example, you may never be able to obtain health insurance for your entire life. Right off the bat, you were sentenced to a life of poverty.
Likewise, if you graduated from school and were no longer on your parents’ plan, you better get insured right away. Say you graduated and accepted a job, but that job didn’t start for a month or two so your coverage lapsed. If you were found to have any type of chronic health condition during that time, you were uninsurable for the rest of your life. You would be faced with the choice of going bankrupt paying for care out of pocket, or going without care and watching your health decline.
Even if you had insurance, many plans came with “lifetime caps” in coverage, meaning you could pay your monthly premium for 30 years while healthy, but once you got cancer your insurer would pay the first $1 million and then kick you off. Good luck fighting cancer while going bankrupt. There’s always the ER (side note: many people did have to use the emergency room as a last resort, resulting in huge, unpaid bills and a very inefficient healthcare system. Correcting this is a major reason Obamacare didn’t bust the federal budget).
All told, the number of people that wanted health insurance but could not get it, prior to Obamacare, was on the order of a few million. This did not include the people that were priced out of the market – offered insurance but could not afford it due to their preexisting condition.
Obamacare solved these problems by forcing the hand of insurers – it outlawed underwriting on the basis of pre-existing conditions (making insurance more expensive for sicker people), and there could be no more lifetime caps. The only exceptions were that people could be charged more for being older and for being a smoker. Together, these changes were known as the principle that insurers would “guarantee issue” of health insurance to all comers.
Now, if you’ve read to this point and thought, “Wouldn’t everyone just wait until they got sick to buy insurance?” Give yourself a point. Heaping regulations on insurers would not solve healthcare problems all by itself, which is why Leg #2 was necessary.
Leg #2: Individual Mandate
The idea behind the individual mandate is straightforward enough: if insurers have to offer insurance to anyone that wants it, consumers can’t wait to “want” it until they really need it. You can’t just pay nothing at all while healthy, then expect to benefit while sick.
If not for the individual mandate, only sick people would have an incentive to buy insurance. The cost of insurance would be astronomical – this just wouldn’t work.
There is an insane political angle to this particular leg. You may recall many Republicans railing against the individual mandate as un-American, totalitarian, and a host of other evils. It is what led Ben Carson (before his presidential bid and tenure as Trump’s HUD secretary when he was “just” a world renowned pediatric neurosurgeon) to call Obamacare “the worst thing to happen in the United States since slavery.”
This criticism was always a load of disingenuous crap. We know this because when Massachusetts Governor and billionaire robot impersonator Mitt Romney signed “Romneycare” into law in 2006 (on which Obamacare was based and with which Obamacare shared many key elements), he spoke approvingly of the law’s “personal responsibility mandate”, which was the same exact thing. No one denounced it – no one – as communist or as slavery.
The name itself – individual mandate – is an example of Republicans being master campaigners and terrible at governing. Mitt’s original tag – personal responsibility mandate – polled better and was uncontroversial. When Democrats copied it, Republicans gave it a new name, pretended it was an Obama creation and bashed it. There was no policy reason for opposing it, and no Republican has ever explained the flip-flop with any coherence.
Leg #3: Subsidies and Medicaid Expansion
If you noticed that forcing everyone to buy insurance might not work because some people are poor, give yourself another point. Just mandating that everyone buy something won’t work for those that can’t afford it.
To deal with this, the IRS had to get involved. If your income falls below a certain threshold, Obamacare pays part of your insurance (grants you a “health insurance subsidy”). The less you make, the greater the subsidy. If you make under 125% of the poverty line, you get “free” health insurance via Medicaid.
Medicaid expansion alone resulted in millions of people getting covered – over half of the 20+ million people that gained insurance through Obamacare got it via Medicaid.
Medicaid also comes right out of the federal budget, so you can imagine this was costly. You know what else was costly, though? Society picking up the tab for millions of uncovered people going bankrupt over huge medical bills. Before Obamacare, about half of individual bankruptcies were due primarily to medical expenses.
Obamacare resulted in many fewer bankruptcies. Republicans want to repeal it anyway. | Chart from Consumer Reports, data from American Bankruptcy Institute
There is so much more to Obamacare:
- the drama behind each state’s efforts to set up their insurance exchanges;
- the initial failure of the healthcare.gov website;
- the “10 essential health benefits” requirement of all insurance plans, eliminating “catastrophic only” plans;
- changes to Medicare provider reimbursements that incentivized results over flat rates for services provided (eliminating incentive for unnecessary procedures);
- the lawsuit that resulted in states being able to “opt out” of Medicaid expansion;
- the Supreme Court upholding Obamacare’s constitutionality by the slimmest of margins;
- risk corridors for insurers; etc.
So, why did Republicans oppose this law?
Republicans opposed Obamacare for the purely cynical reason that their opposition would benefit them politically.
Obamacare borrowed from a Heritage Foundation plan and Mitt Romney’s own creation – a pragmatic design that no one loved but everyone could live with. Democrats bent over backwards to get Republican support, holding dozens of hearings over nine months and courting individual senators with “sweeteners” (pork) to get their votes.
None of the olive branches took into consideration how blindly partisan Mitch McConnell could be, though. He proudly talked about how hard he worked to “keep Republican fingerprints” off the final product, because even one Republican vote might make the law sound bipartisan and thus uncontroversial. It should’ve been. In the end, Obamacare included over 60 Republican amendments but got zero Republican votes.
Republicans ran a truly crazy election pitch in 2010 based on their opposition to Obamacare and picked up 63 House seats. Cynicism sells, and Republicans have been doubling down on it ever since.
Among other insanities, Republicans argued in 2010 that Obamacare had created “death panels“, whereupon the government would decide which citizens were no longer worthy of Medicare and should be left to die. In reality, they were referring to Obamacare’s mandate that all insurance plans cover the development of living wills. As an option to the consumer. That’s it. No government sacrifices.
It was this same insanity that led to about 60 Obamacare repeal votes during Obama’s presidency. Each were either defeated in the Senate or vetoed by the president. Of course they were – Obama wasn’t about to repeal a signature achievement, something he labored so hard for.
Republicans convinced themselves, meanwhile, that their repeal efforts really failed because their own members just weren’t “conservative” enough. I kid you not. They launched crazy lawsuits calling for the whole thing to be struck down, each of which was defeated in the courts.
Which brings us to the current day.
Repealing the individual mandate, and the current lawsuit
Remember the 2017 Trump tax cut? Aside from blowing a hole in the budget big enough to drive a yacht through, it included a provision repealing Obamacare’s individual mandate.
No Republican seems to know enough about how Obamacare works to realize they kicked out one of the stool’s legs. So they left the rest of the law in place, planning to just let it shamble along in the hopes that any ill effects can be blamed on “Obamacare” generally which means Democrats. Twenty-some Republican state attorneys general sued the federal government arguing that since the individual mandate is out, the entire law should be struck down.
They are arguing for the days of getting thrown off your insurance, or being uninsurable due to preexisting conditions.
It seemed unlikely that anyone would go for this, but one judge did. Republicans are now the dog that caught the car. They could never tell you why they were chasing it, and they don’t know what to do next. They have no plan. They never did.
So the healthcare of 20 million people hang in the balance while an appeal awaits a higher court, and no one knows for sure what will come of it all. It’s unsettling, and if you’ve gotten to the end of this article you know more about how we got here than the president who may need to correct this mess. None of it inspires confidence.