Opinion: Repeal or Reform?

Jan 25, 2017

Credit Abraham Schwab

I can remember watching as the Affordable Care Act (ACA/Obamacare) was passed. I was watching on our small kitchen TV in Brooklyn. I remember watching the numbers of votes for and against rise higher and higher until in the end, the law passed.

Since that time, I have given more talks than I can count about Obamacare, what it is, and what it isn't. The misconceptions and misunderstandings about Obamacare continue to this day. 

At this point, the Republicans in the House have done nothing more than they did 50+ times during Obama's administration. The difference now is that a Trump presidency means that passing this “repeal” may actually lead to action. But what will that action look like? We still really don't know. In fact, there's a chance that no meaningful repeal will take place. Members of the House and Senate are notoriously susceptible to public pressure. And so voters may be able to sway their representatives to derail the process currently started by the recent reconciliation vote.

And so you might ask yourself, should we repeal Obamacare? It depends on what you think is important. 

I have been critical of Obamacare. It incentivizes cutting the hours of workers and it uses a market mechanism to achieve a nonmarket goal: universal coverage.

But these criticisms are not enough to warrant the perversity of the “repeal” Congress is currently considering. Because of the nature of the reconciliation process, Congress can take away the aspects of the law connected to budgetary considerations: most notably, the individual mandate and subsidies for poor families (and possibly the Medicaid expansion). The worry or aim (depending on one’s perspective) is that doing away with these parts of the law will undermine the whole law. 

Importantly, though, eliminating these aspects of the Affordable Care Act will likely have far reaching negative effects. Because Republicans will be unable to directly repeal the other aspects of the law (e.g., the requirement to cover pre-existing conditions, the requirement to provide insurance for whoever seeks it, and the elimination of yearly and lifetime limits on covered healthcare expenses), insurance companies will still be required to offer insurance to individuals with the highest healthcare costs. 

At the same time, without an individual mandate, individuals will be incentivized to avoid getting health coverage until they really need it. This will likely lead to a “death spiral” for the individual insurance market. Because insurance companies will still be allowed to set the rates for their premiums, this will push insurance companies, in an economically rational and/or opportunistic way, to substantially increase the costs of insurance plans offered to individuals. But, because the number of these plans they sell each year, and so the costs they incur, will be uncertain, they will want to minimize the volatility of their revenues. They can do this by increasing the costs of these individual plans to all but unaffordable levels. They can also limit the volatility of their revenue by increasing the premiums associated with group plans as well (i.e., the plans offered through many employers, large and small). 

There are certainly individuals who are paying more for insurance than they were before, and some of these individuals (particularly younger individuals) are paying more because of certain features of Obamacare. And so repealing the individual mandate and the subsidies for the poor will save some of these individuals money and eliminate the burden that has been placed on them. But it does so at a high cost. Millions will lose their health care coverage and all of us could pay even more for our insurance.  

The distribution of the burdens of Obamacare across individuals and businesses needs re-dress. But, as I’ve said before, health is fundamentally important. If I have less so that everyone can get the healthcare they need, that's the kind of society I want to live in. As this tweet so succinctly demonstrates, 

"...this isn't an economic argument. It's an argument about the kind of society we want to live in and the kind of individual you want to be."

If you think we should care for the poor and the disadvantaged, that we should provide not only for ourselves, but for others, I encourage you to call your Members of Congress and tell them to refuse this “repeal” and to focus on reform.

Abraham Schwab is a Fort Wayne associate professor of philosophy and medical ethicist.

Opinions expressed in this column are those of the individual writer and do not necessarily reflect the opinions of the staff, management or board of Northeast Indiana Public Radio. If you want to join the conversation, head over to our Facebook page and comment on the post featuring this column.