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Obamacare: The Final Battle
By Avik Roy
July 2, 2012 4:00 A.M.
In 1969, Elisabeth Kübler-Ross proposed that there are five stages of grief: denial, anger, bargaining, depression, and acceptance. In the wake of John Roberts’s incoherent Supreme Court flip-floppery, most conservatives appear to find themselves in stage 1 (“Hey, we held the line on the Commerce Clause!”) or stage 2 (“Roberts is a traitor!”). There are some in stage 3 (“If we lay off Roberts, maybe he’ll help us out in the future?”) and a few in stage 4. But the reality is this: Republicans must run the table in November or we will all have to accept the permanence of Obamacare.
Mitt Romney said it best on Thursday. “If we want to get rid of Obamacare, we’re going to have to replace President Obama.” Those who have been sitting on the sidelines, out of complacency or loyalty to someone else from the primaries, must get out of their chairs and get to work. But while that work must end with Mitt Romney in the White House, it must begin with a Republican majority in the Senate.
The plan
There is much confusion and disagreement among Republicans as to whether or not Obamacare can be repealed via reconciliation, which would require 50 votes in the Senate — and a Republican vice president — instead of the filibuster-proof 60. Governor Romney has committed to repealing Obamacare via reconciliation. “We have to repeal Obamacare, and I will do that . . . with a reconciliation bill. . . . We can get rid of it with 51 votes,” he said last October.
It can be done. Reconciliation can be used for any provision that is germane to the budget, and a simple bill repealing Obamacare would certainly be so. And even a more complex bill could get through reconciliation, as Jim Capretta explains, because much of Obamacare’s regulatory architecture — including the individual mandate — revolves around the law’s revenue and spending provisions.
But the Senate majority needed to repeal Obamacare is far from guaranteed. Indeed, if the election were held today, Republicans would probably fail.
The math
Today, Republicans control 47 seats in the upper chamber. Olympia Snowe’s retirement in Maine — a likely pickup for the Democrats — means that Republicans must gain four more seats to control the Senate, and probably six to gain a governing majority. Based on the latest polls in each race, if the election were held today, Republicans would get only to 49. And even 49 is not assured.
At first glance, the math seems favorable. Of the 15 races that RealClearPolitics deems most competitive, Democrats must defend 11 seats: Stabenow (Mich.), Brown (Ohio), Nelson (Fla.), McCaskill (Mo.), Tester (Mont.), and open seats in Connecticut, Hawaii, New Mexico, North Dakota, Virginia, and Wisconsin. Republicans must defend four: Brown (Mass.), Heller (Nev.), and open seats in Arizona and Indiana.
Though Republicans are likely to hold Arizona and Indiana, Massachusetts and Nevada are going to be tight. Senator Scott Brown is tied with Elizabeth Warren as of the latest poll in Massachusetts, and Senator Dean Heller is up by only one percentage point against Democrat Shelley Berkley. If Republicans were to lose both of those seats, they would have to win six of the Democrats’ eleven to get to 50, and eight to get to 52.
And that won’t be easy either. Debbie Stabenow and Sherrod Brown are up by double digits in their respective races. Hawaii and Connecticut are long shots. That leaves Florida, Missouri, Montana, New Mexico, North Dakota, Virginia, and Wisconsin.
In those seven races, as of the latest polls, Democrats are up in Florida (by 1), North Dakota (by 1), Virginia (by 1), and New Mexico (by 5). Republicans are leading in Montana (by 2); Tommy Thompson is up 8 in Wisconsin, and nearly every potential Republican challenger is leading Senator Claire McCaskill in Missouri.
I don’t want to get into a technical discussion of the various polls’ methodologies and precision; I outsource that to Jim Geraghty. The bottom line is that conservative activists need to realize the stakes, and get active in one or more of these races.
The message
Every reader of National Review knows why Obamacare is bad. It will expand the deficit, a problem that John Roberts’s opinion makes materially worse. It rations Medicare. It forces between 17 and 25 million more people into Medicaid, a program with some of the worst health outcomes in the world, in which people die of toothaches because they can’t gain access to care. It raises taxes by more than $500 billion over ten years.
But there is one aspect of Obamacare that, above all others, will matter to the broadest swath of American voters: the degree to which the law drives up the cost of health insurance. And this is the message that opponents of Obamacare must hammer home.
When President Obama was campaigning in 2008, he repeatedly promised that Obamacare would reduce, on an absolute level, Americans’ health premiums. “We’ll start by lowering premiums by as much as $2,500 per family,” candidate Obama said in October of that year.
But the opposite has happened. In 2011, the average family health plan cost $15,073, a jump of $1,303 — 9.5 percent — from 2010, the year that the president signed Obamacare into law. Over the same period, median household income increased by only 4 percent, from $49,445 to $51,413. That means that, for the average family in 2011, health premiums amounted to a staggering 29 percent of household income.
Imagine if the amount you paid in taxes last year went up by 9 percent, even though your income barely budged. That’s what’s going on with American health insurance under Obamacare, and it’s going to get worse. Why? It all comes down to the economics of insurance.
The logic
On the day of the Supreme Court decision, President Obama was ebullient. “Insurance companies can no longer impose lifetime limits on the amount of care you receive,” he said. “They can no longer discriminate against children with preexisting conditions. They can no longer drop your coverage if you get sick. They can no longer jack up your premiums without reason. They are required to provide free preventive care like check-ups and mammograms. . . . All of this is happening because of the Affordable Care Act.”
But the simplest way to explain the economics of insurance is: There’s no such thing as a free lunch. Every one of those “benefits” that the president touts makes insurance more expensive for the vast majority of Americans.
The law’s famous guarantee that you can buy insurance after you’re already sick—the situation otherwise known as “preexisting conditions”—gives Americans a huge incentive to go without insurance until they fall ill. The dirty secret of the law’s individual mandate is that it’s too weak: Millions will decide to pay the $695 fine, knowing they can buy insurance later, instead of ponying up $15,000 for health insurance. Their absence, in turn, will drive adverse selection, the process by which only the sickest people buy insurance, driving premiums to unsustainably high levels.
The law’s community-rating provision forces young people to pay far more for health insurance, in order to subsidize the old. This is especially troubling given that the majority of people without insurance are under the age of 35. In some states, young people could see premium increases of as much as 75 percent, encouraging many of them to drop out of the system, thereby increasing costs for those who remains.
The law’s requirements that plans cover a government-approved list of “minimum essential benefits” requires that every American will have to pay for things he or she isn’t likely to consume, like acupuncture and substance-abuse services. It’s like going to a restaurant where you’re forced to have a seven-course meal when you would have been just fine with three, and you don’t like salmon anyway.
Indeed, by the very act of subsidizing insurance, the law drives up its cost. If you were given a clothes subsidy, would you spend the same amount on clothes as you did before, or splurge from time to time? The laws of economics don’t magically go away when you buy health insurance. One of the costliest aspects of the law is that it requires all plans on the new exchanges to have a generous financial value, called a “minimum actuarial value,” that will force everyone to buy costlier insurance.
A tiny minority of people will benefit financially from Obamacare: those who have serious illnesses, who are uninsured today, and who have low-enough incomes to qualify for maximal subsidies. Everyone else will pay more. Jonathan Gruber, an MIT economist who helped design Obamacare, has predicted that individual-market premiums in Colorado will go up by 19 percent by 2016, owing to the Affordable Care Act. And that’s on top of existing health-care inflation. In Minnesota, Gruber projects, premiums will go up by 29 percent because of the law. In Wisconsin, they’ll go up by 30 percent. And remember: It’s not like health insurance is cheap today.
The challenge
There are two problems, politically, in explaining these issues to American voters. The first is that these concepts aren’t always the simplest things to explain. But it must be done. After years of conservative legwork, many Americans today understand that raising taxes on the “wealthy” means raising taxes on employers. Similarly, conservatives have to do the legwork of explaining how Obamacare’s nice-sounding insurance regulations are a Trojan horse for higher premiums.
The second problem is that the half of Americans who get insurance through their employers don’t get to see how much their insurance costs. We all know what our monthly paychecks look like, but very few of us know how much our employers spend on our health plans. All we know is that we didn’t get a raise last year, or the year before. But that’s what we have to explain to voters: how the rising cost of insurance is soaking up an increasing portion of their wages.
Finally, we have to remind voters that conservatives stand for lowering the cost of insurance by removing costly mandates and by giving people freedom to sign up for the insurance plans of their choosing. Candidates for the Senate must bone up on these concepts and explain them as they campaign for office.
Health care has long been outside of the Republican comfort zone. We find it easier to talk about taxes and the debt. But if we are to repeal Obamacare and gain a mandate for our own reforms, it’s not enough to say “Obamacare is a government takeover” or “I support Mitt Romney’s plan.” It’s important to explain why Obamacare will make health care more costly, and why free-market reforms are better.
If we don’t, we will lose. And if we lose, we will be stuck with Obamacare forever. And, even worse, we will have deserved it.
— Avik Roy is a senior fellow at the Manhattan Institute and the author of The Apothecary, the Forbes blog on health-care and entitlement reform. He is a member of Mitt Romney’s Health Care Policy Advisory Group. You can follow him on Twitter at @aviksaroy.
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