Health Reform Progress

September 20, 2019 stgblase

By Brian Blase

Moving Beyond Repeal and Replace

Before President Trump took office, the nation’s health sector was being pushed ever further toward greater government control rather than toward consumer choices in a more competitive market.

This was largely due to significant changes mandated by the Affordable Care Act
(ACA). The ACA contains scores of provisions that touch nearly every part of the
health sector, but its core components center on expanding government-centric coverage. The ACA provided massive new federal spending for states that expanded their Medicaid programs to able-bodied, childless, working-age adults; imposed stringent new federal standards for health insurance; included tax penalties and subsidies to encourage take-up of this insurance; and contained funding mechanisms—both a variety of new and expanded taxes as well as Medicare payment reductions—to partially finance the regime.

In sum, the ACA represented a massive federal encroachment—with its complicated web of mandates, regulations, taxes, and subsidies—on the nation’s health sector. The law led to sharp premium increases in the individual market for health insurance, a dearth of coverage options for families, diminished quality of coverage for people with serious medical conditions, a significant reduction in the number of small employers offering coverage to their workers, and an abundance of both improper and wasteful federal spending.

President Trump was elected, in part, on a campaign promise to undo the damage caused by the ACA. However, congressional efforts to repeal harmful aspects of the ACA and replace portions with a more market-based and less Washington-dominated structure proved inadequate to the political challenge. Although the blame for the failure is widespread, from a poor legislative process to a lack of consensus in the centerright policy community, the effort was considerably harmed by bogus estimates produced by the Congressional Budget Office (CBO). In its calculations, CBO attributed far too much importance to the power of the individual mandate to expand coverage, which required most Americans to obtain government-approved health insurance or pay a penalty. Thus, CBO projected highly exaggerated coverage gains attributable to compliance with the individual mandate and therefore exaggerated coverage losses from eliminating the penalty.

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