Paying More And Buying Less: The Story Of Obamacare

David J. Hebert Professor, Ferris State University
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According to the Wall Street Journal, insurance companies are seeking to raise their premiums by as much as 65 percent because the people who signed up “seem to be older and have more chronic conditions like diabetes or congestive heart failure than predicted.” Color me surprised.

There are two sources of this high degree of sickness: first, fewer healthy people have signed up for the exchange than were anticipated. For healthy people, particularly young people, some of the provisions of Obamacare just simply do not make sense as they provide too much coverage in wrong areas, making them too expensive to be worth the cost. As a result, these healthy people do not sign up, meaning that the average person in the exchange is sicker because there are too few healthy people around to decrease the average.

The actual enrollment numbers show this: in 2010, the CBO projected that 35 million people would sign up for Obamacare. Today, a mere 16.4 million have done so. Further, the Obama administration has stated that they need about 40 percent of the enrollment to be comprised of people between the ages of 18 and 34 to make the program work. As of 2014, roughly 25 percent of the Obamacare enrollees were in that age group.

The second source, however, is much more pernicious. Obamacare provides a means for one group of people to use taxpayer money to purchase their health insurance and, in turn, their health care. Because of this, some people are able to go to the doctor at a lower out-of-pocket cost than before. While on the surface this looks like a victory, at a deeper level it is nothing more than a counterproductive failure, especially when coupled with America’s still-broken healthcare system.

For example, by lowering the out-of-pocket expense of going to the doctor, some people are steered away from using home remedies such as bed rest, drinking fluids, and cough medicine, which may have been sufficient to address their ailments.  Because people do not face the full cost of going to the doctor, they are more likely to do so. This can only lead to higher prices at the doctor, which inevitably lead to higher insurance prices. Indeed, this is exactly what was found in a 2015 study by the research division of Health Pocket. Further, thanks to America’s ailing medical liability system, the number of defensive tests conducted at hospitals increases as more people go to the doctor, further increasing the cost of a visit to the doctor and, in turn, the cost of health insurance.

That insurance companies are seeking congressional approval to increase their rates is no surprise whatsoever. Obamacare does nothing more than allow every American to reach into the pockets of every other American to pay for their health care. That health care becomes more expensive to society, not less, is the inevitable result of everyone reaching into everyone else’s pockets to pay for their own health care and to pay for more unnecessary, defensive medical tests and procedures.