John Hood John Locke Foundation
December 19, 2013
As the costly implementation of the perversely named Affordable Care Act continues to baffle, disappoint, and enrage the public, a collection of government vendors and left-wing groups has settled on a brilliant political strategy: castigate North Carolina for failing to do enough to implement the Affordable Care Act.
Among other things, they say Gov. Pat McCrory and the legislature should have accepted Obamacare’s offer to expand Medicaid to all poor and near-poor individuals. Hospitals say it because, after all, they’d get most of the money. Liberals say it because, after all, their ultimate goal is Medicare/Medicaid for all, not the preservation of private, competitive markets for health care finance and delivery.
North Carolina’s leaders have said no. That’s because they can see beyond the ends of their noses — and beyond the flimsy promises of the used-car salesmen in Washington who are trying to pass Obamacare off as something other than the lemon it is.
While the current Obamacare debate has focused on the fate of the insurance exchanges, the bill was always primarily about expanding Medicaid. Most of the people forecast to obtain coverage under Obamacare were to do so as new Medicaid recipients, not enrollees of private plans.
Moreover, the flaws in the insurance exchanges reflect not an accident but instead a heartfelt belief by the law’s framers that true health insurance — a financial product to protect households against unforeseen major medical expenses — needs to go away. They were willing to use federal power to attempt to turn private insurers into regulated utilities. But most of them assumed the effort would fail in the long run, leaving no alternative but to expand Medicare and Medicaid into a de facto single-payer system.
In that one prediction, at least, the framers of Obamacare are likely to be correct. If current trends continue, a combination of adverse selection and moral hazard will render the private exchange plans unsustainable without massive and unpopular government bailouts. If taxpayers are going to be forced to plow more money into the financing system of health care, the argument will go, why not just cut out the middleman and fund the expansion of Medicare (by lowering the eligibility age) and Medicaid (by raising the income-eligibility cap)?
Hospital executives and other providers may not fully appreciate where this is going — although some may have concluded that they might as well be in on it rather than have no seat at the table. For Obamacare’s most-passionate advocates, however, there is simply no doubt about their ultimate goal. If you agree with that goal, so be it. If you don’t agree with that goal, you need to recognize that browbeating North Carolina and other states into expanding Medicaid is intended to hasten its realization.
Many conservatives have an entirely different long-term goal in mind. We want to promote access to medical care for the needy without imperiling private markets or the freedom of Americans to contract with whomever they wish on whatever terms they wish. We envision a system in which all individuals receive refundable, risk-adjusted tax credits with which to purchase health plans or make deposits into health savings accounts. We further envision multiple, voluntary insurance exchanges that compete for the patronage of workers, families, employers, and retirees. Medicare and part of Medicaid would remain a system of what amounts to required savings for retiree health needs, supplemented by general revenues for the poor and severely disabled.
Expanding Medicaid in its current form would obstruct rather than encourage real health care reform. It would also be fiscally reckless, given that the federal government has already promised tens of trillions of dollars in Social Security, Medicare, and Medicaid payments over the next several decades which for which it has no revenue stream. To count on Washington pay for 90 percent of the cost of additional Medicaid recipients in perpetuity would be like buying a used AMC Gremlin at the used-car lot without bothering to look under the hood.
Sorry, lefties, but North Carolinians aren’t so gullible.
Hood is president of the John Locke Foundation. For more information, visit www.johnlocke.org.