Despite headlines of soaring premium increases across the country, one of Obamacare’s chief architects says the law is working as designed and the main adjustment he would make is to increase financial penalties for those who do not purchase insurance.
MIT Economics Professor Jonathan Gruber told CNN that despite millions of people being strapped with much higher premiums and deductibles, the biggest adjustment needed right now is to put more pressure on people to buy insurance when they currently prefer to pay the penalty.
“The law is working as designed; however, it could work better, and I think probably the most important thing experts would agree on is that we need a larger mandate penalty. We have individuals who are essentially free riding on the system,” said Gruber. “The penalty right now is probably too low and that’s something ideally we would fix.”
The mandate penalty is the fine, although referred to as a tax by the Supreme Court, that the government demands from anyone who doesn’t buy health insurance. Many young, healthy people pay the fine instead of purchasing insurance due to the cost savings and bet they won’t have any serious medical issues in the coming year.
Galen Institute President Grace-Marie Turner, a fierce opponent of Obamacare, is appalled by Gruber’s idea, although she’s not surprised by it.
“The individual mandate is the most despised part of a very unpopular law. To expect the Republicans are going to vote to increase those penalties, I don’t know what alternative universe Jonathan Gruber is living in, but it’s not the one I see on Capitol Hill,” said Turner.
She also says many Americans who don’t buy insurance have discovered it’s pretty easy to avoid paying the fine.
“The only way that the law says the penalty can be collected is from people who have a refund due on their taxes. Well, guess what? Well, guess what people are going to do? They’re going to change their deductions so that they don’t have a refund due. Then the IRS won’t be able to collect that money,” said Turner.
Turner is also pushing back on the notion that Obamacare is working fine otherwise. She says it may be true that more people have coverage and people can’t be denied coverage for pre-existing conditions. However, she says the damage done to achieve that is immense.
“In a very narrow technical sense, Jonathan Gruber is right. But when the American people look at this, they’re saying, ‘Wait a minute. Isn’t this called the Affordable Care Act? This is not affordable for me,'” said Turner.
She also points out it’s not just the 10-plus million Americans who are paying every penny of massive premium and deductible increases in the individual marketplace. She says the money to pay the subsidies for millions of others doesn’t just magically appear.
“They are not only paying the higher premiums, but they have to pay the subsidies for those that are in the exchanges, so that their premiums don’t go up,” said Turner.
Turner notes that former Congressional Budget Office Director Douglas Holtz-Eakin, who is now with the American Action Forum, calculates that taxpayers are on the hook for $32 billion in subsidies in 2016. Next year, it will total $50 billion.
“It not only continues to be unaffordable for those who don’t qualify for the subsidies, but it also is unaffordable for taxpayers,” said Turner.
But Turner saved her most visceral reaction for Gruber’s claim that Obamacare is not a nightmare for insurance companies and forcing them out of the marketplace in many places.
“Once again, I think the press here has been misleading. Some insurers are leaving. Other insurers are thriving,” said Gruber on CNN.
“I think what you have is a system where we’ve shaken up the status quo, exactly what we expect of new innovation, disruptive innovation if you will, to do. Insurers who were thriving in the old system are finding this new system sort of hard for them. Other insurers are doing really well and what’s going to happen is the natural process as the market evolves,” he added.
Turner says that’s pure fiction.
“If I were sitting in my living room, I’d be screaming at the television set,” said Turner.
“The only health insurers that are thriving under Obamacare are those that have experience with Medicaid-managed care. The narrowest of doctor networks, the lowest payments to doctors, so it’s hard to get doctors to participate, and the narrowest network of hospitals. What you’re going to see is Obamacare insurance looking more and more like Medicaid, which is one of the worst health care programs in the country,” said Turner.
She says the fundamental problem is that Gruber approaches this issue very differently than most Americans.
“If you want a system that looks like Medicaid? That’s what you’re going to get with Obamacare. That seems to be what Jonathan Gruber is celebrating. He doesn’t care about the quality of care or the access to care. All he cares about is a political agenda, that people have an insurance card in their pocket that Democrats gave them. The American people are smarter than that,” said Turner.
Turner also blasts Obama’s fixes for the system – namely Medicaid expansion, higher premiums and a government-sponsored public option health plan to compete with private insurers.
“What’s the definition of insanity? It’s doing the same thing over and over again even when you get the same result. What they want is more government regulations and more government spending to solve a problem created by too much regulation and too much government spending,” said Turner.
She believes there is a stark choice on the ballot this year for American concerned about where the health care system is headed.
“Hillary Clinton wants more of the same. She wants the public option. She wants more government spending. She wants to increase the subsidies through the Obamacare exchanges. Donald Trump is saying we need to start over again and we need to give the American people more choices and put the states back in charge of regulating health insurance,” said Turner.