Liberals Want to Repeal and Replace Obamacare too… With Free Care

Devon Herrick
|
Posted: Feb 16, 2017 1:27 PM
Liberals Want to Repeal and Replace Obamacare too… With Free Care

I recently watched Sen. Ted Cruz debate Bernie Sanders on the Future of the Affordable Care Act. Cruz was in top form, while Sanders was congenial but still deluded that we can all have free health care paid for with other peoples’ money.

The audience was from all around the country and presumably stacked with invitees from both sides. The moderators would call on audience members to ask pointed questions to specific candidates.

I’ve written about one of the audience participants for Townhall in “Obamacare Is a Job-Killer: Here’s the Proof.” LaRonda Hunter is a hair salon entrepreneur form Forth Worth, Texas. She began investing in Fantastic Sam’s family hair salon franchises about a dozen years ago. She now owns four salons but would like to open one or two more locations. Ms. Hunter explained her dilemma to Bernie Sanders. She employs something like 46 people and expansion would push her past the 49 worker threshold where Obamacare requires her to provide health coverage.

To his credit, Bernie Sanders did not back down and try to sugarcoat his response. He thinks employers like Hunter have a moral obligation to provide workers with health insurance policies, costing, say, $4,000 a year. Of course doing so would wipe out her profits and ultimately put her out of business. That’s fine with Sanders; in his opinion, not offering health coverage is an unfair advantage that makes it harder for Ms. Hunter’s competitors to offer coverage. Although he was being honest his response was naïve. Many of the women who work for Hunter are working class, most of whom cannot afford to spend $350 per month on health coverage.

Employee health coverage is not merely the cost of doing business like Sanders’ thinks it should be. Health benefits is a non-cash portion of employee compensation. Absent Obamacare, Hunter would be indifferent whether her workers would collectively trade $4,000 in health coverage for $4,000 in pre-tax wages. The problem is: her workers are not indifferent to whether she pays them less cash and buys them health insurance. They presumably would look for work elsewhere if their gross pay fell by $350 per month. The large payroll processing firm ADP has found that about $45,000 per year is the threshold below which few workers take up employee health benefits.

The point Hunter should have made to Sanders is the decision to forgo health coverage is not her choice; it’s her workers’ collective choices. Because she wants to expand, Hunter would prefer her workers willingly enroll in coverage. But she also knows if workers refuse to (indirectly) pay for coverage by accepting lower take home pay, she would be stuck paying for it.

Another audience member was a nursing student pregnant with her second child. She wanted to make sure any Republican replacement plan would not force her and her husband to pay for their own prenatal, labor and delivery charges. I don’t recall Cruz’s answer, but he should have said any replacement plan should require insurers to offer coverage if she maintained continuous coverage (i.e. no gaps in coverage greater than 62 days). What he could not say is: why should the rest of us subsidize a $15,000 free medical benefit for her choices if she chooses not to maintain coverage?

Another audience member was a woman with Multiple Sclerosis, who had moved from Texas to Maryland in order to qualify for expanded Medicaid coverage. She pointedly asked Cruz twice if “he would promise” that she would not lose Medicaid eligibility under a GOP replacement plan. She did not say this but her annual medical care likely costs more than the U.S. median household income. To say the least her case is one where politicians fear to tread. How can you reassure people who lost the genetic lottery they will not slip through the cracks? Cruz did his best to explain how Medicaid is a poor quality health plan but his response did not suit her. She wanted his personal guarantee -- in a way that was legally-nonbinding but would haunt his political career for years to come.

If there was a common theme it’s that there are a lot of people whose lifestyles would be much improved if only other people would subsidize the cost of their health care. This gets back to a dirty little secret in the health policy community on willingness to pay for health care. The answer: “nothing!” Many people would prefer to pay nothing if left to their own devices. Many would go years without care -- even primary care -- until something bad happened. The liberal public health community is desperately grasping at straws trying to find the Holy Grail: perfect health literacy, great health care, provided cheaply on someone else’s dime. Of course, that’s impossible, which is why Obamacare is so hard to replace.

Devon M. Herrick, PhD is a health economist and senior fellow at the National Center for Policy Analysis.