Hatch: As Obamacare Continues to Unravel, Patients and Taxpayers Suffer

In a speech on the Senate floor, Senate Finance Committee Chairman Orrin Hatch (R-Utah) outlined ongoing challenges with the President’s signature domestic policy, Obamacare, saying the law, “failed to make healthcare more affordable.”

November 1 marks the beginning of the 2016 open enrollment period for Obamacare’s federal health insurance exchanges. The Obama Administration expects about 10 million people to enroll in the federal exchanges – less than half the number originally projected by the nonpartisan Congressional Budget Office (CBO).

“The plans on the exchanges – even with the Obamacare tax subsidies – are too expensive for millions of the young, healthy consumers the exchanges need in order to keep costs down,” said Hatch. “As a result, not enough of members of this valuable demographic segment purchase insurance, causing plans to become more expensive and leading more insurers to drop out of the marketplace.”

Hatch, a long-time of opponent of the President’s health law, is the coauthor of the Patient CARE Act, a legislative plan that repeals Obamacare and replaces it with cost-addressing measures, with Sen. Richard Burr and Rep. Fred Upton.  

“We can take action to right this ship now. We can control costs.  We can take government out of the equation and give patients and consumers more choices.  There are a number of ideas out there that would accomplish these goals,” said Hatch. “The sooner more of our colleagues – particularly those on the other side of the aisle – recognize and admit this failure, the sooner we can begin to work together on a plan that will deliver real results for the American people.” 

The complete speech, as prepared for delivery, is below:

Mr. President, it has been a while since I’ve come to the Senate floor to talk about the shortcomings of the so-called Affordable Care Act – a few months at least.  The last time I spoke about Obamacare here on the floor, I spoke at some length about the ever-increasing insurance premiums that had resulted from the law’s draconian mandates and regulations. 

Sadly, as I rise today to revisit this subject, things haven’t gotten better for Obamacare.  In fact, if the Obama Administration’s own estimates are to be believed, things are actually getting much worse. 

As we all know, this Sunday – November 1st – marks the beginning of the 2016 open enrollment period for the Obamacare health insurance exchanges.  This is an important milestone for the health law, in large part because President Obama and his supporters have, since the day the law was passed, repeatedly promised that, as Americans become more familiar with how the law works, the more they will grow to love it. 

Obamacare proponents wrote off problems in the first year of enrollment as glitches that were to be expected as the country transitioned to a new health care system.

Problems in the second year were similarly dismissed as necessary growing pains as everyone learned from the mistakes that were made the previous year.

Now, as we approach the third year of enrollment, supporters of the President’s healthcare law are running out of excuses.  At this point, most reasonable Americans – including many who may have initially been huge supporters of this endeavor – expect the system created under the law to work the way it was designed to work.  

And, you know what, Mr. President?  The law IS working the way it was designed to work.  The problem is that it’s not working the way the designers SAID it would work.

At the time the law was drafted, the architects of Obamacare SAID that they could impose all new mandates and regulations on the insurance market, requiring massively expanded coverage above and beyond consumer demand, claiming that any increased costs that resulted from these requirements would be offset when more young and relatively healthy consumers were forced to buy insurance or pay a fine.    

Of course, they only called it a “fine” when they were drafting the law and initially selling it to the American people.  Now, a few years and a Supreme Court decision later, we’re all supposed to call that “fine” a “tax.”

But, I digress. 

My point, Mr. President, is that those who drafted the President’s health law and then subsequently forced it through Congress on a strictly partisan basis SAID that their new system would expand health coverage for everyone without increasing costs.  In fact, they went further – they claimed that it would actually bring costs down.

However, due to the way the law was actually designed, it was never going to work that way. 

No matter how many ad campaigns the government charged to the taxpayers and no matter how many talk shows the President went on to encourage hip, young audiences to enroll in the exchanges, the numbers were never going to add up. 

This is true for one simple reason:  For all the attention the drafters of Obamacare paid to expanding coverage and remaking the health insurance industry, they didn’t do anything to reduce the actual cost of healthcare in America. 

The problems with Obamacare are not due to bad marketing, they are the result of fundamental design flaws. 

Healthcare costs are the biggest barrier keeping participants out of the insurance market.

Healthcare costs are among the main factors contributing to wage stagnation for American workers.

And, healthcare costs continue to be the single biggest problem plaguing our nation’s healthcare system.

Yet, despite these obvious problems, healthcare costs were all-but ignored when the so-called Affordable Care Act was being drafted. 

And, the few provisions in the law that WERE aimed at bringing down costs were either poorly conceived, terribly implemented, or both.

For example, we had the Consumer Operated and Oriented Plans, or CO-OP, program, which was created to encourage the development of a non-profit health insurance sector. Specifically, under the CO-OP program, HHS dealt out $2.4 billion in loans to 23 non-profit startup plans, many of which were headed, not by insurance or healthcare experts, but by political activists with no actual business experience.

Almost immediately, we began to hear reports of mismanagement in the program and poor decision-making at the CO-OPs themselves.  Earlier this year, the HHS Office of Inspector General Reported that 21 of the 23 CO-OPs that received loans under the program – loans that were supposed to last for 15 years, by the way – had suffered staggering losses.  This, of course, was not surprising, given the inexperience of many of the founders of the CO-OPs and the lack of oversight and accountability at HHS with regard to the program.

And, while a non-profit health insurer may not be focused on avoiding losses, one would assume that, at the very least, staying in business would be a priority.  Yet, over the last several months, 10 of the 23 CO-OPs have had to close their doors, with more failures expected in the near future.  The latest CO-OP failure was announced just yesterday and took place in my state of Utah, hitting pretty close to home for a number of people in my state who are just trying to find affordable health insurance. 

Every time one of these CO-OPs fails, they leave patients and customers in the lurch.  A failed CO-OP in New York – which was called “Health Republic” and was considered by many to be a flagship for the loan program – will leave more than 150,000 customers looking for new insurance when its doors close at the end of the year. 

And, of course, $2.4 billion is hardly chump change, Mr. President.  Yet, that’s how much the American taxpayers have shelled out to these CO-OPs, and, as of right now, it is unlikely that any of that money is ever coming back. 

Despite these obvious problems with Obamacare, we hear a constant drumbeat from our friends on the other side of the aisle that the law is a smashing success.  My friends and colleagues have gotten very, very good at cherry-picking favorable data points to make these types of claims. 

They’ll cite an enrollment number out of context or a premium projection that is slightly smaller than one that came before it as evidence that Obamacare is working and that only problems with the healthcare system they so graciously gifted to the American people are the terrible Republicans who have dared to raise objections.

I expect that, as time wears on, and the number of isolated-yet-favorable data points continues to get smaller and smaller, more people will see this ruse for what it is.

Case in point, earlier this month, the Department of Health and Human Services released its latest projections for enrollment in the Obamacare exchanges.  And, for anyone who has an interest – political, financial, or otherwise – in defending the Affordable Care Act, the numbers aren’t good – and I’m being kind when I say that. 

The Obama Administration projects that, in 2016, roughly 1.3 million people will newly enroll on the exchanges.

Now, 1.3 million may sound like a big number.  However, as always, context is important here.

When the law was originally passed in 2010, the Congressional Budget Office projected that we’d see an increase of about eight million enrollees on the exchanges in 2016 compared to 2015.  Now, HHS is predicting that enrollment will be less than a quarter of that projection.

It gets worse.

In 2010, CBO also projected that, by the end of 2016, roughly 21 million patients would be enrolled in plans purchased on the exchanges.  Now, HHS projects that the number will likely be less than half that – probably a little more than 10 million people. 

In other words, all the rosy claims and predictions we heard at the time the law was passed about the impact these new exchanges would have on insurance markets and premiums were based, in large part, on the assumption that twice as many people would enroll.  Now, by its own terms, Obamacare is becoming a bigger failure by the day. 

And, unfortunately, I’m not done, Mr. President. 

HHS also estimates that there are 19 million Americans who earn too much income to qualify for Medicaid but still qualify for Obamacare exchange subsidies that still haven’t enrolled.  According to their numbers, a little less than half of those people buy insurance off the exchange without getting subsidies, leaving more than 10 million people eligible for subsidies on the exchanges but still uninsured.  The administration also says about half of that eligible-but-uninsured population are between the ages of 18 and 34 and that nearly two-thirds of them are in excellent or very good health. 

In other words, Mr. President, a huge portion of those refusing to purchase health insurance on the exchanges – even though they are eligible for Obamacare subsidies – are those same young and healthy consumers that the Affordable Care Act was designed to coerce into the health insurance market in order to subsidize all the new mandates and regulations imposed under the law. 

The exchanges are failing to attract the very customers they need in order to stay afloat.  If they cannot attract more of this prized demographic base, the Obamacare exchanges – and, with them, the entire Obamacare system itself – will collapse under their own weight.

The question now becomes:  What is keeping these young and healthy consumers from enrolling on the exchanges?  Why are millions of people opting to pay a fine and forego coverage rather than purchasing health insurance with the aid of a government subsidy? 

The answer, for anyone who wasn’t listening earlier, is costs.

According to a recent survey by the nonpartisan Robert Wood Johnson Foundation, the vast majority – nearly 80 percent – of uninsured Americans that have looked for insurance said that, after weighing everything, they couldn’t afford the purchase.

Sadly, the cost problem is only getting worse. 

As we learned earlier this year, insurance plans in markets across the country have been requesting dramatic increases in their premiums and those increases have been confirmed as the enrollment date has drawn closer. 

In Minnesota, for example, there are five insurance carriers on the exchange.  In 2016, all five will be offering insurance policies with rate hikes in the double digits – between 14 and 49 percent. 

In Oregon, premiums for the second lowest cost silver plan on the exchange – the benchmark plan – will go up by about 23 percent.  

In Alaska, that hike will be more than 31 percent.

And, in Oklahoma, consumers in this benchmark plan will see an increase of more than 35 percent in their monthly premiums. 

My own state, Utah, will not be immune to this trend, unfortunately.  Last week, the Deseret News reported that, on average, insurance rates for plans on Utah’s federally-run exchange will be 22 percent higher next year.

Keep in mind, Mr. President, that these numbers only reflect premiums and do not take into account potential increases in total out-of-pocket costs, which can include things like co-payments or deductibles.

In a sense, Mr. President, all of this creates a vicious, self-perpetuating cycle.  The plans on the exchanges – even with the Obamacare tax subsidies – are too expensive for millions of the young, healthy consumers the exchanges need in order to keep costs down.  As a result, not enough of members of this valuable demographic segment purchase insurance, causing plans to become more expensive and leading more insurers to drop out of the marketplace. 

None of this should be surprising, Mr. President.  From the outset, opponents of Obamacare – including myself and many of my Republican colleagues – predicted this exact outcome.

The cycle moves in only one direction: higher costs, fewer choices, and a healthcare system that offers poorer and poorer care to the American people.  Absent some sort of independent and intervening action to bring costs down, there is no scenario in which this gets better.  It will only get worse.

I know that some of my colleagues have some specific intervening actions in mind. 

For example, they’d like to see the federal government not only regulate the products offered on the insurance market, but the prices as well.  And, when the inevitable happens, when no private insurance provider can remain profitable in an environment where both product and price are set by the government, these same colleagues will, of course, want the government to step in and provide a plan of its own.  And, soon enough, because only the government will be able to provide health insurance without that pesky need to turn a profit, the government’s health insurance will be the only available option.

In the eyes of many – including, I believe, a number of my colleagues here in Congress – the only way to end the downward spiral we’re currently facing under Obamacare is to create a single-payer health care system. 

I made this very claim back in 2010 when the Affordable Care Act was passed, and left-leaning politicians and pundits said it was a paranoid scare tactic.  But, now, as Obamacare’s downward spiral is becoming more and more obvious, I suspect that my argument is seeming less farfetched by the day. 

Fortunately, Mr. President, the march toward a single-payer system isn’t our only option. 

We can take action to right this ship now. 

We can control costs. 

We can take government out of the equation and give patients and consumers more choices. 

There are a number of ideas out there that would accomplish these goals.  One of them, of course, is the plan offered by Senator Burr and myself, along with Representative Fred Upton over in the House.  Our plan is called the Patient CARE Act, and I’ve spoken about it at length a number of times here on the floor and elsewhere. 

And, while ours is not the only good plan out there, a number of respected health care experts have analyzed the Patient CARE Act and concluded that it would, in fact, bend the cost curve and make healthcare more affordable.

Once again, the failure to bring down costs is the easily the biggest of Obamacare’s many failures.  Our plan would ensure that Congress doesn’t repeat that failure again. 

Mr. President, I’m well aware that healthcare policy is a contentious topic around here.  I know that there are a myriad of views and no shortage of fierce disagreements on virtually all aspects of our healthcare system. 

But right now, it should be clear to everyone that the so-called Affordable Care Act was misnamed.  The law has failed to make healthcare more affordable and it has failed to correct far too many of the problems that have long plagued our nation’s healthcare system. The sooner more of our colleagues – particularly those on the other side of the aisle – recognize and admit this failure, the sooner we can begin to work together on a plan that will deliver real results for the American people.