On Monday, the Heritage Foundation’s blog published a piece comparing the Affordable Care Act to a Reagan-era Medicare reform law that was repealed soon after American seniors revolted against it. The author, Jim Weidman, provocatively titled his piece, “The American People Rose Up To Repeal A Health Care Law Once Before. They Can Do It Again.”
Weidman’s thesis is that the health law’s bumpy rollout — including the one-two punch of a dysfunctional website that’s preventing Americans from signing up for insurance and insurance companies canceling millions of individual policies that don’t meet Obamacare’s coverage requirements — could foretell its eventual demise. But there are several major problems with this comparison.
President Ronald Reagan proposed the Medicare Catastrophic Coverage Act in his 1986 State of the Union address. Signed in 1988, the law provided new medical benefits for elderly Medicare beneficiaries, including “a ceiling on hospital and doctor bills, expanded payments for nursing home care and prescription drugs,” and other similar reforms.
In short, the law expanded the types of benefits available to Medicare beneficiaries and capped how much money they’d have to pay out-of-pocket for said benefits. As Weidman points out, that’s similar to the health law, which requires individual policies sold in the Obamacare marketplaces to cover ten broad categories of essential health benefits while limiting Americans’ contributions towards their monthly premiums and out-of-pocket medical expenses depending on their annual income.
But that’s where Weidman’s comparison breaks down. Seniors were incensed by the fact that Congress paid for the Catastrophic Coverage Act purely by increasing premiums on every Medicare beneficiary and imposing an additional progressive surtax on retirees. That’s a pretty lopsided way of funding benefits in a government entitlement that only exists because Americans pay into over the course of their working years so that they may enjoy it once they’re elderly.
“This [funding mechanism] would have represented a hefty burden on some, and, unlike the rest of the Medicare program, the additional benefits mandated by the act would have been financed entirely by the elderly,” wrote researchers in a 1990 “post-mortem” of the Act published in Health Affairs. What made matters worse is that many of these benefits were redundant, since existing retiree plans already covered them for many beneficiaries.
By contrast, Congress funded Obamacare largely through a combination of savings derived from changes in how Medicare pays hospitals and doctors and revenue collected from a tax on the wealthiest Americans’ investment income (and a variety of other industry fees and penalties). Over $200 billion of Obamacare funding comes from simply reducing the number of uninsured Americans and thereby reducing hospitals’ uncompensated care costs.
Obamacare’s benefits also include essential coverage that isn’t available in the types of junk insurance plans sold in the pre-ACA individual market. Almost 10 percent of these plans excluded basic protections like prescription drug coverage. Over 60 percent of individual policies left out maternity coverage, and 18 percent didn’t cover mental health care. So unlike many Medicare beneficiaries’ complaints about the Catastrophic Coverage Act, Americans gaining insurance under Obamacare will enjoy protections that they never had in the past.
The backlash against the Catastrophic Coverage Act also came from a far larger constituency than the one that’s upset over cancelled policies under Obamacare. There were just under 33 million Americans enrolled in Medicare coverage in 1988. That constituted 13.5 percent of the U.S. population at the time. Experts estimate that somewhere between seven million and 12 million of the 15 million Americans with individual policies will have their plans canceled under the health law — which means that 3.79 percent of Americans, at most, will be affected by cancellations.
The Kaiser Family Foundation (KFF) also estimates that about half of the Americans with individual policies will qualify for government subsidies to pay their monthly premiums under Obamacare. That means that many of the Americans getting their plans canceled could feasibly get better and cheaper coverage thanks to the health law.
Weidman is right to point out Americans’ frustrations with the dysfunctional Healthcare.gov website. But to compare that tech debacle to the Catastrophic Coverage Act is an apples-to-oranges comparison. In fact, three in five Americans who haven’t visited an Obamacare marketplace or didn’t enroll a plan in October say they still plan on enrolling in the future, according to a survey the Commonwealth Fund. Opposition to the law still remains widely divided, with strong majorities consistently saying they’d rather fix the law than scrap it. That doesn’t sound like voters are ready to bring out the pitchforks quite yet.