The New Push to Expand Government’s Role in Health Care Won’t Work

The following is an open letter from 68 leaders participating in the Health Policy Consensus Group. The full list of signatories follows the letter.

Democrats in Congress have proposed a COVID-19 relief bill that includes provisions to dramatically increase government subsidies for health care coverage for millions of people who already have insurance while further expanding government control over health care.

The legislation would increase for more than two years government payments to insurance companies via the Affordable Care Act by:

• Removing even the de minimis premium payments required of people earning less than 150% of the federal poverty level.
• Paying more of the premium for those earning above that amount.
• Newly subsidizing health coverage for the highest-income Americans.  

Most of the spending on premium subsidies will be paid to insurers on behalf of people who already have coverage. The bill would subsidize 85% of premiums for employees to continue COBRA coverage through September. It also gives states that have not expanded Medicaid to cover able-bodied adults a five-percentage-point increase in federal matching funds for traditional Medicaid recipients for two years if they expand their programs.

It also would draw employees away from their job-based health insurance into the exchanges, where they would have inferior coverage.

Instead of addressing Obamacare’s many flaws and costly mandates, the Democrats’ misguided proposal simply throws more money at insurance companies each time they increase premiums. 

According to the Congressional Budget Office, these provisions would increase the deficit by tens of billions of dollars over the next two years and will fuel health care cost inflation without substantially expanding coverage.

Despite projections that millions of people would lose their employer-based health coverage due to COVID-19, a Heritage Foundation analysis of actual insurance market enrollment data for the first three quarters of 2020 found that the economic dislocation caused by COVID-19 did not appear to have had a significant adverse effect on health insurance coverage. The study concluded that “health insurance enrollment has remained fairly stable this year.”

Furthermore, the COVID-19 relief legislation that Congress passed in March 2020 already enhanced federal Medicaid funding, required states to continue covering current Medicaid recipients, and specified that additional unemployment compensation payments were not to be counted as income for purposes of determining Medicaid or Children’s Health Insurance Program eligibility. 

Consequently, Medicaid and CHIP enrollment ballooned from 70.9 million individuals in March 2020 to 77.3 million in September (the most recent month for which figures are available). 

Rather than the mistargeted and wasteful spending in the proposed legislation that papers over the failures of government-run health care, Congress should pursue policies that reduce health costs and expand access to care and health care choices by eliminating cost-increasing government mandates and unleashing the power of innovation and competition.  

We have developed policies to do just that, a plan estimated to lower premiums by up to a quarter and expand enrollment in private plans—all without spending one dime of federal taxpayer dollars. Such an approach succeeds because it empowers and protects individuals and families—rather than insurance companies and big government. 

We would be happy to work with Congress to advance these solutions to address the problems facing Americans in health care today. 

Signatories:*

*Affiliations listed for identification purposes only.