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Tipsheet

Democrat Asks How Obamacare Drove Up Healthcare Costs — Basic Economics Has the Answer

AP Photo/Alex Brandon

Democrat Representative Maggie Hassan of New Hampshire was puzzled this week over how the Affordable Care Act, billed as a fix for rising healthcare costs, has instead made coverage more expensive for Americans.

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I will maybe just ask this one question, which really goes to this issue of what happens if we don't have healthcare coverage for everyone. Because one of the arguments that I hear is somehow that the ACA made healthcare more expensive. And maybe you could comment on the value of having more people covered, or, in the optimal world, everybody covered, you know, people would have to opt out of coverage, let's say, but what is the value in terms of not only healthcare for people who need it, but also in terms of the expense of our healthcare system.

The concept is a fundamental one in basic economics. A program like the ACA dramatically increases demand for healthcare without increasing supply. This pushes the demand curve upward, driving prices higher. And because the ACA does little to expand the actual supply of healthcare, it offered no meaningful counterbalance to the surge in demand. Millions flooded into the program, but other factors necessary to ensure increased supply and lower prices, such as training doctors, building facilities, and expanding equipment, take years. Supply was never the central focus of Obamacare. 

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The result is predictable: to keep the system from collapsing under strain, premiums have to rise. As Rep. Hassan put it, “in the optimal world, everybody [is] covered.” Unfortunately, as it stands, the ACA has done little more than stretch our healthcare system even thinner than before.

And, although it would be beneficial if every member of Congress could comprehend basic economics, that isn't necessary. Take a look at the data: ACA benchmark premiums for a typical 50-year-old enrollee climbed 129 percent from 2014 to 2026, compared to 68 percent for employer plans and 39 percent for the Consumer Price Index, according to the Paragon Health Institute.

It would serve Congressional Democrats well to understand that policy does more than its intended outcome. And the ends rarely justify the means. Just remember, the road to hell is generally paved with good intentions.

Editor's Note: President Trump is leading America into the "Golden Age" as Democrats try desperately to stop it.  

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