New York Times reporter, Sarah Kliff tries to explain Republican’s motivation for recent ACA and Medicaid legislation. She believes that Republicans share two core beliefs about health coverage. First, health coverage should be tied to employment. Second, health coverage is nonessential. Unfortunately, Kliff misunderstands Republicans. They do not necessarily believe health coverage should be tied to employment. Rather, Republicans believe anyone benefiting from taxpayer-funded health coverage (i.e., Medicaid) should demonstrate they are trying to better their situation. The core concept is akin to, “don’t ask for help from taxpayers unless you’re trying to help yourself.”
Democrats also believe it is the responsibility of employers to provide health coverage as part of a job, so perhaps that is why Kliff believes Republicans want to tie Medicaid to a job. Employer-sponsored health benefits are a noncash portion of workers’ total compensation. Workers mostly pay for fringe benefits themselves with reduced wages in lieu of higher take home pay. Most Democrats do not understand that concept (nor do most HR professionals).
As for Ms. Kliff’s second assumption, it is somewhat more accurate to say Republicans do not believe health coverage is essential, but that is not the whole story. Health insurance is a way to pool health risks and insure against unexpected health problems. Another way to look at health coverage is asset protection for people with assets to protect. People who become sick without health coverage can often obtain the care they need but it sometimes requires significant effort. Risk of illness is not equal across all populations. The least healthy 20% of the population consumes 80% of health care expenditures. Indeed, about 5% of the population is responsible for half of total medical costs. Conversely, 80% of Americans use little medical care in any given year. Those who are part of the healthy 80% can easily pay out-of-pocket for physician visits and prescriptions. Financial responsibility laws require liability coverage for automobiles to repair someone else’s car if you are at fault in an accident. No similar product exists for health insurance. One could argue that the Obamacare individual mandate is similar, requiring insurance in case you need care, so you do not burden the health care system. However, the comparison is not really accurate. Obamacare is a means to force most people to significantly overpay given their risk to subsidize the few with high health costs. It’s a bad deal by design. Furthermore, health coverage is not synonymous with health care. You can use your ACA insurance card when you schedule a doctor’s appointment, but you are probably paying the entire tab until you meet a sky-high deductible. My Obamacare plan provided me with nothing of value until I spent nearly $9,000 on medical care, at which point it would only cover 60% of my costs. Premiums for that plan will likely approach $10,000 next year, whereas my expected medical costs will be only a few hundred.
Conclusion: is health insurance essential? It all depends on your risk tolerance, your assets, and your health status. In 2022, 2023 and 2024 I spent a few hundred annually on medical care, but none was covered by Obamacare. I received little benefit from my ACA plans. The same is probably true for most of the people who drop Medicaid due to work requirements. Some will drop due to the mere hassle of reporting work performed. Probably three-quarters of those who drop coverage will hardly notice a difference. The remaining 25% may scramble to enroll when they need care. As the New York Times noted previously, when work requirements are part of Medicaid, support for the program rises significantly among Republicans. Perhaps work requirements are a good compromise between Democrats and Republicans in return for support for the Medicaid program. And perhaps Republicans will view health coverage as essential when the value more closely matches the premiums.
Read more at NYT: The 2 Beliefs Driving Conservative Health Care Policy