Monday, December 7, 2020

Alexandria Ocasio-Cortez (Still) Doesn’t Like Socialized Health Insurance

Even as the coronavirus lockdowns have postponed many holiday events in 2020, some traditions still remain. Rep. Alexandria Ocasio-Cortez, D-N.Y., continued what is quickly becoming an end-of-year tradition for her last Thursday, when she complained about her health coverage:

The tweet followed a similar missive last year, in which she showed she didn’t understand how the Obamacare exchanges work, and one in December 2018 talking about the open enrollment process for members of Congress.

Apart from the not-semantic distinction in her tweet—access to good health insurance does not necessarily guarantee access to good health care—Ocasio-Cortez’s prime complaint appears to lie with New York state’s insurance regulations, which jacked up the price of health coverage for most residents well before Obamacare took effect.

Of course, those regulations also represent a de facto form of socialist redistribution, meaning that Congress’ “democratic socialist” doesn’t particularly care for socialism when it affects her health coverage.

New York Ruined Its Small Insurance Market

Ocasio-Cortez graduated from Boston University in 2011—after Obamacare’s enactment, but before the law’s exchanges and major regulations took effect in January 2014. Her tweet therefore claims she could not afford coverage for most of the time between the spring of 2011, when she moved back to the Bronx, and her inauguration to Congress in January 2019.

On their face, Ocasio-Cortez’ claims seem largely true. A 2011 Manhattan Institute paper noted that in 2010, enrollment in New York state’s individual health insurance market stood at 31,000 individuals.

Given a state population of about 19 million at the time, only about 0.16 percent of New Yorkers purchased coverage directly from insurers. If Ocasio-Cortez did not have health insurance through an employer, she likely did not have coverage at all.

Socialism Makes More Things Too Expensive to Have

But why did so few New Yorkers purchase health insurance on their own? In short, because lawmakers had made insurance unaffordable. As the Manhattan Institute paper notes, in the 1990s the state legislature passed a series of insurance “reforms” that gutted the state’s market for coverage. The laws forced insurers to accept all applicants regardless of health status (guaranteed issue), and charge all applicants the exact same rate (community rating), while also requiring all plans to offer generous benefits.

In other words, New York required insurers to charge a healthy 20-something individual like Ocasio-Cortez the exact same premiums as a 60-something smoker with emphysema. That policy has a nice name to it: Socialism.

What did this socialism do? Enrollment in insurance markets plummeted, and premiums soared. The New York state insurance market ended up in what actuaries call a “death spiral,” in which healthy people found the premium increases too high to justify enrolling, leaving a market consisting largely of people with acute health needs desperate for coverage.

Even the New York Times called the state’s law “an expensive lesson in unplanned consequences. Premiums for individual and small group policies have risen so high that state officials and patients’ advocates say that New York’s extensive insurance safety net…is falling apart.” That is why Ocasio-Cortez couldn’t afford health coverage.

Obamacare’s Pre-Existing Condition Regulations

Of course, New York’s market meltdown served as only a precursor to what the rest of the nation experienced once Obamacare went into effect. In some respects, the law helped New York, because its subsidies helped make coverage affordable (or less unaffordable)—that is, provided individuals qualified for them.

But most other states—the ones that hadn’t previously wrecked their insurance markets— saw massive premium increases as the law’s main regulations went into effect. From 2013 through 2017, premiums more than doubled on the individual health insurance market. In recent years, enrollment on the individual health insurance market has plummeted by more than 5 million people, likely because they cannot afford the higher costs.

Obamacare’s national system of insurance regulations provided a bit more flexibility than New York’s 1990s-era laws. In most states, insurers can vary premiums somewhat by age, which the New York regime prohibited entirely. But a Heritage Foundation study still concluded that these provisions provided the prime driver of premium increases under the new law.

The Un-Affordable Care Act

At its core, Ocasio-Cortez’s tweet therefore not just attacks Obamacare, but the redistributive and socialistic principles underpinning it. All of this makes her support for a single-payer system of socialized medicine that much more confounding. As someone who has to purchase (junk) coverage through the exchanges, I can sympathize with her plight in identifying the problem.

But to quote the old about holes and digging, socialism has done quite enough for our health-care system, thank you very much. I would much prefer choices that allow me to pick the coverage that suits me best, rather than seeing another round of “consumer protections” that would drive me—and millions more Americans—into the poor house.

This post was originally published at The Federalist, and was corrected subsequent to publication to fix a typographical math error.