Summary of Testimony: Joint Hearing on “Lowering the Cost of Health Care: Technology’s Role in Driving Affordability”
Chairmen Burlison and Grothman, Ranking Members Frost and Krishnamoorthi, and Members of the Subcommittees:
Good morning, and thank you for inviting me to testify. I am Chris Jacobs, the Founder of Juniper Research Group, a research firm focused on health policy. My entire written statement is before you, so I will not repeat it, but instead emphasize three main points regarding health care costs and insurance coverage.
First, Obamacare has not met its stated objectives. The law singularly failed to achieve candidate Obama’s 2008 promise that his health care plan would “bring down premiums by $2,500 for the typical family.” Individual health insurance premiums more than doubled in the law’s first four years of full implementation, and continue to rise faster than premiums for employer-sponsored coverage. Meanwhile, the law encourages insurers to avoid the sickest patients, often harming those it most intended to help.
Second, despite what some may believe, there is a surprising amount of bipartisan consensus about the law’s failure to control health care costs. Two years ago, Sen. Elizabeth Warren co-authored a letter noting that Obamacare’s Medical Loss Ratio (MLR) provisions have encouraged insurance companies to acquire other businesses like pharmaceutical benefit managers (PBMs), and to over-charge patients through PBMs, shifting profits from their insurance business—where Obamacare capped their profits—to pharmacies and other areas without such restrictions.
Indeed, health care has only become more consolidated since Obamacare’s passage, with hospitals and health insurers buying up physician practices—and each other—to gain additional market clout. Provisions like the MLR have led progressives to write analyses discussing “How Obamacare Created Big Medicine.” A separate academic study concluded that the 340B drug discount program, which Obamacare greatly expanded, raised Exchange benchmark premiums by 1.8% in 2024, resulting in $2.2 billion in additional federal spending on insurance subsidies.
Third, as to the enhanced premium subsidies expiring on December 31, this Republican Congress should follow the example Democrats set regarding the child tax credit in 2021 and allow this temporary COVID-era policy to expire. The myriad studies regarding fraud on the Exchanges—including last week’s Government Accountability Office report—demonstrate why Washington should not spend $350 billion taxpayer dollars (plus interest) to mask flaws in a law that has made care less affordable.
Thus far during open enrollment, 400,000 more people have signed up for Exchange plans than did so at the same time last year, notwithstanding the impending expiration of the enhanced subsidies. These data suggest that the worst-case scenarios cited by enhanced subsidy supporters have not come to pass, reinforcing why Congress should let them expire. Instead, lawmakers should pursue alternative policies that will enhance insurance portability, realign incentives, and promote price and quality transparency.
Thank you for the opportunity to testify. I look forward to your questions.