Obamacare Is Only 'Exploding' in Red States
When he talks about his efforts to repeal the Affordable Care Act, President Trump almost always asserts that Obamacare is “exploding.” Republican members of Congress make similar claims, insisting that Obamacare is unsustainable—and that they therefore have no choice but to “repeal and replace” it.
There is some basis for this argument. More than 1,300 counties only have one insurer in their exchanges, meaning there is no competition. But there is a nuance that Republicans willfully ignore: This is a problem of their own creation that is largely confined to red states.
Where Republican governors have sought to sabotage the program, they have largely succeeded. Where Democratic governors have tried to make the ACA work, they too have largely succeeded.
Here are the basic numbers. In states with Republican governors, more than 40 million people live in counties with only one insurer. In states with Democratic governors, there are 10.7 million people who live in such counties.
Republican governors had little interest in making their exchanges work.
The difference is far more dramatic if we exclude North Carolina from the Democratic list. While North Carolina does now have a Democratic governor, it had a Republican governor until January, and even now the Legislature is overwhelmingly Republican.
Not counting North Carolina, only 2.1 million people in Democratic states live in counties without competition. Put another way, if someone lives in a state with a Democratic governor other than North Carolina, they have a 1.8% probability of only having a single insurer in their exchange. If they live in a state with a Republican governor, there is a 20.7% probability of the same.
There are two main ways in which Republican governors have been effective in sabotaging Obamacare in their states. The first and most important was by refusing to expand Medicaid.
Governors who chose to expand that program pulled many lower-income people out of the Obamacare insurance pool — people who tend to be less healthy and have higher medical bills on average. By taking this higher-cost population out of the exchanges, they reduced the risk to insurers. Applying this logic inversely, governors who refused to expand Medicaid ended up with a less-healthy mix of people in the exchanges.
The other issue is the extent to which states took the initiative to promote Obamacare. Less healthy people generally don’t have to be prodded to buy insurance, since they know they need it. The issue is whether more healthy people buy into the system. Insurers are going to lose money if all the people they insure have serious health problems.
Democratic governors generally tried to persuade people to buy insurance, while Republican governors were more often neutral, if not openly hostile, to the program. As a result, fewer healthy people bought into the exchanges in their states, making the system less profitable for insurers.
In addition, Republican governors and Republican insurance commissioners were often less cooperative with insurance companies. While Democratic governors cajoled insurers to enter and stay in the exchanges, and met reasonable regulatory concerns, Republican governors had little interest in making their exchanges work.
Now we see Trump and the rest of the GOP boasting about their sabotage. Because Republicans have been so successful in keeping many of their residents from getting insurance, they think the country should trust them to overhaul the ACA.
Sorry folks, it doesn’t work that way.
Dean Baker co-founded the Center for Economic and Policy Research in 1999 and is co-director of CEPR. His areas of research include housing and macroeconomics, intellectual property, Social Security, Medicare and European labor markets. He is the author of several books, including Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.
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