Losing ACA Subsidies ‘Far From the Whole Story’

A version of this op-ed by Tom Payne, Atlanta resident and board member of the Competitive Enterprise Institute, appeared in The Atlanta Journal-Constitution on June 18. Access the op-ed online here.

Finding Another Way Than ObamaCare

By Tom Payne

Georgians have a lot at stake in the outcome of the ObamaCare case, King v. Burwell, which will be decided by the U.S. Supreme Court this month. As a board member of the Competitive Enterprise Institute, the organization leading the litigation, I believe a ruling in favor of the plaintiffs will benefit Georgia’s economy, allow Georgia policymakers to drive down insurance and health care costs, create jobs and help the neediest Georgians gain access to affordable health insurance.

For those reasons, Gov. Nathan Deal, Attorney General Sam Olens and other state leaders deserve praise for declining to form a state-level exchange and for supporting CEI’s position in King.

To date, headlines have focused on the potential loss of subsidies for an estimated 400,000 Georgians — all of whom are presumed to be dependent on subsidies to afford coverage and will therefore lose it. While the case centers on the availability of subsidies in the 36 states that have not established an exchange, that is far from the whole story.

By itself, a victory for the King plaintiffs will create full-time jobs in Georgia and deliver net benefits to its economy and its citizens. It would free employers in Georgia — and the 35 other non-participating states — from the ObamaCare employer mandate, which has led to a decrease in jobs, wages and hours for working employees.

It would also free the vast majority of Georgians from the highly unpopular individual mandate, which penalizes them for paying for medical costs out of their own pockets, and deprives them of the choice of coverage they once could access but is now deemed inadequate under ObamaCare.

The employer mandate is entirely dependent on the receipt of subsidies by at least one full-time worker at a business that does not offer coverage compliant with ObamaCare’s draconian rules. Employers that cannot afford the dictated coverage or pay the ObamaCare penalties have no choice but to minimize their full-time headcount and reduce workers to part-time status. Studies show this has severely depressed full-time employment among small businesses and Georgia is no exception. Without the employer mandate, this disincentive to full-time hiring goes away. Freed from the enormous costs of ObamaCare, Georgia businesses will be able to grow and hire.

Beyond that, what should Congress do regarding the loss of subsidies if the Supreme Court rules for the King plaintiffs? Simple: make sure that Georgia and the other non-participating states get sufficient funding to help their neediest residents gain access to health coverage, and get out of the way. Georgia state policymakers need the ability to regulate Georgia’s insurance markets to meet the needs and wishes of its citizens. Georgians’ tax dollars flowing to Washington to fund ObamaCare should be returned to Georgia, so Gov. Deal and his team can decide how to best use that money.

In the process, Georgians can address the real problem with ObamaCare — it makes insurance far more expensive for everyone not receiving subsidies. In Georgia, that’s more than 8 million people paying higher costs, or 20 times more than the number of people receiving subsidies. A recent Heritage Foundation analysis shows that Georgians pay between 7 and 42 percent more for coverage because of three ObamaCare features — benefit mandates, age band regulations, and minimum plan value requirements. And that’s not even counting the regulatory compliance costs and taxes paid in the large group market, which drive up costs for the majority of Georgians.

By eliminating many of the market-distorting ObamaCare regulations and bypassing the Department of Health and Human Services’ gargantuan regulatory apparatus, Georgia’s leadership can reduce costs for employers, their workers and purchasers of individual policies — allowing them more affordable choices regarding the kind of coverage they want.

Rep. Tom Price (R-GA) has proposed legislation that would do just that, freeing Georgia from the constraints of ObamaCare’s worst features. His bill would also introduce new market-based reforms state leaders would welcome.  Rather than such a Washington-knows-best approach, our elected representatives should do what they were elected to do — free Georgia to address the problems created by ObamaCare. If other states wish to form exchanges and embrace ObamaCare, it is up to them. Gov. Deal and his team have better ideas and should be freed to pursue them.

W. Thomas Haynes is president and founder of TBP Solutions, LLC., a health-care insurance broker and consultant for Hamilton Landing Beverage Advisors, LLC, which provides consulting and merger and acquisition advisory services in the beverage industry. 

Previously, Haynes served as the CEO of The Coca-Cola Bottlers’ Association, Inc, where he built a $100 million health care benefits business, which was sold to National General Insurance. He served as the CEO of that benefits business for a transition period. Previously he was general counsel of Coca-Cola North America. He is a veteran of the insurance, healthcare and beverages industries and testified before Congress on healthcare reform on four separate occasions.

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