by Marco Rubio
If you ask me, the better—not to mention more conservative—option is to allow parents to keep more of their own money and make their own choices, rather than have government spend more of our own money and make choices for us.
I’ve talked to and heard from middle- and lower-class Americans from all walks of life in the course of developing my conservative reform agenda. It was the rare person who didn’t have a story of how the Affordable Care Act had either increased their costs or limited their health care options—or both. Time and again, the impact of the law has been described as gratuitously adding even more hardship to already struggling families. Families who were perfectly happy with their coverage described being forced to pay more for coverage they didn’t want or need. Some, like the Broyles family in Chapter Two, have been forced out of the health insurance system altogether and sought refuge in faith-based cost-sharing plans. I’ve heard plenty of horror stories about dealing with the Affordable Care Act Web site. One family described Obamacare officials repeatedly demanding that they provide pay stubs from their children before the family could enroll for health insurance. Their kids are twelve, ten and five.
After the first enrollment period for coverage under the law ended last year, the administration and its allies in the media did their best to convince us that the law had become a stunning success. In fact, when judged against all the promises the president himself made for the law, it has been a stunning failure. Here’s what the president said when he came before Congress to lobby for the law in September 2009:
It will provide more security and stability to those who have health insurance. It will provide insurance for those who don’t. And it will slow the growth of health care costs for our families, our businesses and our government.5
The Affordable Care Act has failed each of these promises. Those who have health insurance have seen their premiums go up. Enrollees in the health care exchanges have been older, sicker and more expensive to insure, forcing rates up for everyone. When ten states submitted their proposed health insurance premiums for this year, the companies that insure the most people in all but one of the states proposed increasing premiums between 8.5 percent and 22.8 percent.6 Premiums are going up almost 14 percent for one of Arizona’s most popular plans.7 In another populous state, Ohio, premiums are set to increase by 13 percent this year.8 In Iowa, rates are slated to climb by a similar amount.
The picture that emerges from the many people I’ve heard from is that, instead of helping struggling middle- and working-class Americans afford health insurance, the Affordable Care Act is actually pricing these Americans out of the health insurance market. Middle-income folks talk about being caught between a rock and a hard place: making too much money to qualify for subsidies under the law, but making too little to be able to afford the higher prices. The data back this up.
At the close of last year’s enrollment period, the Department of Health and Human Services released a report showing that the overwhelming majority of Americans who signed up for Obamacare received significant government subsidies to pay for their insurance. Of the 6.8 million people who actually paid for the insurance they signed up for, a full 5.9 million received subsidies—big ones, an average of $264 a month.9 But for those Americans who are not eligible for subsidies—and even those who qualify only for smaller subsidies—the higher premiums, higher deductibles and narrower choices of doctors caused by the law are not working. One health insurance expert, Bob Laszewski, put it this way: “The Obamacare plans are unattractive to all but the poorest, who get the biggest subsidies and the lowest deductibles. The working class and middle class are not getting access to attractive benefits.”10
On the other end of the income spectrum are higher-income Americans, who, along with many of the top doctors, are rushing to join concierge, or cash-only, health networks in order to avoid the regulations and restrictions imposed by the Affordable Care Act. What’s taking shape as a result is a three-tiered health care system in which the poorest are subsidized in Obamacare, the richest can afford the best private networks and the middle class is left out in the cold. In fact, far from reducing the number of uninsured, the law threatens to create what Laszewski calls “a chronically uninsured class” of middle-class and working-class Americans. It’s not difficult to predict what happens next if supporters of the law continue to hold sway in Washington. As reporter Byron York has written, the next act for Obamacare is likely to be calls in Washington to expand subsidies to the working and middle classes to compensate for the higher costs created by the law.
The abject failure of the Affordable Care Act—visible to all but the administration’s most ardent true believers—has tempted some of my colleagues to sit back and allow the law to collapse of its own weight, bringing its supporters down with it. This may or may not be good politics—that’s not the point. What I know is that it would be a huge disservice to the American people to allow our health care system to collapse just to make a political point. Already, Obamacare is doing damage, not just to our health care system but to our economy as a whole. At a time when those who want a job can’t find one and record numbers of young men have opted out of the workforce altogether, the law is actively discouraging work. Employers are being forced to cut hours and avoid hiring workers. And employees are falling further into the poverty trap I discussed in Chapter Three. The more they earn, the less of a subsidy they receive, so the less they work. The effect, according to the Congressional Budget Office, will be the equivalent of 2.5 million people simply stopping working by 2024.11
Another, lesser-known danger in Obamacare is that it contains a bailout for big insurance companies. The legislation originally contained “risk corridors” for insurance companies that limit the expenses they are liable for—basically insuring the insurers against unanticipated major losses. Under normal circumstances, risk corridors can be a good thing. They protect consumers against disruptions in service. And when they are budget neutral—that is, when they don’t expose taxpayers to open-ended risk—they can even protect taxpayers against being on the hook for losses if something unforeseen happens.
The problem with the Affordable Care Act—one of the many problems—is that its failures aren’t unanticipated or unforeseen; they are virtually written into the law. As many predicted, the law has pushed premium prices upward. The exchanges aren’t competitive markets—they’re more like high-risk pools—and their prices are reflecting that. The losses facing insurance companies under the law aren’t the result of one or two of them miscalculating their rates. They’re being felt across the board. The entire industry is being primed for a bailout.
A few months after the law went into effect, the Obamacare risk corridors went from being a badly needed insurance policy to what one writer called an Obama administration “slush fund” for the insurance companies. Remember when, in November 2013, President Obama was forced to announce that Americans whose insurance policies had been banned by Obamacare could keep them? The president’s infamous “If you like your plan you can keep it” promise had turned out to be a cruel joke and millions of people were being forced off their insurance plans. To avoid political Armageddon, the president unilaterally declared that they could keep their plans. That meant that millions of healthier, lower-cost Americans who were supposed to be forced onto the exchanges weren’t, and that was bad news for the insurance companies. The American Academy of Actuaries predicted that the move would result in higher than expected costs for the insurance companies and therefore higher costs for the federal government through the risk corridors. Despite creating these higher costs, however, the Obama administration has done nothing to change the risk corridors. The effect has been to put the American taxpayers on the hook for the insurance companies’ higher costs.
Last year, I introduced legislation to prevent this bailout. My office was quickly inundated with calls from health insurance executives begging us to back off. They claimed that without the bailout they would h
ave to raise premiums dramatically. Without it, they pleaded, they could no longer participate in the exchanges. Their message was clear: Removing the bailout provision would be to punish them for the errors of Obamacare.
What the insurance executives never mentioned, though, was how hard many of them had lobbied for the law when it was first debated. After all, the individual mandate would force people to become their customers and the bailout would protect them from losses. So they used their power and access to have Obamacare written in a way beneficial to them. And now to keep them in line, they’re getting a taxpayer bailout. It’s classic crony capitalism.
That is why it is imperative that we repeal Obamacare and that we not waste time in doing so. The law is a disaster that puts affordable health care out of reach of more middle-class Americans every day it is in effect. It’s not too late to replace it with reforms that give all Americans the chance to buy the kind of health insurance they want, from any company they choose, at a price they can afford. Wisconsin Representative Paul Ryan and I have proposed a set of modern, market-based health care reforms we believe will do just that. At the heart of our plan are two simple changes to our health care system that will make health care more affordable and ensure that every American gets the same benefit, regardless of where they live or where they work.
The first change is to convert the tax preference for employer-sponsored health care into a tax credit for the individual. The current system allows employers to deduct their share of the cost of their employees’ health care as a business expense. It also has employees deduct the costs of their health insurance from their gross income. The result has been to favor employer-provided health care. This third-party payer system, in which the consumer doesn’t control his or her own health care, encourages health care consumption and drives up costs. But health care isn’t free. The higher costs to employers have resulted in lower wages for employees.
Our tax credit, in contrast, would restore the middle class’s ability to both afford and control their own health care. If everyone under sixty-five who is not on Medicaid participated, we could offer a $2,000 credit for an individual plan and a $5,800 credit for a family plan—more than enough to cover the average worker’s current out-of-pocket costs. Americans could use the credit to purchase whatever insurance plan they want or deposit it in a Health Savings Account (HSA). What’s more, the credit would be refundable—if an individual’s health care costs are less than the credit, they get to keep the difference. It would be paid out every month, just like a health care premium. And in an era when the average worker stays at a job for less than five years, it would travel from job to job with the individual.
In order to safeguard those employers and employees who prefer the old system, our second reform, such as it is, is to maintain the ability of employers to deduct their health care costs as a business expense. This will ensure that some employers still have an incentive to provide health insurance to their employees. Our plan would phase out the employer health insurance exclusion over ten years, while immediately creating a refundable health care tax credit. This would ensure the creation of a vibrant individual health insurance marketplace while avoiding disruptions to the health insurance plans that people currently receive from their employers.
In addition to changing the tax treatment of health insurance, the Ryan-Rubio plan would increase access to low-cost health care options like HSAs, increase the bargaining power of small business, reform medical liability to decrease the practice of defensive medicine and allow people to purchase health insurance across state lines. To provide a better option than Obamacare to protect the most vulnerable, our plan would support the creation of state-based high-risk pools for those with preexisting conditions who can’t get coverage in the private market.
The high cost of making ends meet today hits one group particularly hard: single parents, particularly our more than ten million single mothers. Many of these women have been abandoned by the father of their children. All, like Kristeen, face the struggles of parenthood alone. In the last chapter of this book, I will have more to say about how difficult it is for single parents to achieve the American Dream, and what we as a society can do about it. But for now we have to face the fact that we have a lot of Americans like Kristeen, most of whom want a better life for themselves and especially for their children.
Kristeen knows that the only chance she has of realizing her dream for her daughters is to get a better job. Not just a job that pays more, but also one with some flexibility in its work hours so she can make it to parent-teacher conferences or stay home from work when one of the girls is sick. And she knows that the only chance she has of getting a better job is by earning a degree.
So Kristeen enrolled in online classes in early childhood education, which she hoped would lead to a job that not only paid more but also allowed her to be with her daughters after school. But it cost around $1,200 per class—much more than the cost of physically attending the local community college. With all her other expenses, she couldn’t afford it, so she dropped out.
For parents who are working, the government provides a $1,000 per child tax credit, called the Child and Dependent Care Tax Credit, to help offset the cost of child care. The problem is, under today’s outdated system, a single mom like Kristeen loses her eligibility for the credit if she quits working and returns to school full-time.
In today’s job market, this is a self-defeating rule that keeps people like Kristeen trapped in dead-end jobs. Kristeen would like to become a teacher so she can be at home more with her daughters. Our policies should support, not hinder, her ambition. That’s why I have proposed allowing parents who are pursuing their education to be eligible for the child care credit too.
Kristeen will tell you that as important as her own education is to her, the education of her children is her greatest priority. Yet, unless something changes dramatically in Kristeen’s life, her daughters will be headed to an underperforming school. She desperately wants them to have a better education than she received, but she feels completely helpless to do anything about it. We should empower all parents to have a choice of schools for their children. To do this, I’ve proposed a federal tax credit that encourages contributions to scholarship organizations, which would distribute private school scholarships to children like Jada and Lexi.
Louisiana Governor Bobby Jindal likes to say that the American Dream begins with education. He should know. Against the active opposition of the Obama Department of Justice, Jindal has fought for good schools for the poorest kids in Louisiana through school choice. When Hurricane Katrina ripped through New Orleans in 2005, it literally washed away the corrupt, underperforming public school system there. What has been built in the aftermath is a demonstration project for the transformative power of empowered parents and motivated teachers. When school began last fall, the New Orleans Recovery School District became the first in the country to consist of all charter schools. Graduation rates are up by over 20 percent since before Katrina. The number of children performing at grade level in reading and math has more than doubled since 2007.12
There is no reason that poor parents like Kristeen should have to send their children to a failing school just because it happens to be down the street. Rich people exercise their school choice, either by sending their kids to private schools or by moving to neighborhoods with good public schools. Our leaders can no longer be allowed to get away with telling us they care about the poor while they stand in the way of empowering parents to choose the best school for their children. A quality education is more important than ever, because the jobs of tomorrow will require more education and skills than ever before. Any so-called leader who stands between parents and the school of their choice is consigning another generation of American children to poverty, plain and simple.
In earlier chapters, I discussed other reforms to our outdated, big-government institutions that will help Americans like Kristeen with t
he daily struggle to make ends meet. For instance, she had the right idea when she sought an online education. Yet she discovered a perplexing truth: All the resources of the Web still haven’t managed to bring down the cost of a degree. The online classes she wanted to take actually cost more than going to school in person. The reason higher education institutions have been able to get away with this is that they are effectively a cartel that can squash competition by lower-cost providers.
I have proposed that Congress break up this cartel by creating a new, independent entity to encourage the development of affordable and accessible online options for folks like Kristeen. I’ve proposed ways to empower her to acquire employable training from the resources all around her—including free online tools, apprenticeships, mentorships and personal training.
I’ve also proposed a transformation of how we fight poverty in America. We’ve seen time and again that effective antipoverty programs—the kind that incentivize work, bolster training and education, and open up transformative opportunities—come from the states, which know the specific needs of their people far better than Washington. We need to transfer our federal antipoverty spending to the states. And to further encourage work, we should create the Wage Enhancement Credit, which would raise Kristeen’s wage at the pet kennel. Much more effectively than a minimum wage, such a wage credit would make work pay for Kristeen without killing jobs for other workers.
The paradox of the American Dream is that it evokes such grand, stirring passion, but it is in reality the sum of the mundane details of life. It’s a car payment you can make, the mortgage you can afford, the college acceptance letter your daughter receives in the mail. Whether the American Dream is achievable has a real impact on real people’s lives.
Our success as a nation isn’t measured simply by the size of our economy or the performance of our stock market. Instead, it depends on whether Americans like Kristeen are able to go back to school, get a better job and give their children a better life. These are small things in the sweep of history, but big things in the course of people’s lives. How we choose to address them will define our legacy. And it will define Kristeen’s future.
