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Individuals added to the health insurance rolls on exchanges are using more services than anticipated, insurance companies lost considerable sums in 2016, and premiums are up about 22 percent for 2017.

Obamacare has not delivered on its promises to provide health insurance for virtually all Americans and lower costs, but Republicans will find it tough to repeal and replace.

According to the Kaiser Family Foundation, the ranks of the non-elderly uninsured are down nearly 13 million, but 28.5 million still lack coverage. Even with generous federal subsidies, 57 percent of the uninsured say insurance is too expensive or they are unable to get coverage.

Requiring Americans to obtain coverage — through their employer, by purchasing policies on government-run exchanges or enrolling in Medicaid — was supposed to improve the risk pool for insurers by including more healthy young people and reduce the cost of taking care of low-income individuals by increasing access to preventive care and reducing expensive treatments for ailments left to fester.

However, individuals added to the health insurance rolls on exchanges are using more services than anticipated, insurance companies lost considerable sums in 2016, and premiums are up about 22 percent for 2017.

Small businesses that were insured before the Affordable Care Act lost access to more cost-effective policies that permitted owners and employees to pay for everyday expenses out of pocket and through tax-sheltered health savings accounts, and rely on insurance for large unexpected bills.

For most Americans, the ACA has created an unfair, two-tiered system.

Medicare and Medicaid reimburse doctors poorly, and many of those providers limit the number of patients they accept from these programs. Elderly and low-income Americans often face difficulties finding a primary care physician. Thanks to limited insurance company provider networks, many Americans have lost access to family doctors and face long waits to see specialists.

In contrast, well-off Americans can subscribe to concierge services that charge high annual fees for access to primary-care physicians, who offer same-day appointments, telephone consultations and assistance obtaining access to specialists quickly.

Medicare legislation does not permit the government to negotiate drug prices. Pharmaceutical companies can set those as high as they like knowing the elderly will simply send the bill to Uncle Sam. That encourages arbitrarily high drug prices for everyone, and most Americans now support some kind of federal intervention to lower drug costs.

Republicans cannot simply repeal the ACA. Private plans lost in the upheaval cannot be easily resurrected, and now that millions of Americans rely on federal subsidies to obtain coverage, simple politics require those be sustained even if repackaged as income-tax credits.

The German system of private insurance, like Obamacare, requires virtually everyone to obtain coverage, but costs for medical services are more tightly controlled. For example, regulators price new drugs according to how much they improve treatment over existing medicines.

Northern European countries spend about 11 percent of GDP on health care (whereas the United States spends 17 percent) and enjoy high standards of care. However, their approach violates two basic principles Republicans are not likely to abandon: Americans should not be compelled to purchase insurance under threat of fines, and government interference in the pricing of health services is unacceptable.

The private mandate could be eliminated by charging non-elderly adults, who do not maintain continuous coverage, a fee when they apply for private insurance. Medicare already imposes a penalty to discourage the elderly from opting out of the system until they need expensive care.

However, permitting insurance companies to sell insurance across state lines, as Republicans propose, will not solve the cost problem through competition. States like New York and California provide large enough populations to encourage robust competition, but little persuasive evidence indicates that their prices and premiums are lower than in moderate-sized states like Virginia.

25 comments on this story

In the end, Republicans in Congress and President Trump will have to accept a role for government in regulating prices inside the private marketplace for health care or “repeal and replace” will prove a terrible failure.

Otherwise, the Democrats may well oust them from power in 2020 and then impose a single-payer system that subjects most Americans to moribund, low-quality service akin to that offered by the Post Office and IRS.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.