What the Health Care?

By | April 10th, 2017 | Day/Night, News & Views, web-featured

Political strife threatens Obama’s landmark healthcare bill

It is safe to say that President Trump was disillusioned in his recent claim that “nobody knew that health care could be so complicated.” We all knew. One doesn’t need to understand American health care policy to appreciate its complexity. Health care language can feel coded, discouraging many from learning about policy and its implications, but its policy is well worth trying to understand, as it affects every citizen. To understand where we are now, let’s begin in 2009, before the Affordable Care Act.

Before Obama signed the ACA into law, Americans who had health care got it in one of three ways. The two government-funded, or public, insurance systems were and still are Medicaid, which is intended for low income families and individuals, and Medicare, which is intended for elderly members of society. Everyone else either received private insurance through their employers, bought their own private insurance, or simply weren’t covered. Purchasing private insurance was costly, and, as a result, few did. The Commonwealth Fund reported that in 2010, before the rollout of many of the ACA reforms, “four of 10 adults went without care because of costs.” Companies were at liberty to deny insurance based on pre-existing conditions, which made coverage even more inaccessible.

The other problem with American health care is its high costs. In 2009, health care costs reached $8,000 per capita, and accounted for 17 percent of the GDP. In comparison, data suggests that the per capita costs were around $9,000 dollars in 2014, after the ACA was signed into law, though the rate at which costs are increasing has slowed.

This is far more than other comparable countries. PBS reported that in 2010 the United States, combining public and private spending, spent $8,223 per person on health care, which is 2.5 times more than the $3,268 per capita that was spent in the average comparable country. For all this spending, fewer people are covered here than in other developed nations, and the care that Americans get is the same or worse than these other countries. This, clearly, is a fundamental problem.

There are two main challenges that the American health care system faces: we need to be covering more people, and we need to spend more efficiently. The ACA aimed to address the coverage issue in several ways. First, “health care exchanges” were introduced to improve accessibility, creating a virtual space for private companies to compete for people’s business without discriminating based on gender, age, or pre-existing conditions, which was a major issue prior to the ACA, because it prevented many from getting health care.
Secondly, the ACA expanded eligibility for Medicaid because there was a gap between Medicaid income qualification levels and marketplace subsidies income qualification levels. This gap led to a large chunk of poor Americans who couldn’t reasonably get insurance. Another way the ACA got coverage to more people was by requiring employers with more than 50 employees to provide insurance to employees.

This expansion, and the rest of the ACA, is funded in many ways. It included cost control measures like getting tougher on Medicare fraud. It incentivizes hospitals to keep elderly patients healthy so they don’t need to be readmitted to the hospital. There were new or higher taxes on the wealthy and large businesses, and a number of other taxes on tanning salons, brand name drugs, etc. These taxes were projected to raise over $800 billion by 2022.

In March, the ACA turned seven years old. This health care reform had a 12-year timeline, with the final elements of the act going into effect in 2022. The question, therefore, is not “did it work?” but rather, “is it working?” To assess this, let’s return to the original problems identified with health care in America: lack of coverage and unsustainably high costs.

The health care exchanges, which were intended to assist with the access problem, had a widely publicized and disastrous rollout in 2014. Now, though, these exchanges are user-friendly, insurance premiums are increasing at a slower rate than before the exchanges, and more insurers are participating, creating more competition. Consequently, more than 12 million people have gotten insurance through the exchange marketplaces.

The Medicaid expansion aimed to make more people eligible for the program so that it would more effectively cover low income individuals and families. Because of the expansion, over seven million individuals have gotten health insurance through Medicaid. However, the 2012 supreme court case National Federation of Independent Business v. Sebelius made the Medicaid expansion optional for states. As a result, 19 states still have not adopted the expansion, leaving millions in the same position that they were in before. In these states, even very poor individuals still do not qualify for insurance under Medicaid.
The other problem identified with American health care is the unsustainably high costs. Before the ACA changes were implemented, in 2010, health care expenditures accounted for 17% of the GDP, and in 2015, this figure increased to 17.8% of the GDP. This increase is to be expected with the expansion of programs like Medicaid, yet still, the costs are unsustainably high. In the average developed, OECD country in 2015, health care accounted for 12.1% of the GDP. For all this spending, health care in America is not measurably better, and fewer people are covered. This problem of cost, then, remains an unresolved issue. This is largely because the Affordable Care Act did not replace our earlier unsustainable system, but rather built on top of it. It sought to cover more people under the current system, rather than attack our problem of unsustainable health care spending.
So, in a sense, the ACA is working. It is indisputable that more people are now covered, although still, 10.4% of adults in America do not have health insurance. While this number is impressive compared to five years ago, care isn’t universal. There are still millions of Americans lacking health insurance, and the problem of inefficient spending remains unaddressed.

Regardless of its effectiveness, with the polarizing nickname “Obamacare” and Republican control of congress and the presidency, the longevity of the ACA is in peril. Barack Obama needed a democratic president to cement his legacy, especially in this regard, and with Trump in power, it is unlikely that the ACA will remain.

The question now is what will happen instead? The plan put forth on March 6th by house Republicans, dubbed the American Health Care Act, is different in many ways that leave the elderly and poor people at a disadvantage.

For example, the ACA introduced tax credits for insurance premiums that were adjusted based on income level and cost of living, intending to encourage people to sign up for insurance through the exchanges. They most benefitted and were intended primarily for low income and elderly people. Under the AHCA, these credits are not adjusted for income or cost of living, meaning that a 65-year-old with a yearly income around $20,000 qualifies for the same amount of credit as a 65-year-old with a yearly income around $75,000. The effect of this is that the people who really benefitted from and needed this aid would receive far less, making insurance unaffordable for many. Higher premiums, especially for the poor, result in less coverage.

Additionally, the ACA encouraged enrollment by requiring “people who can afford it to obtain health insurance or face tax penalties.” The AHCA repeals this, meaning that people would not have to pay a penalty for being uninsured. The point of the measure in the ACA was to drive down costs, as without it, healthy people may be less likely to buy insurance, which results in higher prices for people who need it more, like the elderly and sick. Repealing the “individual mandate” will result in fewer people being covered.
The expansion of Medicaid would change, too. The AHCA allows Obamacare expansion until 2020, at which point “federal funding for people who became newly eligible starting in 2020 or who left the program and came back would be reduced.”

It is these changes and more that inform the report released by the Congressional Budget Office which predicted that the AHCA would result in 14 million fewer people without insurance in 2018 than if the ACA were to remain in place. That number rises to 21 million fewer insured people in 2020, and 24 million fewer in 2026. Overall, by 2026, “an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.” On the other hand, with the implementation of the AHCA, federal deficits would be reduced by $337 billion over the 2017-2026 period. But as the AHCA does not do what health care reform is intended to do, which is to increase access to health care, the benefit of a reduced deficit is, in some ways, beside the point, as the legislation is completely ineffective as health care reform. In fact the New York Times recently reported that under the AHCA, fewer Americans would be covered than with a simple repeal of the ACA. The AHCA also doesn’t address the systemic problem of unsustainable spending.

If the ACA only addresses one of the two major problems, and the AHCA addresses neither, then major reform needs to be on the horizon. The solution is a complex one, and I don’t have it. Policy, however, is a process, and bills rarely, if ever, look the same at the end of congressional negotiation as they do at the beginning. Even with this in mind, the AHCA stands to further disadvantages already vulnerable Americans. The U.S. has to look to other nations for a solution, as they model that universal health care for significantly less is achievable. Our system now is dysfunctional. In addition to looking to other countries, representatives have to start living up to their titles and representing Americans. The stories and interests of a diverse body of Americans seem to not be considered in the AHCA, as for some reason, the elderly and the sick, two populations that should be central in health care policy, are put at a disadvantage in this new proposal.

American policymakers need to look to other countries and listen to the stories of American citizens. In a democracy, the interests of the people come first and health policy should reflect that.

Isabel Brooke is a first year exploratory major that still has a few years on her parents’ healthcare plan and taking full advantage of it. You can reach them at ibrooke@ithaca.edu

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