The rollout of the Affordable Care Act is one of the most dismal policy failures ever to take place at the federal level. The ACA has resulted in the cancellation of millions of existing policies and rapidly rising health insurance costs. The mostly inoperable website has become a symbol of an overly complex, unworkable law. The Congressional Budget Office now estimates that 31 million Americans will be left uninsured when the ACA is fully in place. By definition it will have failed in its primary mission.
The President’s plan does recognize, however, that there is a health care problem. The United States is the only industrialized democracy that allows its citizens to go bankrupt from health care bills. Millions of Americans are without health insurance (those that would like to see the true figures for the uninsured, which are substantially lower than the “official” figure should see Beyond Those Healthcare Numbers, by Gregory Mankiw, New York Times, November 4, 2007). Many millions more fear that a job loss or sudden illness will result in bankruptcy. If the Republican Party plans to recapture the middle class and working poor, this problem must be addressed. The most straight-forward solution is to provide every American with catastrophic health coverage, administered through the existing Medicare system.
Obamacare in Fairfield County is not addressing our health problems. According to Kevin Counihan, the Executive Director of Access Health CT, the Connecticut Exchange, as of early February of this year, approximately 122,000 Connecticut citizens have enrolled. But further analysis of these statistics reveals that many of our middle class and poorer citizens are being left behind. Approximately 25,000 -50,000 are new enrollees in Medicaid – the program for the poor – while only 5,000 to 8,000 of those who enrolled in private exchanges were previously uninsured. The new enrollees in Medicaid, a program that was already available prior to the ACA, will find few doctors and very long wait times. Fully 286,000 citizens remain uninsured, indicating that hardly a dent was made towards addressing the central goal of the ACA.
Those who have managed to find private insurance are paying skyrocketing premiums. The premiums are too high for working class families to afford and the deductibles vary from $2,000 to $5,000 for individuals and up to $10,000 for families. Furthermore, only 20% of Connecticut doctors have signed up for the Obamacare plans, indicating that, like Medicaid, enrollees will be experiencing long wait times to see physicians.
Obamacare is actually a plan to reward politically-connected health insurance companies with an unending cash flow. The CEO’s of Aetna and US Health Care earn $15,000,000 a year. Furthermore, there is a provision in Obamacare that provides the insurance companies with a taxpayer bailout if they lose money on the exchanges. This is why the stock prices of many healthcare companies more than tripled after Obamacare was passed. After the mid-term elections this year, the health insurance company executives will exercise stock options and reap hundreds of millions of dollars. Meanwhile, they will continue to harass the patients and doctors with new forms, incomprehensible codes and endless holds when doctors seek information.
Typical Republican plans involve allowing the marketplace to solve the problem. This is unlikely to protect our most vulnerable citizens. The marketplace works fine for cars, shoes, computers and flat-screen TVs. It does not work for health care. The reason is very simple. The way to make money in health care is to insure healthy patients while ignoring those who are sick or punting them to the taxpayers. Consumers can decide what care is best for them. They cannot choose their DNA.
The beauty of providing all Americans with a Universal Safety Net is that no new plan is needed. It already exists. It is called Medicare – a popular plan that protects our elderly and disabled from huge health care bills. All that is necessary is to extend Medicare to all Americans for medical bills that exceed $50,000 annually. One could then purchase the insurance to cover the first $50,000. This could be done in a variety of ways. Some patients could buy large deductible plans with HSA’s (Health Savings Account). Others could insist on plans with minimal co-pays and deductibles. Patients could decide to add dentistry, chiropractic and naturopathic medicine. Sixty-year old women would no longer be forced to purchase obstetric coverage, like they are now forced to under Obamacare. Some patients may even decide to not purchase any insurance.
The cost to the federal government would be substantially lower than most would assume. Figures from the Agency for Healthcare Research and Quality, part of the Department of Health and Human Services, indicate that only a tiny proportion of individuals faced medical bills in excess of $50,000 per year (somewhere around 1% in 2012, the latest year that HHS has complete numbers). Of these, only a fraction (about a quarter, or 0.3%) faced bills in excess of $90,000 in any given year. The federal government’s assumption of these costs – only those in excess of $50,000 – would not raise the cost of Medicare significantly, but it would make private insurance very cheap, as the catastrophic costs insurance companies most fear would be eliminated. Even if one reduces the individual liability to $20,000, only about 5% of families would have utilized the catastrophic insurance safety net in 2012.
Tort reform is crucial too. Several independent studies have demonstrated that trial lawyers add 15% to medical costs by forcing doctors to order unnecessary tests. In fact some of these tests, such as CAT scans, may actually increase the incidence of cancer. Doctors are also afraid to use modern technology such as e-mail, Skype and Facetime to service their patients. Indemnifying doctors for using this technology would enable elderly patients to be consulted without leaving their homes and greatly decrease the need for caregivers to take time off work saving billions in worker productivity.
There are those who would argue that this is the first step to socialized medicine. In fact the opposite is true. Presently, anyone can walk into an emergency Room and receive free care. Hospitals in Fairfield County write off at least 3% of what they bill for this reason. By offering a plan to provide a Universal Safety Net for all Americans, Republicans can offer a credible alternative to Obamacare and reclaim the middle class and working poor.
This article was written with Dr. Mark LeClair who occupies the Lynch Chair of Economics at Fairfield University