The Aches and Pains of Obamacare

The history of the Patient Protection and Affordable Care Act – known more commonly as the Affordable Care Act (ACA) or Obamacare – has been a tumultuous one. Intended to improve national health care quality, affordability, and drive down the cost of care in terms of GDP, it introduced a set of mandates for coverage on both the industry and consumer sides, subsidies to help consumers, and created insurance market exchanges. From its very onset the law has been challenged by an array of conservative organizations and the Republican Party who have raised the specter of socialized medicine and “death panels,” and have made repealing Obamacare a continued rallying point. Obamacare has also been attacked by the political left for being a feckless substitute for a real single-payer universal healthcare system.

Like so many other issues in our highly partisan culture, what one thinks of the Affordable Care Act can probably be traced back to one’s other political inclinations. The Kaiser Family Foundation’s polling on the ACA 12 days before the Presidential election found the country split exactly in half, with 45% of those interviewed having a favorable opinion and 45% unfavorable. Also, like many of the debates in this country, individual Americans won’t be swayed by arguments or facts that could persuade them to change their minds. A modest 9% of those surveyed said they’d change their minds to an unfavorable position when learning that some insurers were declining to further participate in the state exchanges due to rising costs and mandates from the government. Only 3% were willing to switch to a favorable view upon finding out that Obamacare policies have resulted in the lowest percentage on record of Americans without health care coverage. [1]
The ACA, indeed, has succeeded in considerably reducing the rate of Americans who do not have health care coverage. Despite disagreements on many other areas of contention about Obamacare, half of the participants in the Kaiser study believed that those with low-incomes were better off with the law than before. But the ACA continues to have persistent problems with critical issues like affordability, the “family glitch,” and the “coverage gap.” The family glitch is a glaring mistake in which low-income individuals are caught out by not being eligible for ACA subsidies because they do have some sort of coverage through an employer, but do not make enough to purchase coverage for other members of their household. Those occupying the coverage gap are victims of the nineteen states that have refused to expand Medicaid eligibility, with the result that some people earn too much to receive Medicaid, but who have incomes low enough to qualify for subsidies. Between 6 and 8 million people, disproportionately minorities and working poor are not receiving coverage due to these policy errors. [2]
In addition to these unintended consequences, a combination of fewer insurance companies wanting to participate in the state exchanges and rising premiums for consumers have cast some doubt on whether the ACA is sustainable in the long run. In August, Aetna, one of the largest insurers, announced it would reduce involvement by 80%. Other insurers like UnitedHealth Group (the nation’s largest insurer) and Humana have had very little involvement in Obamacare. John A. Quelch and Emily Boudreau note in Fortune that consumers had an average of 6.9 plans to select from in 2015. That was reduced to 6.5 this year, and is projected to decline further to 5.8 in 2017. [3] Unsurprisingly, both sides of the political spectrum arrive at different reactions to the problems with insurers in the Obamacare marketplace. Conservatives see the exchanges as part of the failure of government intrusion into health care, and liberals see the Affordable Care Act as ineffective in comparison to a single-payer system. But the chief reason for the rise in premiums is that younger and healthier participants are selecting the cheapest plans, while the older and less healthy opt for more costly plans that provide more coverage. This has caused costs for insurers to rise and profits to fall. Lost in the discussion though is that some insurers are successful. The ones who have made a go of it on the exchanges have been innovative in selling products geared towards consumer choices whereas it appears that the larger insurers that have failed have not been able to make a transition from selling plans to the employer market to a one-on-one public market. Quelch and Boudreau suggest that the government should provide some sort of safety measure against undue losses for insurers that have taken on the riskier customers. Consumers too need to learn the same kind of budgeting skills for health care that they use for purchasing such things as homes or cars, or in planning for retirement.

In the Democratic Party primary election campaign there was a policy difference between Hillary Rodham Clinton and independent Senator Bernie Sanders about the future of Obamacare. Ms. Clinton wanted to preserve the Affordable Care Act, while fixing problems that had occurred, and edge toward universal coverage. Senator Sanders wanted to replace Obamacare with a “Medicare for all” government-run system. Progressives have suggested for many years that single-payer as practiced in other western nations would ultimately be fairer and more efficient than the patchwork (sometimes threadbare) quilt of insurers and state programs currently available to Americans.

Since the Second World War, most Americans have received coverage through their employer, and so the mainstream view has long been that the system worked well enough to not require Washington meddling. Given that the Republicans have had nothing but open hostility toward the Affordable Care Act, and may soon control the judicial, as well as the executive and legislative branches of the federal government, a single-payer system would appear to be a pipe dream for now. As Bob Doherty put it in the Health Cents blog, the “more politically expedient pathway is to keep the current system of multiple payers and have the government help people who fall through the cracks, as Obamacare does.” [3]

But prior to the enactment of the ACA Doherty co-authored a study of a dozen other industrialized nations’ systems for the American College of Physicians which looked at the benefits of a universal access framework. While there are differences between countries in terms of how the health care system operates, “(s)ingle-payer systems generally have the advantage of being more equitable, with lower administrative costs than systems using private health insurance, lower per capita health care expenditures, high levels of consumer and patient satisfaction, and high performance on measures of quality and access.” [4]

In France, for example, health care consumers pay for services up front, but utilize their “Carte Vitale,” which operates as a smart card monitoring their health transactions. They receive reimbursement between 70% and 100% directly to their financial account within a week. Some citizens opt for additional coverage through an insurer or through benefits paid by a participating employer.

The United Kingdom’s National Health Service (NHS) was ranked top in the Commonwealth Fund’s international rankings of health care. Since its inception in 1948, the NHS has had a mission statement of providing universal service free at the point of use. British patients still see a primary care doctor free of charge. Ambulances, chemotherapy, and many kinds of surgery are also free. But as the British newspaper The Guardian points out, there are signs of strain. Booking appointments is not easy, and this may be why 11% of their population prefers to pay for private insurance. The British population is aging, and expected increases in poor health outcomes from the rise in obesity and excessive alcohol intake may eventually take a toll. [5]

Doherty noted that universal systems require a higher tax burden, particularly in nations where there are fewer younger (presumably healthier) workers who pay into the system. Conservatives have long noted that a shortcoming of single-payer systems is that they often must take measures to cut spending, and any depletion in budgeting can lead to shortages of special services, or delays in some kinds of medical procedures.

An earlier study from 2014, also by the Commonwealth Fund, found the U.S. system lagging behind other developed countries in many categories. Besides trailing in health outcomes, quality, and efficiency, the report also notes that “U.S. physicians face particular difficulties receiving timely information, coordinating care, and dealing with administrative hassles.” [6] One of the chief issues associated with the lack of universal coverage is that, of the 11 countries surveyed, Americans were the most likely to have cost concerns that limited access to needed care.

At the same time, the United States excels is in bringing the newest innovations to the health care market before most others. This can lead to an inequitable system where those with means in America can access cutting-edge medical technologies while others can’t afford to see a primary care doctor. Americans frequently noted passing up seeing a physician when ill, avoiding additional treatments, or rationing prescriptions due to cost concerns. This is in contrast to, say, Canada, where there is no access issue for care, but some specialized services can result in wait times. The study is quick to note, however, that innovation and access do not need to be an either/or proposition, as countries like the Netherlands and Germany have been able to craft systems with low consumer costs and also efficient access to services.

For his part President Obama has proposed his own changes to the ACA. [7] Some of the most notable include expanding the Medicaid expansion. For the nineteen anti-Obamacare states that refused to lower eligibility to lower-income residents, he has offered to have full federal payment of the cost of expansion for the first three years, regardless of when a state decides to begin. Earlier states were required to start in 2014 if they wanted to take the federal deal. He has also suggested changes to simplify policies on the exchanges so that they are easier to understand and have more standardization. Other ideas include extending the Children’s Health Insurance Program (CHIP), and including provisions that providers and insurers work out payments so that consumers aren’t stuck with surprise bills.

But now any tweaks and changes to Obamacare may be purely academic. President-elect Donald Trump pledged throughout his campaign that he would repeal and replace the ACA. Except that, maybe he won’t! As part of an overall change in tone from the bombast of his rhetoric at his rallies and social media outbursts, Trump has suggested to the media that he may keep the portions of Obamacare that prevent insurers from denying coverage to consumers with preexisting conditions, and the provision that allows parents to keep adult children on their plans for longer than was traditionally the case. Trump may support these because they are fair and reasonable, or he may back them because he realizes they are two of the most popular innovations of the ACA. But what could happen to the rest of the ACA is anyone’s guess. While the calls for “repeal and replace” have been a GOP talking point since the law went into effect in 2010, David Cutler notes that national conservative leaders are likely going to find repealing Obamacare much easier than developing a responsible alternative. [8]

During the campaign, Trump spoke of replacing the ACA with a tax deduction for those who pay for health insurance out of pocket. He has also promoted greater access to Health Savings Accounts (HSAs) (in which tax free contributions are combined with a high-deductible insurance policy). The problem with potential solutions like these is that they primarily only assist upper income earners where a tax deduction is an attractive option or have the ability to set aside savings for future health spending. Cutler points out that any tax savings that moderate and lower income Americans may save from moving away from the ACA won’t come close to matching the financial strain with the loss of coverage that as many as 20 million may experience with a repeal of Obamacare. 

Trump has also promoted the idea that insurers should be allowed to sell plans across state lines. But the states that have already eliminated restrictions on out-of-state carriers (Georgia, Maine, and Wyoming) have failed to attract any new insurers due to startup costs. While the plan might seem to promote competition, if it was enacted nationwide insurers could relocate to states with the weakest regulatory commissions (think Delaware and South Dakota) where consumers would be worse, not better off.

Trump and Republican leaders have chafed at Obamacare’s individual mandate. But Steven Pearlstein notes that the mandate is required to have a functioning system. If insurers are going to be required to cover everyone at roughly the same prices, it’s critical that everyone has some minimum level of plan so that consumers don’t crash the system by only taking out a policy once they are ill. [9] In other words, the social compact works on the idea that younger and healthier people keep the system going in order for rates to be affordable for older and less healthy people. Pearlstein catches the highlights of the situation American health care reform is currently in when he says, “(y)ou can’t have all the good parts of an unregulated insurance market (freedom to buy what you want, when you want, with market pricing) without the bad parts (steadily rising premiums and insurance that is unaffordable for people who are old and sick). But, he says, it is also true that “you can’t have all the good parts of a socialized system (universal coverage at affordable prices) without freedom-reducing mandates and regulations and large doses of subsidies from some people to other people.” Americans will soon see whether Trump can make health care “great.” Let us hope that the great builder can devise or reform such a system.

Kirk G. Morrison, MLIS

(Mr. Morrison is a librarian in Connecticut and interested in issues of social justice, rebuilding social capital, and enhancing civic engagement in communities nationwide.)