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Tuesday, 30 May 2017 08:29

Crossroads in US Health Care: Which of Three Financing Alternatives?

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It has become clear that neither the ACA nor the AHCA can ever make health care accessible and affordable for all as long as they rely on a multi-payer, profiteering market-based system, and that either approach will leave out increasing numbers of Americans.It has become clear that neither the ACA nor the AHCA can ever make health care accessible and affordable for all as long as they rely on a multi-payer, profiteering market-based system, and that either approach will leave out increasing numbers of Americans. (Photo: Pixabay)JOHN GEYMAN FOR BUZZFLASH AT TRUTHOUT

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In this time of bitter partisan debate over the future of US health care, the Republican Party is deeply split within its ranks while the Trump administration gives mixed signals as to its goals. On the one hand, President Trump says that the ACA, or Obamacare, is already a dead duck while his selected Secretary of Health and Human Services, Dr. Tom Price, plans to use whatever administrative means are available to kill it altogether. The GOP's American Health Care Act (AHCA), narrowly passed in the House, has little support in the Senate, where secret discussions, likely to take months, are proceeding to develop its own plan to replace the ACA.

Within this confusing debate, there are three basic options to finance our health care system: (1) continue the ACA, with some possible revisions; (2) replace it with the AHCA, as modified within Congress; or (3) adopt a single-payer Medicare for All plan for national health insurance (NHI).

Today's Crisis in US Health Care

Unfortunately, this debate continues with US health care already in a crisis mode, as shown by these markers:

• Soaring costs of care in our market-based system without significant price or cost controls; one in four Americans rank health care costs as their top concern, even above job security and unemployment.

• The cost of health insurance and care for a typical family of four on an average employer-sponsored PPO plan has reached almost $27,000, while the median US household income is about $53,000, clearly a major disconnect in any family budget.

• Almost two million Americans go through bankruptcy every year because of medical bills and illness, despite most having had insurance, owning their own homes, having attended college, and having held responsible jobs.

• Under the ACA, insurers have consolidated and narrowed networks, resulting in restricted access to care.

• There are still about 28 million Americans without any health insurance.

• Many physicians refuse to see uninsured patients, even those with Medicaid coverage, and waiting times can be lengthy if they are to be seen.

• There are still widespread disparities of care, including by race/ethnicity, socioeconomic status, age, gender, location, and disability status, that lead many people to forgo necessary care and suffer worse outcomes.

• Studies by the Commonwealth Fund find that the US ranks #11 among 11 advanced countries in overall ranking, cost-restricted access, efficiency, equity, and healthy lives.

• Under our multi-payer system with some 1,300 private insurers seeking to enroll healthier patients and avoid sicker patients, the health care bureaucracy is massive and expensive -- the overhead of the private health insurance industry is $792 per capita, more than five times that of Canada with its single-payer public financing system.

• Facing uncertainty over the future of government funding for cost-sharing payments under the ACA, the extent of deregulation that will come out of the current political debate, and the future of Medicaid, insurers are planning sharp premium increases in 2018 and threatening to exit even more markets than they have left already. People living in rural areas are especially vulnerable to these changes.

• The new Trump budget proposal would cut federal spending by $3.6 trillion over ten years, with deep cuts to Medicaid and other safety net programs.

Comparison of Three Financing Alternatives

1. Continuing the ACA (ObamaCare)

The ACA brought important improvements in access to care, providing new coverage for 24 million Americans, especially through expansion of Medicaid in 31 states. It established ten categories of essential health benefits, and also required insurers to stop denying coverage for pre-existing conditions and allow children to stay on their parents' coverage until age 26. Cost-sharing reduction (CSR) payments were made to help 7 million people afford coverage through the exchanges, about 60 percent of all new enrollees.

Despite these improvements, the ACA falls far short of our needs on many counts. Costs and prices of health care services have continued to soar, forcing many people to forgo necessary care and incur worse outcomes. Although the ACA expanded funding for community health centers, we still have a porous safety net that will become even more so under the proposed Trump budget proposal. Most Democrats are strongly defending the ACA against Republican attacks, calling for continuation of CSR payments and reconsideration of the public option, which was dropped in 2009 due to strong opposition from the insurance industry. That opposition remains today, and if put in place, the public option would attract more expensive, high-needs patients, relieving private insurers of the costs of covering them.

2. Repeal and replace the ACA with the AHCA (TrumpCare)

This has been the consistent goal of the GOP since the passage of the ACA in

2010, but repeal has failed on some 60 occasions in Congress. Since the 2016 elections, despite having control of both chambers of Congress and the White House, Republicans have had great difficulty in coming up with a replacement plan. The provision of subsidies or tax credits, definition of essential health benefits, and cutbacks to Medicaid have been especially controversial.

After the first GOP plan for the AHCA was pulled from the floor without enough votes, House Republicans hastily drafted a revised bill, hoping to appease the hard right Freedom Caucus while gaining enough support from more moderate Republicans. That bill barely passed by a vote of 217 to 213, with these provisions:

• Eliminates the individual mandate and requirement that larger employers offer employer-sponsored coverage.

• Allows states to limit essential health benefits through waivers (such as hospital care or maternity care).

• Reduces funding for Medicaid by $839 billion.

• Allows insurers to charge seniors up to five times the rates for younger patients.

• Defunds Planned Parenthood.

• Replaces the ACA's subsidies with less generous tax credits.

• Allows insurers to raise premiums on patients with pre-existing conditions, while providing (inadequate) funds for high-risk pools.

• Repeals taxes on pharmaceutical and medical device industries.

•Provides wealthy taxpayers $882 billion in tax breaks.

That bill has gone on to the Senate, where it is receiving little support. A 13-man (no women) working group is charged with writing a new bill. The CBO has recently scored the House bill, noting that 23 million people will lose coverage by 2026, including 14 million who would otherwise have had it through Medicaid. That 23 million, plus today's 28 million uninsured under the ACA, totals 51 million uninsured (even more than when the ACA was passed!), plus tens of millions more underinsured as insurers reduce benefits. The CBO projects a 20 percent increase in insurance premiums in 2018, and that sicker patients can expect huge increases in costs. It also recognizes that costs for skimpier coverage may be unaffordable for many in states that get waivers to back away from some essential health benefits and/or cut CSR payments. If ever a final GOP bill is passed by both chambers of Congress, its main elements will likely include such already discredited approaches as further deregulation of the insurance industry, increased cost sharing with patients, health savings accounts, high-risk pools, selling insurance across state lines, and more privatization of Medicare and Medicaid.

3. Single-Payer National Health Insurance (NHI), or Medicare for All

It has become clear that neither the ACA nor the AHCA can ever make health care accessible and affordable for all as long as they rely on a multi-payer, profiteering market-based system, and that either approach will leave out increasing numbers of Americans. We can expect the AHCA or whatever version might eventually clear both chambers of Congress will be even worse than the ACA, while giving huge tax breaks for the wealthy.

Single-payer NHI (H.R. 676 in the House, with 112 co-sponsors) is theonlyfinancing alternative to effectively reform US health care. It is a common sense approach to long overdue fundamental system reform. When enacted, all Americans will gain universal access to affordable, comprehensive health care regardless of their health status or income, with full choice of physician and hospital anywhere in the country. They will be part of a single risk pool of 320 million Americans that accommodates the needs of the sickest patients while saving enough money to provide health care to our entire population. Benefits will include physician and hospital care, outpatient care, dental and vision services, rehabilitation, long-term care, mental health care, and prescription drugs. Today's huge bureaucracy and wasteful overhead of a failing private insurance industry will be a thing of the past.

According to the latest projections, NHI will save $616 billion a year ($503 billion by eliminating administrative overhead and $113 billion on outpatient prescription drugs through negotiated drug prices). It will be funded by a progressive funding plan whereby 95 percent of Americans will pay less than they do now for insurance and care. As an example, those with annual incomes of $50,000 will pay $1,500 in taxes.

If either of our two major political parties would inform themselves of previous and current health care reform experience and evidence -- instead of reflexively defending the ACA or promoting the AHCA -- they could perhaps see the obvious merits of real reform -- NHI -- which if enacted would benefit the public common good on a long-term sustainable basis and bring credit to legislators and the parties making it happen.

Adapted in part from my recently released pamphlet, Common Sense about Health Care Reform in America, now available from Amazon.com and CreateSpace.com, and my 2017 book, Crisis in US Health Care: Corporate Power vs. the Common Good.

John Geyman, M.D. is the author of Crisis in U.S. Health Care: Corporate Power vs. The Common Good, and The Human Face of ObamaCare: Promises vs. Reality and What Comes Next. visit: http://www.johngeymanmd.org/