With many members of Congress promising to “repeal and replace Obamacare,” it seems we are doomed to have another “debate” about how to make sure all Americans have access to decent and affordable healthcare. Before we examine the current state of play, it’s worth remembering a few things.
4 REMINDERS ON THE AFFORDABLE CARE ACT (ACA)
- If you get insurance through your employer, you don’t have Obamacare. “Obamacare” refers to the individual health insurance market put in place under the Affordable Care Act (ACA). It makes health insurance available and affordable for people who do not get health insurance through their job or through a government program such as Medicaid, Medicare, CHIPS or the VA. This group is estimated to be 30 million out of the 300 million people living in the United States.
- Before Obamacare, most of the 30 million people referred to above could not get insurance because they were either too poor, or because they had been treated for an illness in the past (a so-called “pre-existing condition”). This doesn’t mean that these people did not receive care – they went to hospital emergency rooms where taxpayers picked up the tab for high-priced emergency care. Episodic treatment in emergency rooms is the most expensive, least effective way to treat people. People who show up for free care only after they get sick are known as “free-riders.”
- Obamacare reduced the number of uninsured in its first 3 years by 20 million by expanding Medicaid (in States that accepted the generous funding offered by the Federal government) and by forcing insurance companies to sell coverage to people with “pre-existing conditions.” In exchange for this, the government promised to expand the number of people buying insurance by requiring everyone (including young, healthy people) to buy insurance. Between expanded Medicaid and the requirement that everyone buy insurance, Obamacare tried to take care of the “free-rider” problem.
- President Obama famously said that under the ACA, “if you like your doctor, you can him [or her]” and “if you like your plan, you can keep it.” The problem with this statement is not that it was true before the ACA was enacted and it became untrue after the ACA was implemented. The problem is that this statement was never true. Doctors and hospitals can (and do) move in and out of insurance company networks all the time, and there is no law or regulation that can prevent this from happening. Your doctor may be in-network when you sign up for a plan and may become out-of-network a month later. Moreover, insurance plans change each year. This was true before the ACA and it is still true.
THE GOVERNMENT’S ROLE IN HEALTHCARE
In the initial debate over Obamacare, opponents howled about a government take-over of health insurance and often repeated, “I don’t want the government between me and my doctor.”
The truth is there is always somebody between you and your doctor. Healthcare is not a free market. Buyers and sellers (doctors and patients) don’t bargain for the exchange of goods and services in an arms-length transaction. When you go to the doctor you don’t know what you have purchased, what the “sticker” price is, or what your insurer or the government agreed to pay. Healthcare is an opaque system of costs and alliances that involve healthcare professionals, pharmaceutical companies, device manufacturers, hospitals and 300 million people that account for 18% of the GDP of the United States.
Because quality and access to healthcare is essential to the health, well-being, and security of any country, healthcare will never be left solely to market forces. Our government will (and must) regulate education and licensing requirements for doctors, when and how drugs and devices are permitted to come to market, standards for medical research and development, and quality and access to care for citizens. The battle over Obamacare can be understood within the framework of our need to strike a balance between the free market and the need for significant government regulation and oversight of the healthcare market.
THE ROLE OF HEALTH PLANS IN HEALTHCARE
Health insurance companies manage the healthcare utilization of their subscribers. They make money by collecting more in premiums than they pay out in claims. To ensure this business model is effective, they negotiate favorable pricing with medical service providers and they limit access to medical services by policy holders (or subscribers) in a number of ways. For example:
- An insurance company may require prior authorization before a subscriber can see a physical therapist or specialist or access a particular drug.
- Insurance companies limit access to care by creating “narrow networks” of doctors and hospitals that offer favorable pricing for medical services (but are often less sought-after providers and hospitals).
- High deductibles and confusing cost share provisions discourage people from seeking medical care.
- Finally, insurance companies routinely deny claims, requiring subscribers to spend needless hours on the phone or file time-consuming appeals.
THE ROLE OF GOVERNMENT PAYERS IN HEALTHCARE
Like private insurers, government-run health care management programs negotiate rates for medical services and act as gatekeepers and paper-pushers for consumers when they use medical services. Medicare and Medicaid set a price for services, determine your eligibility and allow you to see any doctor or facility that accepts payment.
Government agencies conduct extensive research into the efficacy and cost of various treatments and the quality of the hospitals and doctors that provide treatment in order to maximize outcomes and minimize cost. Government-run healthcare management programs are non-profit. Beyond maximizing profits, insurers have no inherent interest or incentive to try to drive down the cost of healthcare or improve outcomes and quality.
Because commercial insurance companies are profit-driven entities, they spend a lot of time and energy figuring out how to avoid paying claims. Medicare and Medicaid are government-run programs that are tasked with fulfilling their mission of providing excellent healthcare to the elderly, the poor and the disabled and operating in a fiscally responsible manner. Medicare and Medicaid are not in the business of figuring out how to avoid claims. Government is accountable to the citizens. Insurers are accountable to shareholders.
Given the choice, I would rather have the government between and my doctor any day, especially if the alternative is my insurance company. In the meantime, while the majority of us are covered by for-profit health plans, it pays to have easy access to the information necessary to make a smarter, better-value health insurance decision.