With the long-term need to have a serious GOP health care plan on the table, if nothing else to counter Democratic touting of Medicare-for-all and single-payer as we move toward 2020, perhaps it would be best to discuss where misconceptions are mucking up conservative policy on health care and related political impacts. Here are 10:
1) We should stop calling “health insurance” insurance
What we commonly call health insurance in today’s world is nothing like the “insurance” we buy for autos or homes. It’s pooled, pre-financed health care, with many things paid for early and often by the “insurer.” It was like this in the individual market in many states before the ACA, and was definitely that way before Obamacare in the employer market that is the 800-pound-gorilla of American health care coverage, where community rating and guaranteed issue were the established norm long before the Obamcare bills appeared in 2009.
Moreover, the increasingly big player in the employer market are self-funded plans who don’t even buy “insurance,” they pay an “insurer” to administer their health care plan and then pay the bills directly. Self-funded plans (especially large employers) cover 60% of all people in employer-sponsored health care coverage – up from 44% in 1999.
That’s all why every time I hear a GOP Member of Congress talking about regulating health insurance like auto or home insurance, where rare, big events are the reason people file claims, I want to run head first into brick walls. They’re talking about something that doesn’t exist, and hasn’t existed for most Americans in a long time.
2) Selling “across state lines” is a nothing burger
Speaking of dumb things some Republicans say, the proposal to sell health insurance “across state lines” sets a new standard for worthless policy proposals. Why? It won’t work:
To date, six states have enacted laws to allow cross-state sales: Georgia, Kentucky, Maine, Rhode Island, Washington, and Wyoming. Yet none of these states has had a single new insurer enter its market because of its law. When asked about their laws, state officials and insurance industry experts in those states agreed that establishing a competitive provider network is the primary barrier to new market entrants. They also observed that the sheer complexity of how insurance products are developed, priced, and regulated makes it difficult to establish a single cross-state framework for consumer protection.
Put differently, while government regulations can impact the price of health insurance (see Obamacare), the overwhelmingly dominant driver of the price of the health care coverage is the cost of the health care used by the people in the plan. Even if you could buy a plan in, say, Texas, while you lived in, say, Alaska, no health “insurer” in their right mind will want to charge you a Texas price because health care is so bloody expensive in Alaska. Which is exactly why those six states allowing sales “across state lines” have been complete duds.
3) Coverage of pre-existing conditions is here to stay
Above and beyond the fact it’s a long-standing norm in the employer market, “prohibit[ing] health insurance companies from charging sick people more” and “prohibit[ing] health insurance companies from denying coverage coverage because of a person’s medical history” is really, really popular with both the general public (84% and 87% respectively) and popular with many Republicans too. Support for Medicaid expansion and subsidies for low-to-moderate income Americans to purchase coverage under the ACA near equally high levels.
This being a representative democracy, directly trying to repeal popular things that already benefit tens of millions of Americans is not a political winner. Just ask every soon-to-be-former Republican Member of Congress from the suburbs how that plays out.
4) Obamacare is here to stay
That’s what I said. The evidence of the popularity of key provisions of the law today is clear.
And really, once Obamacare started covering tens of millions of Americans in 2014 it was pretty much so. John Boehner said as much right after the 2012 Presidential election, downplaying the ability of Republicans to stop the law after Obama’s re-election, declaring it “the law of the land.” In 2017 he was more candid, predicting repeal and replace would fail and the only hope was tweaking the law, not tossing out some of its major provisions, in part because: “In the 25 years that I served in the United States Congress, Republicans never, ever, one time agreed on what a health care proposal should look like. Not once.”
Similarly prescient were comments from then former Republicans elected officials, US Senator Slade Goton (WA) and Attorney General Rob Mckenna (WA) on a health care conference panel in 2015 (moderated by yours truly).
McKenna said: “the practical difficulty for Republicans is that they if they do move forward and repeal Obamacare, they’re going to throw a lot of people off of coverage that they now have under Obmacare.”
Gorton added: “Obamacare/the ACA is enough of a reality so that in a real sense, it can’t be repealed. It’s created so many interest groups and beneficiaries who will have to be taken care of with any change.”
Almost four years later those predictions were exactly right.
5) Medicare and Medicaid are here to stay
Speaking of federal health care programs that aren’t going anywhere, consider the size and scope of the number of Americans covered by Medicare and Medicaid/CHIP:
That’s 122 million people. If passing Obamacare and attempts to repeal it both created serious political problems for the respective parties making the effort, cutting or dramatically trimming much larger programs is political seppuku.
6) Medicare has a private sector success story
The fastest growing part of Medicare is run by the private sector, Medicare Advantage, packaging Medicare Part A (Hospital), Part B (Clinics), and Part D (Prescription Drugs) into plans administered by health insurers. The program is popular because it offers more benefits and lower overall costs to most beneficiaries. Perhaps it’s no surprise it’s growing in raw numbers and as a percentage of the growing Medicare population too.
Maybe building on what’s working there is a better option than proposals to simply cut beneficiaries or “slow the growth” of federal spending.
7) Lowering costs means picking a fight with hospitals and drug companies
I would say pick a fight with doctors too, but they’re typically the most popular of that trio of the three biggest costs in the health care system (setting aside the general unhealthiness of Americans which is a huge driver of rising costs and bad health outcomes…but is really, really difficult to legislative from DC).
Take the short-hand version or the longer one, the single biggest factor in why health care, and thus health care coverage, costs so much more in the United States is the cost of the health care services Americans receive. Many Americans love their family doctor (for not-so-good reasons, but that’s another story) so picking a fight with the AMA is tougher than say, one with the “non-profit” hospitals who are anything but based on how much they charge for care and the profits they make. Likewise, picking on an interest group, pharma, with an increasingly less defensible pricing construct is feasible.
What does that mean? Health care policy focused on how we do or do not provide health care coverage is playing on the margins of the issue of rising costs that politicians supposedly care about. Find a way to address health care prices or you’re just engaged in policy masturbation in an attempt to gratify oneself politically.
8) Countries like Switzerland or Singapore may provide insight
The entrenchment of the ACA affirms that full or near universal coverage is now something of a policy norm in the United States. If we want to build on that reality with private sector-focused solutions then the regulated systems of private insurance in Switzerland and Singapore are options for ideation, as is perhaps the Dutch system. American conservatives might object intellectually as such solutions involve a significant government hand but, we’re already there and I’d rather something like those systems than Canada or Great Britain, which is the path of many more aggressive Democratic proposals.
9) We can’t fix the biggest flaw in our health care system
This long, thought-provoking piece reminded me of how our biggest structural problem in the health care system is the system of tax-advantaged employer-sponsored health care, which is a peculiar result of the World War II economy. Looking back on those current employer coverage statistics in the first item on this list, you can’t do a lot out of DC to blow-up the employer-based system given the huge number of Americans covered by it…at least without digging your own political grave.
Democrats made relatively incremental changes to our overall health care system with Obamacare and damn near burned at the stake in 2010 (and 2014). Republicans fared little better in 2018 after trying to reverse those benefits. Massive change in health care is not our political reality right now.
10) If we can’t break the employer-sponsored system, we should work with those focused on disrupting it
Specifically, what comes of the potentially significant joint-venture of Amazon, Berkshire Hathaway, & JP Morgan Chase, will that endeavor find ways to lower costs? What about the varied efforts of Apple, Google, et. al.? Or what about less tech-focused partnerships like CVS-Aetna potentially disintermediating swaths of basic primary care from the traditional health care system?
Rather than spending a lot of time trying to screw around with a construct of covering people the American public is largely happy with, why don’t Republicans in DC and beyond counter Democratic moves to nationalize health care by instead focusing on incenting and supporting the innovators who might actually reduce costs for American consumers?
That sounds potentially more fruitful and less politically painful than the current trajectory of fumbling in DC.
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