By Mark A. Kelley |6/1/17
Our last blog focused on the political movement to replace Obamacare. Since then, the U.S. Senate has been busy revising a new healthcare bill passed by the House of Representatives called The American Health Care Act (AHCA). Some of the specifics of the bill have been clarified.
The Facts to Date
If the AHCA replaces Obamacare, the Congressional Budget Office (CBO) predicts the following outcomes:
• 14 million Americans would lose their coverage within the next two years. Most of them have little or no income and have serious healthcare challenges.
• By 2026, over 51 million Americans would be uninsured compared to 28 million if Obamacare remained in place.
• By 2020, insurance companies would be able to exclude those with pre-existing conditions. As a result, millions of sick Americans could lose their current health insurance.
The AHCA also cuts taxes for the rich, and reduces federal revenue by $700 billion over ten years. The impression is that health care is being sacrificed to help the top 1% of wage earners in the nation.
The Key Issues – Insurance Availability and Cost
Most Americans are focused on two health insurance issues: availability and affordability. There are reasons to worry on both counts.
• Insurance Availability: The AHCA cuts Medicaid and threatens other forms of insurance coverage. Obamacare defined the benefits for all health insurance, including no penalty for pre-existing conditions. The AHCA offers “waivers” for insurance companies to “customize” these features to reduce cost. These waivers could include denying coverage for pre-existing conditions or any future expensive illness. In a worst-case scenario, pre-existing conditions might include common problems like hypertension, asthma, and obesity that affect many Americans.
• Insurance Affordability: The AHCA may lower premiums by limiting benefits or covering only low risk patients. However, this would deny health insurance from those who need it most.
Even more worrisome is a long-standing problem of national healthcare costs. The reality is that cost inflation continues to drive higher premiums and threatens the national economy. There has been little attention paid to that major challenge.
Can we afford to cover more people when health care cost inflation continues to rise? The answer is “No”…unless we change the current status quo.
Health Care Cost Inflation – A National Problem
The cost problem can only be solved through a national system that has a budget, reliable revenue, and the tools to control costs.. The best example is Medicare, which covers the elderly. With the advantages of national price and policy controls, Medicare has begun to curb the rate of medical cost inflation.
Why is this example important? Medicare is a federal insurance plan that sets prices, controls costs, and covers its beneficiaries through taxes. Private health insurance is different. It is an industry that operates as a free market, like any other type of insurance. No country has successfully used the free market to provide health care for its citizens. The reason is that many people cannot afford to buy private health insurance. Only a government program can help them.
Obamacare was a major step forward. The law standardized benefits and offered subsidies to help cover the cost of private insurance. The result was that over 14 million Americans were newly insured.
But that plan will fail without a system that has enough predictable revenue to cover everyone and has the power to control costs. That is a task that only the federal government can manage.
We have already started down that pathway. The federal government manages, directly or indirectly, more that half of all U.S. health care expenditures: Medicare, Medicaid, the Veterans Administration, and the Armed Forces. In effect, we have a large national health portfolio supported by taxes.
Voters are becoming weary of the politics of health care. Soon they will wonder why they cannot enjoy the same benefits as their parents on Medicare. If that bandwagon gains momentum, politicians will scramble aboard.
The process may take time but as Winston Churchill quipped, “You can count on Americans to do the right thing…after they have tried everything else.”