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Repeal and replace Obamacare, 2.0

A while back, comedian Groucho Marx had a line that always got a laugh: “I wouldn’t want to join any organization that would accept me as a member.” It was funny because the circular reasoning was so illogical. There is a similar kind of illogical, circular reasoning going on in the health insurance debate today, but this time it isn’t so funny.

“There is a simple way to keep health insurance premiums down,” it goes. “Just don’t insure sick people — or, as the insurance industry describes them, people with pre-existing conditions.”

The guiding principle is certainly not new. In order to maximize profits, insurance companies have to take in as much as possible in premiums and pay out as little as possible in claims. If you are an insurance company, that means you prefer to sell policies to younger and healthier people, and put a limit on the number of older, sicker clients you insure. Well, yeah, but isn’t the goal of health insurance to make sure that people who need health care can afford it? Nevertheless, profits are the driving principle for even the best of health insurance companies, which are first and foremost Wall Street corporations whose primary mission is to generate dividends for their shareholders.

This reasoning has generated the newest wrinkle in the Republican plan to repeal and replace Obamacare: a provision aimed at lowering premiums by allowing individual states to opt out of the provision that prohibits excluding those with pre-existing conditions. A “pre-existing condition” is not well defined and in the past could include anyone from an infant born with a heart defect to a child with asthma, to a young adult with a back injury, to a middle-aged person with cancer or diabetes. All these people have one thing in common: They are likely to have higher-than-average medical costs. Before passage of the Affordable Care Act (ACA, also known as Obamacare), insurance companies routinely required applicants to fill out long, detailed forms that would reveal any condition lurking in the background that might generate medical bills, and just as routinely refused to sell a policy to anyone if they didn’t like the odds. One of the most popular reforms under Obamacare was that insurance companies could no longer refuse people with pre-existing conditions, nor charge them more for coverage. With this provision of the ACA, along with subsidies to help pay premiums, many Americans with long-standing health problems were able to afford insurance and get necessary medical attention for the first time, without going bankrupt.

Of course it would be too draconian to just shut out people who had the misfortune not to be in good health, so the new provision would place people with pre-existing conditions in “high-risk pools” and provide subsidies to assist with premiums. Who benefits from this arrangement? Not those with pre-existing conditions, since premiums in the high-risk pool would certainly skyrocket and people would be dependent on the government’s generosity to adequately fund their subsidies. That’s not a good bet, given that subsidies in the proposed Republican legislation are already woefully inadequate, and predictions are that 25 million people would eventually lose health insurance.

The taxpayers would not be better off since the subsidies would have to come from the public coffers, because the proposed Republican legislation also eliminates the tax surcharges on the ultra-wealthy, which funded the ACA’s expanded coverage. But such a provision would certainly satisfy the insurance companies, since they could then charge those in high-risk pools as much as they deemed fit — and if an applicant couldn’t afford soaring premiums even with a subsidy, these are customers insurance companies would be quite happy to lose anyway.

Instead of making health insurance more precarious for people with pre-existing conditions, perhaps we need to look elsewhere for cost-cutting measures and reconsider the wisdom of placing responsibility for health care in the hands of profit-driven corporations in the first place. Consider these statistics:

¯ Private insurance companies spend between 12 and 30 percent of every health care dollar on administration, including marketing, compared with just 2 percent overhead for Medicare.

¯ The top executives at five major insurers — Aetna, Cigna, UnitedHealth, Anthem and Humana — make millions, with each CEO earning between $10.3 million and $17.3 million in 2015.

¯ Health-care firms and their lobbyists spent money at the rate of $1.4 million a day on a campaign designed to influence health care reform legislation as it moved through Congress.

Republicans zealously campaigned for the repeal of Obamacare, but so far the major beneficiaries of legislation to replace it turn out to be the ultra-wealthy, who will see their surcharge taxes repealed, and the insurance companies, who will be released from requirements that cut into their profits such as the one requiring coverage for pre-existing conditions. According to the American Medical Association, this legislation would “make coverage more expensive — if not out of reach — for poor and sick Americans.”

Donald Trump promised that under his plan, everyone would be covered, that they would have great health care with much lower premiums, and that it would be “so easy.” Modifying Obamacare could be one way to achieve that goal, but the complicated Republican plan now before Congress makes things worse, not better. The most direct path to providing the kind of health care Donald Trump promised is with single-payer health care, also known as Medicare for all. It is the system in place in countries such as England and Canada, countries that cover everyone and still achieve better health outcomes at lower cost than we do. Bernie Sanders is proposing such legislation in Congress, and individual states such as New York and California are considering it. Maybe, finally, after we have tried everything else and failed, it is an idea whose time has come.

Rosalie Fontana lives in Bloomingdale.

Sources:

David Blumenthal, M.D., Sara R. Collins, “ACA Repeal-and-Replace Bill Likely to Increase Premiums and Decrease Covered Services for Many,” The Commonwealth Fund, April 27, 2017, http://www.commonwealthfund.org/publications/blog/2017/apr/amendment-aca-repeal-and-replace-bill

Pfeffer, Jeffrey, “The Reason Health Care Is So Expensive: Insurance companies,” Bloomberg, April 10, 2013, https://www.bloomberg.com/news/articles/2013-04-10/the-reason-health-care-is-so-expensive-insurance-companies

Jacobsen, Lewis, “Barbara Boxer says Medicare overhead is far lower than private insurers’ overhead,” Politifact, May 30, 2011, http://www.politifact.com/truth-o-meter/statements/2011/may/30/barbara-boxer/barbara-boxer-says-medicare-overhead-far-lower-pri/

“AMA Says American Health Care Act is Critically Flawed,” American Medical Association press release, March 8, 2017, https://www.ama-assn.org/ama-says-american-health-care-act-critically-flawed

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