Stop Arguing and Do Your Damn Job: A Failing Healthcare System

Before you read this, I want you to understand that I am nowhere close to being a healthcare expert. I’m a below average data lover, political moderate, and healthcare “novice.” But, given the current state of our government, these self-imposed titles make me just as qualified as a lot of folk in Washington — if not more. As good ole President Trump recently stated: “nobody knew healthcare could be so complicated.” However, when you consider how inherently biased analyses of the AHCA have been in recent days, an undergraduate’s take on the current dilemma could make for an interesting perspective.

On March 6, 2017, House Republicans released “Budget Reconciliation Legislative Recommendations Relating to Repeal and Replace of the Patient Protection and Affordable Care Act,” otherwise known as the American Health Care Act of 2017 (AHCA). According to its authors, the piece was drafted in response to the reality that “Obamacare is hurting more people than it is helping, forcing Americans to buy insurance they don’t like, don’t need, and cannot afford.”

That bill, of course, ended up a subsequent failure, demonstrating the inability of our current federal government to simply work together and reach a reasonable solution. However, given how complex the healthcare market is, I would not bet on such a solution coming any time soon. The relationship between the three major stakeholders consumers, healthcare providers, and insurers will always make it nearly impossible to establish an efficient system.

Each actor may want their fair share of the bargain, but we all reap the benefits of well-drafted health care legislation. Both sides need to acknowledge the failures of the Affordable Care Act, as well as its benefits, and come together to create a reasonable alternative from scratch.

In order to understand why Republicans are so strongly against universal healthcare and the implications of any incoming pieces of legislation impacting healthcare, it is important to understand what has actually played out in the market since Obama signed the Patient Protection and Affordable Care Act into law in 2010. After all, as evident in Washington, it is much easier to criticize someone else than to do anything yourself; so, doing so will make for an okay starting point for this argument.

When Democrats proposed the Affordable Care Act, their argument was based on the idea that increases in the number of people without insurance could be solved by establishing a government-supported health care system. In addition, they wanted a system that would drive down the cost of healthcare for middle-class Americans. They successfully managed to solve goal number one, but only at the expense of making goal number two even worse.  

Using polling and market data, the US Department of Health and Services recently published data on the number of uninsured people, specifically relating to the Affordable Care Act. After brief analysis, Obamacare has conclusively made strides towards increasing insured levels. However, analytically speaking, it is incredibly difficult to predict whether or not these same results will hold in the foreseeable future, especially given the proposal of the American Health Care Act.

Visualization of uninsured rate of change from 2010-2015. Data compiled from the US Department of Health and Human Services.

At the end of the day, conservatives and liberals alike who oppose the Democratic initiative must concede that the ACA has provided more Americans with insurance. Whether or not this is at the expense of rising costs for middle-class Americans is up for debate; but, as I will discuss later, there is no clear way to simultaneously achieve the unique interests of all three competing stakeholders, who happen to be in near-constant conflict.

Critics of the ACA from the left claimed that the legislation did not establish a strong enough social market, leaving people able to avoid paying associated fees. As a result, the federal government created an individual mandate penalty for those who can afford insurance but choose not to. According to HealthCare.gov, “if you can afford health insurance but choose not to buy it, you must pay a fee called the individual shared responsibility payment.”

Generally, forcing individuals to pay for something that they made a calculated decision to avoid in the first place is impractical and one of the many reasons Republican lawmakers chose to bring suit. Despite failing to achieve a reversal of Obamacare in the Supreme Court, (which occurred in part due to Chief Justice John Roberts’ unexpected decision), they made the Obama administration appear as though they were too powerful and had infringed on individual rights.

However, no matter your opinion on the individual shared responsibility payment, our nation’s most pressing issues resides in rising premiums in the healthcare marketplace, as well as resolving which stakeholder can obtain the most out of any negotiated piece of legislation. In the ACA’s health care marketplace, there are four categories of insurance: bronze, silver, gold, and platinum. According to HealthCare.gov, “Metal categories are based on how you and your plan split the costs of your health care. They have nothing to do with quality of care.”  

Visualization of the rate of change from 2016-2017 for the second lowest cost silver before tax credit by state. Data compiled from the US Department of Health and Human Services.

These plans divide the cost of insurance between the insurer and individual at different ratios (e.g. 70-30 for silver). Although the results remain almost the same across all plans, a hypothetical analysis of monthly silver plan premiums for a 40 year old middle-class American over time can give us a better idea of how the ACA impacts everyday Americans. In the chart below, nearly all states experienced a rise in silver costs before tax credit.

Given this model, we can reasonably conclude that the ACA played a role in increasing health care premiums amongst middle-class Americans. Democrats promised a healthcare system that lowered the cost burden on lower income brackets. However, while more people are insured, costs have risen across income brackets.

We can go in depth about how the Affordable Care Act impacted the market and what may continue to happen, but looking forward can give us a better idea of what to expect with a Republican-led Congress.  Since the American Health Care Act, sponsored by Speaker Paul Ryan, has already fallen flat, I will only briefly touch on its shortcomings.

In short, the primary features of the AHCA were to dismantle Obamacare taxes, eliminate the individual and employer mandate penalties, and establish a Patient and State Stability Fund. While many Republicans were against the bill as it did not fully repeal the Affordable Care Act, its potential impact on the market would have negatively affected everyday consumers.

The Congressional Budget Office (CBO), a nonpartisan department that conducts data analysis for the US Congress, produced fiscal estimates as a “benchmark to measure the cost of the legislation.” Their results mirrored those of many leading healthcare market research firms, concluding that the AHCA could actually drive up premiums for the first few years of its enactment.  

According to the CBO, “The legislation would tend to increase average premiums in the nongroup market prior to 2020 and lower average premiums thereafter, relative to projections under current law. In 2018 and 2019, according to CBO and JCT’s [Joint Committee on Taxation] estimates, average premiums for single policyholders in the nongroup market would be 15 percent to 20 percent higher than under current law, mainly because the individual mandate penalties would be eliminated, inducing fewer comparatively healthy people to sign up.”

Looking back at the two main goals of healthcare policy, lowering premiums and increasing insured rates, this piece of legislation would have failed the American consumer in both respects. Since this is not analyzing insurance provided by a corporation to its employees, it makes up the nongroup market. The overall market as it pertains to Ryan’s first attempted solution with a legitimate chance of passing would have favored insurance companies and healthcare providers.

As much as I try to defend the free market, in the healthcare realm, the free market has shown time and time again to only benefit insurers and healthcare providers via increased profits. Policymakers should keep in mind that they are to serve the general population of the United States and, as a result, should avoid the enormous role of lobbying when drafting policy. This may not be feasible given the role of campaign finance and lobbying in Washington, but politicians’ constituents should be at the forefront of their decisions.

The biggest issue in finding a point of equilibrium between both stakeholders and rival political parties is that certain aspects of policy must coexist. If we have a market such as Medicaid, which leans more towards socialized healthcare, then there must be an individual employer mandate penalty accompanying it. Not having one, such as the AHCA attempted to do, creates a faulty system from the beginning. Individuals would not have to enroll, in turn, defeating the purpose of socialized healthcare.

After carefully analyzing the ACA and its aftermath in Washington, Congress should repeal the legislation as promised. The problems created by the law are unsolvable in its current form and coverage gains are not due to better access to private coverage.  Like I’ve previously hinted at, if the Republicans are going to set the agenda on health care reform, they cannot attempt to do so through the Affordable Care Act.

If it’s not one way or another, the American consumer reaps the consequences. After all, congressmen receive their own healthcare funded by taxpayers. There is no way to add free-market amendments to the ACA while simultaneously driving down the cost of premiums to middle-class Americans.

Instead, Republicans should offer legislation that encourages personal ownership of healthcare by cutting taxes and deregulating the market. Medicaid should be restored to a true safety net, especially for high-risk consumers who are unable to pay costs out of pocket. The new system should not create tension between federal and state funding, and establish state as the primary determinants of their own policy. As much as nationalized healthcare could positively impact the lives of many Americans, it is intrinsically difficult to create a system that does not negatively impact a certain income bracket.  

Trump’s statement that he wants to pass healthcare soon or live with the Affordable Care Act as law, could potentially be the biggest mistake of his presidency. His inability to see the larger picture, while instead solely focusing on trying to bully Congress, will just serve as another example of the middle-class paying the price for poorly negotiated policy in Washington. A solution must be achieved soon and make an earnest attempt to lower the rising cost of healthcare for everyday Americans. If not, the consumer will be the one negatively affected.

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