THE REPUBLICANS’ HEALTH CARE DILEMMA
by Bob Wheeler
This week Republican efforts to “repeal and replace” the Affordable Care Act, or “Obamacare” as it is also known, collapsed as Senate Majority Leader Mitch McConnell failed to muster the votes necessary to pass the measure. The problem is that his Republican colleagues are divided over how to replace Obamacare, with some thinking that the proposed measure went too far and others thinking that it did not go far enough. While the Republican caucus is coming under a lot of criticism for failing to act, it is not all clear what they could have “replaced” Obamacare with. If the aim is to take the government out of health care decisions, then the objective would simply be to repeal Obamacare and not replace it with anything. If, on the other hand, the aim is to stabilize the insurance markets, then the objective would be to fix Obamacare, not “replace” it. It was never clear what the Republicans would have put in its place.
A proposal advance by Sen. Ted Cruz during the debate highlighted the problem. He suggested that insurers be allowed to market plans that do not meet current ACA standards as long as they were required also to offer plans that do. But actuaries from two major health insurance associations pronounced the plan unworkable. The insurers’ objections go right to the heart of the health insurance dilemma facing the Republicans today. If healthier people have the option of buying less expensive coverage, the insurance companies will have to charge older, sicker people more money to pay for their coverage.
In order to make health insurance affordable it is necessary to spread the risk over as wide a base as possible. You need a large number of healthy people paying into the plan to cover the expenses of those who are sick. Or to state the matter more crassly, the whole idea behind health insurance is to take money from someone who is healthy and use it to pay the hospital bill of someone who is sick. If you make the system voluntary you run into a problem known in the health insurance industry as “adverse selection” – only sick people sign up and the insurance company has to charge them astronomical premiums to cover their expenses. The patients, in effect, wind up paying their own medical bills, albeit through a third party payer. It defeats the whole purpose of health insurance and makes the individual insurance market unworkable.
The main problem with Obamacare is that even with the individual mandate not enough younger, healthier people enrolled. Insurers were forced to raise their rates, which caused even more enrollees to drop out. Remove the individual mandate and the problem becomes even worse.
The main problem with the various Republican proposals is that they would leave a large number of people uninsured, and that in turn raises the question of what to do when the uninsured become sick or injured? Who will bear the cost of their treatment? In the past such persons would seek treatment in the emergency rooms of hospitals, and the hospitals then would engage in elaborate cost shifting, overcharging patients with insurance to cover the cost of those without. The U.S. as a whole spent more per capita on health care, but without better health results. One can hardly imagine a less cost effective way to provide health care. These are problems that plagued the American health care system for decades, and Obamacare was an attempt to correct. The Congressional Budget Office has pointed out that the various Republicans proposals would simply take us back to where we were before, with potentially millions left uninsured.
The dilemma, then, for the Republicans, is this: if you make the system voluntary and peal back the Medicaid expansion, you leave large numbers of persons uninsured. It is a classic case of where individual self-interest comes into conflict with the public good. But the whole idea behind health insurance is to pool our financial resources to protect ourselves against risk. And none of us want to wants to get seriously ill just so that we can claim that we got our money’s worth out of the insurance. Health insurance is something that we pay for and hope that we never have to use. It is enough just to know that it is there in case we need it.
The goal of any humane and socially responsible health care policy should be exactly what President Trump has stated – to make affordable health care available to all. It remains to be seen what Congress will do next. But if Obamacare cannot be fixed is it time to repeal and replace it – with a single payer national health insurance plan?