The unresolved future of healthcare

By Theresa Frasca

Health Care Reform imageANN ARBOR–In early May, the U.S. House of Representative passed a revised version of the Republican healthcare reform bill, the American Health Care Act (AHCA). Republican senators are assembling their own bill to bring to a vote. If it passes, the bill will return to the House for reconciliation. The implications for the millions of Americans who receive healthcare from the Affordable Care Act (ACA) or “Obamacare” remain unclear. The Congressional Budget Office (CBO) was unable to score the final version of the AHCA before it passed. Without a score, Congress is unable to predict how the bill could affect the federal budget and those already covered by Obamacare. The CBO is scheduled to release its score of the AHCA on May 24.

On the campaign trail, President Donald Trump promised sweeping healthcare changes, yet it appears the enthusiasm for such reform was greatly overestimated after the first version of the AHCA failed to pass the House. Approximately 24 million Americans would have lost health coverage if that version of bill had succeeded, according to the CBO.

“The longer Obamacare sits in place, and the longer that it provides insurance to people, the less the public will have the stomach for a whole-scale revamp,” says James House, University of Michigan (U-M) professor of Survey Research, Public Policy, and Sociology, and author of Beyond Obamacare: Life, Death, and Social Policy. “The degree to which congressional leaders were out of touch with this is unbelievable. And the resistance to anything beyond attempts to extend and improve Obamacare from people in President Trump’s own political caucus and even among Republican governors and legislatures is more likely to spread.” House points to the close call in Kansas, where the Republican-controlled legislature was only three votes shy of overriding Republican Governor Sam Brownback’s veto of a bill to join the Obamacare Medicaid extension.

Sixty-four percent of Americans say it was a “good thing” that Congress did not pass AHCA in March, according to a recent Kaiser Health Tracking Poll. “As we’ve seen, healthcare reform is tremendously difficult as a policy and political process,” says House. “Only once in our nation’s history has anything on a similar grand scale occurred, which was the formation of Medicare and Medicaid under (President) Johnson in 1965.” House says that as difficult as it is to pass such legislation, the task is made more challenging by the growing U.S. medical-biotechnology industry, which exerts inertial forces and maintains vested interests against healthcare reform. Estimates are that this sector will constitute 20 percent of the U.S. GDP by the mid-2020s, making it an increasingly powerful influence on healthcare policy.

“I don’t see any upside for congressional leaders or the Trump administration in trying to cut the benefits that people already have,” says Helen Levy, research professor at U-M’s Institute for Social Research. “The most sensible thing to do now is to move forward and make the Affordable Care Act work better.” To make the ACA workable for the long-term, bipartisan compromise is needed to solve some of its controversial points.

House believes the ACA includes many good ideas for changing the healthcare system. Its biggest success has been to massively increase health insurance coverage, bringing it closer to universal coverage than ever before. “This not only helps individuals and families, both economically and in terms of health, but also creates the conditions for a more economically efficient insurance system,” he says.

While much of Obamacare works pretty well, House says, some aspects of the health insurance markets are complicated and difficult. The bill must address large variation across states, such as urban centers in California as well as rural areas in Wyoming. Supporters of offering cross-state insurance believe it will drive a more competitive marketplace and lower costs, but critics say it will undermine consumer protections. President Trump highlighted cross-state sales as part of his solution to replacing Obamacare during his February address to Congress.

Aside from cross-state sales, consensus is needed to ensure a sound marketplace while also keeping premium costs low. Levy says that to encourage greater health plan participation in the market, risk must be better managed for insurers. “Fully funding and extending reinsurance and the risk corridors program, both of which help encourage health plan participation by more evenly distributing liability, is key to moderating premiums,” says Levy.

Another major area of uncertainty is cost-sharing subsidies. They make healthcare more affordable by lowering the out-of-pocket costs for deductibles, coinsurance and copayments for those with incomes between 100 to 250 percent of the Federal Poverty Level. During the Obama administration, the House of Representatives sued the government over the subsidies, deeming them unlawful due to vague funding appropriation. The lawsuit was put on hold during efforts to repeal and replace the ACA. The subsidies will continue until a resolution is reached, leaving those who depend on the cost-sharing subsidies in limbo. If these subsidies are discontinued, insurers will likely raise premiums to recoup the loss.

“Since we don’t know what’s going to happen, all we can do is be as careful as possible about collecting and capturing data so that when or if there are changes we can measure them,” says Levy. “That’s what we did with Medicare Part D, the initial implementation of the Affordable Care Act and that’s what we’ll do with anything else that changes in the health insurance landscape.”

House points out that the government will have spent nearly an entire decade, 2010-2020, rehashing the issue of healthcare reform. Meanwhile, healthcare and insurance expenditures continue to grow faster than inflation, yet population health continues to decline in several key areas, including life expectancy and infant mortality.

“We’re seeing a decline in life expectancy in the U.S. that you can’t find anywhere else in the world in a country as developed as ours,” says House. “This is the larger and most fundamental problem and failure of American health policy, and it is not going to be solved by either the Republicans or the Democrats if they focus solely on healthcare and insurance as if it constitutes all of health policy.”

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