It’s no wonder Republicans are in trouble with their plan to destroy Obamacare. They have nothing that addresses the market failure that prevents millions from getting coverage while costs keep rising.
Republicans are having a difficult time actually delivering on their promise to “repeal and replace” Obamacare for many reasons, not least because Obamacare is at its core an old Republican health-care plan.
The Affordable Care Act had its origins in GOP ideas of the 1990s, some from the highly influential Heritage Foundation. The goal was to use incentives and reforms within the existing private insurance system to provide care for more people, as an alternative to a single-payer system.
A forerunner of Obamacare was successfully implemented in Massachusetts by then-Gov. Mitt Romney, the Republicans’ 2012 presidential nominee.
When President Barack Obama set out to expand coverage after his 2008 election, he spent more than a year seeking bipartisan support. He kicked liberals aside in their demand for a public option (a Medicare-based system with the government effectively the insurer) and went with a “market-based” plan, a potential gold mine for insurance companies.
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Yet not a single Republican voted for the ACA. The party discovered its own political gold in demonizing Obamacare as “socialism” at the hands of someone many Republicans (including Donald Trump) refused to believe was even an American citizen. The Republican-controlled House voted more than 60 times to repeal or change ACA, knowing it would never get past Obama’s veto.
Now in total power in D.C., the Grand Old Party is having to face the music: the devastating Congressional Budget Office report showing its replacement plan means 24 million Americans would lose health coverage by 2026, enormous cuts to Medicaid and big premium hikes for older, lower-income people.
This might offer some deficit relief, but more would come from, say, reducing our military adventures and subsidies for climate-changing fossil fuels. Neither of these will happen on the GOP’s watch, but the party is scurrying to find a way to have its philosophical purity and avoid being creamed in the midterm elections.
That purity of the right is simple: Get government out of health care. The same cohort opposed Medicare in the 1960s. The purity of the left is that health care is a basic human right.
The economics are fairly straightforward. As a landmark Commonwealth Fund report laid out in 2015, the United States spends much more on health care than other high-income nations and sees some of the worst outcomes. The result is a huge weight on the U.S. economy and desperation for millions of Americans.
This is almost entirely a consequence of a market failure in the private-sector-based system of American health care. “Money-driven medicine,” as journalist Maggie Mahar put it in her book of the same name. Too much of the edifice of American health care is built on expanding profits at all costs, with huge administrative and marketing overhead.
Like the big banks, another sector prone to market failure, the pharmaceutical, hospital, insurance and medical-device companies, along with other players in health care, have powerful lobbyists in D.C. to work their will.
The market failure goes deeper, however, because of the unique nature of health care. As University of Oregon economics professor Mark Thoma explained in a recent Fiscal Times article:
“The most problematic aspect of delivering health care in the private marketplace is that consumers do not have the information they need to make informed health-care choices,” Thoma wrote. “What type of implantable heart monitor is best? If they are on sale down the road, can I trust the quality? Do I even need this procedure — are there other treatments that are equally or more effective? Doctors often disagree, if they don’t know the answers, how can I make informed choices?”
For many years, a majority of Americans were largely untouched by the consequences of the system because they received health coverage, often free or with very modest premiums, from their employers.
That began to change around the turn of the century and now every year brings new premium shocks and benefits cuts — and this is for the employees fortunate enough to have health insurance.
Employer-based health coverage, a peculiarity of America that began as a way to attract workers in World War II, headed off a national single-payer system (although both Truman and Nixon explored creating one). But the umbrella is getting smaller.
According to the Kaiser Family Foundation, half of the U.S. population under age 65 was covered by employer-sponsored insurance last year. But a federal study shows this is down from the 79 percent that was the norm from 1968 to 1980.
Insurance is especially unlikely for businesses employing fewer than 50 workers. In 2015, only 27 percent of employees at small businesses enjoyed this coverage.
With the loss of stable jobs across many industries along with the rise of the gig economy and more involuntary temp workers, the challenge of covering Americans’ health needs is growing. This need is not aligned with the profit goals and business models of the health-care industry.
Here was where the Affordable Care Act was supposed to at least make a big dent. It allowed individuals who would otherwise be priced out of the market to buy insurance, and it also expanded Medicaid.
ACA had its problems. There was the rocky rollout. Not enough healthy young people signed up, leaving a pool of sicker people, making it harder for insurance companies to make money. Republicans worked tirelessly to undermine Obamacare, including GOP-controlled states that refused to set up state exchanges to offer insurance.
Still, Obamacare proved successful in dramatically lowering the number of uninsured. Roughly 15 million Americans have gained access to health care. In Washington, more than 750,000 are enrolled through marketplace exchanges or expanded Medicaid.
If Republicans were smart, they would reclaim ACA as their own, shore it up and declare “mission accomplished.”
Or we have the alternative: Medicare for all. Think of the burst of entrepreneurship if millions didn’t feel chained to their jobs to keep health insurance.
In the past, Republicans defended the pre-ACA system by saying no one actually went without care: They could go to emergency rooms. Both George W. Bush and Romney expressed variations of this theme.
But ER care is very expensive and is eventually passed on to all paying patients and their insurers. Also, ERs can’t handle cancer or other long-term, complex afflictions.
To say “tough luck,” as the Republicans seem to be implying … now that’s sick.