EDITORIAL

Time to Expand Medicare

Republicans have been working to undermine the Affordable Care Act for the past seven years, and the campaign has taken its toll. But Paul Ryan and Donald Trump failed to strike the fatal blow this past week, as Republicans split over the replacement for "Obamacare." They might try again, after Health and Human Services Secretary Tom Price gets a shot at undermining the health exchanges, but if Price succeeds in wrecking the Affordable Care Act through maladministration, the answer should not be another look at the Ryan-Trump proposal to give the insurance companies more flexibility and rely on the “free market” to set things right. Insurance companies had their shot at providing universal coverage, and they failed.

President Obama determined in 2009 that insurance companies had too much clout in Washington to make any headway with a universal health care initiative that did not get the insurance companies to sign on.

Obama managed to get the insurance trade group, America’s Health Insurance Plans, to publicly back the passage of the Affordable Care Act in 2009, but Wendell Potter, a former insurance executive who became a critic of the private insurance system, noted that the insurance lobby secretly funneled tens of millions of dollars to allies like the US Chamber of Commerce to finance anti-Obamacare PR and ad campaigns.“The big for-profit insurers, which gave AHIP the lion’s share of the secret money, arguably are more responsible than any other special interest in turning the public’s attitudes against reform,” Potter wrote for the Center for Public Integrity in April 2015.

The anti-reform advertising blitz in late 2009 and early 2010 helped convince Democrats in Congress to give up on the “public option,” which would have allowed people under 65 to buy Medicare coverage, Potter wrote. Lawmakers also agreed to make the penalty for not buying insurance more painful with every passing year, which would send more customers to the insurance companies.

But Republicans tried to undermine Obama’s assurances to insurance companies that they would not lose money on these new customers, many of whom had been uninsurable because of pre-existing medical conditions. The law provided fodr insurance companies to be made whole, but in 2014 Republicans slipped a “rider” into a spending bill to stop federal funds from being spent to cover “risk corridor” shortfalls for insurance companies during the first three years of the ACA’s rollout. Because of the rider, the government was able to pay only 13% of what insurance companies were expecting to receive from the risk corridors in 2015.

The monkey wrench didn’t kill Obamacare, which was Florida Sen. Marco Rubio’s goal, but it did force premium increases that were announced in the weeks before the 2016 election. Also, Michael Hiltzig of the Los Angeles Times noted, “The lack of full reimbursement contributed to the collapse of a dozen healthcare co-ops that had been created to provide coverage to individuals and families, interfering with coverage of some 800,000 Americans. Many, if not most, of these co-ops likely would have survived if the promised financial cushion was there for them when expected.”

The major insurance companies still made out OK under the new law, with revenue increases from Medicaid and Medicare Advantage customers more than offsetting losses from the exchanges.

UnitedHealth, the nation’s largest health insurer, dropped out of the exchanges effective this year, claiming that Obamacare reduced its 2016 earnings by $850 million. But UnitedHealth had record-breaking profits in 2015, and an even better year in 2016, when UnitedHealth saw total company revenue jump 18% to $185 billion.

Aetna has also celebrated sky-high profits, reporting a record annual operating revenue of over $63.15 billion for 2016, an increase of 5% from 2015, though Aetna said it lost money in its individual products, on and off the health exchanges. But Aetna’s departure from health insurance exchanges in 11 states may also have been motivated by CEO Mark Bertolini’s anger at being denied a merger with Humana, which also scaled back its participation in the exchanges but reported a record $54.38 billion in revenue for 2016. Obama’s Justice Department blocked the $37 billion deal on the grounds that merging two of the nation’s five largest insurance providers was an antitrust violation that would strangle competition in the marketplace.

The Congressional Budget Office on March 13 reported that the Republican health plan would cause 24 million people to lose insurance and increase insurance costs dramatically for older Americans.

Under the current law, in 2026, a 64-year-old earning $26,500 with an insurance policy that costs $15,300 a year would get a tax credit of $13,600, leaving the consumer responsible for $1,700. Under the Republican plan, health insurers could charge older people up to five times more than they charge younger people (compared with three times more under the current law), raising the older person’s premium to $19,500. But the tax credit would be only $4,900, and that older person’s share of the premium would then be $14,600.

By contrast, a single 21-year-old earning $26,500 with an insurance policy that costs $5,100 a year would get a tax credit of $3,400 and would have to pay $1,700 of the premium. Under the Republican bill, that person’s share of the cost would drop to $1,450.

Republicans, who have disputed the success of the Affordable Care Act, played down the CBO analysis. They note that the agency predicted that the ACA, also known as Obamacare, would put eight million more people under insurance than actually signed up. But the number of people who signed up for insurance through the government-sponsored health exchanges was lower than expected, in part, because employers did not drop coverage to the extent that had been anticipated, and many Republican-led states opted not to accept the federal funds to expand Medicaid to provide coverage for the working poor.

The Republican plan also would sharply cut Medicaid and give states more leeway in developing and administering their own program for low-income health coverage. Most savings would go to tax cuts for the wealthiest Americans.

The Affordable Care Act was a good try, but it should be replaced by Medicare for All. Four principals of Physicians for a National Health Program made the case for a single-payer national health program in an op-ed in the American Journal of Public Health in June 2016. They noted that employers have tripled deductibles on insurance policies since 2006 in an effort to restrain their health benefit costs and many of the estimated 11 million Americans who have purchased plans on ACA exchanges face punishingly high copayments and deductibles, which average more than $5,300 in “bronze” plans. That can compromise access to health care and financial well-being. In 2014, 36% of non-elderly adults skipped needed care because of cost (that’s down from 41% in 2010), and more than half of all overdue debts on credit reports were medical.

A single-payer plan, expanding Medicare to cover everybody, could provide comprehensive coverage without copayments or deductibles, replacing the current wasteful patchwork of coverage, and a February 2016 Kaiser Family Foundation poll found that two-thirds of Americans support such a move. Cutting administrative spending to Canadian levels would save 15% off what we now spend on health care, freeing nearly $500 billion annually for expanded and improved coverage. And allowing Medicare to negotiate with drug companies over prices, as do universal health programs in other advanced nations, would result in significant savings. “The greater efficiency and simplicity of the [national health program] would curb inflation in health costs, so that cost savings would grow with time,” the physicians note.

Insurance companies had their chance and they failed. Medicare has been providing efficient health coverage for the most expensive patients in the nation for 50 years and it’s time to give it a shot at covering the rest of us. — JMC

(This editorial has been updated from the version in the printed edition, to reflect the decision of Trump and Ryan to pull their bill on March 24.)

From The Progressive Populist, April 15, 2017

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