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Obamacare and the cost of gridlock

Four years after the rollout, the United States still has the most expensive system in the world, one of the highest uninsured rates, and some of the worst health outcomes. 

Private corporations exist to make money for their owners, and it would be foolish to count on them to view serving the health care needs of the poor and the sick as a higher priority.
REUTERS/Lucas Jackson

The Affordable Care Act, aka Obamacare, is too complicated and too expensive and still leaves too many Americans without health insurance, but it has still done more good than harm by adding millions of formerly uninsured Americans to the ranks of the insured. About 20 million Americans are now insured through the various provisions of the ACA, and recent studies indicate that those millions are healthier, less likely to have medical debt, and more likely to get preventive care as a result of the program.

Problems keep popping up, and Democrats would like to make some small fixes to the program to address some of these issues, but anything that requires legislation is a non-starter because Republicans would rather see it fail and/or be repealed. This is a perfect example of the cost of gridlock and the era of no-compromise. (Paul Krugman makes the case for some reforms that would help, but can’t help, because they won’t pass.)

The Republican goal of repeal is also not possible unless Republicans get control of both houses of Congress and the White House, and even then, I wonder if they would actually have the nerve to do it, assuming it would throw millions of Americans out of the ranks of the insured. Republicans claim to want to “replace” it, but have never put out a sufficiently detailed vision of their replacement that can be analyzed and scored according to how many winners and losers it would create. If they come up with a way that covers more people and costs less, I’m all ears.

In addition to trying to repeal the ACA, Republicans have also tried to sabotage it. Although 31 states, including some with Republican governors, have exercised the Obamacare option of expanding the eligibility for Medicaid coverage, 19 states blocked the expansion — all of them because of Republican resistance. That leaves millions of near-poor Americans uninsured. Here’s a point I don’t hear made often enough:

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Since the vast majority of the cost of Medicaid is paid for by federal taxes, the states that refuse the expansion are still paying their share for the expansion in the other states, while depriving their own uninsured of the advantages. That’s not only mean-spirited, but economically self-punishing. Try to imagine a state that would deny Social Security benefits to its own elderly, while everyone still working in the state continued paying their FICA payroll taxes to support the benefits of retirees in other states. Crazy.

So the ACA struggles on, to be the best version of itself it can be, under those circumstances, and with frequent setbacks, such as the recent announcement by Aetna to cut back its participation in the program, pulling out of all but four states. This follows similar pullbacks by two other health insurance giants UnitedHealth Group, and Humana. According to this New Republic piece, Aetna’s pullback is a retaliation against the federal government, which had blocked a proposed merger between Aetna and Humana on antitrust grounds.

It’s possible to overstate the impact of these withdrawals from the exchanges. Although the companies are large, their role in Obamacare was not that big. Aetna, for example, represented about eight percent of the ACA market. Private corporations exist to make money for their owners, and it would be foolish to count on them to view serving the health care needs of the poor and the sick as a higher priority. I suppose the question is whether a system that relies so heavily on maximizing private profits is the best vehicle for serving the health care needs of the rich and the poor, the sick and the well.

Former Labor Secretary Robert Reich, now a professor of public policy at Berkeley and a big-time Bernie Sanders backer, nonetheless seized on the Aetna cutback to make the argument that we would be much better off with single payer. Here’s the guts of Reich’s argument:

The problem isn’t Obamacare per se. It’s in the structure of private markets for health insurance – which creates powerful incentives to avoid sick people and attract healthy ones. Obamacare is just making the structural problem more obvious. 

In a nutshell, the more sick people and the fewer healthy people a private for-profit insurer attracts, the less competitive that insurer becomes relative to other insurers that don’t attract as high a percentage of the sick but a higher percentage of the healthy. Eventually, insurers that take in too many sick and too few healthy people are driven out of business. 

If insurers had no idea who’d be sick and who’d be healthy when they sign up for insurance (and keep them insured at the same price even after they become sick), this wouldn’t be a problem. But they do know – and they’re developing more and more sophisticated ways of finding out. 

It’s not just people with pre-existing conditions who have caused insurers to run for the happy hills of healthy customers. It’s also people with genetic predispositions toward certain illnesses that are expensive to treat, like heart disease and cancer. And people who don’t exercise enough, or have unhealthy habits, or live in unhealthy places. 

So health insurers spend lots of time, effort, and money trying to attract people who have high odds of staying healthy (the young and the fit) while doing whatever they can to fend off those who have high odds of getting sick (the older, infirm, and the unfit). 

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As a result we end up with the most bizarre health-insurance system imaginable: One ever more carefully designed to avoid sick people.

Sanders managed to demonstrate that it’s possible to openly advocate for single payer and still win a lot of Democratic primaries, not just in Vermont. But there are a lot of Americans who aren’t Democrats and a lot of Democrats who accept, at least as a political reality, that we can’t have single-payer in America, and even in within the Democratic electorate, Sanders lost to Hillary Clinton, who has never favored single payer.

(In case you forgot this, Barack Obama, when he was coming up politically, described himself in 2003 as a “proponent of a single-payer health care system.” By the time he was running for president in 2008, he preferred to say that if he was designing a U.S. health care system “from scratch,” single payer would be the way to go, but to switch from what we have to single payer would be “too disruptive.”) He eventually took to saying that he had never favored single-payer, a statement that got him a rating of “false” from Politifact.

Before Obamacare, comparing the United States to other major wealthy nations of the world, the U.S.  had the most expensive health care system, the largest portion of its population lacking health insurance, and the worst or among the worst health care outcomes. For example, over recent history, the United States never cracked the top 25 nations for average life expectancy and never compared with the world leaders in reducing deaths by preventable diseases. Because of those measures, those who constantly tried to declare the pre-Obamacare U.S. health care system to be the best in the world were engaging in a denial of reality that could only be described as willful self-blindness.

Some of those measures have gotten a bit better in the four years since the 2012 Obamacare rollout, most especially the sharp drop from 18 percent to 11 percent in the share of Americans without health insurance. That would drop still further if those red states that have rejected the Medicaid expansion would accept it. Here’s a Gallup chart showing the drop.

The uninsured rate varies so dramatically by state that the disparities are jaw-dropping. Massachusetts has the lowest uninsured rate at 3.5 percent. Minnesota is fourth lowest at 5.8. Texas is highest at 22.3 percent. Yes: 22.3 percent. And there are 26.5 million Texans; it’s our second biggest state.

Massachusetts and Minnesota were much lower than Texas before Obamacare of course, but both states also accepted the Medicaid expansion and created a state-run health insurance exchange which further reduced their uninsured population. Texas did neither.

Here’s the 2015 Gallup survey showing the state-by-state rankings.

But, four years after the rollout, the United States still has the most expensive system in the world, one of the highest uninsured rates, and some of the worst health outcomes by any of the appropriate measures of overall health. That’s not the fault of the ACA, which is helping us close some of the gaps. And the explanation for the poor health of Americans is not entirely about the health care system either. But you would have to engage in some pretty serious cherry-picking to find any measures that contradict those generalizations, or you have to focus only outcomes for the affluent and the shrinking pool of those with particularly good employer-subsidized health care plans.

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Here’s a recent ranking of nations by life expectancy, in which we come in 43rd.  Canada, which we normally don’t think of as a crazy socialist country, has single-payer and comes in at 18. And spends far less than we do, per capita, on health care. I’m not saying life expectancy is the one best way to judge the efficacy of a nation’s health care system. And there are many complicating factors. But the U.S. system doesn’t do particularly well on any of the measures other than costliness, where we’re number one in the wrong direction.