The Straight Dope On Healthcare
Updated: Oct 1, 2019
I recently decided to gain a better understanding of healthcare, the Affordable Healthcare Act (Obmacare), the current administration’s policy efforts and the range of proposed policies by democratic party candidates.
So a story in the September 14-15 weekend Wall Street Journal caught my eye - Trump Health Official Blames ACA in Uninsured Increase - by Stephanie Armour. The WSJ story reported excerpts from a blog post titled, Thank Obamacare for the Rise of the Uninsured, authored by Seema Verma, the current Administrator of the Centers for Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services. The blog can be found on CMS.gov.
The CMS blog authored by Mrs. Seema presents data from the 2018 Census to support the Trump administration’s opinion that the ACA is responsible for higher health insurance premiums and in turn an uptick in the uninsured rate.
In my effort to learn, I prepared for and interviewed Dave Odell, a healthcare services provider steeped in patient, provider and administrative healthcare knowledge. Among other things, in the interview we touched on the exact points referenced in the WSJ article and the CMS blog, so I feel compelled to share some key insights gained from my research and my podcast interview with Mr. Odell.
A review of both individual and family premiums under both private and employer based plans for the twenty year period beginning in 1999 and ending in 2018 reveal that premiums have risen on a consistent trend line of 5-7% (see chart below - example: covered worker family plan $5845 in 1999 rose to $19,972 in 2018). In the short-term, experts project premium increases ranging from 3-6%. There is no data to support any extreme changes in premiums, at any time during the last twenty years, most importantly including the last ten, since the ACA was signed into law.
What about out of pocket expenses like deductibles? The data suggests these trends are slightly higher than the trends for premiums, a little over 7%.
From the blog on CMS.gov:
The U.S. Census Bureau released their annual report on health insurance coverage in the United States which shows the number of uninsured Americans rose from 2017 to 2018. As usual, critics of President Trump have been quick to blame the Administration’s healthcare policies for this increase. But a review of key facts suggests the rising uninsured rate stems largely from Obamacare’s failure to deliver affordable health insurance premiums and has created a new class of uninsured.
Take a look at the uninsured chart below from the Kaiser Family Foundation: 44.4 million were uninsured before full implementation of ACA in 2014, the low point was set in 2016 at 26.5 million and the current rate is between 27.5 and 28.5 million. The drop in uninsured from 2013-2016 is attributable in large part to the ACA, and in small part to lower unemployment (newly employed covered by employer plan).
What changed between the low point of 26.5 million uninsured in 2016 and the current estimates of 1-2 million higher? The Trump administration’s repeal of the Individual Mandate, that’s what. The individual mandate is what required everyone to obtain health insurance or face a penalty.
The CMS blog points to a few circumstances where people chose not to obtain insurance due to an extreme imbalance in cost relative to income. But is that number higher than those who opted out because they were no longer mandated to obtain insurance?
The positive impact of the ACA on the uninsured rate is irrefutable.
The Case for the ACA - Isn't the Trade-off Worth It?
Premiums and overall costs are inline with historical trends. Additionally, roughly 50 million people were health insurance declinable due to pre-existing conditions prior to the ACA. Combine the number of declinable with the drop in the uninsured over the same period and roughly 67 million people, or 20% of our population has benefited directly and significantly from the ACA.
Are the costs higher for some? Sure, healthcare costs don't exist in a vacuum, when subsidies are introduced to improve life for up to 67 million people, there has to be a pinch felt somewhere up the line. But isn't the trade-off worth it?
The Case Against the ACA (and the private and employer based legacy system)
In the podcast interview, Mr. Odell shares provider perspective on the adverse impact of Medical Loss Ratios (MLR's) that direct how much of premiums must be spent on actual healthcare and quality improvements for patients yet cap reimbursements for doctors (providers). Dave shares his concern that these MLR’s are driving current doctors to prioritize both their schedule and practice in a way that doesn’t best serve the patient, plus the lower reimbursement rates de-incentive the next generation of medical school candidates from pursuing a career as a doctor.
Dave walks through a typical healthcare transaction, from patient visit to provider reimbursement, including every person, code, entity, and agency in between. It’s a revealing look at the systemic issue of layer upon layer of administrative costs - layers that existed prior to the ACA - driving health care premiums to increase 2-3x’s faster than wages or inflation over the past 20 years. It’s no wonder why 45% of people opting to forgo insurance cite cost as the #1 reason. It's a perception issue for most because they're wages aren't rising as fast as healthcare costs.
Our healthcare system is troubled with or without the ACA.
There is a transparent, uncomplicated system in place that isn’t burdened with administration costs or medical loss ratios - Medicare. It's up to voters to determine who presents the best policy course of action: Medicare for all, legacy system burdened with costs, or a combination of Medicare and private insurance (and what combination?). I hope the insight from this blog post and my podcast interview with Dave Odell help you, but it won't matter unless you VOTE!