Ever since passage of the Affordable Care Act in March 2010, Republicans in Congress, governors, and legislators – with the help of Super PACs funded by wealthy interests – have demonized the law with a relentless, expensive attack campaign. Now, their goal of repealing Obamacare is in sight.
I recently retired after 15 years at Blue Shield of California, a not-for-profit health plan that was among the strongest supporters of the Affordable Care Act. Starting in 2009, I walked the halls in Washington and Sacramento to help create legislation and regulations that would enable every American to obtain affordable health coverage. It was a worthy effort, one that can work and is worth preserving. It is imperiled for reasons that have little to do with health and much to do with partisanship.
More than 20 million Americans have obtained health coverage through the Affordable Care Act. Despite massive effort to discredit it, polls show that a significant majority of Americans don’t want to repeal most of Obamacare’s provisions. Voters support guaranteed coverage for people who are sick, free preventive care, subsidies for people who can’t afford coverage, the Medicaid expansion, cost-sharing reductions for drug coverage, increased taxes on upper-income people, and allowing kids to stay on their family’s plan until age 26.
What Americans do not want is a partisan dismantling of Obamacare. Their primary complaint is that health care costs too much. And for good reason.
In 1999, health insurance premiums averaged 11 percent of Americans’ family income. By 2015, that had doubled to more than 23 percent. Deductibles and co-payments have skyrocketed. Rising health care spending has held down wages, reduced corporate and public investments in projects that could grow the economy, and forced too many Americans to choose between paying their bills or taking their pills.
Since 2000, U.S. spending on hospitals has risen from less than $400 billion to $1 trillion. Spending on physicians has doubled to $500 billion. The cost of prescription drugs has tripled to $300 billion and will cost $400 billion by 2020.
So what do the Republican repeal-and-replace proposals do to restrain rising health care costs? Almost nothing.
They plan to reduce government health care spending by scaling back subsidies to individuals and cutting Medicaid payments to states. But they don’t address the prices of health care services.
The Affordable Care Act seeks to address health care costs in a variety of ways. First, by expanding coverage and offering free preventive services, people can stay healthier and use less medical care.
In addition, the fundamental structure of the legislation – establishing exchanges in which insurers compete for customers – relies on market forces to motivate insurers to reduce costs and offer lower prices. The law includes provisions to limit unnecessary spending by providing incentives for coordinated care; research to compare the effectiveness of treatments; and limits on insurance company profits and administrative costs.
These programs have had only modest impact on health care spending so far. But reform takes time. And the act provides a framework for long-term progress.
The Republicans’ primary strategy is to shift more expense to individuals through high-deductible plans and Health Savings Accounts. They hope people will seek services less often if they have to pay more for it. That’s a prescription for illness.
People with limited income will forgo getting care if they can’t afford the deductibles or don’t earn enough to receive tax benefits from health savings accounts. By reducing government subsidies and Medicaid payments, more people will become uninsured, and uncompensated hospital care will rise, which will shift costs to people with insurance.
President-elect Donald Trump’s nominee for health and human services secretary, Rep. Tom Price. is a Republican physician from Georgia who wants to return to the bad old days of a fee-for-service world. He has even supported allowing doctors to charge Medicare patients the difference between what the physician bills and what Medicare pays.
So what can be done to reduce rising health care costs? Here are a few ideas, based on my years of working in the health care industry.
First, we need to pay for the value of care, not the amount of it we receive. That requires more transparency and research into the effectiveness of treatments. Second, we must provide financial incentives to hospitals, doctors and insurers to keep people healthy, rather than pile on unnecessary tests and prescribe high-cost drugs. This is especially important for patients with chronic conditions, who drive a significant percentage of health care spending.
Hospitals consume by far the largest share of health care costs. Regulators must scrutinize health system consolidation. When hospitals buy other hospitals and medical practices, they gain enormous leverage in price negotiations with insurers.
In Northern California, where a few health systems control most of the market and competition is limited, prices are 30-40 percent higher than in Southern California.
Third, we must control the dangerous increase in drug prices. Drug companies are exploiting lax laws and regulations that enable exorbitant prices. The federal government grants monopolies to manufacturers of brand drugs even if their products don’t provide better value than existing therapies, while generic drug companies have increased prices by triple digits when they recognize they have no competition.
Many firms pay more to promote their drugs than they spend on research and innovation, and earn profit margins higher than 20 percent. Adding to the insult on our collective wallets, several large drug companies have moved their headquarters to other countries to greatly reduce their domestic taxes.
The pharmaceutical industry spends more than any other health care sector to influence Congress and regulatory agencies, and they have gotten their money’s worth. Because of pharma’s efforts, the U.S. is the only advanced country that does not negotiate drug prices for government programs. Medicare and Medicaid are prohibited from creating formularies to limit the use of expensive drugs that have little value.
Those of us who helped to implement Obamacare recognize that the law needs some changes. But those changes should not come at the expense of the 20 million people who obtain coverage from the Affordable Care Act.
As Congress considers dramatic changes to the way people receive their health care and how much they pay for it, Americans should give close attention to the details, and insist that Trump and Republicans who control Congress put the interests of their constituents ahead of a partisan political agenda.
Tom Epstein worked on health care policy for the California Department of Insurance, the Clinton White House, and, lastly, Blue Shield of California, since 1991. He can be reached at firstname.lastname@example.org