Doctors, nurses and hospital executives have taken a stand to protect patients against the House Republicans’ American Health Care Act, the bill to eviscerate Obamacare.
The potent voice of most health insurers so far is silent. Worse, some seem supportive.
If major insurers support the Republican proposal, they would be making a tragic mistake, reinforcing their status as one of the country’s most reviled industries.
The Republican plan would reduce insurers’ taxes and preserve next year’s profits. But the bill would jeopardize their long-term health, as well as the health of the members they serve.
I’m a former health insurance executive, and understand the industry’s concerns about the Affordable Care Act, President Barack Obama’s signature domestic achievement. Many companies lost money in the individual market and the ongoing political uncertainty makes prospects for fixing the problems highly unlikely.
Some insurers are all too eager to please the Republicans who they believe control their fate. Anthem has sent a supportive letter, and Aetna Chief Executive Officer Mark Bertolini described the current market as being in a “death spiral.”
But rather than surrender to political pressure, insurers should take the long view, and not plunge into what would be a very risky future.
Surely, the industry recalls the instability of Insurance markets before the Affordable Care Act. Health care costs were rising dramatically and nearly 50 million Americans were uninsured. Health plans were castigated for denying coverage to sick people and charging them higher rates.
Since Obamacare’s enactment, those complaints have subsided. Insurance company profits and stock prices have soared, tens of millions of people obtained coverage, and healthcare spending has moderated.
The results would be even better if not for relentless campaigning by conservative political groups, in concert with Republican elected officials, to file lawsuits, curtail funding for high-cost patients, and spread misinformation about Obamacare.
The Affordable Care Act fared worst in states where Republicans actively resisted the law by refusing to expand Medicaid and discouraging people from signing up.
As a result, the most motivated and least healthy residents were more likely to buy coverage, resulting in low enrollment in those states, high prices and unstable markets. The supposed Obamacare “disaster” was a self-fulfilling prophesy of sabotage.
So why would the industry choose to embrace Republican proposals that will eliminate hundreds of billions of dollars in spending on health insurance and guarantee declining membership and higher premiums?
The Republican plan does nothing to address the medical care costs that drive insurance prices higher, and includes dangerous provisions. In addition to restricting Medicaid eligibility and reducing spending, the plan limits tax credits to $2,000 for younger, lower-income purchasers. That is not nearly enough to offset the price of policies that can cost $5,000 a year, plus out-of-pocket expenses.
Worse, as written, the GOP plan would guarantee coverage without insisting on an individual mandate. As a result, healthy individuals would wait until they get sick to buy insurance. Though coverage would cost 30 percent more for people who allow their policies to lapse, their medical expenses would offset that penalty. Once they receive care and their medical crisis subsides, they would be free to drop coverage again.
The nonpartisan Congressional Budget Office last week estimated 24 million Americans would lose coverage. Many others would pay more for premiums, co-payments and deductibles.
Hospitals would be forced to provide free care to the newly uninsured. As they did before Obamacare took effect, hospitals will shift those added expenses to privately insured patients, raising their premiums.
Republicans claim that these costs will be offset by eliminating Obamacare regulations and allowing states to “modernize” Medicaid. Insurers often have advocated for more flexibility. But changes in the GOP plan won’t help their bottom line.
Many potential customers will recognize that policies with higher cost-sharing won’t be worth buying. Moreover, frustration over deductibles and copayments will anger customers and the industry’s reputation will further decline.
Health insurance companies are playing political odds that the Republican political leadership will get what they want. But that’s a bad bet. Polls show rising support for the Affordable Care Act. As details of the Republican bill’s impact become known, public opinion will favor the status quo over the insecurity of change.
The politics will be even more challenging when voters understand that the principal beneficiaries of the Republican plan are wealthy individuals who no longer will pay higher taxes to offset the cost of expanded health coverage for lower income Americans.
Avik Roy, a prominent conservative health policy expert, recently described the proposal to reduce taxes on the wealthy and expand subsidies to higher income people while cutting health coverage from the working poor as “a left-wing caricature of mustache-twirling, top-hatted Republican fat cats.”
Insurers have the clout to make a difference in the outcome of this critical public policy debate. Enlightened leaders in the industry must speak out for the Affordable Care Act. That would be in the best interest of their customers, and ultimately in their own self-interest, as well.
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. His most recent op-ed for The Bee, GOP should focus on cost of health care, appeared on Jan. 1. He can be reached at firstname.lastname@example.org