As a nation we spend about twice as much per person as other high-income countries, and yet we have 50 million people uninsured and have worse health outcomes. This is not a result of Medicare or the nearly half of health care spending that is funded by government, but rather the private insurance companies that dominate the system, as well as pharmaceutical companies.
The 2010 Affordable Care Act did not provide the needed reforms that would bring us to parity with the rest of the high-income world. However, it will bring significant and noticeable improvements in the health care coverage of many Americans.
Some of this will be done by reducing or eliminating some of the worst abuses committed by private insurance companies. For example, by 2014 most insurance companies will not be allowed to discriminate against people who have a pre-existing health problem. This is now in effect for children up to age 19.
Most insurance companies are also prohibited from placing limits on the amount that they pay for a patient’s illness over a lifetime; and the law raises and then eliminates such limits on annual spending. The law also makes it more difficult for insurance companies to cancel a customer’s insurance after they get sick.
There are other benefits that expand coverage for those who have insurance. Parents will be allowed to keep their children on their insurance policies up to age 26. There is some reduction of prescription drug costs for Medicare patients. And in 2014, most insurance companies will also be required to cover treatment for mental health and substance abuse.
There are some loopholes and of course implementation can still be changed by future legislation. But most of these improvements can be expected to happen if the law survives.
The law will also expand health insurance coverage to an estimated 60 percent of the uninsured. This relies on a mandate for employers as well as uninsured individuals to purchase health insurance, with subsidies for low-income people. The mandate for individuals has become controversial and is also subject to legal challenges now pending at the U.S. Supreme Court.
Ironically, the reform is being attacked as having gone too far in expanding the government’s role in the health insurance system. But the real problem is that it did not go far enough.
A simple expansion of Medicare to cover the non-elderly population would have achieved much more that the ACA in terms of eliminating abuses, covered all of the uninsured and avoided the controversy over forcing people to pay money to private insurance companies.
It would be affordable because it would eliminate the biggest source of waste – which comes from private insurers. The second biggest source of waste – the monopoly pricing pharmaceuticals – could also be drastically reduced to save hundreds of billions of dollars each year.
When Medicare and Medicaid were enacted it was widely believed that covering the elderly and the poor were just the first steps to providing the same single-payer insurance to everyone.
That it has not happened yet is a result of the corruption of our political system by powerful corporations – especially pharmaceutical and insurance companies – and a lack of political leadership.
The major media have also played a supporting role in this process of keeping what Americans want and need off the political agenda.
But Medicare for everyone is the future, and hopefully the ACA will end up being a step in that direction.
Mark Weisbrot, co-director of the Center for Economic and Policy Research, can be reached at CEPR, 1611 Connecticut Ave. N.W., Suite 400, Washington, D.C. 20009.
CON: Health law is already sending costs through the roof
BY GRACE-MARIE TURNER
Alexandria, Va. – There may never have been a law more misnamed than the Affordable Care Act.
President Barack Obama’s health overhaul law already is driving up health insurance costs for businesses and consumers and will inflict even higher costs on American taxpayers in the years ahead.
Obama repeatedly promised the American people he would cut a typical family’s premium $2,500 a year before the end of his first term. But costs are rising now even faster than before the law was enacted in March 2010.
A Kaiser Family Foundation survey found that premiums for a family policy topped $15,000 a year in 2011, increasing an average of $1,300 in the past year – three times faster than the year before.
The many more mandates to come from Washington will raise premiums even further. Health insurance is consuming a bigger share of employer budgets, pre-empting pay raises and pushing higher costs onto employees, the Kaiser survey found.
The $500 billion in new taxes in the law will further fuel premiums increases. A number of factors contribute to rising health costs, but the mandates, taxes and regulations in the health law are accelerating the trend.
The increases in premiums reflect the law’s early provisions, such as “free” preventive care and adding “children” up to age 26 to their parents’ policies. Consumers may like these features, but they come at a cost, and because they now are in federal law, people can’t opt out.
Analysts at the Congressional Budget Office estimate that the average policy for those who get health insurance through the workplace will cost $20,000 a year for a family of four by the year 2016. Millions of Americans who buy insurance on their own will pay at least $2,100 a year more for their policies than if the law had not passed, CBO says. And obtaining health insurance will not be optional since everyone will be required to have coverage or pay a fine.
Former CBO Director Douglas Holtz-Eakin estimates that as many as 35 million more people will flood to the subsidized exchanges for health insurance than Congress expected, adding $1 trillion to the $2.6 trillion cost to taxpayers.
One of the tools companies have found valuable in helping them offer affordable coverage – Health Savings Accounts – are at risk of being strangled by obscure and complex regulations issued by the Department of Health and Human Services.
The lower-cost HSAs would not be able to comply with strict new rules dictating how premium dollars must be allocated. The chief Medicare actuary has said health spending will actually increase thanks to the Affordable Care Act by at least $311 billion over the decade.
But supporters of the law are pointing to figures released in December showing that per capita spending in Medicare increased only 2 percent in 2011, half the normal rise. The actuaries, however, attribute the slowing primarily to lower utilization of medical services by seniors, not to provisions in the new law.
With 10,000 baby boomers aging into Medicare every day, spending will soon bankrupt Medicare and the federal government unless the program is modernized.
One of the reasons the business community supported passage of the law was because of promises it would finally get health costs under control. The experience in Massachusetts, which passed legislation in 2006 similar to the national law, shows that costs are continuing to soar, with Massachusetts still facing the highest health costs in the nation.
The rest of the country faces the same threat under the new law. We needed health reform, but the Affordable Care Act tried to do too much too fast and it is backfiring in its goals. It’s time to head back to the negotiating table and get this right to save consumers, businesses and taxpayers from the law’s calamitous costs.
Grace-Marie Turner, president and founder of the Galen Institute, which is funded in part by the pharmaceutical and medical industries, can be reached at GraceMarie@galen.org.
