Now that the Supreme Court has once again saved Obamacare, can we have an honest talk about it?
Let me explain. On one side—you don’t need me to spell out which—the Affordable Care Act was demonized. It was going to bankrupt the health care system; destroy the United States’ reputation for excellent service; steal you away from your doctor; and, by some means never quite explained, lead us straight to communism. Today, subsidized health care premiums and an end to pre-existing condition exclusions; tomorrow, Stalin and FEMA detention camps located in semisecret parts of Texas. You know how it goes.
Under this assault, all too many ACA defenders turned into fanboys and fangirls, dismissing any issue raised against the law as inconsequential and exaggerated. And besides, it’s not like legislation to improve any aspect of it would get through our paralyzed, polarized, and now Republican-run Congress anyway.
But this strategy might well come back to bite the Democrats. The bill for the health care expansion is coming due, just as the recipients will be heading to the ballot box to vote in the first primaries for the 2016 election. More than a few are likely to be annoyed.
Last week Oregon’s insurance commissioner, Laura Cali, announced that the state had approved a 25 percent premium increase for the largest health insurer on the state’s exchanges. The second largest insurer did even better: It received permission to boost its monthly charge to consumers by 33 percent.
Oregon might be the first health insurance exchange equivalent of a penguin getting shoved off an ice floe, but it won’t be alone in the freezing-cold waters for long. For example, BlueCross BlueShield of Tennessee requested an average 36 percent price increase for the plans it offers—after receiving a 19 percent bump last year. And that sounds like a relative bargain compared with Minnesota and New Mexico, where the BlueCross BlueShield family is looking for increases of more than 50 percent. Even if the final numbers are lower than the asks, it seems quite likely these states will approve substantive premium increases.
The problem is simple. As Trudy Lieberman reported this month in Harper’s, the ACA made a decent stab at solving the problem of Americans lacking insurance. Unfortunately, the bargain struck to get the bill to a point where lobbyists for the hospital, insurance, and pharmaceutical industries to sign on, or at least not fight it, did not adequately address the issue of overall medical costs.
And that’s where the consumer comes in. Someone is “it,” the party paying the bill. And that “it” is increasingly you, whether you receive insurance on the exchanges or from an employer.
According to the Health Research Institute at PricewaterhouseCoopers, the health care spending growth rate was 6.5 percent in 2014. It’s expected to climb slightly to 6.8 percent this year, before dropping back to 6.5 percent in 2016. That’s certainly an improvement from the pre-ACA years, when increases often topped 10 percent, but our overall inflation rate is lower too. At the moment, it’s all but nonexistent, with the consumer price index registering annual gains in the low single digits.
Moreover, that doesn’t mean your overall rate of medical inflation is 6.5 percent or in the single digits at all. It might well be much higher than that. “Much of the slowing growth can be attributed to cost shifting,” the writeup accompanying the report helpfully announces.
And how does that play out? Higher premiums are one way. Another is high-deductible plans that leave consumers responsible for, say, $6,750 in out-of-pocket costs for individuals or $12,900 for a family before payments kick in.
If you’re wondering, the number of employers only offering high-deductible plans surged this year, from 18 percent in 2014 to 25 percent this year. Altogether use of these plans has grown by almost 300 percent since 2009.
Another way to lower medical care spending is to simply stop it, something that high-deductible, tiny-network plans are great at. In phraseology that could come straight from the pen of George Orwell, PricewaterhouseCoopers noted that “cost-shifting pushes consumers to be more conscientious about their health care choices” before going on to explain that 24 percent of those surveyed either did not take or took less than the recommended amount of medication and another 16 percent delayed or skipped a recommended treatment. These are people like Jennifer Ross, who USA Today reports can’t take a medication that will possibly get her out of her wheelchair. Why? Her family lacks the money to pay the $600 monthly copay for the treatment.
True, more than 80 percent of those purchasing insurance on the exchanges are eligible for subsidies for their premiums. But that’s not a solution, in either the short-term or the long-term. First, there are still deductibles, and although subsidies covering parts of the deductible and other approved costs are available to those meeting certain income limits who sign up for particular plans on the exchanges, it’s a complicated, difficult-to-understand process.* Second, subsidies don’t mean freebie. The taxpayer pays the money to the insurance industry, leaving less funding for other priorities. Third, of course, it leaves the people who are not eligible for subsidies feeling like chumps, stuck paying the bill for a health insurance expansion that, no matter how necessary, many of them don’t see as offering them enough in return for their own personal increased costs. It’s highly unlikely they will give the reforms a pass simply because premiums were also increasing before the ACA became law. Obamacare, after all, was supposed to put a stop to this sort of thing.
It’s possible that deals that consolidate insurers, like Aetna’s $37 billion planned purchase of rival insurer Humana, will bring down prices by giving them increased leverage over the hospitals. But it’s also possible they won’t, or won’t bring them down in any way that helps consumers all that much. Insurers facing less competition for their offerings—a combined Aetna and Humana, for example, will control just under 90 percent of the entire insurance market in Kansas—could ask state regulatory authorities for ever greater price increases. Hospitals faced with more powerful insurance companies could attempt to dump even more costs onto consumers through the practice known as balance billing, which means making them pay for the charges their insurance won’t cover. Nor do these mergers do anything about the surging price for pharmaceuticals, which is also a driving force in our medical budgets, both personal and corporate. In sum, it’s a problem so pressing that even Ezekiel Emanuel, one of the major players behind Obama’s health care reforms, took to the Wall Street Journal this week to declare, “If Mr. Obama doesn’t act soon to control costs, escalating costs may ultimately threaten the sustainability of his coverage expansion.”
In the meantime, you shouldn’t need a political consultant to tell you why consumers paying hundreds of dollars—or even more than $1,000 a month—for health insurance they are required to buy and often can’t afford to use might well get angry. Once you name something the Affordable Care Act, people oddly expect the product on offer to be affordable. Who’d have thunk it?
Correction, July 9, 2015: The article originally stated that subsidies are not available for health plan deductibles. Subsidies are available to some customers on some plans on the health care exchanges. (Return.)