Skin In The Game: Why Republicans' AHCA Bill Should Fail

03/16/2017 08:45 pm ET Updated Mar 23, 2017

Once powerful City of Chicago Mayor, Richard J. Daley, once supposedly famously said: “If it ain’t broke, don’t fix it”.

There has been much written and read daily in the pages of Huffington Post and other media outlets over the Republicans’ American Health Care Act (ACHA). Arrows slung every which way are too many count. There is slop everywhere on everyone (e.g., “4 Ways The Republican Health Care Plan Uniquely Screws Older People”), so let’s take that distasteful froth atop all conversations and debates, cast it aside, and focus on amending the Patient Protection and Affordable Care Act, aka the Affordable Care Act (ACA), aka “Obamacare”. To do this is to identify a necessary “four-legged stool” involved in our health care system: (1) health care insurers; (2) health care providers; (3) patients; and (4) the government.

I. [CEMENTING] A PHILOSOPHY ABOUT HEALTH CARE

Much has been written about this thing we call our health care, e.g. “Health Care As A right: Republicans Won’t Succeed In Dismantling Obamacare”. Over the decades it has been referred to as a privilege, a right, a government responsibility, and the province of the private marketplace. The latest is Paul Ryan telling Chuck Todd earlier today on MSNBC in response to Todd’s question of whether health care is a right or privilege, Ryan answered that it is not a right of all Americans if the government has to intercede. All other industrialized countries don’t see it that way. Health care in the U.S., nee the avenue by which to receive it, is based in our country on the insurance model: we go to a health care provider or health care institution like a hospital or clinic because we have insurance, and, except for co-pays or deductibles, those providers get paid an amount from our health care insurance company. Those that don’t have insurance can still be treated at any hospital per the 1986 law, EMTALA (Emergency Medical Treatment and Labor Act). That is a much more expensive option for everyone that has to foot the bill for those patients, not to mention the hospitals themselves.

The philosophical bent should be that health care is a right, in the sense that it is a moral imperative in which the government should, and must, be engaged for all of its citizens.

II. ACCESS (CHOICE), AFFORDABILITY and COVERAGE

We have heard much from President Trump about how he intends to ensure all Americans have health insurance for what they want and at lower (premium) prices than under the ACA. HHS Secretary Dr. Tom Price as well consistently mouths this as if it was his personal mantra, and asserts that the AHCA will do precisely this. As we now know, the CBO disputes these premises in a very significant and credible way. Let’s dissect, then, what it means to have access to health care coverage.

Once more, health care insurance is the financial vehicle by which we obtain health care services, either directly because our employer or we pay for it; our employer pays it with us contributing; or it is supplied through various government programs like Medicare, VA, Medicaid, and the CHIP program. Insurance cost money, and for those in our society less fortunate, poor, the disabled, or children such coverage is beyond reach...absent government intervention.

Dr. Price states that the AHCA will provide coverage for all. Data beyond measure contradicts this assertion, since millions of Americans that never before had coverage before the ACA will now lose it, particularly those on Medicaid. Dr. Price and other Republicans say that the government should shift the expense of Medicaid back onto the states, including those that are taking expanded Medicaid coverage via the ACA. Many of those states, however, are in dire need financially aside and apart from having to pony up more money for Medicaid, so this is not an appealing alternative for any governor whose state coffers benefit from the ACA. At present, the government supplies 90 percent of the Medicaid expansion, but the ACHA would reduce that to 50 percent.

Choice (access). Dr. Price says the ACHA will provide choice for all Americans. This is another way of saying that we are all going to be given access to obtaining insurance coverage for what best suits us. The money his plan would provide is $2,000 for younger insureds, and $4,000 for seniors. Again, however, if we don’t have the money to pay for the privilege of coverage (even with this government help), we don’t have, in reality, any choice. We cannot thus access health care insurance coverage. Another way to explain this is by looking at expensive cars in a showroom. Sure we all have the choice to purchase such vehicles. But if we cannot afford them, then choice means nothing. And that is what Price and his colleagues seem to forget to tell us.

Price further says that premiums will go down under the AHCA. The CBO tells us just the opposite in explicit language. Equally true is that the cost of health care services continually increases; those increases mean insurance premiums will increase as we have seen (though slowed by the ACA).

Dr. Price, with House leader Ryan, declares that the ACA is responsible for insurers that were writing health care insurance as part of the ACA exchanges leaving many counties throughout the country, or maybe one or two are still writing policies in a particular county. It is not the fault of ACA. The true reason is that insurers aren’t making enough money with the benefits they have to provide under the ACA (and which we continually want to have, including for those of us not in the exchanges) plus their administrative costs and overhead. So, why not consider apportioning the high risk patients, notably the senior population because they require more health care services than other population groups, among insurers that wish to write health care insurance for residents in a particular county or region while keeping the individual mandate in tact? Some formula could be worked out so that insurers would be at risk for a given patient population in any county in which they do, and want to do, business. They need to have “skin in the game” if they want to continue writing insurance in ACA programs. This would also have a curing effect to criticism surrounding why the individual mandate is not working since insurers needed that funding mechanism to pay for, for example, pre-existing conditions or children staying on parents’ policies until age 26 or having no annual caps on benefits.

IIA. SELLING INSURANCE ACROSS STATE LINES

Dr. Price says that the ACHA will allow this. He doesn’t say that the ACA already provides for this in Sec. 1333. If one or more states wish to enter into a health care choice “compact”, and an insurer wants to then sell across state lines, then such insurers can do this. A handful of states allow for this (Ga., Ky., Maine, R.I., and Wyo.) However, insurers do not like doing this for it would force them to expand their lists of in-network providers, and, besides, a premium is based on the residence of the insured, not where the insurer is located. In addition, states regulate insurers operating in their states, so enforcement issues arise when an insurer sells policies to out-of- state policyholders.

III. HEALTH CARE PROVIDERS

Health care services and attendant costs are much too high, as are pharmaceutical prices. The average spent per American is roughly $9,000+; in other countries it is nearly half, with better outcomes and with life expectancies higher elsewhere than here. The government must be allowed to negotiate with big pharma to lower drug costs. Just look at what the same drugs cost outside our borders. Equally, true, the cost in the United States to receive health care services needs to be lowered, and not enough is being done in this regard. Health care providers must be willing to lower the costs. If costs are lowered, there will be less insurance dollars to expend for them, thus a reduction in insurance premiums should follow. Just look, again, to countries outside our borders for proof of what health care should cost. We can do this with the ACA.

The skin in the game for providers is keeping the cost for their services in check, certainly more so than today.

IV. PATIENTS

We need to do more to be well, and be incentivized to take steps to be well. Incidentally, the ACA already provides for this too. The better we are, the less likely we are to call upon our insurance to pay for medical services.

All Americans must have their “skin in the game” too. This is why the individual mandate must remain in place. However, tailoring it to specific populations of insureds should be formulated. For example, males don’t need to have Ob./Gyn. coverage as part of any standard policy offered through Obamacare. And women don’t have to be insured for prostate disease (guys, they don’t have a prostate).

V. EXPANSION OF MEDICARE―-USING A STEPPING STONE APPROACH TO UNIVERSAL CARE

It has been borne out that the administrative costs of Medicare are only a third the costs for private insurers (about 6 percent vs. 18 percent). “Insurance Companies Just Accidentally Made the Case For Medicare For All”. Because this is one way to reduce the costs to be insured, why not lower the age for Medicare coverage in five-year increments, starting at age 55 rather than at the current age of 65?

To be sure, the ideas expressed above are probably only scratching the surface, but they are but in microcosm to the premise that the ACA is not broken; the CBO scoring included a sentence that it is not, so there is no need to “fix” it by repealing and then replacing it with the AHCA―-something much, much worse for all Americans than what we have. You don’t “throw out the baby with the bathwater”. All the ACA needs are amendments so long as there remains skin in the game for our health care system’s “four-legged stool”.

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