OP-ED

The Presidential Healthcare Curse – Why Do They Even Try?

Until now, virtually every president who has dabbled with comprehensive health reform has failed spectacularly, often at huge political cost. Think of Harry Truman’s lonely campaign for national health insurance, Jimmy Carter’s devastating conflict with the late Senator Edward Kennedy over universal health care coverage, the first George Bush’s ineffectual (and little-remembered) health insurance proposal, or Bill Clinton’s damaging first-term effort to pass health reform.

Health reform is a presidential nightmare. No sane presidential consigliere would ever recommend his or her boss try it. Our health care system is so complicated and convoluted that any conceivable proposal is bound to make someone worse off. And in health care, worse off can mean real pain and suffering that creates powerful, emotional stories that echo through the news cycle. There is simply no way for presidential health care reformers to avoid grievous political harm, as the experience of President Barack Obama is now demonstrating in spades.

Which raises the question: why bother? It would have been so easy for President Obama, in the midst of the Great Recession of 2008, to kick the health care can down the road, saying that his all-consuming priority was economic revival, and that health reform could wait.

The answer provides critical context for the relentless stream of troubling news—and the cacophony of charges and counter-charges—about the implementation of the Affordable Care Act (ACA) that fill the media each day. The reason to proceed with this painful technical and political process is that there is no alternative. Before the ACA, the current health care system—and especially its private insurance market—was collapsing before our eyes, like a house tipping into a sinkhole.

Recently the Commonwealth Fund released its 13th cross-national survey documenting health care experience in the developed world. Based on responses from more than 20,000 individuals in 11 countries, the survey shows unequivocally that the United States has the worst health insurance among industrialized nations. Whether you’re talking administrative hassles, out-of-pocket expenses, costs of administration, complexity of policies, or adequacy of coverage, the U.S. consumer gets a bad deal.

The system is not only bad, but getting worse. Every year, more people lose insurance as they or their (usually small) employers get priced out of the health insurance market by rising premiums. The Commonwealth Fund biennial health insurance survey shows that 55 million Americans are now uninsured and, equally telling, another 30 million are underinsured, meaning that they spend more than 10 percent of their income on medical expenses despite having health care coverage (5 percent if their income is under 200 percent of poverty). The U.S. has more uninsured and underinsured citizens than the entire population of Germany, where, by the way, private insurance organizations compete, no one is uninsured or underinsured, and the economy is thriving.

The individual and small-group insurance markets in the United States—now ground zero in the ACA rollout war—are particularly dysfunctional, and were imploding prior to the enactment of the law.  In these markets adults report paying high premiums and facing high deductibles and copayments for plans that are often insurance in name only: they lack prescription drug and dental coverage, exclude services covered for subscribers in larger groups, and limit annual payouts. Not surprisingly, consumers in the individual market spend a larger share of their income on out-of-pocket costs and experience medical debt and bill problems at higher rates than those with employer-based insurance.

And people with these problematic policies are in some ways the lucky ones. Prior to reform, insurers had the unfettered ability to set premiums based on an individual’s age and health history, creating financial barriers that were difficult or impossible to overcome for many older adults or those with chronic health problems. A 2011 Fund survey found nearly half of those who tried to purchase individual coverage never ended up buying a policy, with 80 percent of those who tried to buy it saying the premium was too high, the deductibles and copayments were too high, or the plan did not cover a preexisting condition.

Individual and small-group insurance policies are products with no future unless those markets are reformed to make coverage affordable, and to protect consumers against insurance that, while seemingly cheap, provides no meaningful protection against the cost of illness. Private insurers recognize this fact, which is why they have been such steadfast (though quiet) supporters of the ACA and the marketplaces it is trying to create.

Reforming the individual and small-group markets is precisely the purpose of the ACA marketplaces and their regulations, which set a floor under the quality of individual and small-group policies. It is these minimum standards and expanded consumer protections that many pre-reform individual and small-group market policies did not meet. The new regulations have prompted insurers to notify many subscribers that such plans would not be available beginning next year. Policies meeting new minimum requirements will cost some currently insured individuals more, especially the young and healthy, who were more likely to purchase the skimpy policies that have been so prevalent. While some of these consumers will be unhappy with premium increases, they will be grateful later if they get sick. They will also be guaranteed that, as they age and come to really need insurance, a private insurance industry will exist from which they can purchase meaningful protection against the cost of illness.

Until 2013, we’ve never had the chance to see what would happen when a president who wanted health reform got what he wished for. The sight isn’t pretty, but that was inevitable. This is hard, costly, painful but essential work. It could have been managed better. But there is no turning back.

David Blumenthal, M.D., M.P.P., is president of The Commonwealth Fund, where this post originally appeared.

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30 replies »

  1. I agree that the plans need reform, and that Obama Care at the root of the cause is offering everyone a chance for healthcare… BUT… if you can’t afford the premiums of the monthly payments in the first place then US, WE, ME will be worse off? The stress of the monthly payments will lead me to sickness …

  2. The main reason that reform, especially healthcare reform, has failed over the years is because people are refusing the change, Obamacare is offering a safety net!
    ‘We’ve never had the chance to see what would happen when a president who wanted health reform got what he wished for. The sight isn’t pretty, but that was inevitable. This is hard, costly, painful but essential work. It could have been managed better. But there is no turning back.’

    Exactly! It was inevitable, the current system was too complicated and still is too complicated, however Obamacare will fill in the cracks where some cheap and scantily clad insurance companies leave flaws. If you were to get sick, whose to say that there isn’t a flaw in your current insurance plans that won’t leave you facing a hefty medical bill?

  3. Tom:

    In 2010, 21% of the population was on Medicaid so I do not think it’s accurate to say the poor had no insurance, but as for the sick you are right.

    This said there were certainly people across the income strata that did not have insurance though.

    ACA certainly better in some regards, but I think will be far worse in others. Time will tell.

  4. “It is true that some persons in this market will see huge increases — maybe 500,000 of them who are forced to the exchanges but make too much for subsidies………..”

    Bob, will the next election numbers be won by those who want it as it was or by those who want it the way it is?

  5. Yes, we can always save money by not insuring the poor and very sick. That was the old system.

  6. I’m on the individual market, too, and I’m glad to have the ACA. My premiums are not going up next year and those small details about lifetime caps and guaranteed issue, they aren’t so small. Having to buy a different policy (and having the option, in contrast to those who lost coverage before the ACA) seems rather petty to me.

    Rates are set by insurance company actuaries. If they’re going up now, it’s because they know they can’t drop people when they get sick.

  7. See, it’s like this: when the responsibility for righting historic injustices weighs heavily upon your shoulders, there are occasions when you must conceal the facts to prevent antisocial elements from frustrating your mission.

  8. “It will result in millions paying higher premiums so that they are more or less fully covered when they become ill.”
    ___

    AHIPcare at its finest. Out of your pockets and into Karen bin al Ignagni’s. She (at a polite remove) wrote the law. What else could one expect?

  9. Your retorts are at times bordering on redefining lame and absurd. Yeah, googling me will bring up “no results for this request”.

    But, keep grasping for efforts to deride and dismiss dissent. The partisan play book by the likes of Alinsky and Goebbels must be maintained without any variance. After all, all those problems and inconsistencies after getting this legislation set in a 3 & 1/2 year time frame, they are not to be noted, right? Bet all you Democrat stalwarts are a bit nervous when the next glitch happens at Hellcare.gov in the next week.

    Who or what to blame next, hmm?

  10. Note to BC — we may find that letting people be uninsured or underinsured was actually better for the economy.

    Before the ACA, millions of Americans could either have no insurance or a very limited policy.

    Maybe 2-4% of those persons became ill and needed hospital care. Often their bills were fully forgiven or partly forgiven, and the lost revenue was silently recouped by overcharging employer plans. Only this was done silently so there were no protests, and employers on the whole just paid up.

    Now the ACA is going to remove this problem. It will result in millions paying higher premiums so that they are more or less fully covered when they become ill.

    The net result is less disposable income.

    Businesses outside health care will hire less. Health care agencies will hire at about the same rate, at best.

    Overall the economy declines as you say,

    We may find that the cure for uninsurance is worse than the disease.

  11. If you were so simple as to believe what you read here, you might well have supposed that the medical needs of the indigent and uninsurable would be funded by forcing insurers to disgorge their vast, ill-gotten wealth. I don’t recall seeing a single comment here expressing a willingness to make some personal sacrifice for the benefit of the “deserving other.” The nobility of mind of those clamoring for “equality of access” didn’t extend to their own pocketbooks.

  12. Nice pick up there, Raj, part of the agenda of the partisan dismantling of the health care system, with the lackies just spewing those lame defenses of the characterologically impaired.

    Aren’t Mr Gladd’s trite little retorts so mature and effective?

    But, what do you turn to when the truth shows incompetence, lack of vision, and oh, per the replies by Mr Gladd, pure arrogance at times?

    Certainly not concern for full public welfare.

    Oh, don’t worry Democrat attack dogs, I advise readers go to the Washingtonpost.com and read Kathleen Parker’s column excoriating the Repugnocants for their relentless attacks on cutting off Food Stamp coverage in these times.

    Gee, you turn to the Democraps for dependency, or the ‘Cants for abandonment. What lovely choices in representation.

    Care to rebut this, Mr Gladd’s?!

  13. I for one can not trust Blumenthal or the government. He is hot air and did little for HIT when he was ONCHIT chief. All he did was demand that the FDA not regulate HIT devices. Shame on him.

    Is the Gladd man a shill for the vendors? Just wondering

  14. Bob:

    I think we’re talking about 10 of millions of policies that will be more expensive. How else can you pay for all the people getting free or subsidized HC?

    For everyone not getting a subsidy….

    Individuals will take the full brunt of the rise, but for small and large employer – depends.

    Employers may eat 100% of the rise, part of the rise or none of the rise. In all cases money is leaving all other sectors to go into HC.

    So many individuals will have less disposable income = less spending.

    Corporations will have less money as well if they take part or all of the rise, which means their cost of doing business rises.

    So they spend less – cut back on travel/entertainment, replace computers less often, etc.

    Then some corporations will fire people directly as a result of ACA in terms of getting rid of positions. Other companies will outsource more jobs – China, India, etc.

    The problem with ACA is that it is a huge hit all at once rather than say over 10 years. To alleviate this the govt. may further delay small/large business participation and then debt finance the subsidized plans. This would ease job loss by avoiding less individual/corporate disposable income, but one then creates an even larger national debt problem.

    To be fair, ACA did not create our astronomical debt or current high unemployment, but it will make it worse.

    As per the 90s, the recession was a lot milder and therefore easier to get out of. Once we got to 95 the tech bubble served to get the economy cranking again although in a largely artificial manner.

    Our current economic morass is at least 30 years in the making. We didn’t get here overnight nor will we get out of it overnight.

  15. The problem with this reform, indeed any reform, is the belief that there is a Pareto optimal solution to healthcare; i.e. a “win-win” solution. That’s what the president articulated in his “you can keep your healthcare plan if you want”.

    With the expansion of access to care, abolition of caps and exclusions, did people not wonder “what’s the catch”?

  16. My, what clouds of equivocation. Can hardly see a thing in here. But what’s this? Looks like a question, scrawled on the wall: How many former supporters of Obamacare are changing their minds, as a result of what they are now learning?

  17. Note to BC:

    As ugly as things look in the individual insurance market, will this really lead to large job losses?

    It is true that some persons in this market will see huge increases — maybe 500,000 of them who are forced to the exchanges but make too much for subsidies………..

    Those who remain on non-exchange policies (if they can) will also see large rate hikes.

    So you have several million persons with less disposable income.

    Is that enough to tilt the economy on way or another? Every year about 8 million Americans lose one job and get another job, often at lower pay, and this in itself does not submerge the economy.

    Factory workers lost their jobs or took pay cut all during the 1990’s but overall employment went up.

    I may be missing something, let me know.

  18. Gotta love these persistent defenses of what is overtly indefensible in applying this legislation on just a select percentage of Americans, oh, and let’s not lose sight of that little fact, not everyone has to participate here, RIGHT!?

    So, the denial of outright disruptions of millions of people TODAY, how the president continues to make unilateral changes in the law without appropriate congressional oversight, and not noting the growing exodus of physicians and hospitals from participating, all trivial matters and not consequential, right, all you defender writers here?

    Oh, and all that deflection, the site will work and costs will be defined up front and participants’ information will be secure, again, not a concern or issue.

    And then there is the minimizing, so a few million people lose coverage so 20 million can have it, but will it be used responsibly and efficaciously by these newcomers, oh, and can the system offer them the full compliment of devices? Trivial points for the apologists here, true?

    And as for the projection of who are the bad guys here, I submit both sides of this polluted party of Republocrats are guilty of this shameful primitive defense, but, who is doing it more and obscenely of late? Republicans alone don’t care, people who dissent are racist and want to harm the country, challengers of the law haven’t thought things through?!

    Pay attention to whom is defending and apologizing for these assaults on your freedoms and liberties, at least when it comes to health care right now.

    Just wait ’til you see who sits on the IPAB panel, it will be priceless.

    Oh, but the standards of care they rule on for you, the common citizen to access, those will be too pricey! You know what cracks me up the most reading the commentary at this blog, it is that 90% of these writers won’t be affected by this law, and they know it, they just don’t want the majority of affected citizens to be aware.

    Painful disclaimer here: I am very much affected by this law, as an individual policy holder, a freelance physician, and middle class American.

    Not reading too many other disclaimers by the usual suspects of apologists and defenders here. No surprise though!

  19. Bob:

    You hit on a very important point as per premium increases all at once. Anyone not getting a subsidy has to pay a lot more – it’s simple math.

    This is going to take a great deal of money out of all other vertical markets and the end result is going to be a large increase in joblessness over the next 2-3 years. The job losses will not be offset by increases in HC vertical jobs.

    Delaying small/large employers need to comply with the bill means issuing more Federal debt (QE) to offset the costs for those subsidized not being covered by small/large business.

    The govt. debt bubble and equity market bubble are far worse than the three bubbles that preceded them and when they pop (and they will) it will be extremely injurious to the economy.

    ACA was launched at the wrong time – joblessness was and is too high. The most accurate unemployment number is U-6, which is 13.8%.

    The other problem with ACA is that it has done nothing to reduce the high cost of medicine.

    Many laud ACA benefits like no denial for pre-existing conditions and other things and they should, but in doing so one cannot just gloss over its challenges.

    HC is a huge part of the economy and cannot be radically altered as if it were happening in a vacuum because it’s not.

    I agree with Dr. Blumenthal that there is no going back. Let’s hope our leadership can figure it out.

  20. “There is simply no way for presidential health care reformers to avoid grievous political harm, as the experience of President Barack Obama is now demonstrating in spades.”

    Sorry, David. Don’t buy this. The harm being done now was not inevitable.

    The two indispensable ingredients missing from Obama’s approach:

    – making sound policy choices in the first place (instead of letting an overmatched Senate Finance Committee staff and Speaker Pelosi make them for you).
    – executing with discipline on the choices ultimately made.

    These were self-inflicted wounds, not the inevitable result of dealing with a difficult policy challenge.

  21. Hey David,

    In an earlier post, there were comments about a med mal lawsuit that you settled. It behooves your credibility to disclose the details of the law suit. Rumor has it that the EHR at the time played a significant role in the negligence.

  22. Dr Blumenthal is articulate as always, but one sentence seems like a bit of a stretch……….

    “While customers are unhappy with premium increases, they will be grateful later if they get sick.”

    That is pretty thin gruel for those who face a substantial premium increase right now. If my increase was from $250 a month to $750 a month, I am more concerned about going broke than future security when and if I am sick.

    The drafters of the ACA knew that the reform of the individual markets would drive up premiums. (Prof Gruber stated this openly in 2010)

    But the party line was that the ACA subsidies would mitigate the harm to most families.

    And that is true for persons under 400% of poverty.

    The P.R, problem now is that you can be at 401% of poverty ($63,000 for a couple) and be a long,long way from rich in most cities. This group is howling and this group could scuttle the whole project.

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