The recent debate over the potential repeal and replacement of the ACA, with the current focus on coverage for preexisting conditions, has drawn a great deal of attention to the concept of health insurance. While our political leaders are constantly talking about it, few of them seem to understand the “insurance” component of health insurance. As a result, much of what they say about preexisting condition coverage is gibberish. We are here to set the record straight.
At its most basic level, insurance provides protection against the risk of unexpected financial losses. We focus on the term risk because if we were risk neutral (i.e., we were indifferent between sure things and actuarially equivalent gambles), then we would not value this protection. But nearly all of us are risk averse, meaning that we would rather not face having to dramatically reduce consumption of everything we enjoy in the event we are hit with an astronomical medical bill. Because we are risk averse, health insurance improves our collective well-being by helping us collectively smooth our consumption. Everyone who purchases insurance consumes somewhat less of everything else when healthy, but does not have to consume dramatically less when sick.
Late-night comedian Jimmy Kimmel, in a recent opening monologue, spoke tearfully of his newborn son Billy, born with a serious congenital heart defect. Heart defects in newborns, while uncommon, occur in 1 in 100 births. The more serious ones, meaning those needing surgery in the first year, represent about a quarter of all congenital heart defects.
Jimmy’s son fell into the latter category, with Tetralogy of Fallot, bad plumbing in the heart, causing oxygen-poor blood to circulate out into the body without picking up a fresh supply of oxygen from the lungs. Hence the newborn baby turning blue.
I have firsthand experience with this, as my youngest son was born with the same heart defect. He needed surgery as an infant and then two additional open heart procedures before reaching adulthood. I have walked in Jimmy Kimmel’s shoes and understand exactly what he is feeling – terror, anguish, guilt, helplessness, and hopelessness.
I know you’re busy rebuilding Washington, reshaping the international order and doing a lot of other weighty stuff. Full disclosure, I voted for you. Not because you promised to repeal the Affordable Care Act, or because you tweeted at me about it, but because our healthcare system is hopelessly broken and requires an overhaul that does not simply convert over to a single payer system.
Recently you were quoted in an interview with Reuters:
“I loved my previous life… I had so many things going… this is more work than my previous life. I thought it would be easier.” Yes. I did too. Welcome to the frustrating world of shaping health care for a nation. It should be about making others’ lives better, but instead it is about padding lobbyist pockets.
There are people who say you’re the wrong man for this job. I think they have it exactly backwards. You’re famous for your hatred of complicated solutions. They annoy you. They annoy you because you know they’re a waste of time and energy. Time and energy that can be put into more important things.
You’re also well known for your distrust of experts, who you’ve learned to dislike after years of doing business and listening to boring presentations by people who don’t know what they’re talking about. There are more experts in healthcare than any other area of the economy. Does that tell you something? I think it does.
In 2014 I took my first trip to Kenya. After my plane landed in Nairobi I rode for 10 hours with my medical colleagues to Bungoma, a town on the western edge of the country. We set up our clinic in the local hospital and then spent the week training local healthcare providers on a technique called ‘Visual Inspection with Acetic Acid (VIA)’. This is an inexpensive method to screen for cervical cancer and pre-cancer in low resource settings using vinegar. As a part of the training we screened 189 women for cervical cancer in that week.
The last few weeks had been brutal. Despite working twelve-hour days, he felt that he had little to show for it. His annual board meeting was to take place the next day, and he expected it to be tense.
With a replacement bill for the ACA about to be voted on, and with Trump in the White House, the situation seemed particularly precarious. The board members had asked him to present a contingency plan, in case things in DC didn’t go well.
As CEO of a major health insurance company, Jim was well aware that business as usual had become unsustainable in his line of work. No matter what insurers had tried to do in the last few years—imposing onerous rules, setting high deductibles, pushing for government subsidies—prices had been going up and up.
Premiums, of course, had had to do the same but, evidently, the limit had now been reached. The horror stories being told at town hall meetings across the country were all too real. People were fed up, and politicians were feeling the heat.
Something needed to be done to change course, but what? He did not have any good plan to propose to the board.
As the White House continues to push for a revised Republican proposal to replace the Affordable Care Act (ACA), one thing is for certain, many of the sickest Americans will continue to suffer as they are denied medications and other treatments under current health insurance strategies to save costs.
Both the ACA, and the recently proposed MacArthur Amendment, do not address a well-established practice of health insurers’ use of restrictive prior authorization requirements to deny or delay coverage of medications and treatments to seriously ill patients. In my own practice caring for cancer patients and those with terminal conditions, I have witnessed the additional suffering caused by denying these patients timely access to medications for pain.
A prior authorization is essentially a check run by insurance companies or other third party payers before approving certain medications, treatments, or procedures for an individual patient. Insurance companies justify this practice as a means to save costs to consumers by preventing unnecessary procedures from being covered, or requiring generic drugs to be used instead of brand-name, more expensive alternatives.
Judging by the dazed expression on President Trump’s face at his Friday afternoon press conference, it is clear that he never saw his first major political defeat coming. It was as if he had stepped off the curb looking the other direction into the path of an uncoming bus.
The key to any political victory is situational awareness- clarity about your goals and mastery of the details. There were warning signs of a potentially fatal disengagement, for example, in Trump’s periodic references to “the healthcare” when discussing the issue.
It doesn’t make Trump’s political pain any more bearable to know that he was mugged by a ghost, by a potent political symbol nourished by the Obama administration. The stunningly rapid political failure of the American Health Care Act more resembled a botched exorcism than a serious exercise in health policy.
From his successful campaign, Trump knew that repealing and replacing ObamaCare was the most reliable thunderous applause line in his stump speech. This visceral connection moved the issue to the top of his political agenda. To Trump’s political base, repealing ObamaCare was striking a blow against a paternalistic all-knowing federal government, against interference in citizens’ private lives, against confiscation and redistribution of peoples’ wealth, to a new “entitlement” program, but most of all, against a President they reviled.
President Trump campaigned on making health care better, cheaper and available to all Americans, regardless of ability to pay. Once Mr. Trump was safely in the White House, the Republican thought leaders in Congress were quick to supply him with plans to repeal and replace Obamacare. Most were written in protest to President Obama’s policies and were never meant to be implemented.
When scrutinized by the rank and file of the Republican Party, it turned out that the Ryan/Price American Health Care Act was neither repealing enough for some, nor replacing enough for others.
There are approximately 18 million Americans who purchase health insurance on the so called individual market, on and off the Obamacare exchanges. There are another 14 million or so who could be buying insurance on the individual market, but choose not to buy anything. This puts the total individual market at about 10% of Americans. Half of those are, or are eligible to be, heavily subsided through Obamacare (including those huge deductibles). The other 5% are facing the full brunt of health insurance price increases under Obamacare. Of those, 3% are paying for Obamacare health insurance and getting garbage in return for their money, while the remaining 2% are uninsured.
This is the magnitude of the primary problem we are supposedly trying to solve. The 17% of Americans on Medicare are not upset at Obamacare. The approximately 23% of Americans on, or eligible to be on, Medicaid are not angry at Obamacare either (although the 1% eligible for the Medicaid expansion in states that chose not to expand it, might be angry with their Governors). Some of the 50% or so, who are getting health insurance through their employer, and used to get rather flimsy insurance in the past, may be somewhat disgruntled because the Obamacare imposition of “essential benefits” caused their share of premiums and deductibles to rise, and their ability to choose their doctors to plummet.
This is the secondary problem we are supposedly trying to solve. The American Health Care Act (AHCA) addresses neither problem and exacerbates both.
Say what you will about Obamacare—at least President Obama eventually took ownership of it. When it comes to the American Health Care Act, President Trump isn’t ready to do that. He’s discouraging people from calling it “Trumpcare.” Since Trump normally he puts his name on everything within reach—even the trash can liners at the Trump SoHo Hotel bear his moniker—he must be keeping his distance from the AHCA because he’s ashamed of it.
The editors of The New York Times think he should be. They accuse Trump and the rest of the GOP of “Trading Health Care for the Poor for Tax Cuts for the Rich.” The charge is based on the CBO’s prediction that Trumpcare will immediately cause 14 million Americans to lose their coverage through private insurers or Medicaid, with that number rising to 24 million by 2026. Adding those people to the existing un-covered population, 52 million Americans will be uninsured a decade after Trumpcare incepts.
The consensus among policy wonks on the left and the right is that this would be a disaster for the country. Rolling back Medicaid will harm the states that expanded their programs on the promise that the federal government would pick up the tab. It will damage hospitals and other providers too as the demand for charity care goes through the roof. The newly uninsured will suffer worst of all. Without private insurance or Medicaid to rely on, many will forgo needed medical treatments and all will face the risk of financial catastrophe associated with serious injury or illness. All of these possibilities worry Republican governors and legislators, who fear losing office when the healthcare sector revolts and voters take revenge at the polls.
One can, however, see the GOP’s predicament as an unparalleled opportunity. Instead of vewing the 52 million un-covered Americans as pathetic creatures with nowhere to turn, one could regard them as an enormous army of consumers who will have to buy their own healthcare and who will be hungry for medical services that are effective and cheap. If we were talking about housing, transportation, energy, food, clothing, televisions, cell phones, or computers, we might already see them that way.