That healthcare thing

In more than a few surveys, the majority of Americans have noted that healthcare is a key dinner table issue. In several surveys, shoring up and stabilizing the Affordable Care Act (ACA) is preferred by a smaller, but still majority of Americans, than its repeal.

With a background of being a former benefits actuary, consultant and manager of benefits, here are a few facts and observations that I encourage you to research and verify.

– The ACA borrows from a Republican idea implemented by Governor Mitt Romney in Massachusetts which was advocated by de facto Tea Party leader Senator Jim DeMint for the whole country. Some elements can be found in a healthcare idea of Senator Bob Dole when he ran for President in 1996. These are reasons Republicans had a hard time with other ideas to repeal and replace it.

– The ACA is designed to require employer and public plans to offer certain minimum level benefits. The non-employer benefits are delivered through healthcare exchanges of policies and the expansion of Medicaid for people near or in poverty (32 states and the District of Columbia elected to do this).

– The biggest benefits of the ACA are guaranteed issue and renewability of coverage and the premium subsidy for people with incomes up to 4 x poverty limit. If you or a child has a preexisting condition, guaranteed issue and renewability are huge benefits.

– The botched roll out of the online exchanges sits at the feet of President Obama. For this to be such an important issue, it deserved better planning. The online exchanges are doing much better now, but you don’t get a second chance for a first impression. And, this poor roll out was used as fodder to nay-say the program, even though the problems were fixed.

– The ACA has experienced higher premiums due to adverse selection (pent-up demand and more high risk than better risk customers), but it is frustrating that the Republican Senators and President have masked their role in making premiums even higher. Senator Marco Rubio led an effort to strip 89% of the funding to insurers for initial adverse selection a couple of years ago and President Trump stripped out funding for co-pays and deductibles for lower paid people last year. Both of these changes cause premiums to increase even more than they otherwise would have.

– The lack of expansion of Medicaid in 18 states means the ACA is still not fully implemented. Per The Commonwealth Fund, this implementation would help people, rural hospitals and state economies. GOP Presidential candidate John Kasich called Medicaid expansion a no-brainer when he did it in Ohio as Governor.

The ACA is not perfect, but it is working OK. It could work even better if it were stabilized and improved. Taking away the mandate will be harmful and cause premiums to go up even more. What troubles me in our zero-sum game of politics is we are foregoing improving an imperfect law, which we have done countless times before on major changes. The way I see it, Congress and the President own this law now. If it fails, people should look to them asking why did they let it happen. This impacts people.

I have mentioned before several changes to consider. National healthcare is not going to happen in our country as it is too political and the healthcare industrial complex is strong. Yet, I advocate expanding Medicare in a targeted way down to age 62 (or maybe 55). Unlike the more complex Medicaid, Medicare actually works pretty well and strips out the profit load embedded in insurance premiums. This will reduce exchange premiums and Medicare premiums, as it makes both audiences younger on average.

I think we need to reconstitute the adverse selection and co-pay subsidies to insurers. The federal government needs to repay insurers they stiffed and invite insurers who left back into the exchanges. I would also recommend the remaining states expand Medicaid and I would add back the mandate for coverage, even though this feature is unpopular. If there are areas where competition is not significant, select use of Medicare (or Medicaid) could be deployed in those counties.

There are other changes that should be considered, but we need to shore this thing up. Congress and Mr. President, the ball is in your court as well as the legislatures for those eighteen states.


13 thoughts on “That healthcare thing

  1. I think expanding medicare to age 55 would be awesome. Mostly because I’m 2 years away from that and I live in perpetual fear of losing healthcare. But also because I think true universal healthcare is the most efficient solution to healthcare and that would be a step in that direction.

    You are very right about the zero sum politics. I have continued to be surprised that the GOP is STILL defining itself by Obama. They often couch their legislative and admin victories as overturning Obama policy. It feels like a deeply destructive viewpoint from a long lens. If every government only focused itself on undoing a previous government’s work we would soon implode.

    And of course it’s such a weak way to self identify – they are defining themselves by a man who isn’t there instead of defining themselves by their own policy.

    • Many thanks. I think it would also let us measure things, as well, to see if this makes sense. Insurers will like it as it reduces their risk.

      Your secondary point is huge. The Republican Party uses Obama, Hillary Clinton and Nancy Pelosi foils. Attacking people reveals a dearth of ideas. This is one reason I believe the Dems should pick a new House Minority leader – take that name off the table.

      To win more seats, Dems need to continue fielding good candidates in every race. One of the drawbacks of the gerrymandering for Republicans is some very poor candidates got elected in a primary and ran unopposed. This is one reason the House is more irrational than the Senate.


      • Yes. Gerrymandering to protect party is a disease in our politics. 99 Percent Invisible did a report on gerrymandering. It was based on the deep dive that 538 did. I found the various problems associated with fixing the existing mess fascinating. All districts are gerrymandered. How you divide up the electorate must have a bias. It’s a basis for how divisions get made. I think that Texas had a good plan – basing it on competitiveness. Making sure that either party had a chance at winning. But boy did it cause grief when it was implemented. California took the route of making sure any group of common interest was kept together so they could be heard. That is of course open to all kinds of manipulation but it has many good points. Anyway – I highly recommend the podcast on gerrymandering by 99 PI. Well worth it.

      • Thanks for sharing that. Districts have to be drawn outside of the party in power. The fact Obama’s first midterm was in a census significant altered the landscape for ten years. The GOP rode the wave in and then changed the rules. I don’t like when Dems did this either. Keith

  2. Nice summary. I got the impression you might like to expand Medicare to 55 year-olds, then maybe even include infants, then children, then use the two ends to squeeze out the middle, resulting in Medicare for all. Nice idea?

    • Susan, it works for me. To me, the easiest path forward be in two steps. Medicare expanded to 62 could be done relatively easily with an emphasis on longitidunal and comparative measurement cost. If those numbers work out, then it could be extended to age 55.

      The rationale for Medicare is it exists for retirees and disableds who are eligible for SS disability check. It is an easier path to expand the eligibility for retirement.


  3. Note to Readers: One of the drawbacks of the Trump move to open states up to competition with lesser policies is we are inundated with robo phone calls from New Mexico to Oregon to Michigan to Florida representing insurance brokers of these 3 month policies with preexisting condition exclusions that typically pay about 50% of UCR charges (Usual, customary and reasonable charges). Rather than develop a thoughtful design, this is a scattergun approach which is not unusual for the President.

  4. Good post, Keith. I don’t think Trump will do anything to shore up your healthcare system. When Congress failed to repeal it, he declared that he would sit back and watch it destroy itself. The system needs to be simplified. The only people benefitting from health care today are the insurers, hospitals, and doctors. I fear that America is headed down a self-destructive path: the majority of citizens will have little to no access to higher education and to good health care.

    • John, as a Canadian, what does it say to you that the President of the US would rather see people harmed to win a political argument than to fix the problem? To me, this speaks volumes. But, it is not just him, it is members of Congress, most of all Senator Marco Rubio. Keith

    • Linda, many thanks. This topic is confusing to begin with, but people who have purposefully lied or perpetuated lies about it have done a disservice to the country. It continues to this day. Keith

      • It is so very frustrating that the people who are hurt most are the ones who are so easily swayed by smoke and mirrors rhetoric.

      • True. Rural hospitals could have been saved by the Medicaid expansion. That affected healthcare and jobs. You may recall the Republican mayor who got no satisfaction from the state Capitol, so he walked to Washington to try to save his town’s hospital.

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