Two Americas ? – Will Where You Live Decide if You Benefit from Obamacare?

~ “No man is an island, entire of itself; every man is a piece of the continent, a part of the main. Any man’s death diminishes me, because I am involved in mankind. Therefore, never send to know for whom the bell tolls, it tolls for thee.” ~ John Donne, 1624.

~ “ Did you know you could possibly save hundreds or even thousands of dollars in your healthcare costs – just by your selection of providers? ” ~ Aetna (private insurance company) “Member Essentials”, 2012.

Watching the fervor of Republican efforts to “defund” the Affordable Care Act (ACA – or Obamacare), I have been wondering : is it just ‘kibuki’ theater – acting out a ritual attack on Pres. Obama? Or, do they actually have teeth to undo the reform in U.S. health care ? Last November, Speaker Boehner said Obamacare is now the “law of the land”. It’s worth recalling, in 2003, Democrats supported implementation of the Republicans’ Medicare Prescription Drug legislation, after they had opposed its design. In 2013, should we not expect Republican legislators to do the same for Obamacare? Listening to Sen. Ted Cruz tell bed-time stories to us all from the Senate floor, it was difficult to see what practical impact Republican opposition may have on the ACA. He has made no specific proposals to “lower health care costs without growing government” .

Obamacare is approaching a major start-up milestone : On October 1, 2013 the new healthcare exchanges in the states are to start operation, signing up uninsured Americans. But there are widely varying actions being taken across the States. So chances of improving your family’s healthcare may depend ultimately upon the politics of the State you live in.

Key Questions : ~ Where does start-up of the ACA stand – nationally and in the States? Will the benefits and costs be shared more or less equally by all Americans? Or will State-level differences mean some benefit more, while others pay more? Does Obamacare constitute Federal takeover of Americans’ healthcare limiting choice, more than private insurance? What other actions are needed to reduce health care costs and make it more affordable?

ACA State of Play : As Federal law, the 2010 Affordable Care Act (ACA) is something we will all pay for. If implementation varies widely across the States, it may be due to quite different social philosophies of the two political parties at work. It will show how practically Republicans are trying to undermine Obamacare :

~ Over twenty – mainly Democrat governed – states, such as New York and California, have made substantial progress to implement Obamacare. They have set up their state health insurance exchanges, signed up over a dozen private insurance companies offering competing plans. As a result, premiums for previously uninsured residents will be as much as fifty per cent lower than previously available individual plans. Access will expand reducing the number of uninsured from 20% to about 5% of state residents. Big efforts are being made to explain the new program to the public, although they started too slowly. These states are also expanding their Medicaid programs, largely through Federal funding.

~ On the other hand, over twenty – mainly Republican governed – states, such as Texas, Florida and Ohio – are resisting implementation of Obamacare. Several of these states have refused Federal funds to expand Medicaid. They all have tried to block implementation of health insurance exchanges. They have refused to establish State exchanges. They have passed laws and regulations to obstruct efforts to inform people about the Federal health insurance exchanges. These actions are likely to increase the numbers of uninsured and reduce health care access for state residents over the next five years. Already these states’ healthcare costs per person and numbers of uninsured are higher than in America as a whole. This will mean these states’ residents will pay the same Federal taxes as in other states, but obtain less health care.

~ Other key ACA provisions will kick in in 2014 but State-level divergences could limit limit their impact. Private insurance companies will be prohibited from refusing health plan coverage to individuals with pre-existing conditions; and setting lifetime coverage limits. Increased Federal funding will further close the “donut hole” in Medicare Part D Prescription Drug program, saving American seniors thousands of dollars annually. Tax credits for Americans earning up to 400% of poverty level incomes will make access to health insurance more affordable. The individual mandate requiring all of us to buy health insurance will start in 2014. Together with ACA provisions already in effect, these actions will make health insurance coverage more affordable and accessible to tens of millions of Americans.

~ Paradoxically, despite the positive benefits, a majority of Americans have doubts about the overall value of the ACA. But, taken individually, major Obamacare provisions are strongly endorsed. This could be due to widespread lack of public understanding of the ACA. Six out of ten Americans still do not know its main elements. For a program relying substantially upon State level implementation, efforts in almost half (Republican governed) states to block public awareness have added to this.

Impact upon Health Care Costs : How the ACA will affect what we pay for health care is hotly disputed between proponents and opponents. The debate is shrouded in confusion by its complexity and the misinformation spread by both sides, particularly Obamacare opponents. The latter claim the 2014 Federal health insurance exchange premiums will raise health care costs substantially above private insurance now available. But in fact, they will be much lower than the premiums paid in 2010. This is particularly true for states blocking the insurance exchanges which now have the most people uninsured – such as Texas, Florida, and Louisiana. By offering fewer insurance plan options, these states will have less scope to reduce premiums to more affordable levels, even though they already suffer from higher than national average poverty and income inequality.

Impact on Cost Containment : For many years, private insurance companies have tried, without success, to contain health care costs through an elaborate system of price coding of all treatments and procedures. In response, healthcare providers have hired medical coding staff to game the system to maximize profits. By now this is a complicated system of price controls administered by insurance companies. In addition, both Medicare and Medicaid run similar administrative pricing systems. The net result has been to distort markets so much there are no true market prices for medical treatments and purchases – as there are for most other consumer purchases we all buy. So, like Aetna (see quote above), private insurers and HMOs have for many years restricted consumers’ choice of doctor or other providers as part of cost containment. It is therefore disingenuous for Obamacare opponents to claim it will dramatically change this situation. Limited choices under Bronze, Silver, Gold and Platinum plans on the exchanges follow directly approaches earlier adopted by private insurers and HMOs from the 1980s onwards. They are more the result of private insurance efforts to control costs, than Obamacare requirements.

Lack of Market Prices in Health Care : The crucial weakness in Obamacare is the lack of measures to control the future rise in health care costs, in addition to health insurance premiums. If it cannot do both, sooner or later, the costs we pay for health care will continue to rise substantially . For reforms to be sustainable, financial incentives need to be given to us all as individual consumers to manage our health care budgets more efficiently. As private healthcare market advocates – like Dr. Stephen Atlas – propose, information on prices and quality of healthcare services from competing providers needs to be made freely available to all. This will require a sea change in the organization and culture of American health care. But so far most private healthcare providers have resisted. As former Speaker Gingrich has observed, absent such a change, the USA may inevitably move towards a single payer system in years to come – simply as a way of keeping healthcare affordable.

Conclusions : The health care reforms under the ACA, if effectively implemented in all States of the USA, will make health care substantially more affordable and accessible to many Americans. This includes the fast growing numbers priced out of private employer based plans – now over fifty per cent of the U.S. population – up from under 35% fifteen years ago. However, absent measures to contain costs, through administrative means or market forces, the promise of sustainable affordable care may not be realized. Obstructing Obamacare at individual State level could well be quite destructive. All it may accomplish is greater inequality in healthcare and incomes among Americans paying the same Federal taxes.

Rather than mounting a last ditch stand to undermine Obamacare, Republican private health care advocates should find constructive ways to build on it by opening up the health care services industry to market competition. This will require standing up to the powerful private vested interests (in insurance, pharmaceuticals, hospitals, doctors’ practices and testing labs) that have so far resisted it.

Four places to start : (1) open up the US pharmaceuticals market to import competition by lifting the current import ban; (2) revoke the anti-trust exemption of the healthcare and health insurance industries; (3) create a single national market for health insurance; and (4) require all health care providers to post up-to-date prices online.

I, for one, hope that our political leaders will have the foresight and courage to do so!