One domestic issue has been largely absent from the presidential campaign, and it's the one with the highest profile over the Obama presidency: health care. Since the Supreme Court shut the door on a second attempt to invalidate parts of the Affordable Care Act, Republicans have retreated from highlighting it on the stump. The only time health care emerged in last week’s Democratic debate concerned allowing undocumented immigrants to access insurance exchanges, more of an immigration issue than a health care one.
But while Obamacare may be more settled politically than at any time since passage, the policy itself is showing fractures in key details and intellectual underpinnings. The moment calls for discussion on how to improve health care in America, not to retrench and hope for the best.
Take for example those exchanges. The Department of Health and Human Services predicts that 9.1 million Americans will get insurance coverage from the exchanges by the end of the year. But by December 2016, that number will rise only to 10 million, according to HHS projections. The Congressional Budget Office initially estimated 21 million on the exchanges by that time.
You can spin this as a good problem. Fewer employers have dropped coverage than expected, leading to a smaller universe of exchange-eligible participants. And HHS’ projection is just that, with room for variability. But even the sunniest interpretation acknowledges the primary cause: prices for insurance remain too expensive. Not only do surveys consistently show this to be the key sticking point for at least half of the uninsured, but attrition on the exchanges – 11.7 million had signed up by this February for 2015 coverage, but 2.8 million dropped it at some point – can be chalked up in part to missed payments and affordability concerns.
Premium prices appear to be increasing next year at a higher rate than in 2015, adding to the affordability problem. And that’s layered with confusion about system design. Speaking of the uninsured, HHS Secretary Sylvia Matthews Burwell said, “Almost 60 percent are either confused about how the premium tax credits work or don't know that they are available.”
Subsidy levels link to the available insurance policy with the second-lowest cost, which can change year-to-year, making exchange customers have to constantly monitor and change policies to get the best deal. This can make it unaffordable to keep your doctor. Around enrollment season, individuals seeking coverage must put in hours to navigate their choices and shop.
But a new working paper from the National Bureau of Economic Research suggests that health care consumers are extraordinarily bad at shopping for lower prices. An unnamed self-insured company switched to a high-deductible plan, but also gave workers the deductible amount as a subsidy in a health savings account. They also provided tools like online comparisons on the cost of doctor’s visits and tests.
None of this mattered. Health spending subsequently dropped around 13 percent – precisely what the company wanted – but this was entirely due to workers visiting the doctor less. “We find no evidence of consumers learning to price shop after two years in high-deductible coverage,” the study’s authors write. Employees passed up potentially wasteful treatment, but also potentially valuable things like preventive care, a signature goal of the ACA.
This is very bad news, as our health care system has been shifting costs onto the backs of individuals for some time, a trend that only accelerated with Obamacare. Coverage on the exchanges is frequently high-deductible, and employers have shifted hard in this direction as well, with about half of all workers with employer-based coverage now saddled with a deductible of $1,000 or more.
The study proves that “smart shopping” does not exist in the health care marketplace, and therefore behavioral nudges to turn patients into consumers are ineffective. This was a pillar of Obamacare, the idea that empowering people to make cost-effective choices about health care would “bend the cost curve.” It doesn’t. When costs get poured onto individuals, they forego care as a result. The mission of our health care system should not be to make people sicker.
One counterweight to this was supposed to come from a public option, creating competition for insurance that would lower premiums, and bolstering bargaining with Medicare providers to lower prices. But the public option died amid legislative wrangling, replaced by state-based “co-ops” that would compete for subscribers. Eight of the twenty-three co-ops created have now collapsed, poisoned by what co-op leaders consider a flawed risk adjustment model that punished their plans, which attracted younger, healthier customers. The co-ops had to pay out to insurers with older, sicker populations, and they couldn’t withstand the losses.
Even America’s main single-payer program is struggling with an imminent spike in premiums for Medicare Part B, which covers hospital visits and other care. A “hold harmless” provision protects about 70 percent of Part B subscribers from having to pay more when Social Security’s cost-of-living adjustment stays flat, as it will this year. But that puts the burden on the other 30 percent, including “dual eligibles” in Medicare and Medicaid, higher-income retirees, Medicare beneficiaries who receive no Social Security (like retired public employees) and the newly eligible.
Fifteen million beneficiaries will be affected, with $650 a year in additional premium costs, an unprecedented increase that risks affordability for some. States who pay Medicaid premiums for the indigent may have to bear much of the cost.
This information suggests that the U.S. health care system, a mélange of compromises and Rube Goldberg-like designs, looks extremely vulnerable. Exchange take-up is coming in lower; individuals are suffering from higher costs throughout the system and respond by denying themselves care; alternatives to the for-profit insurance model are withering; and even Medicare, suffering from a too-small, too-sick risk pool, is creaking.
Nobody wants to talk down Obamacare when Republicans still have the knives out for it, but the subsidies appear too low, the premiums too high and the risk shift too burdensome. And staying in defensive mode is a recipe for the cracks within the law to widen. Democrats need to talk about improving Obamacare, even if legislation to do so is out of reach, to make clear what is happening and why.
That means supporting initiatives like Maryland’s all-payer rate-setting, where insurers band together and force all health providers to charge the same prices for their services. It means dropping the absurd penchant for “demand-side” solutions, like the idea that smart shopping can lower prices. And it means reckoning seriously with the fact, endlessly repeated by Bernie Sanders, that “we should not be the only major country on Earth that does not guarantee health care to all of our people as a right of citizenship.”
Maybe Hillary Clinton agrees with this, or at least “on the goals” if not the means, as she said in last week’s debate. But the biggest tragedy would be to remain silent. There are real problems with health care delivery, and the complex solutions we’ve arrived at only exacerbate them. We haven’t solved this problem, and it would be the worst possible time to move on to other matters.