Ezekiel Emanuel is chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania and author of “Prescription for the Future,” which is scheduled to be published in June. He served in the President Barack Obama’s White House from 2009 to 2011.
Everyone wants to reduce health insurance premiums. They have become unaffordable. The question is how. In an effort to salvage their foundering health-care bill this last week, House Republicans and President Trump explored eliminating the requirement that coverage include a set of essential benefits. That didn’t get them to a deal, which is a good thing: The position is shortsighted, anti-family and illogical. It would shift costs around but not save money.
Many Republicans hate the idea of letting Washington dictate what benefits people must purchase. But it’s important to understand: The essential health benefits in the Affordable Care Act are not a long list of precise services. Rather, they represent 10 broad categories of basic benefits: office visits, emergency services, hospitalization, lab work, prescription drugs, preventive care, rehabilitative services and devices, maternity and pediatric care, and mental health.
And that is the first problem with the Republican approach: We all want benefits covered. Republicans want people to be able to choose the scope of their coverage, but which benefits should be eliminated? In the midst of a national opioid crisis, should substance-abuse treatment be cut? Do we want anyone to go without prescription drug coverage? Home oxygen care?
Second, the Republican position is anti- family. The only benefit that Republicans seem willing to admit in public that they want to cut is maternity and newborn care. Why, so this argument goes, should a male or a post-menopausal woman have to pay for maternity care? In this view, only women who are going to get pregnant should have to purchase coverage for maternity care. This Republican logic would also mean that single people and older people who no longer have young children should not pay for pediatric care that they will never use.
Instead of spreading health-care costs associated with families across the population, Republicans demand that families bear these costs alone. This rejection of insurance for maternity and pediatric care is a peculiar position for the party of “family values.”
Indeed, the Republican approach ceases to make the product here health insurance. Insurance works by having a large number of people each pay a small amount into a pool of money. That pool is then used to pay for services for the few people who incur large health expenses. A system that only has women who will bear children pay for maternity care or only families pay for pediatric care is not insurance — it is pay-as-you-go. There is no spreading of cost across a large number of people.
Another way of stating this is that the Republican approach is a cost shift, not a cost savings. Republicans do not reduce health premiums by reducing total health-care spending. The costs for maternity and pediatric care do not disappear. They remain. The Republican approach simply changes the burden, from a small contribution by everyone to a large cost for families. We should never confuse making someone else pay with saving money.
In fact, few families could actually afford maternity or pediatric care under these circumstances. On average, insurers pay approximately $8,775 for a routine vaginal delivery and $11,525 for a Caesarean section. With the median household income in the United States just under $57,000, this would make it nearly impossible for ordinary families not on Medicaid to afford to have one child, much less two or three.
At the same time, adopting the Republican approach would scarcely reduce health insurance premiums for most people.
Just do the math. Each year, there are about 4 million births in the United States. About half are to families covered by Medicaid and half are paid out of private insurance. That means that each year private insurers pay just under $20 billion for maternity care. In 2015, total spending by private insurance for health care was almost $1.1 trillion, making maternity care about 1.9 percent of premiums. In 2016, the annual employer-sponsored insurance premium was $18,142. Thus, eliminating maternity care would reduce family premiums by about $345 per year, or $29 per month. Since workers’ contributions average a bit under a third of the total premium, workers would see a reduction in their out-of-pocket payments for insurance by about $115 per year — less than $10 per month.
Let’s stop pretending that the way to reduce health-care costs and insurance premiums is by shifting payments around. Today, 84 percent of all health-care costs are the result of chronic illnesses — hypertension, cancer, diabetes, emphysema, heart disease. If we want to reduce premiums we must cut costs associated with caring for patients with these diseases — the rate of hospitalization, the price of hospital stays and surgery, and drug costs. We should not penalize pregnant women and babies. It is cruel — and won’t save much money to boot.
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