Steven Brill is the author of “America’s Bitter Pill: Money, Politics, Backroom Deals, And The Fight to Fix Our Broken Healthcare System.” He has received consulting fees for work on a consumer information and ombudsman program for New York-based Oscar Health Insurance.
The failure of the Republicans to agree, so far, on an alternative to Obamacare should not be surprising — because Obamacare was, in fact, the long-standing Republican alternative to the more radical health-care reforms, such as a single-payer system, that Democrats have proposed since the Truman era. What President Barack Obama and his party pushed through Congress in 2010 was more conservative — and more pro-private sector — than what Richard M. Nixon proposed in the 1970s, or what Republican Gov. Mitt Romney implemented in Massachusetts in 2006. Put simply, Obama dared Republicans to take yes for an answer. In a polarized America, they still said no.
Obamacare did little to deal with the problem of health-care costs. There would be no cost-control interference with the only-in-America profits of drug companies, medical device makers or hospitals. Instead, the law subsidized Americans who could not otherwise afford health insurance, allowing them to become paying customers in the same overpriced private-sector system.
True, there would be a provision aimed at making the insurance pool big enough to keep costs lower than they would be if people could just buy insurance when they got sick. Everyone would have to buy insurance (with subsidies where necessary) or pay a penalty. But that big-government mandate was first suggested by the conservative Heritage Foundation in 1989 under the banner of a classic conservative principle: "individual responsibility." Romneycare included the same mandate.
Obamacare performed a great public service by giving more Americans access to health care. But by not addressing costs, it preordained the problem that McConnell and the Republicans have said they are trying to fix this year: rising insurance premiums and some insurers fleeing the market because their costs are too high.
However, the Republicans' answer would fix nothing related to health-care costs, while eliminating access to care for millions of poor people in order to cut taxes for the wealthy. They have proposed lowering premiums not by reining in costs, but by allowing insurers to sell shoddy insurance that pays for less health care. That will not work in any event, because the healthiest people would buy the cheaper products, leaving those who need full protection in a less healthy insurance pool facing sky-high prices. ("Consumer choice" may sound like an unassailable virtue, but in insurance it can be self-defeating.)
So, here are nine ways that Democrats and Republicans could come together — if they really wanted to — to fix Obamacare by truly tackling the problem of high premiums caused by high costs.
1. The Republicans were right that a 3-to-1 ratio — heavily lobbied for by the Democrats' friends at AARP — between the rates charged for older people and those for the youngest adults does not match the relative actuarial costs of insuring the two groups and discourages the young from enrolling. The ratio should be moved to 5 to 1, as was originally contemplated by those drafting Obamacare until AARP got to them.
2. However, much more generous subsidies should then be given to older Americans to make insurance more affordable to them.
3. Those increased subsidies could be paid for by new controls on the price of prescription drugs, either by allowing Medicare to negotiate prices or by other mechanisms used by every other developed country, where prices are 30 to 60 percent lower than here. Taking just 15 percent off the price of prescription drugs would produce more than $600 billion in health-care savings over the next decade, which would lower private premiums while saving taxpayers billions on Medicare costs.
4. As an additional lure to get younger, healthier people into the insurance pool, insurance companies should be allowed to offer them an introductory 50 percent off for their first year of coverage.
5. Five percent of Obamacare's 2.3 percent excise tax on medical devices (which was suspended in 2015 and should be reinstated) should be used for a massive marketing program aimed at enticing younger people into the pool. The ad campaign should also tout the mandate to buy insurance (which must be kept) as, in the Heritage Foundation's words, a matter of "individual responsibility." The more young people who enroll, the lower the premiums will be for everyone.
6. Medicare should finally be allowed to fully implement competitive bidding for medical equipment and devices. Believe it or not, Congress has restricted Medicare’s ability even to negotiate the price of diabetes test strips to selected “pilot project” regions. Competitive bidding could save the government at least $50 billion over the next decade, which could be used to increase premium support for older Obamacare enrollees.
7. Antitrust reform needs to be part of the new package, too. Hospitals are merging with abandon. Every study says that although they say they are doing it to save money by consolidating services, prices always go up instead. How are insurers supposed to keep premiums under control if they can negotiate with only one hospital system that controls all the area’s hospital beds and most of the doctors and clinics?
8. The experiments in bundled payments (as opposed to paying for every episode of care) for knee and hip replacements or cardiac surgery, which Health and Human Services Secretary Tom Price has sharply curtailed, need to be restored and intensified.
9. Finally, tort reform should be included. Abuse of malpractice suits is not as costly as Republicans claim, but it is a real issue because it provides a reason — and an excuse — for hospitals to over-treat and over-test. If tort reform shaved just half of one percent off of health-care costs, that would yield close to $200 billion over a decade. Democrats need to stand up to their trial lawyer patrons on this one.
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