The ACA fix (Part 2)

“No one knew healthcare could be so complicated,” Trump famously declared with childlike wonderment. At times it does seem quite complex, as the ACA is the bill we can't live without, but might not survive by its own legislation. There has been a lot of discussion about whether to repeal or replace by the Republicans while a very vocal public has successfully begged their representatives to have the ACA remain, at least until something demonstrably better is offered.

However, there hasn’t been much discussion of repairing the ACA. Is it possible to repair the ACA? If so, how, and what would that legislation be?

First we need to recall why it’s broken. There are two main places where ACA legislation currently fails. The first is soaring costs. In 2016, Arizona’s average price for ACA insurance rose over 115% while nationwide plans raised 25%. The other problem with the ACA is dwindling plan options. In many places there are less than 3 options and in some regions there are no plans left.
Ultimately, the problem is that the ACA is missing vital components for successful long term implementation. It simply was never completed. TWR would like to propose a fairly simple plan to repair the ACA: all existing ACA provisions would be kept and two would be added.

1- Price Controls:
Price controls are the obvious and straight forward way to control prices. Price controls should not just be applied to the price of coverage for ACA insurance, but more importantly to the chargemasters used by hospitals, which the insurers are also victim to, but to a lesser degree. The chargemaster is a rarely seen document detailing every product and service the hospital offers, and what they charge. As Steven Brill explains in his article, “Bitter Pill: Why Medical Costs are Killing Us,” (https://www.uta.edu/faculty/story/2311/Misc/2013,2,26,MedicalCostsDemandAndGreed.pdf) “No hospital’s chargemaster prices are consistent with those of any other hospital, nor do they seem to be based on anything objective — like cost.” Prices are consistently dozens of times more expensive then what providers’ receive from Medicare, which is price controlled. “By law, Medicare’s payments approximate a hospital’s cost of providing a service, including overhead, equipment and salaries.” Many hospitals grossly overcharge while claiming to be non-profit. Added together, it’s actually billions in profits, which a handful of owners and CEOs are not required paying taxes on. And those profits are made on the backs on the poorest in their communities.

Uninsured individuals pay by far the most, but even the insurers have limited ability at controlling the sky-rocketing prices. Excessive costs begin with the pharmaceutical providers, continue with the hospital’s chargemasters and manifest in soaring insurance costs whether on the ACA or private insurance. The result is not a free-market where cost and quality determine success, but a type of “totalitarian seller’s market” where you are required to pay, or die, without knowing costs. In this situation one should never expect emergent free market solutions, such as quality advantage or innovation due to competition. This explains why the US “ranked last overall among eleven industrialized countries on measures of health system quality, efficiency, access to care, equity and healthy lives.” Significantly, the US was noted to have the highest costs while also displaying the lowest performance. (http://www.ajmc.com/contributor/julie-potyraj/2016/02/the-quality-of-us-healthcare-compared-with-the-world/)

Understandably, tax payers might not want to pay for others healthcare, but why not let uninsured individuals have the option to pay, out-of-pocket, the Medicare prices? It doesn’t cost tax payers a dime while the hospitals claim to be non-profit. If we also let ACA insurers pay Medicare costs, it will help prevent ACA plans from having volatile pricing.

Price controls on hospital chargemasters is just one part of controlling ACA prices. The other part is directly controlling ACA plan prices. Consumeraffairs.com reports record profits from insurers saying, “In July 2016, UnitedHealth celebrated revenues that quarter totaling $46.5 billion, an increase of $10 billion since the same time last year. Company filings show that UnitedHealth’s CEO Stephen J. Hemsley made over $20 million in 2015…” and Aetna recently reported record annual revenue of over $60 billion. The insurers are doing quite well while Americans are suffering.

Healthcare reform is intended to make it more accessible and affordable, right? Then price controls are necessary for a functioning ACA. Progressives urged for price controls from the beginning, however, the Democrats made the concession to leave out price controls, trusting insurers not to take advantage of the public. But instead, the insurers raised ACA prices until their low-income plans became functionally worthless before leaving ACA exchanges, bringing us to the 2nd necessary provision to add.

2- Mutual Mandates:
As discussed yesterday, the unpopular individual mandate could be removed, but it might raise the cost of ACA insurance, making price controls all the more necessary. However, we’re suggesting the individual mandate remain for three reasons. First being that it leads to universal coverage, the second being an added measure of price control and finally to entice the insurers into accepting their own mandate. The “Insurers’ Mandate,” we’re suggesting would state “to be able to access a state’s market the insurer must offer at least one price controlled plan in that state’s ACA exchange.” They will in turn know that the entire state’s populism will be mandated to purchase their product. If they don’t participate in price controlled ACA pools, they forfeit their state health insurance license. If they choose not to participate, it will open competition potential for innovators, making free market solutions an actual possibility.

This is a fairly easy to understand approach to fixing what we already have on the books, which is the ACA. Besides doing anything less than a single-payer public option, such as H.R. 676, this would be, possibly, the only solution.

But the Republicans are offering counter-productive solutions. By removing the individual mandate and offering high-risk pools, the costs will soar even more. Tax credits and healthcare savings accounts won’t pay for emergencies. They can’t let insurers offer across state lines without losing the option for a mutual mandate. Plus if they do the insurers will all locate in the least regulated state, likely a Dakota, and the public will have even poorer coverage than now.

Meanwhile, the Democrats are happy to stand-by and watch the GOP fail, at our expense. Fortunately, some establishment Democrats have started to agree with the progressive wing of the party, saying the answer is a single-payer public option. But they don’t offer any repairs to the ACA… so if comes to an independent online news source to suggest these simple solutions, I suppose the solution should be called Wrightcare.