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A day late and a dollar....

The Republicans have finally gotten serious about health care reform.  The bad news for them is that they are four years too late.

Earlier today, Senators Hatch (R-UT); Burr (R-NC); and Coburn (R-OK) released the details of their Patient Choice, Affordability, Responsibility and Empowerment Act (a.k.a. “Patient CARE Act).  Hatch, in particular, is no stranger to health care issues, having co-sponsored the State Childrens Health Insurance Program back in 1997.

The bill largely follows the outlines of a health care reform proposal developed by a group of conservative policy wonks dubbed the “reformocons.”  In an article published in Commonweal’s print edition in December, I questioned whether the wonks would find Republican politicians willing to carry their water.  I am happy to have been proved wrong, as the return of Republicans to the actual work of legislating is a welcome development.

The bill genuflects in the direction of the Tea Party faithful in its first article, which repeals the Affordable Care Act in its entirety.  Sort of.  Except for all the provisions dealing with Medicare.  And the provision allowing children to remain on their parents’ health insurance plan until age 26.  Oh, and several of the insurance regulations too.  Did I mention there are subsidies to help people buy insurance? And….well, you get the idea.

This is not to say that the bill does not make major changes to the Affordable Care Act.  It eliminates the standard benefit package, the individual mandate, and the federal health insurance exchange.  While there are subsidies, they are channeled through the tax system and are less generous than the ACA’s.   It also makes significant changes to the federal Medicaid program, giving states considerably more flexibility to redesign their programs but also shifting more of the financial risk from the federal government to the states.

What is striking, however, is how much this “repeal and replace” proposal concedes to the essential structure of Obamacare.  The bill retains the ACA’s prohibition on lifetime caps on insurance coverage and requires that insurers allow individuals to enroll in a new plan without premiums being adjusted for their health status as long as they have been continuously covered for more than 18 months.  While the bill eliminates the individual mandate, it contains a “soft mandate” in the form of strong incentives for individuals to remain continuously covered or risk losing the aforementioned protection from being re-rated when switching plans.

The overarching vision that underlies the bill is the shifting of more responsibility and risk to individuals.  Rather than comprehensive insurance coverage (which they believe is largely responsible for the United States’ excessive rate of health care cost growth), the drafters would clearly prefer a world in which more individuals were covered for truly catastrophic health care costs, but paid more routine costs out of pocket using medical savings accounts. 

To give the reformers their due, they do not shrink from trying to move the current employer-based system in this direction.  One of the most significant reforms in the bill would make a much larger portion of employer-provided health insurance taxable as income to employees as compared to the ACA.  While embraced by many economists on the left and right, such a change will bring significant disruption to the employer-based system.  Employers will be in the uneviable position of having to either scale back health benefits or see their employees face hundreds of dollars in tax liability on “income” they can’t spend. 

Many questions can be raised about whether the bill will work the way the drafters hope.  Greater competition among health plans will not bring costs down unless we are willing to confront the challenge of local hospital and health system monopolies.  Health Savings Accounts are usually modelled on IRAs, which have largely failed as a device to get lower and moderate-income families to save more for retirement.  Malpractice reform (a cause I support) is a good idea for many reasons, but most studies have found that “defensive medicine” has little impact on the nation’s health care costs.

Nevertheless, I give the authors of the legislation an “A” (well, perhaps a “B”) for effort.  The proposal is a serious one.  The problem, as I suggested earlier, is that it is four years too late.  The absolute earliest that this bill could be passed into law is 2017.  By that time, tens of millions of people will have obtained coverage under the provisions of the Affordable Care Act.  At that point, the political costs of “repeal and replace” are likely to be more than even many Republicans will want to bear.

If Republicans are dissatisfied with this state of affairs, they have no one to blame but themselves.  Back in 2009, the Democrats were desperate for Republican support to put a bipartisan imprimatur on the ACA.  If the Republicans had been willing to bring a proposal like this to the table, the result could have been a productive dialogue about the appropriate balance between individual and collective responsibility when it comes to health care.  There is much to be said for directing more of the resources that currently flow into health care into other productive uses.

But that was the road not taken.  The Republican leadership, led by Senator Mitch McConnell (R-KY), decided that the party’s best course was intransigent opposition.  They placed a large bet on the 2012 election that failed to pay off.  Now the bill comes due.

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Would Democrats in the Senate even allow this bill to come up for a vote?  I wish we could somehow lower the political temperature and step away from the all-or-nothing brink.

The salient fact seems to be that Americans aren't satisfied with Obamacare.  So what to do?  Of all the possible choices before our leaders, why isn't "Repair Obamacare" a mantra?  Don't prop up an upopular and, apparently, deeply flawed program; don't repeal it and replace it with something else; fix it.  There is a bipartisan opportunity here.  Will any of our leaders seize it?  

 

I agree that the three senators have put themselves in the position of sky divers who just jumped out of an airplane and have suddenly decided they would rather be water-skiing. I'd suggest they land first before trying any new stunts. This does give the Rs a "replace" to talk about after four years of "repeal and replace" without a replacement in sight. (Obamacare, you might recall, is basically what they suggested as a replacement for "Hillarycare.")

By removing the dreaded mandate, Hatchcare removes what would make their plan financially responsible. Obamacare needs near universality so the healthy can pay (while they stay healthy) for the ill. Hatchcare leaves the problem of the uninsured 20-year-old motorcyclist, riding freely without a helmet (since the law was repealed in a burst of freedom signed by Gov. Jeb Bush) who gets clipped by a white Mercury Grand Marquis and skids across the highway removing the skin and part of the skull from his uninsured head. I have been unable to figure out the funding for Obamacare, but at least it covers that yo-yo, which Hatchcare does not.

Frankly, I don't believe the Obamacare finances will ever work. I didn't think they would work when they were the Republican replacement for Hillarycare, either. But Hatchcare can't begin to explain its financial underpinning, which looks like subsidies for the rich and bribes for the poor which the poor won't have enough up-front cash to use.

But, in any case, I think we ought to analyze the failures we have before we set ourselves up for another round of them. Of course, we could copy some country that did it right, oh, 50 years ago, but that would be unAmerican. Anyway, I wouldn't give Hatchcare a 1 in 5 chance with the House crazies if it ever comes to a vote there.

The ACA has been in effect for four weeks. Granted the rollout was awful, but I think it's a little early to identify, let alone fix, any defects. And quite a few people seem to be pleasantly surprised by the coverage now available to them, often for the first time. Let's give it at least to the end of the first quarter before turning it over to the tender ministrations of those noted bipartisan lovers of universal health care, the Republicans. If I weren't such an innocent, I would say that this proposal by Hatch, Burr, and Coburn is more an effort in an election year to deflect criticism for having no policy but obstruction, rather than an honest attempt to improve the nation's health care and lower the cost. They've had four years to make constructive suggestions, and what we got was Hitler! Holocaust! Death Panels! Tyranny! Now they're scared that the thing might work.

John, I hope the juxtaposition of my comment with Jim's didn't give the impression that I am ready to give up already on Obamacare. I'd say it would take at least a year -- that's next fall, after the elections -- to have any idea of what fixes it might need, and another year to be sure it won't work.

As I said, I don't think it will. But if we are going to talk about "salient" facts, the first one is that this is a Republican plan passed by Democrats, a good number of whom were doubtful all the way and are not likely to fall on their swords to protect it. I don't think we should kill a Republican plan only to replace it with another one which, by definition, is a watered down version of it.

The ACA has many parts - it is a complex document.  It has been in effect for two years or more - examples of this:

- 19-26 year olds can now be covered on parents' plans

- annual limits have been removed

- pre-existing conditions limitations have been eliminated

- wellness coverage (annual visit co-pays removed; coverage of other wellness visits)

- last year, thousands of members received checks because their plans had to use 85% of premiums for healthcare costs and if they didn't, then members were reimbursed

- many large insurers have begun to move to *health home* approaches to treatment (these are best described as one stop approaches in which a patient's care is coordinated among PCP, specialists, etc.)

- many large insurers are moving to electronic patient records - effective, efficient, better outcomes, saves money

- many large insurers are transitioning from Fee for each Service to payment for outcomes (this is the most expensive part of US healthcare - we pay for every service rather than outcomes)

- roughly 50% of all states have expanded Medicaid coverage (reducing the number of uninsured)

- this is only a partial list - parity federal rules have come out; etc.

Sorry, but one of the major issues in this whole debate is that folks don't understand ACA, how it is structured, its many complex moving parts, and its impact on US healthcare delivery.

By what you posted above, we continue to provide misinformation.

No, Tom, I was not responding to your comment, which I didn't see until I posted mine, but to the idea that the ACA is already a failure. That judgment may depend on whether we measure it against what came before or against how much better it could have been if every Republican in Congress had not sought to kill it first in the womb and now in the cradle. If it is really as bad a law as they say, they should be content with the electoral reward they will win when it crashes. But they fear the opposite.

The idea that "Americans are not satisfied with Obamacare" is misleading if they have had little or no experience of it until very recently. They are dissatisfied, of course, with the horrors they have been told it will bring upon us, but very well satisfied with real changes like the one on pre-existing conditions, a change which this new proposal appears to at least dilute.

When I wrote, "Let's give it at least to the end of the first quarter...," I was being facetious. I don't think there will be any serious changes in the law until after the next presidential election.

I'm dissatisfied with Obamacare because it's not single payer.  I doubt that's comforting to Hatch et al. 

Angela, +1. Deep dissatisfaction here, but not for the reasons politicians on either side of the chasm want to hear.

A good analysis written by Ezekiel Emanuel (Rahm's brother and a physician) is posted at the New York Times website.  As always in the Times, the comments are also very good.

Do you think they're on to something about containing costs by having consumers pay out of pocket for more routine expenses? 

On my medical insurance, I grit my teeth when I see the $$ amount of claims compared to what insurers pay.  It just reinforces for me how self pay are getting hammered. My daughter's getting physical therapy for her knee; the therapist is submitting claims for @$300 per session, the insurer allows $45.   Maybe it would be cheaper if insurance didnt cover this for anybodyy, and we all paid $45, with people who can't afford the cost getting some kind of direct subsidy/or reimbursement, rather than the money flowing from the insurer to the practitioner with the practitioner  then charging $300 to uninsured people.

 

I think Irene's question is worth thinking about. I have always been able to pay for doctor visits, meds, and bloodwork (hospital allowed a payment plan) out of pocket (cuz I had no insurance), and these items, when I totalled them up at the end of the year, were far less than the $385 per month I would pay in insurance premiums for the cheapest policy available to me under Obamacare.

So: If I were able to pay LESS than $385 per month and be covered ONLY for hospitalization and more expensive diagnostics needed every few years, that strikes me as a fairly good deal. 

In addtion, the lack of health care among many Michigan residents in my low-income rural area has actually caused many local docs to lower their doctor visit prices or set up clinics on Saturdays to do pro-bono work.

I also think Obamacare needs another year to redeem itself. The Web site is at least navigable now, but what's available to you and how much subsidy you get depends to a large extent on how you complete your application (yourself alone or your entire family), whether your state has expanded Medicaid and when that expansion kicks in. (Michigan's kicks in in March, so I really won't know the lay of the land until the Obamacare sign-up window is nearly closed.) 

I realize the GOP line is that Obamacare is already a failure and spending more money keeping it open is just chucking more down the rathole. However--adn I say this as a low-income person deeply disappointed in Obamacare--I think it's going to be easier to streamline and amend what's already there than repealing it and starting over. 

-I think it's going to be easier to streamline and amend what's already there than repealing it and starting over.

I agree.  And it would be best if a bipartisan way can be found to do this.  

Jean, I've found your comments on Obamacare, from the point of view of someone who previously lacked health insurance, to be very valuable.  I've also spoken recently with a couple of friends who are from another category of Obamacare consumers: those who previously had individual policies which no longer are renewable, so they must now purchase plans on the Obamacare exchanges.  I've read  that most of those who have purchased Obamacare so far are from this category (rather than the previously-uninsured).  My friends are somewhat disgruntled, as they were more or less satisfied with what they were buying previously, had some understanding of what the policies paid for and didn't pay for, and knew that the policies were within their budgets.  One friend in particular has some serious health issues and is frightened that what he chooses will somehow curtail the quality of his care.  And in all their cases, it appears that the premiums on the Obamacare plans will be considerably higher than what they were paying before.  

Not all of these objections are show-stoppers; they may not be compelling reasons to kill Obamacare; they may all be solvable problems.  But they're not trivial, either, and they add up to dissatisfaction.  My friends are looking at this from the point of view of consumers, and they're asking, "Where's the value?"  For them at least, Obamacare is delivering less, or at least they perceive or fear that Obamacare is delivering less, at a higher price.  I don't know if there is a way to reswizzle the price points and feature packages to make them more appealing to consumers like my friends. 

All this is anecdotal, so take it for what it's worth.

 

JP - OTOH, had family members who were in the same category as those you described.  But, last year, one hospitalization revealed to them that their plan was *sub-standard* and left them with significant bills to pay.

There is always constant churn in insurance plans year in and year out.  80% of insured get coverage via employers.  Large and small employers constantly change their medical vendors to get better cost savings, tweak plans and specific coverages to guard against risk from certain conditions, etc.

Some (if not most) ot those who are complaining about their plans ending (even without PPACA) would have seen either plans changing or getting even less coverage.  Fact Checker has also found that some claiming that their plans ended and then signed up on Healthcare.gov and wound up paying significantly more are quoting a ACA plan without the ACA subsidy (so as to make their point even bigger).

Finally, one of the driving principles behind PPACA was the fact that US healthcare costs were continuing to increase (at times in double digits).  Ex;perts agreed that the inclusion of wellness (no co-pays) can start to address the upside down nature of US healthcare - basically, 80% of costs go to emergency care for conditions that have been ignored or denied (obesity, heart disease, diabetes, chronic pulmonary diseases, etc.).  So, a huge chunk of our medical dollars go to last minute solutions rather than a more comprehensive approach that pays for health vs. pays for sickness.

There is always constant churn in insurance plans year in and year out.  80% of insured get coverage via employers.  Large and small employers constantly change their medical vendors to get better cost savings, tweak plans and specific coverages to guard against risk from certain conditions, etc.

Good point. When I had employers that offered health care insurance, the percentage of the premiums I was required to pay as well as coverage changed on a yearly basis. The ACA does not control all the market and societal forces that drive health care costs up. One of the big health care changes that's already upon us is the aging Baby Boom generation. Many of us are already getting knee/hip replacements and having our first bypass surgeries.

My guess is that as we age, we will be increasingly discouraged from highly invasive treatments to extend length but not quality of life. 

 

"My guess is that as we age, we will be increasingly discouraged from highly invasive treatments to extend length but not quality of life."

As someone in that upper age category, I agree that the finite resources are better spent on those with longer lives ahead of themselves and a better chance of actually improving, not just "living" a bit longer.

Most of us have seen way too many people "dying in place" surrounded by equipment but with no chance over leaving, improving or actually living.  To be kept alive is not the same as living, no matter what anyone says!