Is healthcare in America a right or a privilege? In order to answer this question, we need to understand the path America has taken towards the concept of universal healthcare. That path could have started with the Declaration of Independence where certain rights were considered “unalienable,” such as “life, liberty, and the pursuit of happiness.” But, of course, in the context of the time, the right to life did not include the primitive healthcare then available. Early Americans survived or died without the lifesaving treatments medical science provides today.
In the Eighteenth and Nineteenth Centuries, our modern concept of medicine and healthcare was still unimaginable. When settlers moved west, their covered wagon migrations rarely included doctors. People learned to take care of themselves with well-worn practices passed down through generations. Many died in transit. Though medical science advanced a great deal during the early Twentieth Century, it was not readily available to most Americans. By midcentury, most Americans still subscribed to well-established home remedies and “old wives’ tale” preventative measures. As a child, I still remember the foul taste of castor oil. It was the universal remedy for many ailments and required no doctor’s prescription. When my dearly beloved canine friend pulled me to the ground, no doctor sewed up the deep cut on my knee. Spot was more interested in a cat than my five-year old ability to hold onto his collar. But neighbors came to my rescue and staunched the bleeding until my mother could close the wound with kitchen tape. Today, my knee still displays a gash with scar tissue as wide as the original length of the cut. But my experience was not unique for that post-war period.
Although health insurance was introduced after the war, its availability was limited to those who could afford it or whose employer could provide it. Gradually, more and more companies offered this insurance to their employees as an additional job enticement. But the unemployed had no access to this insurance; and the retired had no assurance of health insurance in their retirement. From 1958 to 1965, Congress considered various amendments to the Social Security program to address healthcare for the aged, the poor, and the disabled. Senator John Kennedy had worked with Senators of both parties to advance his healthcare proposal. As President, he sponsored a Social Security amendment to extend healthcare to more Americans. But it was his successor, President Johnson, who negotiated this amendment through a barrage of adopted and deleted provisions in both House and Senate committees. Finally, on July 27th, the House passed the Social Security Amendment by a vote of 307 to 116. The Senate overwhelming supported the final bill by a vote of 70 to 24. The President signed it into law three days later, thereby establishing both Medicare and Medicaid. The new law allowed every worker to pay into a system that would assure him/her access to medical care after retirement. In a sense, this new “entitlement” program recognized both aspects of individual healthcare: personal responsibility and a social obligation. The former required every worker to pay into Medicare; the latter assured healthcare for all workers in retirement. Moreover, this new law established Medicaid which, together with Medicare, would operate equally in all States by addressing “the failure of some states to implement (healthcare) to the extent anticipated and thus the existing program is inadequate to solve the problem” (quoted from the Congressional Bulletin, September 1965, p. 6). Congress seemed to recognize the need for healthcare to meet basic expectations and to treat all citizens equally. Its non-partisan votes created the first nationwide standard for healthcare and established the entitlement programs we have come to accept as a basic right.
Nearly a generation later, President Reagan enacted the law that forced hospital emergency rooms to treat patients who could not pay for their treatment. Before he did so, critically ill patients could be turned away from medical care. I can remember that the only time I saw a doctor as a child was when my life was at risk. One such memory was of my father threatening a doctor on such an occasion. He demanded the doctor save his son or risk physical retribution. My father’s desperation was not unusual for the time. In these extraordinary, often life-threatening, situations, a Republican administration recognized that urgent medical treatment was morally required, regardless of the patient’s ability to pay for it. While ongoing medical treatment and “preventative care” were still not pervasive practices, emergency medical treatment was made an individual right for all Americans.
Today, modern medical treatment has progressed far beyond the ER and care for the elderly, the poor, and the disabled. It provides drugs and therapies that help millions of otherwise “healthy” Americans to live active and productive lives. And it can extend the lives of those suffering from heart disease, cancer, bacterial or flu epidemics, bone shattering or organ damaging accidents, and so much more. Babies used to die in the womb and at birth at an alarming rate, but not anymore. Women suffered more during pregnancy and died during child birth much more frequently than today. Preventive medical measures can keep us healthy and active for a much longer portion of our adult lives: colonoscopies, mammograms, annual blood tests, maternity care, and annual health examinations help us keep our jobs and personal lifestyles. Of course, these advancements in medical treatment are costly—in fact, medical expenditures now account for one sixth of our economy. And they raise two urgent questions: does every American have a right to the healthcare the medical community can now offer; and, if so, how can we provide that healthcare or, more simply, how can we afford it?
The Affordable Care Act (ACA), or so-called Obamacare, made possible the expansion of the existing state run Medicaid program, significantly extended the financial viability of Medicare, established competitive healthcare exchanges for purchasing private health insurance, and regulated the insurance market by capping insurance company profits and by standardizing coverage to assure preventive care for all insured, to allow children to remain on their parents’ plan until the age of 26, to remove lifetime insurance caps, to eliminate gender discrimination in premium costs, and to eliminate the practice of refusing coverage based upon previous conditions. For those who could not afford the costs of private insurance, the ACA provided subsidies. These changes were paid for by various fees and taxes paid by insurance issuers, by sponsors of fully funded health plans (large businesses), and by high earners. These high-income earners must pay an additional Medicare wage tax of .9% on incomes over $200,000 ($250,000 as a family) and a securities income tax of 3.8% tax on investment incomes over $200,000 ($250,000 as a family). The latter tax targets individuals with massive holdings in stocks, mainly millionaires and billionaires. The ACA does in fact represent a modest shift in wealth whereby tax revenue drawn from the rich is reallocated to subsidize health insurance for the less fortunate. For example, it was recently reported that 400 families in the richest 1% of the population in effect subsidize healthcare for about 750,000 enrollees in the exchanges. As a matter of public policy, the ACA also reoriented America in the direction of universal healthcare. Its basic assumption is that healthcare is one of those Jeffersonian unalienable rights, specifically, “that among these are Life . . .”
The ACA was passed in Congress by a Democratic majority. Though individual Republicans offered 143 amendments to the legislation during its nearly yearlong debates, committee mark-ups, and hearings, no Republican voted for it. Both Parties politicized their opposing positions to the point of absurdity. My first blog on this subject, entitled “Subtlety and Bombast,” attempted to find a baseline of facts amid the exaggerated claims and criticisms. (That blog seemed to have touched a cord and triggered a surge in readership, leading eventually to 8,000+ new subscribers.) It quoted the Congressional Budget Office to undermine the extreme positions taken by both Parties, that is, a trillion-dollar savings versus a trillion-dollar deficit in the Federal budget. It also explained the Parties’ differences on philosophical grounds, naively intimating that the financial argument might be no more than political hyperbole. Today, their differences expose a more realistic explanation of this partisan divide, specifically the Republican opposition to the ACA. For we can now see more clearly what this current version of Republicanism has been reluctant to reveal until now.
Recent antagonism against the ACA reveals the underlying truth behind Republican opposition. While the financial argument is and always has been the core Republican issue, the Party has deflected Americans from its real intent. First, it complained about the “trillion-dollar deficit,” then “the rising cost of healthcare,” and now “the death spiral.” But the ACA has not caused deficits or a self-induced devolution. In fact, America has reduced by two thirds the trillion-dollar deficits it incurred from Middle Eastern wars and the Great Recession, while it has simultaneously extended the solvency of Medicare and enrolled an additional 24 million people in health insurance. Healthcare is one of the two fastest growing segments of our economy and now accounts for one sixth of our GDP. Its 3.9% inflation rate, though nearly double the country’s growth rate of GDP, is still a relief from the double-digit inflation rates of prior decades. The real Republican issue with the ACA IS financial in nature, but NOT about deficits, inflation, or its financial instability. The real Republican issue is and always has been about the taxes that support the ACA, specifically, the .9% wage tax for individuals earning more than $200,000 and the 3.8% income tax for individuals earning more than $200,000 from securities. Republicans simply cannot justify taxing the well-off in behalf of universal healthcare. Could it be that they think the wealthy cannot afford to pay more to support the less fortunate among us? No, they just cannot accept healthcare as an unalienable right. If they did, they would have acted accordingly.
I must emphasize the fact that the current Republican Party is not representative of Republicanism or conservatism. Prior iterations of the Party gave full throated support for the creation of Medicare and Medicaid, as witnessed in the Sixties. Moreover, President Reagan defined conservatism to include emergency medical care for everybody. The Party has been well on the path to universal healthcare, until now. The current Party leadership is, by contrast, radically regressive and bears little resemblance to our forefathers’ Republican Party or to its own historical roots. But we do have individual Republicans who are or can be profiles in courage. They can lead America down a different path. But they must begin by stopping the despicable steps taken to dismantle the ACA and leave so many Americans without healthcare. Since the ACA was passed, Republicans have done whatever they could to discourage enrollment in the exchanges and force insurers out of the exchange market. Their assault now encompasses defunding the healthcare safety net former Congresses worked so hard to establish. Today, a Republican Congress and Administration have tried to undermine the ACA and the 52-year-old healthcare programs that insure half of our children, the disabled, the elderly, women, and low-income Americans. Let’s review what Republicans are doing versus what they could be doing to support healthcare for all Americans:
➣ Republicans have tried to make the ACA less affordable. The Party has filed several lawsuits that attempt to freeze subsidies or CSRs (Cost Savings Reductions). One such lawsuit attempted to put a hold on reimbursements for certain high deductibles, affecting seven million people and likely pricing them out of the healthcare market. At this time, those subsidies continue while the court allows time for the appeal process.
Versus: The President could order the Justice Department to defend this suit, but he has not done so. Congress could implement Section 1402 of the ACA, but it has not done so. Or it could just appropriate funds for these reimbursements, rather than sit on their hands while 7 million Americans face the possibility of losing their healthcare.
➣ The President has caused ACA premiums to increase in 2018. He has ordered Health and Human Services (HHS) to levy a 19% tax on ACA premiums. While the President’s order allows him to claim a significant increase in ACA premiums, 80-85% of the insureds will be reimbursed by tax credits via the ACA subsidies. For most, then, their effective premium expense will be unchanged. In other words, the President is willing to waste tax dollars to prove a point, i.e., that premiums are going up in the exchanges. Fortunately, our free press noticed his ploy—disingenuous at best, malicious at worst.
Versus: The President could rescind his scheme to artificially increase future premiums and subsidies.
➣ The President has ordered the IRS not to enforce the individual mandate. In effect, he is deliberately cutting off a source for ACA funding to make another political point—specifically, that it is no longer self-sustaining, but in a “death spiral.”
Versus: Instead of eliminating the individual mandate, Congress and the President should be reviewing ways to make it more enforceable and fairer. Its fees might be recalibrated to income. Or, as some Republican legislators suggested, non-compliance with the mandate might be penalized by higher premiums for any future private insurance application.
➣ The President’s budget defunds ACA marketing and future upgrades to its exchange websites. In other words, the President’s HHS will not advocate for the ACA or make any online improvements.
Versus: Obviously, the President must administer the government programs Congress establishes, whether he agrees with it or not. He can veto or propose legislation. But he should not sabotage legally functioning programs his office is obligated to administer. No President is above the law.
➣ The President’s HHS has attempted to shorten the ACA enrollment period. Coupled with not advertising for enrollment, this action by the President’s HHS attempts to suppress enrollments and thereby the number of healthcare recipients.
Versus: HHS should be encouraging enrollments for they entice more insurers into the exchanges, encourage price competition, and progress America further along the path to universal healthcare, one of the major goals of the ACA.
➣ The President’s HHS has needlessly increased paperwork for ACA consumers. It appears that HHS believes cumbersome paperwork will convince potential consumers that enrolling is not worth the effort.
Versus: Obviously, HHS should not be discouraging enrollments. Given the purpose of HHS and the ACA, this pointless obstructionism is oxymoronic.
➣ Republicans have loudly and consistently discouraged insurance companies from participating in the exchanges. Some Republican governors and congressional representatives have touted the “death spiral” tagline even though the 2017 enrollment surpassed expectations. Instead, they mention extreme premium increases in Arizona and Colorado or the number of counties with only one insurer in Pennsylvania and Ohio. They never explain these problems in the broader context which includes more than 12 million enrollees through the ACA exchanges.
Versus: A Republican Congress and Administration must address the fundamental issues that explain why premiums are costlier in some markets than in others and why insurance companies are pulling out of many exchanges. First, they will discover they need to stop the anti-ACA political campaign which includes lawsuits, threats to curtail subsidies, and legislation to rattle the insurance market’s risk sharing. Secondly, instead of justifying past political positions, they need to work across the aisle with Democrats for a common goal, i.e., better and affordable healthcare for all Americans.
➣ The President and Congress have now decided to defund the ACA instead of repealing it altogether. By eliminating its tax supporting structure, they not only reduce the private insurance subsidies and eliminate the Medicaid expansion, but also roll back the 52-year-old Medicaid program and potentially impact Medicare costs as well.
Versus: The current American Health Care Act (AHCA) is a tax bill masquerading as a healthcare bill. If Republicans truly wanted to create healthcare legislation, they would build on what the ACA has accomplished. Instead they are eviscerating it to fund tax breaks for the wealthiest among us.
➣ Republicans are destabilizing the healthcare insurance market by eliminating the risk corridors. Senator Mark Rubio added an amendment to a 2015 spending bill that limited the government’s ability to fund shortfalls in the risk sharing fund. Insurers paid $362 million into the risk pool, far short of the $2.87 billion needed for the first year of the ACA. The purpose of the fund was to stabilize the insurance market during the first few years of the exchanges. The fund, established in Section 1342 of the ACA, phases out in 2020 by design. Legislating its early demise allows Congress to drive insurance companies out of the exchanges prematurely, before they can establish a firm foothold. Of course, Republicans understand the need to stabilize the insurance market. Their proposed AHCA includes funding for risk pools in each state. They fully know how to aim an arrow at a bullseye in the kill zone.
Versus: Instead of eliminating the ACA’s risk sharing, Republicans should have reviewed its effectiveness and shored it up. Because of their actions, many insurers have dropped out of the exchanges. In effect, their claim of an ACA “death spiral” was never an accurate assessment. It was their promise and mission. But it is not too late to re-establish the risk corridors and perhaps extend it beyond its original 2020 expiration to remedy the damage already done by Congress.
My previous blog on this subject (“Why Repeal and Replace Obamacare?) delved into many areas where the ACA could be enhanced. Although it focused on providing healthcare to more Americans, it also accomplished better healthcare outcomes by promulgating preventative care and standardizing more effective treatment options. These benefits may in part account for a significant reduction in the healthcare costs inflation rate. But the fact remains that Americans pay more per capita for healthcare than any other developed nation.
It is true that we have many of the most advanced medical facilities and research centers in the world. People from around the world come to America for leading edge treatment for conditions such as cancer and diabetes. However, for most Americans, high end medical treatment is either not available or not required. In terms of the medical outcomes most desired and anticipated—such as successful birthrates, long life expectancy, timeliness of non-emergency care, and other commonplace treatments for infections, workplace injuries, and so on—America is last among the other eleven developed nations evaluated. The obvious conclusion is that we are paying more for less.
My personal belief is that the ACA not only moved America well along the path to universal healthcare—its primary goal—but also pushed our medical community in the direction of lower costs and better outcomes. Regarding the latter, HHS has tracked an upswing in treatment successes. In part that success can be attributed to better preventative care. But it is also the result of the HHS empowering its innovation center, identifying best practices, critiquing hospital death rates, funding medical research, and propagating its centralized learning throughout America’s healthcare system. More successful treatment outcomes and less visits to the ER have also accounted for the decrease in medical cost inflation. Incapacitating the innovation center or the other functions of HHS by defunding them will not reduce healthcare costs, as the current Republican Administration seems intent on accomplishing. We would be pulling the plug not only on the healthcare improvements the ACA has afforded us but also on the cost savings it has sustained.
The ACA did not address, however, the price structure that still exists within the American medical community. Reversing some of the Republican political positions listed above will help lower costs and stop the Party’s attempts to increase it further. But there are more specific cost saving measures that may be taken and that the ACA did not address. The following are a few suggestions:
➣ Eliminate the “charge master” used by nearly all U.S. hospitals. At best, insurers negotiate prices that on average are only 40% of the ridiculously high charge master price structure. That charge master price is pegged as much as forty times the actual costs. It is an arbitrary number that differs from hospital to hospital across the country. By contrast, Medicare bases the cost of medical services on actual costs plus a reasonable profit margin to pay for hospital operations and innovation. The result is that insurers often pay 10x (the “x” here is an exponent, not a factor, please forgive the rendering limitation) times more than Medicare for the same service. If Congress proposed some form of price control on medical services—perhaps using Medicare pricing as a starting point—it would significantly bring down healthcare costs and, therefore, premium costs.
➣ Allow the government, perhaps via Medicare or the Veterans Administration, to negotiate with the pharmaceutical industry on the pricing structure for all drugs sold to Americans. If the U.S. paid what other countries pay for pharmaceuticals, for example, drugs would be 40% cheaper; and insurance premiums would be 6 to 8 percent cheaper.
➣ Adjust the income threshold between upper income eligibility for ACA subsidy to include those who can’t afford private insurance. One of the issues with the ACA is this threshold which affects people who have more income than four times the poverty rate. Their premium costs for private insurance is often much more than they can afford. But Congress could adjust the sliding scale currently used for subsidies to include those currently trapped in this zone of unaffordability. For those so affected, their healthcare costs would decrease. Admittedly, it is not clear whether overall healthcare costs would do likewise. The CBO would have to weigh many factors, such as, improved healthcare outcomes, the insurers’ premium adjustments on other offerings, increased costs for ACA subsidies, and, of course, unforeseen consequences. For example, what do we know of this affected class who are forced into high priced private insurance? Are they near retirement? Are they families with children who might qualify for CHIP? You see, healthcare really is complicated.
➣ Finally, the ACA-caused shift to larger healthcare institutions raises the issue of uncontrolled profits in these institutions, including non-profits. For example, some highly successful hospitals, like the Cleveland Clinic and the Mayo Clinic, are multi-billion-dollar corporations with hospital outlets in many locations. Of course, these are highly regarded institutions. But they are also publicly regulated. Can we be assured that their profits are reinvested in the best interest of the public they serve?
I have yet to meet a fellow citizen who is thrilled about paying taxes. Most of us want assurances that justify what our taxes buy in the way of public services and security. For example, recently the President christened the most expensive ship ever built, the USS Gerald R. Ford aircraft carrier. It costs 13 billion-dollars. The President promised to spend an estimated 43 billion-dollars to build three more such behemoths. My question: are we really willing to spend our national treasure in preparation for the last war? The next war, if there is one, will begin in space and on the internet. It will include laser guided missiles and radar cloaked planes. One such device could destroy the USS Gerald R. Ford and its forty thousand sailors in just one pass. Now I imagine there are arguments that can rebut these comments. But should we not weigh the benefits of stabilizing the ACA risk pool with a public expenditure less than half the cost of one of these aircraft carriers? American healthcare is an immediate concern. How do we balance that concern against an exorbitantly expensive weapon that may be obsolete in a future attack? But, aside from practical considerations, we should be considering what motivates us as Americans: is it fear of future threats or the will to live our values?
Universal and affordable healthcare is a right that makes our ongoing fight for “life, liberty, and the pursuit of happiness” possible. Without those values, what would be fighting for?