By David Blumenthal
Until now, virtually every president who has dabbled with comprehensive health reform has failed spectacularly, often at huge political cost. Think of Harry Truman’s lonely campaign for national health insurance, Jimmy Carter’s devastating conflict with the late Senator Edward Kennedy over universal health care coverage, the first George Bush’s ineffectual (and little-remembered) health insurance proposal, or Bill Clinton’s damaging first-term effort to pass health reform.
Health reform is a presidential nightmare. No sane presidential consigliere would ever recommend his or her boss try it. Our health care system is so complicated and convoluted that any conceivable proposal is bound to make someone worse off. And in health care, worse off can mean real pain and suffering that creates powerful, emotional stories that echo through the news cycle. There is simply no way for presidential health care reformers to avoid grievous political harm, as the experience of President Barack Obama is now demonstrating in spades.
Which raises the question: why bother? It would have been so easy for President Obama, in the midst of the Great Recession of 2008, to kick the health care can down the road, saying that his all-consuming priority was economic revival, and that health reform could wait.
The answer provides critical context for the relentless stream of troubling news—and the cacophony of charges and counter-charges—about the implementation of the Affordable Care Act (ACA) that fill the media each day. The reason to proceed with this painful technical and political process is that there is no alternative. Before the ACA, the current health care system—and especially its private insurance market—was collapsing before our eyes, like a house tipping into a sinkhole.
Last week the Commonwealth Fund released its 13th cross-national survey documenting health care experience in the developed world. Based on responses from more than 20,000 individuals in 11 countries, the survey shows unequivocally that the United States has the worst health insurance among industrialized nations. Whether you’re talking administrative hassles, out-of-pocket expenses, costs of administration, complexity of policies, or adequacy of coverage, the U.S. consumer gets a bad deal.
The system is not only bad, but getting worse. Every year, more people lose insurance as they or their (usually small) employers get priced out of the health insurance market by rising premiums. The Commonwealth Fund biennial health insurance survey shows that 55 million Americans are now uninsured and, equally telling, another 30 million are underinsured, meaning that they spend more than 10 percent of their income on medical expenses despite having health care coverage (5 percent if their income is under 200 percent of poverty). The U.S. has more uninsured and underinsured citizens than the entire population of Germany, where, by the way, private insurance organizations compete, no one is uninsured or underinsured, and the economy is thriving.
The individual and small-group insurance markets in the United States—now ground zero in the ACA rollout war—are particularly dysfunctional, and were imploding prior to the enactment of the law. In these markets adults report paying high premiums and facing high deductibles and copayments for plans that are often insurance in name only: they lack prescription drug and dental coverage, exclude services covered for subscribers in larger groups, and limit annual payouts. Not surprisingly, consumers in the individual market spend a larger share of their income on out-of-pocket costs and experience medical debt and bill problems at higher rates than those with employer-based insurance.
And people with these problematic policies are in some ways the lucky ones. Prior to reform, insurers had the unfettered ability to set premiums based on an individual’s age and health history, creating financial barriers that were difficult or impossible to overcome for many older adults or those with chronic health problems. A 2011 Fund survey found nearly half of those who tried to purchase individual coverage never ended up buying a policy, with 80 percent of those who tried to buy it saying the premium was too high, the deductibles and copayments were too high, or the plan did not cover a preexisting condition.
Individual and small-group insurance policies are products with no future unless those markets are reformed to make coverage affordable, and to protect consumers against insurance that, while seemingly cheap, provides no meaningful protection against the cost of illness. Private insurers recognize this fact, which is why they have been such steadfast (though quiet) supporters of the ACA and the marketplaces it is trying to create.
Reforming the individual and small-group markets is precisely the purpose of the ACA marketplaces and their regulations, which set a floor under the quality of individual and small-group policies. It is these minimum standards and expanded consumer protections that many pre-reform individual and small-group market policies did not meet. The new regulations have prompted insurers to notify many subscribers that such plans would not be available beginning next year. Policies meeting new minimum requirements will cost some currently insured individuals more, especially the young and healthy, who were more likely to purchase the skimpy policies that have been so prevalent. While some of these consumers will be unhappy with premium increases, they will be grateful later if they get sick. They will also be guaranteed that, as they age and come to really need insurance, a private insurance industry will exist from which they can purchase meaningful protection against the cost of illness.
Until 2013, we’ve never had the chance to see what would happen when a president who wanted health reform got what he wished for. The sight isn’t pretty, but that was inevitable. This is hard, costly, painful but essential work. It could have been managed better. But there is no turning back.
Read other posts in David Blumenthal's "Reflecting on Health Reform" series:
A Tale of Two IT Procurements
The Marketplace Experience: Month One
Two Weeks in October