The Commonwealth Fund Blog

Reflecting on Health Reform—The Presidential Health Care Curse: Why Do They Bother?

November 19, 2013

Tags: Affordable Care Act health insurance health insurance marketplaces Reflecting on Health Reform

David Blumenthal

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

Buckeye Bellwether?

Two Weeks in October

Post Comment Read or Post Comments

WILLIAM BUTLER of Energy Independence Group says:
November 20, 2013

It is interesting that most of this discussion is about the insurers without a word about the insurers. It is very difficult for insurers to reduce the cost of serving a pubic that is addicted to government subsidized, processed, sugar and fat loaded process food. A public that injures more youth on the highway than on the battle field, a public that takes drugs and dries out at public expense, etc. Know thyself.
As you can guess, I am not running for public office. Bill

Jonathan M. Fuchs, FACHE of Health Management Consultant says:
November 19, 2013

Dr. Blumenthal provides a pithy and accurate summary of the woes associated with dragging the US into a practical and manageable health insurance paradigm. It is stunning in this day and age politicians continue to assert that the United States has the best health care system in the world. While that may be arguably true, it is only true for those who can afford top quality care. The continued lack of universal primary care coverage in many areas of the country; the inability of safety net/critical access hospitals to be financially sustainable and the inability to assess quality in a cost effective, clinically efficacious and transparent manner remain problems even universal insurance coverage would struggle to correct. With all the activity generally in healthcare reform the inability to provide a viable payment/coverage schema serves only to delay providing quality health care for all citizens. So kudos to this administration for taking on the political, clinical and insurance establishment. By no means is the ACA the endpoint. It is only be the beginning of a difficult traverse through the political manifestations of health care reform.

Humphrey Taylor of Harris Interactive says:
November 19, 2013

Reasonable critics of the ACA, who complain about the unbelievable complexity of the "system" - before and after the ACA - should remember Voltaire, that the "perfect is the enemy of the good".

I do not think that anyone in their right mind, who was starting from scratch, would have designed the system we have.

Unfortunately the only politically feasible reform was to build on the system we had before and to avoid alienating too many of the powerful stakeholders whose oxes would have been gored if we had changed to a simpler and better system, like those in many other developed countries.

Gijs van Oort of Healthcare Access San Antonio -HASA says:
November 19, 2013

Thank you for this macro-perspective of the ACA implementation; America seems ready to throw out the baby with the bathwater on technicalities mostly. While annoying and creating frustration, without allowing the new system to function, the benefits will never be quantifiable. And by continuously showing that the principles of health care for all works in other countries, we may counter some of the unqualified rhetoric.

I plan to share this with my Board.

Joshua Cohen of Tufts University says:
November 19, 2013

I agree with what is being said here. The problem is our President has failed to convince the nation of the need for health care reform. He could have taken a page from LBJ's playbook, but he did not. Surely, LBJ had an easier time enacting Medicare and Medicaid because of a less hostile Congress. But, he also told the nation in no uncertain terms why we needed Medicare and Medicaid, and that social insurance always involves a shifting of resources from young to old, well to sick, rich to poor. Invariably this is the case. It's foolish to hide from this as Obama has tended to do, in a futile effort to supplicate and appease.

The raison d'etre for reform is laid out in this blog post. And, it has been similarly explained in thousands of articles. Obama, however, has hardly ever addressed the crux of the matter. In an attempt to make everyone happy - including those with Grade D `insurance' - he has made virtually everyone less than happy. Pragmatism and compromise may be important to get a bill passed. However, clarity, directness, and communication, are essential in getting a bill implemented. Obama's achilles heel is a palpable lack of communication skills. Politically astute, but in practical matters (`getting things done') perhaps the worst President in modern times.

Sadly, in 2009, President Obama allowed those who oppose reform to frame the debate by remaining virtually silent when talk of death panels reared its ugly head. Since that time, the `debate' has gone from bad to worse. Rather than blame the other guys, I pin most of the fault with the President. Reactive, not proactive. Defensive, not aggressively selling his signature legislation to the people.