For starters, the Department of Health and Human Services published an article in Health Affairs saying healthcare costs are outpacing economic growth and accelerating. In the United States, $3.35 trillion is now spent on healthcare each year. That’s $10,345 for every man, woman, and child. What’s more, 5 percent of the population consumes half the total. Americans spend a total of $350.1 billion on out-of-pocket costs, and that number is expected to rise to $555.8 billion in ten years. The industry is stressed as baby boomers become eligible for Medicare, and Medicaid and subsidies provide better coverage for more people and thus increase utilization. As if this isn’t enough, President Obama, just two days before the report came out, opined in an article for the Journal of the American Medical Association, “Too many Americans still strain to pay for their physician visits and prescriptions, cover their deductibles, or pay their monthly insurance bills.” Medicare funding, incidentally, is on a trajectory to zero out in twelve years.
Obamacare’s opponents claimed the program was a thinly-veiled ploy to squeeze private insurers out of the market. Now they can say, “I told you so.” Back in April, UnitedHealthcare, the nation’s largest insurer, announced it would be exiting the Obamacare exchanges in thirty-four of the states it serves. Having already lost $720 million from its involvement, UnitedHealthcare expects to lose about another $500 million this year. The healthcare giant follows in the footsteps of Aetna, Blue Cross Blue Shield, and Humana, BCBS having lost $1.5 billion in 2015. As they struggle to cover more people with more health issues at lower rates, insurance companies and employers are passing more costs on to the paying customers, many of whom are forced, by double-digit premium increases, to opt out. Now, private insurers, like Aetna and Humana, and Cigna and Anthem, are undergoing mergers, reducing the field of big players from five to three.
Which is the opposite of what advocates of Obamacare claimed would happen. Obamacare created co-ops as one terminus in risk corridors, big insurance companies with high overhead being the other. According to the plan, insurance companies’ excess profits would go into a fund that would metaphorically slide financial aid down the corridor to less-profitable companies. Somewhere along the way, a price would be found where the insurance companies with unsuccessful business models fared as well as the efficient ones. What happened in reality, was insurance companies proved to be generating less overhead than government expected; so much so, that the latter had to back out of its promise to pitch in to the corridor any shortages the former couldn’t cover. Private companies ended up asking $2.87 billion in reimbursement, and the government only covered 12.6 percent of the damage. That forced all but eight of twenty-three co-ops to close – so far.
Adding insult to injury, the House Ways and Means Committee and the House Energy and Commerce Committee released a report July 7 leveling the current administration has been illegally funding Obamacare. House Republicans claim the program’s cost-sharing program, which subsidizes copayments for indigents, has, to date, spent $7 billion from the US Treasury without authorization from Congress. What’s more, the cost-sharing program and Obamacare’s insurance premium subsidies source the same fund, something Treasury lawyers forbade in 2012. On top of that, the Republicans charge the administration has on multiple occasions obstructed their attempts to obtain information on expenditures intentionally hidden in contorted budget gimmicks.
Rushing to the rescue are House Republicans, led by Speaker Paul Ryan. They released an outline for Obamacare’s promised and long-awaited repealer and replacement. “A Better Way on Health Care” is only a sketch to give constituents hope, its drafters saying nothing would pass as long as Obama is in office, and any details could and would be used against the authoring party. The outline begins with a brief summary of what’s wrong with Obamacare, citing seventeen illegal executive actions that first tried to breathe life into it, including “delays, obstructions, and failures” and “utter disregard for the plain language of the law.” Then there’s the data, like 155 million Americans are paying higher premiums with wider deductibles. While the president promised a decline in premiums of $2500 a year, they’re up on average $3775. Then, on top of direct costs, an estimated 2 million Americans have had their weekly hours cut below 30 by employers who can’t afford to pay their insurance.
Touching only briefly on the highlights, the plan promises to “provide all Americans with more choices, lower costs, and greater flexibility.” The most vulnerable would be cared for instead of being pushed into Medicaid, which Republicans claim fails low-income families. Reforms would focus on major medical coverage. Health Savings Accounts (HSA’s), wherein individuals make their own contributions to a high-deductible account, would not be restricted, but encouraged. Policies would be portable between employers, and between employer and self-funded options. Care for pre-existing conditions could not be denied as long as a person had not allowed his coverage to lapse.
Persons not eligible for Medicaid or Medicare and not offered employer insurance would qualify for a tax credit. To remove market distortions introduced by employers deciding how much of their compensation employees spend on healthcare, employer insurance benefits in excess of an amount to be defined later will be taxable. Whereas currently, states are encouraged to enroll people in Medicaid to “bring federal dollars into the community;” the “Better Way” would disincentivize waste, fraud, and abuse by giving states a fixed amount, set four different categories, for each enrollee. States would pay for expenses over and above that amount. Other benefits include allowing insurance to be purchased across state lines, honoring the free exercise of conscience by not forcing all Americans to fund abortion, and spurring innovation in the medical industry through commonsense deregulation.