The plan recently released by
Republican leaders of Congress to replace Obamacare is a poor
substitute. The new plan, American Health Care Act, attempts to walk
a line of appeasing those who have found something desirable in the
ACA, or Obamacare, while also pushing the system further into the
milieu of free markets and personal responsibility. A move that will
not succeed in doing what Obamacare was intended to do - stabilize
the health care market and make it affordable for all.
Prior to the passage of the ACA,
health institutions were facing major financial stability problems.
At the heart of the problem is the fact that such institutions do not
refuse treatment, particularly emergency care, to anyone on the basis
of ability to pay. As a result, those least well off and unable
to afford health insurance or even regular visits to a clinic aimed
at preventative care, put off seeking any medical attention until
they are unable to function normally and require emergency care.
This form of care is generally the most expensive treatment compared
to other visits with medical professionals. These hospitals would get
what they could from their patients to cover the costs for this care,
but those that attract large numbers of patients without the ability
to pay incur large deficits. In order to cover these deficits,
hospitals structured prices such that they were essentially operating
as insurance providers themselves. Those with insurance or the
ability to pay were charged at rates much higher than the cost of the
treatments they were receiving. This additional revenue could be used
to cover the expenses from emergency care.
However, people with the greatest
ability to pay for the care they receive are also more likely to have
health insurance, and insurance companies are not particularly
inclined to pay more than they feel they should. As such many
hospitals were still operating at deficits. The profitable customers
were simply being outnumbered by the non-profitable ones.
Part of Obamacare's intent was to fix
this crisis in hospital budgets, primarily by providing insurance to
those who previously were unable to pay their hospital bills. This
allows the hospitals to still get paid for the services they are
providing, regardless of who they are providing them to. Secondarily,
it should transfer the resources used from emergency care to more
standard general and preventative care that cost both the patient and
the caregivers far less. Though on this second mechanism, I would
expect the effects to take some time to be seen as behaviors will not
change over night. Together, these mechanisms should lower the
overall cost of health care services and thus health insurance
premiums.
These goals are only feasible by
bringing more money into the pool, that is more healthy people who
will use little of what they are paying in an average year need to contribute.
Obamacare does this through the individual mandate. Everyone has to
have health insurance or else pay a fee
at the end of the year when they file their taxes The revenues generated from this fee are also
applied to medical care and subsidies so even if you choose to go
uninsured, you still contribute to the pool. The more healthy people
contribute, the smaller the burden on those who need care. That is
essentially the idea behind health insurance in the first place.
Ryan's AHCA fails to provide any real
incentive to get more money into insurance pools. Instead of the
individual mandate, the new plan allows for higher punitive rates for
a year on those who choose to go without coverage and then sign up or
those who allow a lapse in their coverage. Such a rule does not
incentivize anyone who may struggle to afford premiums to do so.
Instead, such people will return to the way things were prior to
Obamacare; they will go uninsured and visit the emergency room when
things are bad. Couple this with the change from subsidized insurance
plans to tax credits based on age, Republicare is sure to cause a
shift back to the way things were with the poor unable to afford
adequate health care and hospitals paying the price for their
emergency care.
If our health care institutions are to
survive, we must come up with a way to support them and the services
they provide. The AHCA will not do that. Even the ACA may not be able
to accomplish this goal as it currently stands. Changes need to be
made to our health support system, but they must be ones that ensure
its viability rather than sign its death certificate.
