As everybody above ambient temperature knows, the US Congress is about to repeal and replace the Affordable Care Act. The repeal part is easy. What to replace it with is much harder. As someone who’s spent more than half a century taking care of patients and teaching others how to do the same, I’d like to make a few observations about medical care and how to provide it and pay for it. I’ll offer no prescription as to how the congress should act, but just highlight some of the issues that must be confronted and solved.
Let’s go back to the status quo ante the ACA. About a quarter of Americans did not have health insurance. Not having insurance does not equate to not getting medical care. I spent almost all of my career taking care of patients who weren’t able to pay me. The US has a network of public and medical school affiliated hospitals which take care of all comers without regard to their insurance status. In general, the physicians who provide this care (medical school faculty) are among the best in the country. There was virtually no form of medical care that was not provided to these patients. We even figured out how to provide chronic dialysis to undocumented aliens. The main problem with American medicine was not access to care, but its ruinous cost – the highest in the world.
As mentioned above, before the ACA about a quarter of the country did not have health insurance. So, the logical question is why did the ACA cover the entire population instead of that fraction without coverage? You’ll have to figure that out for yourself. Why did the Act go into great detail as to what must be covered? For example, famously, birth control pills? This medication costs $9/month. Why is health insurance needed to get it?
It was Democrats who enacted the bill and it is Republicans who wish to repeal it. The latter seek to keep the “good” parts of the legislation while dropping the rest – like the unpopular mandates. As we’ll see this is virtually impossible.
What are the good parts? Most of the country thinks that being able to stay on your parent’s health insurance until age 26 is good. This provision is not too hard to keep. The voters also like coverage for pre-existing conditions. This is where reality becomes very unpleasant.
What is insurance? Here are a few definitions:
A financial risk management tool in which the insured transfers a risk of potential financial loss to the insurance company that mitigates it in exchange for monetary compensation known as the premium.
A thing providing protection against a possible eventuality.
Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
Note that these definitions describe protection from a loss that has yet to occur. Medical insurance that covers pre-existing conditions is a contradiction in terms. It’s not insurance; it’s a benefit, an entitlement, welfare, anything except insurance. You can’t buy flood insurance after the rising water has swept your house away. If you could, why would anyone buy such insurance until after it was needed? That is the problem with the ACA and with any scheme that proposes to cover pre-existing disorders.
The ACA’s solution to this dilemma was to tax young and healthy people and transfer this money to people already sick. Hence the hated mandate. Thus, the people hate and love the same coin, depending on which side they are looking at.
Some Republicans propose to cover pre-existing conditions by forming associations that will spread risk over a wide population which, they think, will allow such coverage to be affordable. They cite the insurance that comes when a person is hired by a large corporation or university. This type of health insurance covers the family of the worker including pre-existing conditions. But this obviously requires that the employee be healthy enough to work and that pre-existing conditions in his family will be random and infrequent enough to prevent insurance costs from being prohibitively high. This assumption is almost always realized.
The pre-existing medical conditions that government health insurance seeks to cover falls outside of this group of employees and their families. The people in need of it will mostly be poor and unhealthy. There also will be people who didn’t get health insurance when they were healthy and easily insurable. Who will want to join a health association with them? Not affluent and healthy people. They will eligible for insurance through their job or be able to buy it on their own at a lower price. The only way to provide medical coverage for people with pre-existing conditions is for the government to pay for it directly or through some sort of grant. This government grant would further add to our already massive federal debt. Or the government could force young and healthy people into plans that they wouldn’t join if left alone. Back to the mandate.
But regardless of what plan is seized upon to cover pre-existing conditions, the problem of moral hazard remains. Once people know they can get health insurance regardless of their medical status, many of them will wait until they need it.
We can take a number of actions to lower the cost of medical care and hence the cost of health (really medical) insurance; they will be a balm not a cure. These include allowing the sale of health insurance across state lines, the encouragement of health savings accounts, tort reform, promoting competition among medical providers, making all health insurance tax deductible, and encouraging catastrophic health insurance. The last of these would prevent the horror stories one hears about families being bankrupted by huge medical bills.
There are ways that medical bankruptcy can be avoided irrespective of insurance. In Texas, one’s home, its contents, car, and salary cannot be taken to settle a debt to any person or entity other than the Federal government.
Of course, if you’re really adventurous you could go the Bernie Sanders way and have the government take over the whole shooting match. What could go wrong? People the world over continue to believe, no matter how much evidence to the contrary, that the great problems of life can be solved by politics.
Much of the mess that the American medical system is in is due to past actions by the government. You have to be cockeyed optimist to believe that same government can get us out. Among the actions most needed is for the government to say this much, but no more. Governments can’t do this. The enduring legacy of the ACA, even if it’s totally abolished, is that it established the role of the federal government in all aspects of medical care. No politician is saying that we should repeal the ACA and not replace it. That debate is over. No matter for good or ill, the Feds are here to stay.