New Yorker on Coming Catastrophe
Jul 14, 2017 16:47:33 #
John Cassidy shows it so well
The draft of the Senate G.O.P. health-care bill that Mitch McConnell, the Majority Leader, released on Thursday is, in one way, an improvement on the previous version of the bill. The latest draft dropped a proposal to repeal two tax increases on very high earners, which were part of the Affordable Care Act. The revenue from those tax increases was used to help fund some of the A.C.A.’s most progressive features, including the expansion of Medicaid and the subsidies offered to families of modest means for the purchase of private insurance plans.
But the merits of the revised Senate bill stop there. Enacting it into law would be a disaster. The old and the sick would be forced to pay far higher premiums; deductibles would go up for almost everyone in the individual market; and many millions of Americans, many of them poor, would lose their health-care coverage entirely.
Before delving into the details, it is worth restating what is at stake here: the principle that society is made up of people with mutual obligations, including the duty to try to protect everyone from what Franklin Roosevelt called the “hazards and vicissitudes of life,” such as old age, unemployment, and sickness.
To deal with aging and joblessness, F.D.R. introduced Social Security and expanded unemployment insurance. Originally, he intended to include publicly funded health care as part of Social Security, but opposition from the medical profession persuaded him to leave it out. In the decades since F.D.R.’s fateful decision, it has become clear that private insurance works tolerably well for people who hold well-paid, steady jobs at large companies—especially when the tax authorities don’t treat employer-provided health insurance as taxable income. But for everybody else—the elderly, people with low-wage jobs that don’t offer benefits, the self-employed and employees of small companies, people who are employed intermittently or who are out of work—private insurance is costly, complicated, and often hard to obtain.
During the nineteen-sixties, the Lyndon Johnson Administration introduced Medicare, for senior citizens, and Medicaid, for poverty-stricken families with children. But people outside those categories were left to the mercies of the insurance market, the shortcomings of which eventually became glaringly obvious. By 2013, close to one in five adult Americans didn’t have any health-care coverage. The A.C.A. took a two-pronged approach to fixing that situation.
The A.C.A. raised the income thresholds for eligibility to Medicaid, allowing individuals and families with incomes just above the poverty line to qualify for the program. This policy worked wonders. Since going into effect, at the start of 2014, it has enabled about fourteen million Americans, most of them from working families, to obtain health-care coverage.
The A.C.A. also tried to make private insurance more affordable and accessible. One way it did this was by offering hefty federal subsidies to low-to-middle-income households. But it also issued a series of directives. To improve the quality of insurers’ risk pools, it forced everybody, including the young and the healthy, to purchase coverage. At the same time, it obliged insurance companies to offer standardized policies that provided a comprehensive set of benefits, banned them from turning away people with preëxisting conditions, and placed strict limits on how much more they could charge older people.
All of this was an effort to recognize the principle of mutual obligation while preserving a private insurance system. The revised Senate bill would largely dismantle this effort, reversing both the expansion of Medicaid and many of the reforms that were designed to make private insurance work more equitably. If it passed, the Republican reform would eventually return the country to a system a lot like the one in place before the A.C.A., when older people, sick people, and the working poor struggled to find coverage—or went without.
Despite objections from some Republican senators from states that have expanded Medicaid under the A.C.A., the revised bill leaves in place seven hundred billion dollars of cuts to the program, as well as the idea of converting it to a block-grant program. The consequences of these changes would be dramatic. By 2025, according to the Congressional Budget Office, about fifteen million fewer people would be covered by Medicaid and its sibling, the Children’s Health Insurance Program.
On the private-insurance side, the authors of the revised Senate bill took some of the money saved from dropping the tax cuts for the rich and allotted it to compensating insurers for covering high-risk individuals. But the revised bill also includes a new amendment championed by Senators Ted Cruz and Mike Lee: as long as an insurer offered a standardized, A.C.A.-compliant policy on a government-run exchange, it would be allowed to sell unregulated, catastrophic-care plans outside the exchanges.
To people unschooled in the economics of insurance markets, this proposal may look innocent enough, but it is a torpedo aimed at the exchanges, which are an essential part of Obamacare. For people in their twenties and thirties, the premiums on the unregulated plans, which would come with very large deductibles, would be fairly low. But the insurers would be allowed to charge less desirable customers—older and less-healthy individuals, including ones with preëxisting conditions—much higher prices for these plans, or even deny them coverage. As most of these people continued to buy comprehensive plans, while more and more young people chose the cheaper options available outside the exchanges, the risk pools in the Obamacare-type markets would deteriorate sharply.
This would have devastating consequences. Insurers would hike their premiums, and many people wouldn’t be able to afford them, including people with serious illnesses. A cycle of rising prices and falling enrollments could eventually cause the exchanges to collapse. The only way to prevent this from happening would be for Congress to offer bigger and bigger subsidies to the buyers of comprehensive plans and the insurers who offer them.
Whether this is Cruz and Lee’s intention is irrelevant. It is how private health care works when it isn’t regulated and the principle of mutual obligation is ignored, or relegated to a secondary consideration. “Choice always sounds so good, like with the Cruz amendment,” Larry Levitt, a senior vice-president at the Kaiser Family Foundation, explained on Twitter. “But in insurance, it's generally a recipe for instability and discrimination.” The United States lived for decades with a health-care system that discriminated against the old, the sick, and those too poor to afford coverage. Will Republican ideologues be allowed to plunge the country back into this dark past?
John Cassidy has been a staff writer at The New Yorker since 1995.
The draft of the Senate G.O.P. health-care bill that Mitch McConnell, the Majority Leader, released on Thursday is, in one way, an improvement on the previous version of the bill. The latest draft dropped a proposal to repeal two tax increases on very high earners, which were part of the Affordable Care Act. The revenue from those tax increases was used to help fund some of the A.C.A.’s most progressive features, including the expansion of Medicaid and the subsidies offered to families of modest means for the purchase of private insurance plans.
But the merits of the revised Senate bill stop there. Enacting it into law would be a disaster. The old and the sick would be forced to pay far higher premiums; deductibles would go up for almost everyone in the individual market; and many millions of Americans, many of them poor, would lose their health-care coverage entirely.
Before delving into the details, it is worth restating what is at stake here: the principle that society is made up of people with mutual obligations, including the duty to try to protect everyone from what Franklin Roosevelt called the “hazards and vicissitudes of life,” such as old age, unemployment, and sickness.
To deal with aging and joblessness, F.D.R. introduced Social Security and expanded unemployment insurance. Originally, he intended to include publicly funded health care as part of Social Security, but opposition from the medical profession persuaded him to leave it out. In the decades since F.D.R.’s fateful decision, it has become clear that private insurance works tolerably well for people who hold well-paid, steady jobs at large companies—especially when the tax authorities don’t treat employer-provided health insurance as taxable income. But for everybody else—the elderly, people with low-wage jobs that don’t offer benefits, the self-employed and employees of small companies, people who are employed intermittently or who are out of work—private insurance is costly, complicated, and often hard to obtain.
During the nineteen-sixties, the Lyndon Johnson Administration introduced Medicare, for senior citizens, and Medicaid, for poverty-stricken families with children. But people outside those categories were left to the mercies of the insurance market, the shortcomings of which eventually became glaringly obvious. By 2013, close to one in five adult Americans didn’t have any health-care coverage. The A.C.A. took a two-pronged approach to fixing that situation.
The A.C.A. raised the income thresholds for eligibility to Medicaid, allowing individuals and families with incomes just above the poverty line to qualify for the program. This policy worked wonders. Since going into effect, at the start of 2014, it has enabled about fourteen million Americans, most of them from working families, to obtain health-care coverage.
The A.C.A. also tried to make private insurance more affordable and accessible. One way it did this was by offering hefty federal subsidies to low-to-middle-income households. But it also issued a series of directives. To improve the quality of insurers’ risk pools, it forced everybody, including the young and the healthy, to purchase coverage. At the same time, it obliged insurance companies to offer standardized policies that provided a comprehensive set of benefits, banned them from turning away people with preëxisting conditions, and placed strict limits on how much more they could charge older people.
All of this was an effort to recognize the principle of mutual obligation while preserving a private insurance system. The revised Senate bill would largely dismantle this effort, reversing both the expansion of Medicaid and many of the reforms that were designed to make private insurance work more equitably. If it passed, the Republican reform would eventually return the country to a system a lot like the one in place before the A.C.A., when older people, sick people, and the working poor struggled to find coverage—or went without.
Despite objections from some Republican senators from states that have expanded Medicaid under the A.C.A., the revised bill leaves in place seven hundred billion dollars of cuts to the program, as well as the idea of converting it to a block-grant program. The consequences of these changes would be dramatic. By 2025, according to the Congressional Budget Office, about fifteen million fewer people would be covered by Medicaid and its sibling, the Children’s Health Insurance Program.
On the private-insurance side, the authors of the revised Senate bill took some of the money saved from dropping the tax cuts for the rich and allotted it to compensating insurers for covering high-risk individuals. But the revised bill also includes a new amendment championed by Senators Ted Cruz and Mike Lee: as long as an insurer offered a standardized, A.C.A.-compliant policy on a government-run exchange, it would be allowed to sell unregulated, catastrophic-care plans outside the exchanges.
To people unschooled in the economics of insurance markets, this proposal may look innocent enough, but it is a torpedo aimed at the exchanges, which are an essential part of Obamacare. For people in their twenties and thirties, the premiums on the unregulated plans, which would come with very large deductibles, would be fairly low. But the insurers would be allowed to charge less desirable customers—older and less-healthy individuals, including ones with preëxisting conditions—much higher prices for these plans, or even deny them coverage. As most of these people continued to buy comprehensive plans, while more and more young people chose the cheaper options available outside the exchanges, the risk pools in the Obamacare-type markets would deteriorate sharply.
This would have devastating consequences. Insurers would hike their premiums, and many people wouldn’t be able to afford them, including people with serious illnesses. A cycle of rising prices and falling enrollments could eventually cause the exchanges to collapse. The only way to prevent this from happening would be for Congress to offer bigger and bigger subsidies to the buyers of comprehensive plans and the insurers who offer them.
Whether this is Cruz and Lee’s intention is irrelevant. It is how private health care works when it isn’t regulated and the principle of mutual obligation is ignored, or relegated to a secondary consideration. “Choice always sounds so good, like with the Cruz amendment,” Larry Levitt, a senior vice-president at the Kaiser Family Foundation, explained on Twitter. “But in insurance, it's generally a recipe for instability and discrimination.” The United States lived for decades with a health-care system that discriminated against the old, the sick, and those too poor to afford coverage. Will Republican ideologues be allowed to plunge the country back into this dark past?
John Cassidy has been a staff writer at The New Yorker since 1995.
Jul 15, 2017 06:34:14 #
Yes, it seems the concept of mutual obligations has become terribly confused with the ignorant battle cry of "why should we just hand things to people who won't get off their butts and find a job." Why can Europeans grasp the concept of social support and we can't. Thank you for the post.
Jul 15, 2017 09:32:57 #
I don't like the new proposed bill for several reasons. First- it's not a clean repeal. Obamacare is failing. About 1/3 of the American counties have only 1 insurance company to "Choose" (That's not a choice) and many MD's have refused to accept patients under the ACA. Also . many "older" Doc's have simply retired rather than having to endure the many new regulations. Second - the mandate. I don't understand how the Supreme Court could have approved a tax on nothing. It gives Congress unbridled power to tax anything for any reason. Third- My opinion. The ACA was designed to fail. The liberal dems wanted a Government run health Care system (single payer). The unintended consequenses are just to scary to contemplate. I would prefer a free market health care system with reasonble regulations (not the 3,000 pages of regulations under the ACA. which is not Afordable for many Amaricans. Curtailing Medicaid to the purpose for which it was intended. A safety net for those below the poverty line who could truly not afford meical insurance. It was not designed for mioddle income wage earners. Greatly limiting subsidies to the health care industries. Greatly curtailing the Tort law as about 25-30% of medical costs are not clinical but are medico-legal.n Go to a Neurologist and complain of an occasional headache. You will get a 48 hour EEG and an MRA (MRI with contrast). A total cost of about 3 grand instead of "take 2 asprin and call me in the morning". End of rant.
Jul 15, 2017 14:41:43 #
Before Insurance companies really started getting deepely involved in Health insurance the average family could afford general medical care for a reasonable price. How things have changed since big bucks got into the mix.
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