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Tags: republicans | advantage | health care | democrats

How Republicans Handed Democrats the Health Care Issue

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Peter Morici By Monday, 29 October 2018 09:05 PM EDT Current | Bio | Archive

Conventional wisdom says Americans vote their pocketbooks. That's why health care offers Democrats an advantage in the midterms, despite the strong economy and the shortcomings of the Affordable Care Act.

President Barack Obama's signature achievement, the ACA promised to provide insurance coverage for virtually all Americans, lower costs and let folks keep their old insurance policies.

But, by the end of his presidency, about 27 million non-elderly adults remained without coverage-including many working poor in the states that had not adopted Medicaid expansion but also millions of others who found health insurance too expensive even with federal subsidies.

In 2018, the Republican Congress repealed the unpopular individual mandate. However, the requirement that large employers must provide insurance still stands, and it now costs about $20,000 for employers to purchase a family policy.

Overall, Americans now pay even more for hospital stays, doctor services and drugs, because the ACA permitted hospitals and drug companies to monopolize markets. Doctors and other providers increasingly find it necessary to work for hospitals instead of independently.

By requiring insurance policies purchased by employers and individuals through government exchanges to meet inflexible criteria - and by forcing insurers to accept all applicants without charging older Americans and those with pre-existing conditions appropriately higher rates - many insurers across the country left local markets. They simply could not adequately spread the risk of getting stuck with too many older or sick folks in their pools of subscribers.

This encouraged insurers to merge - larger companies can more easily manage the risks of higher-cost subscribers - and bargain effectively with hospitals, doctors and drug companies. However, the hospitals one upped them by merging to form what are effectively regional monopolies and persuaded many more doctors to work directly for them as employees.

Groups like NewYork-Presbyterian and Johns Hopkins Medicine in Maryland now enjoy significant market power, and have jacked up fees for everything from MRIs to outpatient visits. As importantly, they have forced even large insurers like Cigna into restrictive contracts that prohibit them from creating less-expensive policies that require patients to use other more reasonable hospitals.

Primary-care physicians who have managed to maintain private practices still find themselves bargaining for fees with the uninsured patients and accepting payments that hardly cover their overhead, and millions of Americans are still one illness away from financial calamity.

Americans now spend about nearly 20%of gross domestic product on health care - about 70% more than in other industrialized countries. Whether through mandatory private insurance as in Germany or single state-run providers as in the U.K., just about everything is a lot less expensive-a knee replacement, a doctor visit and drugs-because European governments recognize health markets routinely fail and regulate prices.

The 2017 GOP plan that passed the House but could not muster a majority in the Senate would have rearranged subsidies a bit. It would have given the states more latitude in administering Medicaid, which is now the principle mechanism for helping the working poor, and eased requirements on insurers to cover pre-existing conditions by creating risk pools at the state level.

For many ordinary Americans the fear of having their coverage canceled when a major illness strikes is paramount. About 75% don't want the Republicans monkeying with ACA provisions regarding pre-existing conditions, and Democrats have used that to put the Republicans on the defensive.

As importantly, the Republican plan did not offer Americans much hope of saving money on health care with their so-called reforms or with the powers the Trump Administration already has at its disposal. Namely, through market reforms that break up hospital monopolies and impose price regulations for drugs or through antitrust enforcement.

Since the 2016 election, public sentiment has flipped from 44% viewing the ACA favorably to 50%, while the percentage viewing it unfavorably has fallen from 47% to 40%.

Democrats are running campaign ads lauding the ACA twice as frequently as Republicans run ads attacking it. These are the largest share of the Democrats' ad budgets overall. In 2010, the opposite was true when the Republicans won the house by attacking the ACA.

The Democrats may not offer a credible plan for fixing the high prices Americans pay. It doesn't matter, because the GOP hasn't delivered.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist. He tweets @pmorici1

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Conventional wisdom says Americans vote their pocketbooks. That's why health care offers Democrats an advantage in the midterms, despite the strong economy and the shortcomings of the Affordable Care Act.
republicans, advantage, health care, democrats
Monday, 29 October 2018 09:05 PM
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