Healthcare problems and challenges six years after passage of the ACA
Where are we after six years with the Affordable Care Act (ACA), intended as it was to make healthcare more accessible, affordable and to contain costs? It depends on whom you ask and what their circumstances and goals are.
Seen through the perspective of Wall Street, corporate stakeholders in the medical-industrial complex, their CEOs and shareholders, business has never been better. Healthcare stocks have reached all-time highs as the leading sector of stocks, while insurers, hospitals, pharmaceutical and medical device industries are thriving with new financial incentives and expanded markets. The uninsured rate has dropped from about 18% to just over 13% in 2014. About 7 million people gained new coverage through expanded Medicaid, and millions of others have received subsidies to purchase insurance on the ACA’s exchanges.
But if you ask many millions of patients and their families, the ACA is not working well. There are virtually no price controls in the system; healthcare costs continue to soar way above the cost of living, are unaffordable for many, and the system appears to be unsustainable. These markers show some dimensions of the problem:
- There are still about 30 million uninsured Americans, and that number is not expected to drop significantly, compared to 50 million uninsured in 2010.
- We have an epidemic of underinsured, at least another 30 million Americans and growing.
- According to the Milliman Medical Index (MMI), the cost of health insurance and care for a typical family of four with an average employer-sponsored PPO plan now exceeds $25,000 a year (compared to a median annual household income of about $53,800 in 2015).
- 1.7 million people are still forced by medical bills into bankruptcy every year, despite most of them having had private insurance, being middle class, owning their own homes, having attended college, and having held responsible jobs.
- Private insurers receive government subsidies through those newly insured on the ACA’s exchanges and having a “risk corridor” program in place to compensate for their losses. However, they offer less and less value at ever-increasing premiums, through high-deductible plans (some as high as $5,000 or more a year), narrowed networks, high co- insurance for prescription drugs, marketing some plans that evade the ACA’s requirements, denial of services, and exiting markets that are not sufficiently profitable.
- The huge bureaucracy in our multi-payer system includes administrative overhead in the private insurance industry of 18-20%, compared to about 2% for the traditional Medicare program.
- Administrative costs of U. S. hospitals are far higher than anywhere else in the world at 25.3 of total hospital expenditures (compared to about 12% in Scotland and Canada).1
- Typical yearly out-of-pocket expenses for cancer treatment often amount to one-half of the cancer patients’ average household income, forcing many to forgo recommended treatment.2
- CMS projects that more than $2.7 trillion will be spent for private health insurance and overhead of government programs (mostly Medicare and Medicaid) between 2014 and 2022, including $273 billion in new administrative costs attributable to the ACA’s expanded Medicaid program.3
So what we have is a market-based system that benefits from large federal funding (about 64% of total healthcare spending), within which a consolidating largely corporatized system achieves higher profits all the time on the backs of sick people and taxpayers.
Most industrialized nations around the world discovered long ago that a larger role of government is required to make health care accessible and affordable for their populations. The United States remains an outlier, and the ACA has actually accelerated our problems of access, cost and quality of care. We should have learned over the last 30 years that unfettered markets will not fix our problems, that we need to share the costs of healthcare over the largest possible risk pool, and that financing reform is required.
Two Options for Reform
Going forward, we have two basic options for reform, each represented in the current political debate during this election season:
- Continuation of the ACA with some changes (as supported by Hillary Clinton)
- Repeal and replacement of the ACA by a Republican plan
My latest book, The Human Face of ObamaCare: Promises vs. Reality and What Comes Next, shows that neither the ACA nor a Republican replacement plan will meet the nation’s needs. It makes the case for single-payer national health insurance (NHI) based on economic, sociopolitical and moral grounds, and shows how we can achieve universal access to affordable healthcare through a more efficient, accountable financing system coupled with a private delivery system. Business will do well in such a program, to the extent that it competes in a national market with good products that are cost-effective for our entire population.
There is still widespread denial of the discredited policies of the past. Markets are failing the public interest. The economic and political power of corporate stakeholders in the present system stands in the way of financing reform. A moment of truth will soon be upon us as costs continue to soar, unaffordability grows, more people forgo necessary care, and federal and state budgets are exceeded.
- Himmelstein, DU, Jun, M, Busse, R et al. A comparison of hospital administrative costs in eight nations: U. S. costs exceed all others. Health Affairs, September 2014.
- Kantargian, J, Steensma, D, San Juan, JR et al. High cancer drug prices in the United States: Reasons and proposed solutions. J Oncology Practice, May 6, 2014.
- Himmelstein, DU, Woolhandler, S. The post-launch problem: The Affordable Care Act’s persistently high administrative costs. Health Affairs Blog, May 27, 2015.
- Geyman, JP. The Human Face of ObamaCare: Promises vs. Reality and What Comes Next. Friday Harbor, WA. Copernicus Healthcare, 2016, p. 203.