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Ebola-Like Public Health Crises Highlight Need for Improved Medicare-for-All Model, Failures of ACA For-Profit “Market-Driven” Insurance Model

Affordable Care Act: prescription for decreasing coverage, increasing cost.

More than anything, the Public Health crisis of the Ebola virus underscores the need for a universal model of healthcare that covers the health needs of all. Failure to provide needed health care to some quickly jeopardizes the health of all. Past president of the American Public Health Association Dr. Walter Tsou observes, “One out of every seven Americans are uninsured and the Affordable Care Act specifically exempts immigrants from obtaining insurance.” Those who cannot access health care when they feel sick are at risk in a health care crisis, even as they place others at risk.

An Ebola-like crisis accentuates the fragmented piecemeal nature of US health coverage and access. Americans are stuck between a rock and a hard place – some forced to buy insurance that they are unable to use because they cannot afford high deductibles and copays.

Shortcomings of “Free-Market” Health Care

Democrats may yet consider in retrospect that it would have been an all-around better idea to place everyone in a Medicare model of healthcare. Designed around a government mandate to purchase private insurance, Robert Kuttner writes, the ACA has too many moving parts. ACA reform introduces added extra levels of administration to an existing administratively complex “free market” model of health coverage.

The model for the Affordable Care Act (ACA) was conceived in the Republican think tank Heritage Foundation, and first became the foundation for Massachusetts RomneyCare. Kuttner writes that the ACA represents the inefficiency of “public-private partnerships” at its worst – a “public subsidy for the private insurance industry.” It has been reported that under reform taxpayers will subsidize commercial health insurance coverage to the tune of approximately $1 trillion over the first decade. Even though it carries some “Democratic” flourishes, e.g., no denial for pre-existing conditions, the plan remains “free-market” health care – elevating insurance and shareholder profits above individual health care access. Far from a true public program, the ACA is nevertheless cited by Republicans to discredit government.

Coverage remains unstable under the ACA. The fact that reform was built around the two touchstones of for-profit multi-payer insurance and employer-provided health coverage foreshadowed complications and cost-shifting to the insured from the start. Underinsurance is increasingly the norm for many. The insurance bottom line is subsidized by taxpayers. Providers like Community Health Centers pick up the cost of uncompensated care for those who can’t afford more than a bronze plan (60% actuarial value). Such plans carry high deductibles, unaffordable to many, and may discourage the insured from seeking care at all, or delay health care until serious illness develops. Bronze plans, with the lowest premiums, reportedly carry a deductible cost of just under $5,000, to be met every year.

Adding new levels of administration and means testing to existing administrative complexities, state and federal exchanges must take into account changes in income status and definitions of poverty level. It is reported that exchanges must quickly analyze more than 900,000 variables that affect plan selection in order to match the individual needs of any participant. The insured who miscalculate their income and receive too much in subsidies must pay back the difference, which may be subtracted from tax returns. Providers and carriers will enter and leave networks, necessitating change of plans for some.

Cost-Shifting to Individuals by Insurers and Employers

Uncertainties underlie the profit-centered health system that practices cost-cutting by transferring costs to the insured, limiting benefits, restricting and changing formularies, raising deductibles, and limiting the size of provider networks that change unpredictably, as doctors may exit a network midyear. Overall health care access is limited, and access to specialists restricted. Some plans won’t pay at all for out-of-network care, except in emergencies. Furthermore, out-of-network care under the ACA doesn’t count toward an individual’s annual cap on out-of-pocket costs, in effect resulting in theoretically unlimited costs to the insured for a specialist’s care. The recipient of emergency care is in no position to question whether any of the attending providers are out-of-network.

The promise of keeping one’s work-related insurance seems less and less a good deal, as Fortune 500 employers utilize evermore cost-cutting maneuvers. Increasingly, employers shift costs to employees using “cost-sharing” elements like high deductibles, copays and coinsurance. Tactics include moving to so-called “consumer-directed” plans that increase employee deductibles; also, shifting retirees out of their plans, reducing hours for part‑time employees in order to avoid ACA penalties, and limiting numbers of full‑time employee hires while increasing part‑time workers. Because the ACA does not require employers to provide health coverage for employees working less than 30 hours per week, many employers have adjusted hours to avoid having to include part-time employees in their health plans. Previously cutting off health coverage at 24 hours a week, Walmart changed part-timers to 30 hours, permitting them to get more hours out of their employees without providing health benefits. Close to home, the University of Colorado at Boulder decided to limit student employee hours to 25 a week, an effort to avoid the 30-hour requirement for coverage.

Employers seeking relief from the burdens of their employee health benefit programs are turning to private insurance exchanges, and using the opportunity to increase deductibles and other cost sharing, to reduce provider choice through narrower networks, and to switch from defined benefit to defined contribution plans ‑ again shifting the cost burden to employees. Dr. Don McCanne concludes from this Health Affairs article that current inequities and injustices will expand under reform, with perpetuation of the two-tiered nature of “lousy plans for small employers and slightly better but mediocre plans for large employers.”

Decreased Benefits

Over 300 patient advocates detailed shortcomings of the first-year of the ACA marketplace in a letter to HHS Secretary Sylvia Burwell. Cited were “discriminatory benefit designs that limit access, such as restrictive formularies and inadequate provider networks; high cost‑sharing; and lack of plan transparency or an interactive web tool to match an individual’s prescriptions and provider needs with an appropriate plan.

Furthermore, “there is no requirement for plans to cover new medications” with formulary changes during a plan year that causes a patient to lose access to medication, as long as a plan continues to meet a state’s benchmark requirements.

Many medications, including generics, are placed on the highest cost tier, subjecting Marketplace enrollees to the undue burden of 30-50% co-insurance payments per prescription. Some plans impose high deductibles for prescription medications and high cost-sharing for access to specialists, said to be highly discriminatory and to place a particularly heavy burden on those with chronic health conditions. Reference pricing is another gimmick that works well only for those with short-term illnesses.

“Free-market” economists with an ideological preference for market solutions vs. more effective government solutions, assert that narrow provider networks are a good tool for competition and cost containment, even though they are disruptive and limit choice of provider and access to quality care, while forcing the insured to spend more to go out-of-network. Patients may be required to change networks, as providers move in and out. Narrow networks by nature advance two-tier health care that places the low-income at a disadvantage.

Dr. McCanne observes that the only alternatives that “free market” economists can conceive of are to raise taxes to pay for private insurance subsidies, or to limit the number of uninsured who may be enrolled. They reject broader health care access, saying it “would spell the end of market-based health reform” – a revealing statement of priorities and values. Inadequacy of market competition that requires resort to perverse narrow networks calls into question the value of market competition for controlling costs.

McCanne notes that private insurers continue to game the system, circumventing health reform’s requirements for essential health benefits and actuarial values to avoid enrolling those with greater health care needs. Despite efforts to regulate commercial insurances, says McCanne, “they will always use the marketplace tool of innovation in order to advantage themselves over patients.”

“Free-market” commercial insurances do not control costs or guarantee needed coverage. Gallup reports: “The percentage of Americans with private health insurance who report putting off medical treatment because of cost has increased from 25% in 2013 to 34% in 2014.” Despite an increase in numbers of Americans who have acquired insurance, there is also an increase in the percentage who say they have put off needed medical treatment because of cost.

Failed vs. Successful Health Care Financing

A multitude of private and public plans applied to continually evolving personal circumstances is the most inefficient model of health care financing, resulting in wasteful administrative efficiencies, writes McCanne.

The sector of health care financing that the Affordable Care Act was designed to protect is employer-sponsored coverage, assuming this sector was functioning well. However, the 2014 Aflac Work Forces Report demonstrates that these health plans are failing to provide financial security to employees.

A well-functioning health care system, McCanne says, should make all appropriate health care accessible to everyone. Paying for the system should not lead to financial insecurity. Whereas, other national systems that depend on government-administered pricing provide care for everyone at an average of half of what the US spends per capita, such effective cost containment occurs without resort to ideological “market-based” reform. He holds as the gold standard of health care access and financing the Single Payer national health care model, including first-dollar coverage and progressive financing. It is the only model that can save money and provide universal coverage and protection from medical bankruptcy, as well as full access to providers.

Kuttner concurs: “Medicare-for-All would be simpler to execute, easier to understand, and harder for Republicans to oppose.” And it could be done in increments – first incorporate those over 55, then those over 45, etc., until everyone is covered.

Instead of moving toward a Medicare-for-All model, McCanne points to the push by corporations of the Medical Industrial Complex, in complicity with Washington Republicans and neoliberal Democrats, to privatize the major public programs of health care financing – Medicare and Medicaid. Washington has legislated to displace traditional Medicare by deliberately funding more costly privatized Medicare Advantage plans well in excess of traditional Medicare. Prescription drug reform in 2003 denied negotiation of bulk drug rates while subsidizing the pharmaceutical industry to the tune of billions of dollars. The Government Accounting Office (GAO) has revealed that Health and Human Services has permitted manipulation of section 1115 Medicaid waiver process to allow states to transfer Medicaid patients to more costly private health plans.

It is a mark of Democratic Party capitulation to neoliberal/Republican corporate goals that Democratic leadership has at this point abandoned attempts to make the “best case” for health care reform. The political trajectory in Washington has been to privatize and maintain a for-profit system of health care finance and delivery, instead of moving to the more comprehensive, cost-effective model of public financing for private health care delivery.

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