Wednesday, March 1, 2017

MORNING PETE’S ISSUE #1: Affordable Health Care


NOTE: I am calling this and other issue-based posts to come MORNING PETE's ISSUES rather than TRUMP WATCH. This is in keeping with the conclusion I've come to that we all need to focus much more on the issues raised by Trump's presidency and the Republican control of congress and most state governments and less on Trump, himself. I hope you'll agree and find these issue-based posts useful.

Affordable Health Care

“I have to tell you, it’s an unbelievably complex subject. Nobody knew that health care could be so complicated.” Donald Trump, February 27, 2017.

Apparently, Donald Trump just discovered what most Americans and certainly virtually everyone else in federal, state, and local government has known for at least the seven years since the Affordable Care Act was passed in late March 2010 and probably since 1993 when health care industry lobbyists and conservative/libertarian organizations succeeded in killing the Clinton Administration’s Health Security Act ("Hillarycare," as Republicans called it disparagingly.)

However, what Republican politicians and conservative political organizations seem to have learned only very recently (at winter break Town Halls) is that, despite their 8-year war against “Obamacare” (the epithet they invented to whip up voter opposition to it), now that an estimated 20 million Americans have gained coverage under the ACA's provisions since 2010, even the most rabid Trump supporters do not want to lose the health care that they now have as a result of such provisions as:
  • expanding Medicaid eligibility to nearly all poor adults in 31 states that adopted its expansion (which Republican governors in 19 states declined to do)
  • allowing adults under the age of 26 to stay on their parents' plans
  • selling subsidized health plans on Federal exchanges
  • prohibiting all Marketplace plans, Medicaid, and CHIP (Children’s Health Insurance Program) from denying coverage or raising rates for those most in need of medical care, many of whom had historically been denied insurance due to pre-existing conditions and/or needing expensive treatment of chronic conditions.
The fact that millions of people do not want to lose the coverage they’ve gotten under the ACA is clear; what is far less clear is what President Trump, the Ryan-led Republican-controlled House of Representatives, the sharply divided Senate, and Republican governors propose to do about continuing to provide affordable healthcare to those 20 million and perhaps even to whittle away at the still sizable numbers of people who do not have any health insurance coverage.

As I see it, there are two sets of interlocking obstacles facing Republicans: one set is political; the other is mathematical. Let us see how these two sets of obstacles intersect.

Even before he was inaugurated, President Trump created a giant headache for Congress by insisting that they immediately and simultaneously repeal the ACA and replace it with something that would guarantee affordable coverage to the millions of his supporters whom he promised would not lose their affordable coverage. His deadlines for “repeal and replace” have long since passed without Congressional action of any kind on it; and, it now appears that his cabinet and advisors have explained to him (in no uncertain terms) the stark mathematical and political realities that stand in the way of a resolution to the conundrum of providing affordable healthcare to a large majority of Americans.

After trashing and trying their level best to sabotage “Obamacare” for the past 7 years, Republicans seem to have painted themselves into a corner, where they feel they must repeal the existing ACA, but are hard-pressed to figure out the math or the politics of how to replace it with something that will provide insurance coverage to the millions who don’t want to lose what they have, while at the same time eliminating provisions that conservatives and libertarians consider to be government overreach.

Democrats, many of whom participated in passing (over strenuous Republican objections) the highly complex ACA with its byzantine rules and the myriad compromises it struck with the powerful healthcare industry and its lobbyists, understand how challenging it will be for Republicans to craft a replacement that will accomplish the twin goals of guaranteeing affordable coverage for tens of millions, while at the same time scrapping many of the provisions they consider to be “a disaster.” As a consequence, most Democratic politicians seem to be enjoying the discomfiture of their Republican counterparts and to be hungrily anticipating the likely massive unpopularity of “Trumpcare” or “Ryancare.”

Here's some very basic math: As long as for-profit health insurance companies are built into any healthcare system that may be devised, hundreds of billions of dollars will flow through them and they will reap billions in profits.

Mathematically, it may seem obvious that if insurance companies and their profits were eliminated and replaced by a government managed “single-payer” fund (aka the Republican-despised “Public Option), such as Medicare or Medicaid, the overall cost of the country’s healthcare system would be enormously reduced.

However, this is where a mathematical solution runs afoul of a major political obstacle: Congressional Republicans would never agree to create yet another health-care “entitlement” like Medicare or Medicaid or CHIP or SSI, especially one that would grow the size of government way more than what they consider to be the bloat of today’s federal government.

As for the Democrats, it was they who abandoned the “public option” and instead forged an unholy alliance with the health insurance companies to devise a plan that is far closer to what Republicans once favored than to anything ever proposed by Democrats. Why they did so in 2009 seems understandable: they had inherited from the Bush administration the responsibility for addressing the most serious economic crisis since the Great Depression in which the financial services, automobile and many other industries were crashing and burning, so that, led by President Obama, they were unwilling to further endanger the economy by depriving the huge health insurance industry of its cash cow lifesaver (to mix metaphors). Here the politics of a dangerously fragile economy triumphed over the mathematical logic of the “public option.”

Once the for-profit insurance companies were guaranteed a significant role in the healthcare system, it became clear to all that mathematically they couldn’t be expected to take on very sick individuals (not to mention the elderly, pregnant women, and the chronically ill) unless a sizable number of young, healthy men also bought their insurance policies. Hence, the Democrats charged with crafting the ACA provided  a “carrot” (children up to the age of 26 being included in their parents’ family plans, which seems to have been accepted all around) and a “stick” (a modest penalty for not buying at least a minimal health insurance plan, aka the “individual mandate,” which despite its being a pretty feeble disincentive, enrages Libertarians and many Republicans).

In addition to the Health Insurance sector, there are two other huge financial elephants in the room: the powerful pharmaceutical industry and the rapidly consolidating for-profit hospitals that have become the employers of the vast majority of doctors in the country. The huge slice of the health care pie and the over-sized profits derived from these two entities also run into the hundreds of billions, again suggesting mathematically that these huge costs need to be drastically reduced. Yet these giants, too, have been protected by political crony capitalism (in the case of Big Pharma) and ideological red-baiting (in the case of for-profit hospitals and their doctor employees).

Consider first the pharmaceutical companies: some of which aren’t even American companies (e.g., Novartis, Roche and Bayer, which are 3 of the top 5 by revenue) and some of which are American companies-in-fact, but have been merged or sought merger with foreign companies in order to avoid paying American corporate taxes (known as an “inversion”). 

Mathematically, it would seem obvious that with the enormous payments made for pharmaceuticals on behalf of patients under Medicare and the ACA, the government should be able to bargain for lower prices just as it does for Medicaid and the Veterans Administration. Not so. In 2003, when the Republican-controlled Congress approved a major program to reduce the costs of prescription drugs for seniors, it barred the U.S. government from negotiating cheaper prices from the drug companies, and instead outsourced to the insurance companies the task of reducing drug costs under what is now known as Medicare Part D. This clearly hasn’t worked; the costs of prescription drugs and the amounts of such drugs sold have both skyrocketed. Why? It's simple; the insurance companies had little incentive to negotiate costs down with their fellow for-profit cronies, as the costs of these drugs are ultimately paid for by us as patients, as Medicare premium payers, and as taxpayers.

What about the hospitals and doctors? From Teddy Roosevelt to Franklin D. Roosevelt to Harry Truman to Lyndon Johnson, every president who advocated for any kind of national approach to health care has come up against the American Medical Association (speaking on behalf of the nation’s doctors). When in 1945 Truman proposed a National Health Insurance plan, the AMA was quick to poison the well by raising the spectre of “Socialized Medicine.” The use of the “S-word” worked then despite Truman’s making very clear the difference between his proposal for a single-payer system of insurance and the British socialized medicine model in which doctors are employees of the state and hospitals owned by the state. And, it nearly derailed Medicare and Medicaid until Lyndon Johnson’s landslide victory over conservative Republican Barry Goldwater gave him the mandate he needed to overcome the AMA’s misleading charges that these insurance programs for seniors and the poor were a slippery slope leading to British-style Socialized Medicine. And “Socialized Medicine” continues to be the “third-rail” for any national health plan; it helped torpedo "Hillarycare" in 1993 and forced the Obamacare administration website to devote an entire section explaining “Why ObamaCare isn’t Socialism.”

So, where does this collision between mathematics and politics leave us?

In my opinion, the usually enviable position of controlling all 3 branches of government (and the vast majority of state governments) actually puts Republicans in a lose-lose situation. If and when they repeal the ACA, no matter what they come up with as a replacement is going to result in loss of coverage, reduction in benefits, and increased costs for millions upon millions of Americans and, it is also likely to cause chaos and disruption in any sector of the economy that intersects with health care, including the sensitive financial services and insurance sectors. (Anybody remember “Too big to fail?”)

Of course, none of this will be good for the country and it seems likely that Republicans will rightfully be blamed, no matter what they do.

When that happens, if it proves to have significant electoral consequences and Democrats (especially progressive ones) regain real power in state and federal government, I believe we may see a single-payer national insurance system that eliminates the insurance companies from the individual healthcare system (which, by the way may come as a relief since insurance companies historically have preferred less volatile, very predictable markets) and gives the federal government the right and responsibility to jawbone pharmaceutical companies to lower prices.

At the same time, I expect a number of progressive-minded states, both large ones like NY and CA and very small ones like VT, RI, and perhaps DE, to re-establish state-run hospital systems, as an option alongside private for-profit hospitals.

Stay tuned.

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