Thursday, March 16, 2017

The Lessons of Obamacare

What Republicans should have learned, but haven't.

On January 6, President Barack Obama sat down with us for one of his final interviews before leaving the White House. The subject was the Affordable Care Act — the legislation that has come to carry his name and define his legacy.

It was strange circumstances Obama found himself in. He was leaving office an unusually popular president, with approval numbers nearing 60 percent. But his most important domestic achievement was imperiled. Republicans had spent years slamming Obamacare for high premiums, high deductibles, high copays, and daunting complexity. Donald Trump had won the White House in part by promising to repeal the ACA and replace it with “something terrific.” Both houses of Congress would be controlled by Republicans who appeared set to carry out his plan.

But over the course of the next 70 minutes, it became clear that Obama didn’t think they would get the job done. If he sounded unexpectedly confident, it’s because he believed the wicked problems of health reform — problems that bedeviled him and his administration for eight years — would turn on the GOP with equal force.

“Now is the time when Republicans have to go ahead and show their cards,” he said. “If in fact they have a program that would genuinely work better, and they want to call it whatever they want — they can call it Trumpcare or McConnellcare or Ryancare — if it actually works, I will be the first one to say, ‘Great; you should have told me that in 2009. I asked.’”

Two months later, the release of House Republicans’ replacement plan — the American Health Care Act — has made Obama look prescient. The bill quickly placed Republicans under siege from both the left, which has found more to like in Obamacare as its survival has become threatened, and the right, which attacked the replacement as unrealistic and ill-considered, and, most damning of all, as “Obamacare 2.0.”

The biggest problem Republicans face, though, isn’t from activists in either party. It’s from the tens of millions of Americans who now depend on Obamacare, and their friends, families, co-workers, and neighbors. They have been promised a replacement that costs less and covers more, and the GOP’s plan does neither.

According to the Congressional Budget Office, the AHCA would throw 24 million people off health insurance over the next 10 years and leave the remnant in plans with higher deductibles, higher copays, and less coverage. The law would let insurers charge older Americans 500 percent more than younger Americans, and the sparer subsidies wouldn’t adjust to the local cost of insurance coverage, and thus would be insufficient in many areas. This is not the “something terrific” Trump promised, nor the kind of health care that polling shows Americans want.

We are reporters who have covered health care, and the legislative ideas that became the Affordable Care Act, since before Obama’s election. In the course of that reporting, including recent conversations with Obama and dozens of elected officials and staffers responsible for the Affordable Care Act’s design, passage, and implementation, we have unearthed several lessons from the law, which current and future health reformers should heed.

At the moment, Republicans are ignoring most of them.

Lesson 1: Everything in health care is a painful trade-off. Own it.

Obama had a habit, back in meetings during the Affordable Care Act’s drafting, his former advisers recall. He would start twisting an invisible Rubik’s cube in the air, working his hands around to try to make the pieces fit together just right.

This was what health policy felt like: trying to slot together competing priorities in a way that was just as maddening as trying to get the color sides of a Rubik’s cube to line up.

Any government health coverage expansion involves a series of trade-offs, decisions that will inevitably anger one constituency or another. Provide robust health insurance plans, for example, and you need to spend more money — if you don’t, you must decide to cover fewer people. Provide skimpier coverage, and the price tag of a health insurance expansion goes down, but people get frustrated with their high deductibles and copays.

Change the system so one group pays less, and another group, inevitably, has to pay more.

“Those trade-offs have bedeviled efforts to expand health insurance coverage for decades,” says Doug Elmendorf, who directed the Congressional Budget Office during the health law debate. “It is very hard to maximize health coverage while minimizing the cost to the government and disruptions to current insurance arrangements.”

The most important part of writing health policy isn’t figuring out a way around those trade-offs, although many legislators have tried. It’s making the trade-offs that will lead to the best outcomes, and explaining those clearly to constituents. The Obama administration knew from the start that it wanted to make health insurance more accessible to those who had traditionally struggled to get covered: people who are sicker, older, and poorer — and did not have access to employer-sponsored coverage. Democrats didn’t just want to get millions covered. They had specific demographics in mind they wanted to benefit.

“If you replace a 60-year-old with a 20-year-old, that doesn’t change the number of people covered, but it changes the value of the coverage and of the program,” says Jonathan Gruber, an MIT economist who helped the White House model the economic effects of Obamacare.

Democrats had to make very clear trade-offs to advantage this older, sicker population.

For example, the law limits the premiums that insurers could charge their oldest consumers to just three times whatever they billed the youngest enrollees. The Affordable Care Act mandated that insurers must cover 10 “essential health benefit” categories. These included medical care that plans in the individual market have historically left out, such as mental health services and maternity care.

These changes were great for those who were older and required significant medical care. But bringing unhealthy people into the market is difficult, “because it requires the healthy people who had a sweet deal in the past to pay higher rates,” says former Health and Human Services Secretary Kathleen Sebelius. “There is no question that some people’s rates went up, but the old market didn’t work very well for the majority of people who needed coverage.”

Democrats’ trade-off brought consequences, one of them being that the health care law has long struggled to attract as many young people as the White House would like. Back in 2012, administration officials told us they wanted one-third of the marketplace enrollees to be between 18 and 34. The number has never gotten there, hovering around one-quarter for the past four years.

Zeke Emanuel, who worked as one of President Obama’s health care advisers, says the administration tilted the playing field too far in favor of the sick and elderly, making it difficult for young people to sign up. He says the administration should have let insurers charge older people more, perhaps four times as much as the youngest consumers.

“We made the wrong trade-off,” he says. “The consequence is costs for old people are higher because we don’t have enough young people in the pool.”

Veterans of the 2009 health care fight have dozens of stories about different trade-offs they had to make, ones that would anger different constituencies. The administration was constantly trying to balance the desire to expand coverage to as many people as possible against the commitment to keeping the package revenue-neutral. It faced outside pressure from hospitals and insurers, who some thought might turn their backs on the effort if it didn’t bring tens of millions of Americans into the health insurance system.

“Almost every aspect of the bill was inextricably linked,” says Nancy-Ann DeParle, one of Obama’s top health care advisers. “Every time we tweaked the subsidies or the individual mandate penalties, CBO had to re-estimate the bill to see how it affected coverage. If CBO said that coverage decreased, that was a big problem, because the hospitals’ support for the bill was contingent on getting a high percentage of the uninsured covered.”

Trump’s own ideas about health policy do not seem to grapple seriously with these trade-offs. He repeatedly talks about covering more people at a lower cost but has offered no plan to do so.

The American Health Care Act, however, lays these issues bare. It makes different trade-offs than the ones that Democrats made. The bill would change the rules of the individual market to advantage people who are younger, healthier, and higher-income — but disadvantage people who are older, sicker, and poorer.

AHCA, for example, would allow insurers to charge the oldest enrollees five times as much as the youngest enrollees. It would allow insurers to sell less robust health insurance plans that cover a smaller percentage of enrollees’ costs.

The results are particularly grim for older, poorer enrollees — many of whom vote Republican. According to the CBO’s analysis of the plan, a 64-year-old making $26,500 would see his premiums rise by 750 percent under the AHCA. But not only are Republicans refusing to own that trade-off — they’re refusing to own any trade-offs.

“Nobody will be worse off financially,” promised Health and Human Services Secretary Tom Price on a recent Meet the Press appearance. That’s a promise no plan could keep, but that Republicans have now made, in public, and that will be played back on ad after ad after ad.

Democrats learned, over months of hard work, that there was no free lunch in health policy. Republicans are now beginning to run into the same difficult truth: Every new winner in health care comes with a new loser.

by Sarah Kliff and Ezra Klein, Vox | Read more:
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