It was Henry Ford who said, “Whether you think you can or you think you can’t, you’re right.” His wisdom has an amazing array of applications, and our current effort to overhaul the health care system is certainly one.
Back in the 1990s the Clinton administration attempted sweeping reform of a system that even then was escalating in cost at an alarming rate. The Clinton plan was called managed competition, or unofficially – Hillarycare. I didn’t think it would work, and I actively advocated against it in much the same way many critics of the Patient Protection and Affordable Care Act, or Obamacare, are so vehemently resisting today.
What I didn’t realize then, was that our victory over Hillarycare would sentence us to 20 more years of the dysfunctional status quo. Two decades more of health-insurance premiums rising at twice the rate of inflation, and a health care system growing ever further from meeting the needs of patients. Grudgingly I came to realize that in our well-meaning zeal to get reform right, we had shot ourselves in the foot. The same is true now. It is Obamacare or the status quo. There is no Plan B.
Many Obamacare detractors favor a more market-based, less government-controlled system. So did I back in the ’90s. So what happened to the omnipotent but invisible hand of the markets in which we all had such faith? Over time I have come to realize that health care is a social program that simply can’t be made to heel to normal consumerism.
For one thing, we have a federal law requiring all hospitals to treat anyone who shows up in their emergency department regardless of ability to pay. That law was signed by the patron saint of the Republican Party, Ronald Reagan.
The Affordable Care Act isn’t perfect either, but it does have several powerful elements of reform. Health-insurance exchanges are one.
You see, today’s Republicans insist on preserving commercial insurance as the financing mechanism for health care. But health insurers only compete on their margin, administrative costs and profits, which make up about 20 percent of premiums. The rest is medical costs they pay to health care providers. But the system is so fragmented that no insurer has the leverage to drive reform back down through the delivery system.
As essentially a cost-plus business, insurers actually benefit from rising costs.
The health-insurance exchanges set up by Obamacare serve to consolidate the financing of care through a single channel, creating the market leverage necessary to effect real payment reform. Health care professionals know that will transform the delivery system quickly and in a most meaningful way.
Last week, the nascent California insurance exchange announced its first round of premium bids from the dozens of insurers there. To many the rates were surprisingly low in light of the gothic predictions from some insurers and their actuaries.
Forbes ran several angry columns denouncing the low rates as misleading and even an “apples and oranges” comparison to existing premiums there, saying the Obamacare exchange rates were far higher.
The rates will be higher for some, but they will also be lower for others as the ACA compresses the existing rate bands insurers can use to set premiums. The existing rates aren’t available to everyone, but the ACA/Obamacare rates are. It is easy to offer low rates if you can select only healthy customers.
Reform is difficult even if everyone is on the same side. The ACA will surely need to be tweaked. But it won’t be able to overcome obstinate resistance at every stage of its roll out. So if you are hell bent on defeating Obamacare, you could well be successful. But your reward will be another 20 years of costs spiraling out of control. Can we afford that? I think we should decide we can make it work. •