Sometimes life provides a second chance. For Obamacare, that second chance is now.
We’ll soon learn whether the Affordable Care Act is capable of achieving near universal healthcare coverage at an affordable price—the promise made in 2010. President Joe Biden has reopened enrollment on the exchanges and ordered an immediate review of all policies inhibiting sign-ups. He’s rolling back Medicaid work requirements begun under the previous administration and giving the 12 laggard states new incentives to expand their programs.
The administration’s COVID-19 relief package includes more generous subsidies for purchasing individual plans. It eliminates premiums for anyone earning less than 150% of poverty and reduces premiums for those earning up to 400%. In a new twist, it caps them at 8.79% of income for everyone. The legislation also provides new subsidies to help people stay on their employer plans if laid off during the pandemic.
There’s a lot riding on the success of these initiatives. The healthcare establishment and the business community want to see Obamacare succeed. They see it as the best way of serving the nation’s 30 million uninsured.
Their overall goal is preserving what we have now: a fragmented health insurance system with variable pricing and three tiers of coverage (one for the old, one for the poor, and one for the privately insured) and multiple options in each tier. This unnecessarily complex and fragmented system winds up offering different coverage to the same individual at different stages of life, while, perversely, offering different coverage to similarly situated individuals within each stage of life.
When pressed, that is what Americans seem to prefer. A Pew Research Center survey released last fall showed 26% of Americans backed a mixed government and private insurance system. Add in the 30% who only want government to provide Medicare and Medicaid and the 6% who want no government involvement in healthcare at all, and the anti-single payer constituency outnumbers those backing Medicare for All by a wide margin.
The Congressional Budget Office says expanding Obamacare subsidies through 2023 has a 10-year cost of $54 billion and only adds 2.5 million more people to the ranks of the insured. That won’t bring the U.S. anywhere near universal coverage.
Nor will it deal with the public’s No. 1 issue, which is the high cost of premiums and co-pays in their private insurance plans. Those have been going up 4% to 5% every year while wages and salaries rise an average of just 2%. That’s a recipe for constant disillusionment and builds support for more radical solutions.
The only way to make healthcare insurance affordable is to bring down the total cost of care. That will require controlling drug, hospital and physician prices, and imposing strict limits on insurers’ profits and overhead.
Needless to say, Congress is unlikely to act decisively on any of those fronts anytime soon. Therefore, we can expect to see continued fights over Medicare for All, the public option, or, with another swing of the political pendulum, conservative alternatives like skinny, high-deductible or short-term plans.
Unless. The only way to avoid those fights and get to near universal enrollment is to make Obamacare plans—and all employer-based plans—truly affordable for individuals and families. How? Make the new subsidies in the relief bill permanent and far more generous.
Congress needs to place a permanent cap on the amount anyone has to pay out-of-pocket in premiums and co-pays. It should be set at a fixed percentage of total income and fall to zero when people are out of work or stuck in low-wage jobs. Legislators should apply the same rule to employer-based plans.
Costly? On the front end, yes. But Congress will then have a powerful incentive to end this nation’s cost-of-care crisis by getting all the players in a room to hammer out a new, value-based reimbursement system. Let’s put an end to making patients pay for the market’s failure.