By Scott W. Atlas, M.D
Health reform should be about policy, not politics. And changing a law as complex as the Affordable Care Act, a law with such a profound and broad impact on not only medical care but on jobs, taxes, and the future prosperity of our children and grandchildren, must be done with great care.
In a more accountable government, Congress and President Obama would pay attention to the citizens, the majority of whom repeatedly voice disapproval over what is misleadingly named the Affordable Care Act. They would reflect on the voices of seniors – the group who actually use health care rather than abstractly intellectualize about it – and their overwhelming 2-to-1 disapproval of ObamaCare. They would be responsive to the unions representing more than ten million hard-working Americans, constituents who now admit they were wrong about initially supporting the law. They would heed the job creators, the small and large business owners in this country who form the backbone of economic freedom and prosperity essential for individual self-determination.
But a stubborn refusal to admit the facts by an administration whose identity rests in this law, coupled with an unrealistic belief by the GOP that this new entitlement can be wholly eradicated in spite of our divided government, is jeopardizing what is urgently needed.
Short of complete repeal, ObamaCare must be dramatically altered. And it can be done under the name of ObamaCare, to benefit Americans and move American health care reform in a positive direction … and to preserve the legacy of this president as a health care reformer.
Four key fixes are essential to enact now, so that some important reforms can be saved while preventing the harm to Americans and their families from this unwanted law.
1. Deregulate the insurance exchanges
Recently rechristened for marketing purposes as the “Health Insurance Marketplace,” the ACA insurance exchanges are held up by the law’s supporters as originating from conservative principles. And we know from the private sector model that exchanges can benefit Americans with more choices and reduced costs, offering consumers the power to spend their health benefits as they see fit.
Yet most states – 34 – and nearly all conservative governors have refused to set up their own, thereby defaulting to the federal government to handle the structure and administration for the more than 20 million Americans expected to buy new health coverage. Why? The problem is the implementation under the ACA. Already, and just as predicted, insurance premiums are skyrocketing, when considering legitimate comparisons, by 20 to 200 percent across the country, including California, Ohio, Washington, Georgia, Florida and beyond, specifically because of ObamaCare’s hyper-regulations. Moreover, the massive federal subsidies of more than one trillion dollars over the decade as promised under the law will fall short, as even more employers drop health benefits. As if that weren’t ominous enough, the rules required for implementation and enforcement of eligibility by a beleaguered IRS are nowhere near ready.
Even given all that, the exchanges are important and salvageable. The GOP should push for these specific changes:
Instead of defining a bloated list of coverage (ironically named “minimum essential benefits”) that substantially raises prices for consumers, how about facilitating cheaper, less extensive coverage that younger, healthier people and many others prefer and would choose in order to save money? Current coverage mandates (now climbing to 2,271 in the 2012 Council for Affordable Health Insurance report) represent the biggest controllable factor driving up insurance costs. Reforms should aggressively ease mandates, strip back special-interest coverage requirements, require high deductible options, and finally remove archaic state border limits on insurance competition by encouraging multi-state exchanges.
Instead of pricing employers out of providing health benefits altogether, how about incentivizing a new model for employers, one that is perfect for exchanges? A defined cash health benefit, just like that already used for retirement benefits, is better for everyone – workers can shop for health insurance of their choice and simultaneously achieve the long desired portability of coverage, regardless of employer, while employers would face far less uncertainty about their future costs.
Instead of the government’s artificial price fixing that dictates profits (“minimum loss ratios”), how about allowing the actual marketplace that served as the impetus for creating exchanges in the first place to determine price? After all, isn’t competition and comparison shopping on exchanges the main reason for their existence?
Instead of forcing sellers to disregard all projected risks fundamental to pricing insurance premiums, like guaranteeing coverage while virtually eliminating personal responsibility or waiting times for coverage and ultimately discouraging younger, healthier people from buying overpriced insurance, how about reintroducing reasonable risk assessments while facilitating high risk pools achievable through larger exchanges, and then letting consumers benefit from shopping for what they value?·
Instead of the unjustifiable, counter-productive new limit of $2,500 on flexible spending arrangements, how about moving in the opposite direction by doubling the maximum health savings account limits? This would encourage cheaper, higher deductible insurance plans and expose medical care to value-focused consumers who would be considering cost, as they pay for care rather than keep the money.
2. Eliminate the IPAB
President Obama’s ACA established the Independent Payment Advisory Board (IPAB), a 15-member panel of unelected federal employees to be appointed by the president and confirmed by the Senate. Its mission is specific – to restrict payments to doctors and hospitals in order to achieve a reduction in Medicare spending beneath a specified cap. Beyond authority to directly cut payments for care under Medicare, the IPAB has the power to regulate all health care in the US, including private health care and insurance, so long as such action is deemed to “help reduce the growth rate [of national health expenditures] while maintaining or enhancing [Medicare] beneficiary access to quality care.” Decisions by the panel are not simply recommendations; if the Senate, the House, and the president do not concur on an alternative proposal, or if Congress does not act at all, the HHS Secretary is required to implement the board’s recommendations. As of August 15, 2014, if the IPAB does not even submit such recommendations and Congress does not enact its own payment restrictions, the Secretary of HHS is authorized to make and implement them unilaterally, without any other approval.
The reality is that the IPAB represents an unprecedented shift of power from individual Americans to a centralized Board of political appointees that is unaccountable to citizens, to Congress, or to the judiciary. Even Howard Dean, former Chair of the Democratic National Committee and former Governor of Vermont, warned last month that “The IPAB is essentially a health-care rationing body. By setting doctor reimbursement rates for Medicare and determining which procedures and drugs will be covered and at what price, the IPAB will be able to stop certain treatments its members do not favor by simply setting rates to levels where no doctor or hospital will perform them. Rate setting—the essential mechanism of the IPAB—has a 40-year track record of failure.” Dean continued “what ends up happening … is that bureaucrats are making medical decisions without knowing the patients. Most important, these kinds of schemes do not control costs.”
3. Liberate the poor from Medicaid
The ObamaCare Medicaid expansion is a prime example where facts are ignored and, instead, expansion of a failed entitlement program is the proposed solution. Let’s consider the facts. The major medical journals are filled with proof that Medicaid patients have worse outcomes than comparable patients with private insurance, including more deaths, longer hospitalizations, and more serious complications from major surgery, cancer, heart disease, interventional procedures, transplants, and AIDS. And now, in Oregon’s controlled, randomized study comparing thousands of previously uninsured, poor Medicaid applicants who received Medicaid to those who did not receive insurance, we see evidence that “comprehensive” Medicaid insurance failed to improve health beyond no insurance at all.
Beyond outcomes, Medicaid insurance has been only a façade for years, because beneficiaries cannot even find doctors. More than one-third of primary care doctors and one-fourth of specialists already refused new Medicaid patients back in 2008. And from a 2009 survey of 15 large metropolitan areas, almost half of doctors nationally in five commonly used fields refused Medicaid patients, about four times the percentage that refused new private insurance patients.
Instead of pretending that our government is helping the poor while wasting yet another $700 billion of taxpayer money on scandalous health outcomes and no access to doctors, how about getting government out of this already proven debacle? Let’s start by allowing all Medicaid beneficiaries the option to receive defined contributions, actual money, to purchase health insurance of their own choosing, including high deductible plans with health savings accounts.
4. Repeal the misguided excise taxes on medical devices
New taxes on key health care industries and investors, including drug manufacturers and medical device companies, all discourage the risky but essential investment in innovators that form the bedrock of America’s medical technology industry. Perhaps most destructive is the new 2.3% excise tax – on revenues, not just profits – on medical devices already begun that increases federal taxes on medical device companies by $30 billion through 2022.
Beyond suffocating the health benefits from its innovations, threatening this specific sector is highly counter-productive to our economy. The medical technology industry directly accounts for more than 400,000 high paying US jobs and creates about 2 million additional U.S. jobs – the very sort of careers our young people seek.
By some estimates, the ACA will cause a loss of 45,000 jobs in the U.S … and medical device companies are already eliminating jobs because of these onerous taxes. The ACA will cost Boston Scientific alone more than $100 million a year in additional taxes, so they built a $35 million research center in Ireland instead of in the US and announced another $150 million site in China. Stryker Corporation of Michigan announced reductions of 1,000 workers “to provide efficiencies and realign resources in advance of the new Medical Device Excise Tax.” Cook Medical of Indiana announced it is scrapping plans to open five new plants in the Midwest because of this specific tax, while saying “in reality, we’re not looking at the US to build factories anymore as long as this tax is in place.” San Diego’s NuVasive wrote “as a result of the law, for the first time in our history we are being compelled to consider moving manufacturing, clinical trials and investment in new innovation to more business-friendly countries.” And CEO Mark Waite of Lighthouse Imaging in Maine stated what is obvious – “”This [tax] will end up making the cost of goods higher, and since most of these medical devices are required, as opposed to being optional, that cost gets passed on to the consumer and the cost of care goes up.”
Commitment to principles and a sense of urgency are needed now more than ever for our elected congressional leaders and state officials. ObamaCare is stumbling forward, thanks to the Supreme Court’s decision to artificially categorize government mandates as taxes. And belying their overall opposition to the Affordability Care Act, the voters re-elected President Obama. The next several months will determine if this divided government even has the capacity to look beyond politics and honor its commitment to work for the people who actually pay the bills.
David and Joan Traitel Senior Fellow and member of the Working Group on Health Care Policy at the Hoover Institution of Stanford University.