America’s Health Care - 2019
© David Burton 2019
America’s Health Care - 2019© David Burton 2019 |
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Prices in the U.S. and Elsewhere PRESCRIPTION DRUG PRICES in America are among the highest in the world. Prescription drug prices in the United States are high – no surprise to those of us who have to pay all or part of the cost of our medicines. In some cases, the costs of medicines are higher than the patient or his/her caregiver can afford. “. . . U.S. prices for the world's 20 top-selling medicines are, on average, three times higher than in Britain, according to an analysis carried out for Reuters. “The finding underscores a transatlantic gulf between the price of treatments for a range of diseases and follows demands for lower drug costs in America from industry critics . . . - - - “Researchers from Britain's University of Liverpool also found U.S. prices were consistently higher than in other European markets. Elsewhere, U.S. prices were six times higher than in Brazil and 16 times higher than the average in the lowest-price country, which was usually India. “The United States, which leaves pricing to market competition, has higher drug prices than other countries where governments directly or indirectly control medicine costs. “That makes it by far the most profitable market for pharmaceutical companies, leading to complaints that Americans are effectively subsidizing health systems elsewhere.” (Ref. 1) Share the Expense “The average price of successfully bringing a new medicine to market in the U.S. is about $2.4 billion. The entire approval process takes some 12 years before a drug receives its final green light. The expenses include all the would-be medicines that fail to make it out of the research labs or falter during the Food & Drug Administration's expensive, time-consuming clinical trials. [Emphasis mine] “Pharmaceutical companies get 20-year patents for their drugs, which means they really have about 8 years of monopoly power (20 years for the patent minus the 12 years for clearing all the hurdles before a particular prescription can actually be sold). No wonder the initial price for a new drug is sky-high, even though the actual manufacturing cost per pill is minuscule. (Ideally, when a drug goes ‘off-patent,’ imitators rapidly bring copies, called generics, to market, slashing the price. Unfortunately, FDA regulations have gummed up this process. . . . “When a pharmaceutical company sells a new drug overseas, buyers demand a price that's a fraction of what American customers pay. The demand is more in line with a gangsteresque ‘We'll make you an offer you can't refuse’ process than normal business bargaining. The implicit--and sometimes explicit--threat is that if a company doesn't cave the country will allow a knockoff of the medication to be produced by another company. “The U.S. should now make fair pricing of American drugs overseas a top trade priority: If you don't want to pay for our R&D, you won't get our pills. Period. And if you try the imitation game, we'll take painful retaliatory measures. [Emphasis mine] “Success with this would mean significantly lower costs for American consumers. The publicity surrounding the issue would also educate Americans about how costly--and antiquated--much of our current approval system is . . .” (Ref. 2) Why Do Medicines Cost So Much in the U.S.? “The ‘most important factor’ that drives prescription drug prices higher in the United States than anywhere else in the world is the existence of government-protected ‘monopoly’ rights for drug manufacturers [Emphasis mine], researchers at Harvard Medical School report . . . “The researchers reviewed thousands of studies published from January 2005 through July 2016 in an attempt to simplify and explain what has caused America’s drug price crisis and how to solve it. They found that the problem has deep and complicated roots and published their findings in JAMA, the journal of the American Medical Association. . . . - - - “Five key findings in the JAMA review: “Drug manufacturers in the U.S. set their own prices, and that’s not the norm elsewhere in the world. “Countries with national health programs have government entities that either negotiate drug prices or decide not to cover drugs whose prices they deem excessive. No similar negotiating happens in the U.S. “When . . . Congress created the Medicare drug benefit in 2003, they barred the program that now covers 40 million Americans from negotiating drug prices. Medicaid, on the other hand, must cover all drugs approved by the Food and Drug Administration, regardless of whether a cheaper, equally or more effective drug is available. And private insurers rarely negotiate prices because the third party pharmacy benefits managers that administer prescription drugs . . . often receive payments from drug companies to shift market share in their favor . . . “We allow ‘government-protected monopolies’ for certain drugs, preventing generics from coming to market to reduce prices. “. . . The FDA also gives drug manufacturers exclusivity for certain products, including those that treat people with rare diseases. “But sometimes, drug companies deploy questionable strategies to maintain their monopolies, the study says. The tactics vary, but they include slightly tweaking the nontherapeutic parts of drugs, such as pill coatings, to game the patent system and paying large ‘pay for delay’ settlements to generics manufacturers who sue them over these patents. - - - “The FDA takes a long time to approve generic drugs. “Application backlogs at the FDA have led to delays of three or four years before generic manufacturers can win approval to make drugs not protected by patents, the study says. “Sometimes, state laws and other ‘well-intentioned’ federal policies limit generics’ abilities to keep costs down. “Pharmacists in 26 states are required by law to get patient consent before switching to a generic drug . . . “Drug prices aren’t really justified by R&D. - - - “. . . {Drug} companies only spend 10% to 20% of their revenue on research and development. . . . “Instead, the price tags are based on what the market will bear . . . “In general, fixing America’s drug price problems won’t be easy . . . Congressional gridlock and the power of the pharmaceutical lobby make allowing Medicare to negotiate Part D prices an unlikely possibility. And leaving that aside, policymakers must find a way to tighten rules and strengthen oversight surrounding patent protections and exclusivity without chilling innovation . . . - - - “. . . there is not a single policy that is going to address the range of challenges that our health system faces around drug pricing.” (Ref. 3) As has been pointed out, a major reason that spending on prescription medications is higher in the US, per capita, than in any other country in the world is that pharmaceutical companies, basically, can charge whatever they want. “If you look at the landscape of prescription drugs in America, you’ll notice there is nothing in place to keep drug prices low. There are no specific regulations to keep a ceiling on costs. The pharmaceutical manufacturers have the very tempting opportunity to charge whatever they think a drug’s demand and the market will bear. It’s simply possible for a drug company to charge high prices if they want to, just because they can. There’s nothing regulating whatever cost they want to charge. So, the opportunity to charge more exists. “Drug companies will tell you immediately that their costs to research, develop and bring a drug to market are astronomical, and they have to cover those costs and make a profit to continue to stay in business and develop even more innovative prescription medications that will help save more lives. That’s a primary reason pharmaceutical companies will point to as a reason for escalating prices on all the medications they manufacture. And that’s true – to a degree. “But according to a May 2017 AARP {American Association of Retired People} cover story in their AARP.org bulletin, ‘Even after accounting for their research investments, however, drug companies are among the most profitable public businesses in America. And an analysis from the research company Global Data revealed that 9 out of 10 big pharmaceutical companies spend more on marketing than on research.’ [Emphasis mine] - - - “There’s no denying that it’s important that the evolution and progression of getting more and better drugs to patients to help manage illnesses and save lives must continue. More drugs are being approved now as compared to just five or ten years ago. . . . “It’s not just new drugs coming to market where we sometimes see astronomical costs. Even the cost of older drugs – drugs that have been on the market for years, even decades – can rise. You might recall the relatively recent outrage over the price hike for the EpiPen, a four-decade-old product that contains the allergy medication epinephrine, a synthetic version of adrenaline. The patient’s out-of-pocket cost for that product soared 535 percent over seven years from 2007 to 2014 according to news accounts. . . . - - - “The EpiPen story is by no means an anomaly. Take, for example, the case of drug-maker Valeant, who in 2015 raised the cost of a single drug, isoproterenol, from $444 per dose – pretty hefty to begin with – to more than $2,700 per dose. Talk about sticker shock. . . . - - - “New drugs brought to market can be just as costly. Here are a few examples of those costs (highlighted in the May 2017 cover story in the AARP.org Bulletin): “The cost of . . . a new cancer drug that was approved in March, is about $156,000 a year per patient. “A new muscular dystrophy drug came on the market late last year for an eye-popping price of $300,000 annually. “In 2016, the FDA approved . . . a new bladder cancer treatment that costs $12,500 a month, or $150,000 a year.” (Ref. 4) “In 2015, you might recall, the price of {a drug}, which is used by AIDS and transplant patients, famously soared from $13.50 per pill to $750, which sparked an outrage. . . .” (Ref. 5) “{We need to} get the costs of prescription medications lower on a global scale with the help of the government through legislation as well as with the help of pharmaceutical manufacturers bringing costs more in line with affordability.” (Ref. 4) “Confusion, anxiety and anger over the high cost of medicine has been on the rise for more than a decade. But even as the chorus of criticism has grown louder, the price of pharmaceutical products in the U.S. continues to skyrocket. - - - “Other countries drive a much harder bargain with drug companies. In contrast, the U.S. allows drug companies to pretty much set their own prices. - - - “The supply of a {new medicine} is controlled entirely by the drug manufacturer that holds the patent rights. That gives the manufacturer a monopoly on the drug for the 20-year life of the patent. During that time, it is free to raise the price as frequently and as much as the market will bear. . . . - - - “. . . ‘High prescription drug prices affect everyone . . . Even if patients are fortunate enough to have good health care coverage, higher prices translate into higher out-of-pocket costs, premiums and deductibles. And greater spending by taxpayer-funded programs like Medicare and Medicaid are eventually passed along to all Americans in the form of higher taxes, cuts to public programs or both.’ [Emphasis mine] “Put even more simply: One reason that your health insurance rates are high is because you are subsidizing other people’s high-cost medicines. . . . “If you needed a new TV, you would do some research, shop around and pick the best model at the price you can afford. That creates competition that pushes prices down. The market for prescription drugs doesn’t work that way. For example, you don’t make the product choice — your health care provider does. And doctors and nurse practitioners often do so in the dark: There’s little information available to compare one drug to another. The Food and Drug Administration (FDA) does not require drug companies to prove that their new products are better than existing products. So many physicians write prescriptions for the drugs they’re most familiar with — and that information often comes from manufacturers themselves. Drug companies spend $24 billion a year marketing to health care professionals. “Other factors that cause the drug market to be skewed include: “Patent law. Pharmaceutical companies have become adept at coming up with strategies to extend their monopoly on a drug beyond the expiration of its original patent. . . . “Limits on Medicare. One of the largest purchasers of prescription drugs, Medicare is blocked by law from negotiating prices. . . . - - - “Mutiple middlemen. When you pick up a drug at the pharmacy, you often don’t know what its real price is — that is established between the manufacturer and your insurer. You just pay the agreed-upon copay rate. Today, insurance companies rarely negotiate prices directly with drug manufacturers. Instead, most insurers work with pharmacy benefit managers, who negotiate rebates and discounts on the company’s behalf — often in exchange for preferential placement on their list of covered medicines. . . .” (Ref. 6) “Middlemen, like pharmacy benefit managers and insurers, are the ones raising prices on consumers. “Pharmacy benefit managers negotiate drug prices on behalf of health plans. They secure big discounts and rebates on drug prices from manufacturers. But PBMs and insurers routinely fail to pass these savings along to consumers. Instead, they hike consumers' out-of-pocket expenses by forcing them to pay ever-higher co-pays and co-insurance. “If lawmakers want to reduce people's' pharmacy bills, they should demand more transparency from insurers and PBMs. That would drive down prices without jeopardizing consumers' safety or access to medicine.” (Ref. 7) “The pharmaceutical industry offers several responses to the charges of excessively high prices. . . . “It . . . notes that an open market means that ‘patients in the U.S. can access the most innovative treatments far earlier than any other country . . . For example, data . . . show that patients in Europe wait an average of nearly two years longer to get access to cancer medicines than American patients. “But the industry’s primary defense of rising medicine prices are the high costs associated with drug development. “Drug companies spend over 10 years and up to $2.6 billion bringing a drug to market, according to a 2016 Journal of Health Economics article based on research by the Tufts Center for the Study of Drug Development . . . Of that amount, $1.4 billion is actual costs — items like salaries, labs, clinical-trial expenses and manufacturing. The remaining $1.2 billion is ‘capital costs’: what the company sacrifices by investing time and money in an unproven drug. . . ." (Ref. 6) Some Possible Ways to Lower Prescription Drug Costs “The pushback against high drug prices has clearly begun: AARP, the American Medical Association, the American Hospital Association, the American College of Physicians and groups such as Patients for Affordable Drugs have called for making prescription drugs more affordable. Policymakers have started to push for laws that could bring prices down. It won't be easy, but experts say these moves could help improve the situation. “1. Let Medicare negotiate drug prices “Using the clout of the program's 57 million beneficiaries to bargain with pharmaceutical companies could certainly lower prescription drug prices. (The term for this is "secretarial negotiating authority.") Such a move could produce as much as $16 billion in annual savings, according to a 2015 report by Carleton University in Ottawa, Ontario, and Public Citizen, a public advocacy group. “2. Allow more drugs to be imported “The prices of brand-name prescription drugs are typically much higher in the United States than in other developed countries, but right now there are strict limits on when and how consumers can buy drugs from other countries. Setting up a system that would ensure the safe and legal importation of less expensive prescription drugs could help put pressure on drug prices and allow consumers to save on medications. “3. Create transparency in drug pricing “There is no way now to verify the claim by drug companies that high prices are linked to the costs associated with research and development. In fact, the public has very little information about how drug companies actually set the initial price of a drug or decide on subsequent price increases. Improved understanding of how drug companies price their products could help the public determine whether high costs are justified. “4. Provide for easier drug comparisons “The public has no means of knowing whether a newly approved medicine is better than those already on the market. Increasing the availability of research that compares the safety and effectiveness of drugs treating the same conditions would help create price competition and reduce spending on unnecessary or ineffective treatments. 5. Implement ‘value-based pricing’ “Shift the United States to a system in which drug pricing is based on how well drugs work (‘value’) rather than what the market will bear. For example, a drug that cures a disease would be priced higher than a drug that doesn't improve on existing treatments. However, there is no universal definition of value, and developing one will not be easy. Consequently, the possibility that value-based pricing will have a meaningful impact on prescription drug prices and spending is likely years—if not decades—in the future.” (Ref. 8) “Polls show that Americans are fed up with high drug costs. A commonly proposed solution has been to let the federal government, through Medicare, negotiate with drug companies. Currently, while Medicare tells hospitals and doctors what it will pay for services, by law it cannot negotiate with companies for lower drug prices. Some independent estimates suggest that negotiated drug prices could save the federal government $15 billion or more per year. “But this approach will not solve the problem of stratospheric drug prices, for several reasons. For many diseases, there exist only a couple of effective drugs, with little price competition. Also, Medicare would have little negotiating leverage since, unlike private insurers, it cannot maintain an approved drug list and exclude overly expensive drugs from coverage. “The bigger problem, though, is that Medicare negotiations would do nothing to contain drug prices for the 170 million Americans who have private health insurance, through their employer, the exchanges, or by self-purchase. Having the federal government negotiate lower prices for Medicare would most likely drive up prices on the private side as drug companies tried to recoup their ‘lost’ profits. “Almost all developed countries — including those run by very conservative governments — have an effective solution for drug prices, which is why these countries often pay less than half of what people in the United States pay for drugs. For instance, Australia’s more than 60-year-old Pharmaceutical Benefits Scheme has been the single purchaser of drugs for the country, making drugs available at fixed prices that are now listed online. “If the United States were to consider such an approach, drug companies would immediately raise two objections: the high risks associated with drug development and, related, the high cost of research and development. But both of these arguments are fatuous. It is true that a vast majority of drugs fail. On average, only one in every 5,000 compounds that drug companies discover and put through preclinical testing becomes an approved drug. Of the drugs started in clinical trials on humans, only 10 percent secure F.D.A. approval. “Regardless of the risks, many drug companies are making huge profits. . . . “What should be done? The United States government has created myriad special pricing arrangements that pervert incentives. For instance, Medicaid generally gets the lowest prices in the market. This discourages drug companies from experimenting with other payers on lower price arrangements, knowing that they will most likely have to give the same deal to Medicaid. Similarly, through the Orphan Drug Act of 1983 the United States created many incentives for developing drugs for orphan diseases — those with fewer than 200,000 patients nationwide. Through special tax credits and better deals on marketing exclusivity, the federal government is encouraging the companies to benefit thousands instead of millions. . . . While it is important to find effective treatments for rare diseases, it is more important to target serious, common diseases such as stroke and antibiotic-resistant infections. “Also, as outrageous as they are, prices are not the real issue. Value is. What really frustrates people are expensive drugs that do not provide a cure. For instance, {one drug} adds an average of 3.2 months of life to lung cancer patients and costs $150,000 per year for treatment. “Conversely, other drugs are super-expensive but are worth it. There was an outcry over paying $1,000 per pill for {a drug}. But it helps cure hepatitis C and has shown to be cost-effective. “While the Australian system of price controls is one approach, another possibility is the Swiss health system, which is frequently applauded by conservative commentators. The Swiss government includes only those drugs that are effective and cost-effective on its approved drug list. It then establishes a maximum allowable price for the drug, but up to that point, companies can decide what to charge. We could cap the price based on objective, quantitative measures of value. Private payers would continue to negotiate with drug companies over prices as they do now, but there would be a ceiling to prevent prices from becoming unsustainable.” (Ref. 9) The so-called Affordable Care Act (ACA), better known as Obamacare, might die on the steps of the Supreme Court. That will depend on the Fifth Circuit, and, later on, possibly the Supreme Court. As 2018 came to a close, a U.S. District Judge granted a motion in favor of 20 states, led by Texas, to strike down Obamacare. There is sure to be an appeal to the 5th U.S. Circuit Court of Appeals, and ultimately the U.S. Supreme Court. So where do we go if the Supreme Court voids Obamacare? Those states that received waivers under Obamacare were able to innovate around the burdensome regulations of ACA and reduce premiums for their residents. Could Congress and the President build upon that experience? [10] A Hypothetical Medical and Ethical Dilemma Suppose you live in a society of 1,000 people. These 1,000 people each earn $10,000/year and thus have a combined annual income of $10 million. One hundred of these people have various illnesses and require medical care and medicines costing $10,000/year for each – a total of $1 million/year. One other person has a rare illness that is fatal if untreated. The annual cost of that person’s healthcare and medicines amounts to $10 million. What should be done – use the total income of $10 million to treat the one and deny medical care to the other 100, or, treat the hundred and deny medical care to the one? Reality When are medical expenses too high? “The unbreakable tie between individual finances and healthcare cost isn’t new news, and there have been many articles written on the impact of the cost of healthcare to Americans, such as this one from CNBC, which correctly points out that, ‘Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year—making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data. And even having health insurance doesn’t buffer consumers against financial hardship.’ “ (Ref. 4) With Obamacare currently in legal limbo, “it is imperative that policymakers pursue real health care reform. Obamacare isn’t working for too many American families and individuals slammed with high premiums and few choices. Rather than looking for ways to keep Obamacare in place amid these legal challenges, lawmakers should pursue real solutions. [Emphasis mine] - - - “. . . we need a better health care solution than Obamacare. [Emphasis mine] “One of Obamacare’s core conceits was that what (allegedly) worked in Massachusetts would also work on a national scale. That hasn’t borne out. “Instead, Obamacare led to years of increasing costs and decreasing choices. Premiums doubled in the first four years of the program. Millions lost the coverage they used to have. Americans found it harder to pick the right plan and doctor, as health plan choices declined and provider networks narrowed. Frustrated providers are drowning in red tape and increasingly feeling burned out. Meanwhile, taxpayers are on the hook for the money needed to paper over Obamacare’s flawed structure. [Emphasis mine] “Those who seem to benefit most from Obamacare are big insurance companies that embraced the law and receive a steady stream of taxpayer subsidies and politicians who made endless promises to reform Obamacare but failed to deliver. “Some on the left claim Congress must protect Obamacare because only Obamacare allows Americans with pre-existing conditions to get coverage. That’s an irresponsible, false {claim} and Congress {and the American people} should reject it. “There are steps that states can take right now to ensure people with pre-existing conditions are protected, even if Obamacare ultimately goes away. [Emphasis mine] “Congress should let states review their health care regulations and pursue innovative ways to make coverage more affordable and accessible to Americans—regardless of their income or medical status. . . . “Congress does have a role to play in helping families and individuals get the quality private coverage they want, and helping health care professionals meet their needs. Conservatives have a proposal to achieve this: the Health Care Choices Proposal {HCCP}, which undoes Obamacare’s damage by letting states innovate. [Emphasis mine] “Under Obamacare, insurance companies receive taxpayer subsidies dollar for dollar as they raise prices. {HCCP} does away with that flawed spending scheme. “Instead, it would convert existing Obamacare spending into a grant that states would use to ensure chronically-ill patients have access to the health coverage of their choice. Greater flexibility and resources to the states means that all Americans, even those who are chronically sick, would have access to more health plans at better prices. “{HCCP} would lower premiums up to an estimated 32 percent and ensure that everyone can access a quality private coverage arrangement of their choice. “And everyone who gets a subsidy could decide what coverage to use it for, including private or employer-sponsored health insurance. “Individuals and families would be able to decide what coverage arrangement works for them, and decide whether to work directly with a doctor for primary care and buy catastrophic coverage, or get a plan that covers more costs up front. The proposal would be especially helpful to the working poor, who may want to have private coverage but lack the means to pay for it. “For most people, this is a much better option than what happens today: being pushed onto a government-controlled plan a bureaucrat thinks is best for them. “{The HCCP} would build on a promising, emerging trend already happening in the states. When states have been given even a little bit of freedom from Obamacare’s mandates, they’ve been able to lower premiums using tools that ensure that the sick still retain access to care. “Politicians have long promised to replace Obamacare with solutions that help everyone. It’s time to deliver—no matter which way the courts go.” (Ref. 11) HCCP - A Detailed Plan for Healthcare Reform “After more than eight years of the Affordable Care Act, known as Obamacare, health insurance costs continue to spiral out of control, particularly for millions of Americans trapped in the individual and small-group markets. Choice and competition in most of the states’ individual health insurance markets has virtually collapsed, leaving millions of people with either limited, or no, choice of health coverage. Patient access to physicians and medical specialists has declined, as health plan ‘provider’ networks have progressively narrowed. [Emphasis mine] “Across the political spectrum, there is a broad recognition that the Obamacare health law is unworkable and unsustainable. . . . “Health care is at a crossroads. Some congressional leaders advocate keeping this flawed law afloat by forcing taxpayers to bail out (likely endlessly) health insurance companies to compensate for Obamacare’s design flaws that are driving up health care costs and driving people and plans out of the market. Some others in Congress—including leading Democratic Senators and more than half of the Democratic membership of the House of Representatives—have endorsed proposals for a total federal government takeover of the health care system (a ‘government run health care’ system or ‘single payer’ system), including a prohibition of private ownership of health plans and abolition of employer-sponsored health insurance. “These proposals proceed exactly in the wrong direction. The urgent need, instead, is to change the direction of American health care toward a new patient-centered system, where the system responds to the needs and preferences of consumers, rather than to the interests of providers and insurers or the dictates of government central planners. [Emphasis mine] What was needed before Obamacare, and is still needed in the wake of Obamacare’s damage, are reforms that re-orient the system toward being patient-centered by giving individuals and families the ability to control the flow of health care dollars and crucial health care decisions, and by forcing providers and insurers to compete for customers by offering better care at lower costs. “Charting a New Course. Changing course will require Congress to chart a new path that will guarantee robust personal choice and market competition; legalize affordable health insurance while protecting the poor and the sick; and allow health plans and medical professionals to pursue greater innovation, higher quality, and economic efficiency in care delivery. Such a major legislative change, combined with administrative actions on the part of the executive branch and legislative actions in the states, will shift the policy direction away from Obamacare’s centralized and inflexible regulatory regime toward a new path of reform based on real patient choice and genuine market competition. {HCCP} provides the architectural framework for that fundamental policy shift. “{HCCP} is straightforward. It would repeal the Obamacare federal spending scheme and replace it with a more fiscally responsible block grant to the states. The proposal would address Obamacare’s regulatory overreach by restoring state authority over some critical health insurance regulation. Thus, states would have the ability to adjust insurance rules to their own insurance market conditions, which differ sharply from state to state. It would also give individuals enrolled in government-run programs, such as Medicaid, the choice to opt out and enroll in private health coverage of their personal choice. Finally, it recommends changes to health savings accounts (HSAs), enabling consumers to use them with greater flexibility in meeting their health care wants and needs. “Eight Years of Failing Policy: The Obamacare Crisis - - - “. . . President Barack Obama and his allies in Congress repeatedly made a series of bold and high-profile promises, ranging from the right of persons to keep their health plans and their physicians to annual reductions in typical family insurance costs and a full exclusion of middle-class citizens from additional federal taxation in support of the law. None of these promises proved true. [Emphasis mine] “Consider the facts: “Skyrocketing Costs. Next year, Americans enrolled in the individual and small-group health insurance markets—those markets directly governed by the law—can expect another big jump in health insurance costs, ranging from 15 percent to 30 percent. This year, enrollees in the standard (“silver”) health plans in the exchanges face average deductibles of over $4,000 for self-only coverage and $8,000 for family coverage. . . . Between 2013 and 2017, premiums increased by 105 percent. [Emphasis mine] Today, for many middle-class persons, such high-cost coverage is practically inaccessible. Not surprisingly, there is emerging evidence that more Americans are foregoing medical appointments simply because they cannot afford them. “The law’s comprehensive regulatory regime has directly contributed to the increased health insurance costs over the past four years. It is therefore not surprising that millions of younger and healthier Americans have avoided enrollment in the exchanges and the non-exchange markets, or that only a tiny number of persons with incomes above 400 percent of the federal poverty level (FPL), and therefore ineligible for Obamacare subsidies, have enrolled in the exchanges. For 2018, only 11.8 million persons enrolled in the Obamacare exchanges, thus continuing a pattern of decline. “Declining Choice. Likewise, millions of Americans have experienced a decline in their plan choices instead of the benefits of robust market competition among health plans. Between 2013 and 2018, the number of insurers in the individual health insurance markets declined from 395 to 181. At the county level, the decline in patient choice and insurance competition has been devastating. In 2018, there are just two insurers offering exchange coverage in 35 percent of U.S. counties, and there is just one insurer in 52 percent of the nation’s counties. In other words, in over half of U.S. counties, Obamacare exchange customers already face a government-sponsored monopoly in the form of a single, federally regulated and standardized health plan; [Emphasis mine] a ‘government-run health care’ system on the installment plan. “More insurers are leaving the Obamacare exchange market than are entering. . . . “In 2016, . . . unsubsidized enrollment in the individual market declined by 8.2 percent, after declining by 7.5 percent in 2015. Even the growth in subsidized Obamacare enrollment is flattening. . . . subsidized enrollment grew by only 3.7 percent in 2016 compared to 35.8 percent in 2015. Furthermore, over the three-year period, of the 15.7 million individuals who gained coverage, 89 percent of that increase was through Medicaid. “Less Access. This year, Americans enrolled in the individual and small-group markets are experiencing, as they have year after year since the law’s enactment, progressively narrowing provider networks. . . . The result: Some highly prized specialized medical practitioners are no longer in the Obamacare networks. . . . - - - “Charting a New Direction for Health Care Reform “. . . Congress {and the President} must change the fundamental direction of health care reform away from Obamacare’s failed government-based regime toward patient-centered, market-based health reform. {The HCCP constitutes such a plan.} "The Key Elements. . . . Congress should:
“- Private coverage. . . . support the people’s purchase of private coverage. “Risk mitigation. . . . offset the costs of individuals with expensive medical conditions through reinsurance programs or other, similar mechanisms. “Premium support. Individuals who are subsidized by a state grant program, and individuals currently on Medicaid and Children’s Health Insurance Program (CHIP), would be able to direct their share of funding to the private coverage of their choosing. - - - “Optional use. States could also incentivize insurers to offer discounts to individuals who maintain continuous coverage, or to young adults in general, who have been fleeing the market altogether.
“Repeals federal essential health-benefit requirements. . . . “Repeals federal medical-loss-ratio requirement. The ACA sets the minimum share of premium income that an insurer must spend on claims costs. This federal requirement perversely discourages insurers from spending money to limit claim payments. It also creates a barrier to new insurers entering the market and to existing insurers expanding into new markets, because it does not account for the higher administrative costs associated with the initial years of such expansions. “Repeals federal age-rating limitation. . . . “Guarantees Individual Choice. {HCCP} would ensure that individuals and families have the final say in the type of coverage they receive. . . . individuals currently subsidized by Medicaid and CHIP would gain new freedom to direct the subsidy to the private coverage of their own choice. While states would be free to use the block grant to design their own state programs, if an individual was unhappy with the coverage option or options offered by the state using its grant funding, {he/she} would have the ability to take the value of her state subsidy and apply it toward any private coverage for which {he/she} was otherwise eligible, such as a plan offered by an insurer, an employer, or an association, including health plans sponsored by professional or faith-based organizations, or health plans that included a direct primary care component. Finally, the {HCCP would make} HSAs more flexible, available, and useful to consumers. “Goals: Lower Costs, More Choices, Better Access - - - ”The Empty Promises of False Alternatives “Across the political spectrum, there is general recognition that Obamacare is not working. Yet, {many of} the solutions {proposed} either call for even greater centralization of power in Washington, higher federal spending, and heavier federal regulation, or do little to make the necessary changes to advance a patient-centered, market-based system {These contain empty promises and offer false alternatives to the failed Obamacare program. Some of these are}: “Government-Run Health Care/Single Payer. Most liberals in Congress are, either tacitly or explicitly, abandoning Obamacare in favor of a comprehensive ‘single payer’ system, a complete federal government takeover of the health care financing and delivery. {The many negatives associated with a government-run single payer healthcare system, also known as “socialized medicine’, are described in Reference 12.} “Bailouts. Previous attempts to bail out Obamacare with more infusion of taxpayer cash are, at best, a temporary palliative. . . . bailouts are just another exercise in cost-shifting, transferring the losses of a few big insurance companies that are concentrating their control over the nation’s individual markets on to beleaguered federal taxpayers. “Pre-Obamacare Status Quo. The individual and small-group markets have been crippled by Obamacare’s inflexible regulatory and subsidy structure. Any effort to repeal or otherwise unravel Obamacare must involve charting a new path forward, not only because the pre-Obamacare health care system no longer exists, but because health care had problems even before Obamacare. . . . - - - “The Health Care Choices Proposal {HCCP} is just the start. Congress will need to revisit any remaining Obamacare regulations that adversely affect the market as well as other federal policies that contribute to rising costs or impede choice and stifle market competition, including those that pre-date Obamacare. Achieving the goal of patient-centered, consumer-driven, market-based health care will take time. It will also take a firm commitment to pursue many other reforms that extend far beyond {HCCP} and well beyond the repeal of Obamacare.” (Ref. 13) For now, Obamacare stays on the books. But not all is stalemate. President Donald Trump is using his regulatory power to accomplish precisely what the 20 states that have taken Obamacare to court all want: relief from Obamacare's rigid regulations. “One of Trump's most helpful moves is allowing the sale of ‘short-term plans’ renewable for up to three years, in any state that permits them. These plans cost 80 percent less than Obamacare on average . . . {These} short-term plans omit maternity coverage and don't cover pre-existing conditions. They're not for everyone, but for many middle-class buyers, they're a deal. “In Tampa, Florida, a short-term plan for a family of three costs $1,169 a year, less than one-tenth the $12,071 price of Obamacare. [Emphasis mine] “The outrage is that people who live in New York, New Jersey, California or other states . . . can't take advantage of these deals. These states are doubling down on Obamacare, refusing to allow consumers other choices. Welcome to the health care Gulag. “{The governor of New York} even wants the . . . State legislature to copy all of Obamacare's federal regulations into state law. Yikes! Those regulations have caused premiums to more than double in five years. “In Congress, Democrats are pushing a bill to outlaw short-term plans everywhere. . . . Dems would rather prop up the Affordable Care Act than ease the pain of middle-class consumers. - - - “. . . Some 4 million Obamacare customers who paid full freight have dropped their coverage. They can't afford the soaring premiums. The middle class are the new uninsured in this country. “What's to blame for the huge premiums? . . . it's because Obamacare forces healthy buyers in the individual market to pay the same as people with serious illnesses. But 5 percent of the population uses nearly 50 percent of the health care. To make everyone pay the same is sheer extortion. “Democrats and Republicans agree that people with pre-existing conditions must be protected. But the lie perpetuated by the Democrats is that Obamacare is the only way to do it. In truth, it's just the least fair way. “The Trump administration is encouraging states to do it a fairer way, departing from Obamacare rules and allowing insurers to charge healthy buyers less than sick ones. That doesn't mean people with pre-existing conditions are abandoned. The cost of their care is paid for out of general state revenues, spreading the burden widely instead of skewering buyers in the individual insurance market. Alaska, one of the first states to try it, was able to lower Obamacare premiums by double digits in 2018.” [Emphasis mine] (Ref. 14) America needs a new healthcare program. Obamacare was a failure even before it went into effect. President Obama and his Democratic compatriots were in such a rush to put a new health care plan into effect that they refused to listen to all the arguments against the ACA and they rammed it through – warts and all. To thinking Americans with an open mind, the failure of Obamacare was and is clear. My own thoughts on Obamacare are reflected in numerous articles written since 2008 (Ref’s 12 and 15 to 28). To others, facts are irrelevant and blind emotion reigns supreme. Rational Americans have long known that Obamacare must be replaced with a healthcare plan that serves all Americans as best it can. Such a plan will not make everyone happy – unfortunately, real life means not everyone gets an equal share all the time – but it can be infinitely better than the ACA. It can be much fairer and it can be much less costly. With the environment that currently exists in our nation’s capital, the chances for enacting such a healthcare program in the next two years appear to be extremely remote. But, that is no reason for reasonable people not to begin the process. If we don’t achieve better healthcare today, then tomorrow or the day after. A long journey starts with a single step! -------------------------------------------------------------------------------------------------------------------------- References:
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| 3 January 2019 {Article 347; Govt_78} |