© Josh Sager – October 2016
This week, the Executive Office of Health and Human Services (HHS) released a report indicating that the average insurance premium for a benchmark plan under the ACA (ObamaCare) increased by an average of 22% during 2016. This is a dramatic increase over 2015, when benchmark premiums only increased by an average of 7.5%, and 2013, when benchmark premiums increased by only 2%. These increases vary wildly between state markets but are universally higher than overall inflation rates.
If this trend in premiums continues, ObamaCare will either have to dramatically increase its subsidies (and thus the costs to the government) or shift costs onto consumers, many of whom simply will not be able to afford their healthcare plans. Additionally, these premium increases disincentivize young and healthy consumers from entering the marketplace, creating the danger that the risk pool will be skewed even more in favor of the sick.
This recent HHS report also found that the number of insurers in the marketplace has decreased, with 15 new insurers entering the federal marketplaces while 83 leave. A majority of the insurers (43) leaving the marketplaces in 2016 belong to Aetna and United Health, which have used their withdrawal from ObamaCare as a tool to punish the federal government for blocking their merger earlier this year.
The unsustainable increases in premiums and decreases in the number of insurers in the marketplace illustrated in this report confirm what many progressives have been saying about healthcare reform for years: ObamaCare was a good start towards ensuring that every American has access to quality and affordable healthcare, but it is by no means the ideal end goal of our healthcare system. While ObamaCare has important provisions that are a dramatic improvement over the pre-ObamaCare system—ending preexisting condition bans, expanding parental coverage, expanding Medicaid, and limiting administrative costs for insurers just to name a few—it is a market-based solution to a problem where the market has completely failed.
ObamaCare is a retooled version of the Romney/Heritage Foundation plan implemented in Massachusetts and it relies on the private healthcare market to function. While it is better than nothing, it gives health insurers a great deal of power to coerce the government (e.g. by threatening to pull out of the exchange) and lacks strong cost-controlling measures (e.g. rate setting) to deal with increasing premiums. These flaws will eventually lead to ObamaCare’s downfall and the only question is whether its failures will allow the GOP to return us to the pre-ObamaCare nightmare, or whether it will become the stepping stone that helps us get to a single payer or functional multi payer solution.
Progressives need to build upon the ideas Bernie Sanders put forward in his campaign and push hard towards a more progressive healthcare system. This is a race against the right wing for who will control the dialogue when ObamaCare needs to be reformed and it is absolutely imperative that we do not let the nation backslide on this issue.
In a single payer solution, the government has a universal healthcare plan that is paid for through tax revenue and available to all Americans. Because there is no profit motive for the government plan and its administrators would not be paid millions of dollars, a single payer program is inherently more efficient than a private plan (Medicare spends 98% of its revenue on care while private insurance spends 83% on average). A single payer plan provides universal coverage and dramatically reduce costs, but would also require some rationing based upon need and increase wait times for unnecessary procedures.
A functional multi-payer plan could include multiple, highly regulated, private insurers and a public option competing in a marketplace. Every American would have access to the public option at an affordable price, but more wealthy people could buy into private plans that cover more than the public option at an increased price. Strong price and quality controls would be necessary and the profits of the insurance companies would be dramatically cut.
The United States is the only developed western nation that does not have universal healthcare for its citizens. While this is shameful, it does give us a great deal of information when determining what system we want to pursue—we know what their challenges and benefits are, and can use the failures of other systems to inform our choices. We could aim for a single payer program like those implemented in Canada or Australia or a functional multi payer plan like those implemented in France, Germany, Israel, and the Scandinavian countries; regardless, whatever route we choose, it will be better than what we have now or what we will have if the Republicans are allowed to drag us back to the pre-ObamaCare days.