Obamacare leaves the illness untreated

WHY HAS the rollout of the insurance exchanges set up by the ACA been such a disaster?

THE LAW is byzantine in its complexity and creates lots of new structures to do things. This not only made the computers crash and made people very confused, but it's also extremely expensive. All of this paperwork and bureaucracy and computer work adds to the cost of the system, along with the profit-making by the insurance industry.

The administrative complexity and costs that we're seeing with the exchanges is actually very much part of the whole problem with using a private insurance-based system. There's just a huge waste of money.

The correct way to do this would have been the way the Medicare was rolled out in 1966--which was to use the Social Security system, and just say that everyone aged 65 and older was eligible for the Medicare health care system. We already have the Social Security system, which knows people's ages, and the government certainly knows their incomes, at least up to the cap. That's the obvious and logical way to keep track of people and to enroll them.

But of course, Medicare is just one program, and everybody is enrolled in it--unlike what's going on today. Again, this is another way of saying that single-payer is a simple system. It's a fair system, and you don't need a supercomputer to administer it. You could rely on the existing structures we have to make sure everybody gets covered.

A single-payer system would be a much more affordable way of getting to universal coverage because you will save approximately $400 billion annually by shrinking administration and shrinking this paperwork, and then you can use that money to cover everyone.

HOW DO you evaluate the quality of the health plans that are available from the exchanges?

THE PLANS are pretty expensive. Of course, if you've been in the individual, non-group market--if you've been personally purchasing health insurance for yourself and your family--you've been paying a lot of money. What's available to you under the exchange will probably represent a big cost savings.

But if you haven't been paying health insurance premiums--and especially if you're a little bit older, in your late 50s, for example--the cost of insurance is actually quite astronomical.

I went to look up a plan in New Jersey, for instance, for someone who's 56 years old--I couldn't look in New York, where I'm living, because the exchange wasn't running that day. In New Jersey, the cost was a $9,000 annual premium. And there were big co-payments and deductibles--you pay another $5,000 in out-of-pocket payments.

Anyone who earned more than four times the poverty level had to pay that amount without a subsidy. Four times poverty is about $48,000 a year for an individual, and if you're only earning $48,000 a year, spending $9,000 every year on insurance--and potentially another $5,000 in out-of-pocket costs--is really not affordable insurance by anybody's definition.

DEFENDERS OF the new system say the high costs are offset by the new regulations on insurance companies that require them to cover a wider range of services, to end the practice of rejecting people for pre-existing conditions and so on. What do you think about that?

THE REGULATION in Obamacare that says you can't be rejected for a pre-existing condition is a step forward. This is definitely a good thing--people with pre-existing conditions were often completely unable to get insurance at any price previously. But the issue is that the insurance you can obtain is not really affordable for most people.

Plus, while the co-payments and deductibles can add $5,000 to your health care costs in out-of-pocket expenses, there are even larger out-of-pocket expenditures if you use health care outside of your network.

Many of the plans on the exchange have very narrow networks. That may not matter if all you need is a pap smear and your cholesterol checked, but if you have a serious illness, you may have a medical need to go out of your network. You may have a lot of doctors, including at expensive specialty hospitals--not because you're being extravagant or something, but because you're in a very unique position to be seeing those specialists.

When insurance companies base their plans on a narrow network, what they're really saying is many of the sickest and most complicated patients will be forced to spend money on out-of-network care. So we can talk about a $9,000 premium and a $5,000 cap on out-of-pocket expenses as the baseline, but if you go outside of your network and spend $2,000 on specialist care, that doesn't count toward your out-of-pocket cap.

Many people are going to find that their insurance is just not very good. It doesn't give them the financial protection they need--particularly for people with serious and expensive chronic illnesses.

We've done a lot of work at PNHP, as you may know, on medical bankruptcy. While I was at Harvard Medical School, I worked with my Harvard colleague Elizabeth Warren at the law school on one of the most widely cited studies on medical bankruptcy. The most common single cause of medical bankruptcy was that people had insurance, but it had so many gaps--like co-payments, deductibles and uncovered services--that they were bankrupted anyway by a prolonged illness. That type of medical bankruptcy will continue--and, if anything, may increase--under Obamacare.

We found two other main circumstances that led to medical bankruptcy. About 25 percent of people who were bankrupted were uninsured--about half of those folks are likely to be in a somewhat better situation after Obamacare. We also found some people who had good insurance through their jobs, but they got too sick to work, they lost their insurance, and they were bankrupted for this reason.

So some of the people who were bankrupted previously may be helped under the health care law, but many people--in fact, probably the majority--who experienced medical bankruptcy in the past would face the same thing in the future under Obamacare.

THE SO-CALLED individual mandate requiring the uninsured to buy coverage or face a tax penalty kicks in next year as planned. But the mandate for businesses--requiring those with more than 50 full-time employees to provide affordable health coverage, or be penalized--was put off for at least a year, after intensive lobbying. What do you think the impact of that will be?

OBVIOUSLY, FOR businesses who aren't providing affordable coverage currently, this is a big break for them. They don't have any penalties.

And even when the penalties do go into effect, many businesses are going to find ways to wiggle out of them. For instance, if someone worked less than 30 hours, the company doesn't have to buy them health insurance, and there is no penalty. We're already starting to hear stories about the impact of this--for instance, colleges telling adjunct professors that you absolutely cannot work more than 29-and-a-half hours a week, or you'll be fired.

And some businesses may find that it's just cheaper to pay the penalty than offer health insurance to their workers--I think we are going to see some of that, and these employees will be thrown into the insurance exchanges.

And then I think some employers will try to do the right thing by their workers and offer the coverage. So I think it's a mixed bag. But it's certainly not good in terms of covering the uninsured that the business mandate was postponed--that's for sure.

ON THE subject of employer-provided health insurance, there's the so-called "Cadillac tax"--on health plans with higher premiums. The claim is that this will help control costs, but it seems obvious that the tax, when it kicks in a few more years down the road, will be used as an excuse for further hollowing out employer-provided insurance coverage so the cost stays below the tax threshold.

THE CADILLAC tax is pretty clearly aimed at penalizing unionized workers, because many unions have set a priority on getting complete coverage for their members. When they've gone to the bargaining table, they've been willing to accept lower wages in exchange for excellent health benefits. So the Cadillac tax is going to fall very heavily on these good plans--and all the more so because many union members are aging and have older families, and that tends to raise the premiums up into the so-called Cadillac range.

And by the way, those excellent health benefits are what everybody ought to expect. Everybody ought to expect complete coverage when they're sick. There's no reason why anyone should be expected to pull money out of their pocket to get health care when they're sick.

That's why I don't like the terminology of so-called "Cadillac" health care. People in every other developed country just expect they're going to have excellent coverage. I don't think we should be pretending that health care is a luxury item. It's absolutely not--it's a human right.

WHEN THE health care law passed in 2010, you said that you thought the most positive aspect of the legislation was the expansion of the Medicaid system to cover people up to 133 percent of the poverty line. But the U.S. Supreme Court decision in 2012 allowed states to opt out of the expansion, and about half of them--those with Republican governors--are doing so. What do you think about this aspect of the law now?

MEDICAID IS much better than no Medicaid, of course. When you compare Medicaid to having no insurance at all, it's clear that Medicaid is better.

But Medicaid is not equivalent to full coverage, particularly because the payment rates that Medicaid offers to health care providers are so low that many Medicaid patients are, for instance, unable to see specialists when it is medically needed. A specialist just won't find time for them.

A good national health program would make sure that everybody had the same type of insurance, so no one faced discrimination based on their insurance paying such a low rate to doctors and hospitals.

We heard in mid-October that Ohio is going to accept the Medicaid expansion, but there are nearly 8 million people who would have gotten Medicaid under full implementation of the ACA because red-state governors have turned down the expansion. That reduces the net positive of this part of the ACA still more--though the fact that the Medicaid expansion will take place in the other states is still something good.

HOW DO you think the discontent with the health care law is going to play out past this initial sign-up period for the exchanges?

PRETTY SOON after January 1, 2014, people are going to look around and say, "Hey, we still have 30 million uninsured people here" and "Hey, I may have insurance, but I still can't afford health care, I'm still paying way too much for premiums, co-payments and so on, and I'm still at risk of being bankrupted by a major illness."

Right now, many people don't really know what's going on or what to expect. They haven't experienced Obamacare yet. The lived experience of having it as the law of the land is going to lead many people--maybe most people--to say that Obamacare is not the solution.

Transcription by Andrew Cole