UnitedHealth Group's announcement this month that it will consider exiting the insurance exchanges in 2017 because of sizable financial losses on its exchange business was the latest in a series of blows to the Affordable Care Act.
Other woes include sharply rising 2016 premiums for individual-market health plans, widespread complaints about inadequate provider networks, increasingly large deductibles and cost-sharing, surprise out-of-network bills and consumer confusion about choosing a plan. Plus, there are worries about the sluggish progress in enrolling the remaining millions of uninsured Americans.
But these problems should come as no surprise to long-time followers of the healthcare reform debate.
The law's opponents crow that UnitedHealth's warning shot signals that the ACA's exchange market is entering a “death spiral,” with too many sicker enrollees driving up premiums. But that argument was undercut by statements from other major insurers such as Aetna and Anthem, which said they think the exchange business can be profitable and expressed their intention to stick it out.
In the midst of this tumult, Democratic presidential candidates Hillary Clinton and Vermont Sen. Bernie Sanders are jousting over how to address the ACA's inadequacies. Sanders wants to establish a single-payer, Medicare-for-all plan to replace the private health insurance system. He argues that a single-payer system would reduce national healthcare spending, save most Americans money, and “end the international embarrassment” that the U.S. is “the only major country on Earth that doesn't guarantee healthcare to all people as a right, not a privilege.”
In contrast, Clinton favors incremental fixes such as capping some out-of-pocket costs for medical services and prescription drugs, and providing a tax credit for healthcare expenses exceeding 5% of income. She warns that Sanders' proposal would force a big tax hike on middle-class families. The single-payer bill Sanders introduced in the Senate in 2013 would have imposed a 2.2% income tax on couples earning less than $250,000 a year and a 6.7% payroll tax on employers.
Meanwhile, Colorado voters signed enough petitions to place a single-payer proposal on the state ballot next November that would require $25 billion in new payroll taxes while providing coverage for most Coloradans with no deductibles or copayments.
The irony of Clinton's defense of the ACA and her rejection of Sanders' proposal is that she used to be a single-payer supporter herself. When she led the healthcare reform initiative during her husband's presidency, she expressed grave doubts about the individual-mandate model that became the centerpiece of Obamacare. She told congressional Democratic leaders in September 1993 that “it would be a lot simpler” to adopt a payroll tax-based system, rather than a premium-based private insurance model. Presciently, she also said the individual mandate would be a “much harder sell” politically because individuals would bear full responsibility for coverage.
Indeed, when I reported on the political battle over the Clinton plan in 1993-94, I quoted many experts who warned that the GOP-proposed individual-mandate model would be more expensive and administratively cumbersome than an employer-based or single-payer model and that it would extend coverage to fewer Americans.
Even when the ACA was debated in 2009, there were many consumer advocates who warned that its premiums, deductibles and cost-sharing, combined with premium subsidies that phase out quickly for middle-class consumers, would make coverage unaffordable for many Americans. There were some who questioned the law's basic premise that competition among health plans for consumers' business would drive down costs and improve care quality.
Liberal-leaning experts were not surprised by UnitedHealth's announcement that it may abandon the exchanges. They long have warned that relying on profit-oriented private insurers to provide universal healthcare is risky. Last week, Princeton University health economist Uwe Reinhardt told the Los Angeles Times that UnitedHealth was simply throwing “a tantrum” because it didn't think it could make enough money selling plans on the public exchange. “Of all the conceivable ways to finance healthcare,” he said, “Americans have found the dumbest way to do it.”
Yet most veteran observers don't think the American public, the healthcare industry or the political system are ready to embrace Medicare for all—even if many of them privately say it would be a more sensible healthcare financing model. That means healthcare and political leaders will have to figure out ways to make the flawed but necessary Affordable Care Act work better.
