In most presidential election years, the politics of healthcare at least has a nodding acquaintance with reality. This year, the two aren't even on speaking terms.
Let's start by correcting some untruths polluting the national conversation. Then I will show what I think is the main reason why millions of Americans are angry about rising healthcare costs: there is a major shift underway in who pays for health insurance.
The Affordable Care Act, aka Obamacare, has been a total failure. This ignores the fact that 20 million more people have health insurance today than when President Barack Obama took office. Only 10% of the population was uninsured at the end of last year, down from about 15% when the president was sworn in.
Healthcare costs are out of control. This ignores the fact that overall spending on healthcare has gone up at about the same rate as the rest of economy for six straight years. Today, it's 17.5% of gross domestic product, just two-tenths of a percentage point higher than in 2009. Between 2000 and 2009, on the other hand, it went from 13.8% to 17.3% of GDP.
People in private insurance plans are angry about limits on coverage and will vote with their pocketbooks. This ignores polls such as the one from the Kaiser Family Foundation in January that found only 6% of registered voters named healthcare and healthcare insurance costs as the most important factors in their presidential choice. Just 28% said it would be “extremely important” in determining whom they voted for.
The same poll found 65% of voters were “very satisfied” with their choice of doctors and another 34% were “somewhat satisfied.” Only 12% reported they had to change doctors because of shifts in their insurance plans.
People in private insurance plans are angry about skyrocketing rates, and the Affordable Care Act is to blame. This one begins to get at the truth, but it has nothing to do with ACA plans on the exchanges, which only cover 12 million people. Those rates will rise this year as insurers adjust to how much care the newly insured wound up using, and how few people signed up for the plans.
Meanwhile, health insurance premiums in the employer-based, private insurance market—which covers about 150 million Americans, or nearly half the population—continue to rise at historically low rates. The annual survey released by Aon last November projected total premiums for employer-based plans would rise just 4.1% this year, which—like overall healthcare costs—is about the same rate as the rest of the economy after discounting for inflation.
And it's been that way since 2013, rising between 3% and 4% a year. It was around 5% a year in the first Obama term, before the ACA went into effect. During the George W. Bush administration, by contrast, healthcare insurance premium costs rose in the 7% to 10% range every year.
But something is going on in health insurance that is making people angry. It has nothing to do with the ACA. In short, employees are picking up more of the tab for their own plans. It is coming in two ways.
First, they're picking up more of the basic insurance premium. Though the cost of the overall premium went up 4.1% this year, the employers' share of those costs, on average, went up only 3.6%. Employees' coinsurance payments—which are deducted from their checks every pay period—went up 5.8%, according to Aon.
That shift and the resulting erosion in pay have been going on for years. In 2011, employers picked up about 79% of the total premium for workers' plans. This year, it stood at 77%.
That's not the only way that employees are getting hit by their employers' decision to shift the cost of health insurance onto their workers. Out-of-pocket costs, largely because of the growth of high-deductible plans, are skyrocketing—up 10.2% in 2016 to $2,433 per family. The average family spends $1,000 more on healthcare, compared with 2011.
After last week's Indiana primary, the nominees for both parties seem set. If I were a single-issue voter, and healthcare was my issue, I'd turn on my TV to see which of them had a plan to address the great insurance cost shift that is eroding the household incomes of average American families.