The Legacy of Obamacare
By Imogen Rowley
Posted: 13th January 2017 08:15Bill Clinton called it “the craziest thing in the world”. Trump says it’s a “total disaster” that will implode by itself come 2017. Vice President Joe Biden famously called it “a big f------ deal”. At any one time it’s been anything from a train wreck to the most important piece of healthcare legislation in the United States since the 60s; the most positive thing the country has ever done, to Obama’s Waterloo (“it will break him”): The Affordable Healthcare Act (ACA) is no less divisive today than it was during its wobbly 2010 enactment. When Americans go to the polls this November to choose between two of the most unpopular presidential candidates the country has ever seen, they could simultaneously be tightening the noose of this most beloved of Republican piñatas or preening it into something else entirely. Whatever happens, ‘Obamacare’ will earn a firm position on Obama’s mantelpiece beside his laurel as First Black President of the United States, but in terms of blemishing or beautifying such a legacy it remains to be seen whether the ACA will be more Watergate than Civil Rights Act.
‘Obamacare’ is the preferred nom de plume of the otherwise flabby ‘Patient Protection and Affordable Care Act’, following ‘Giulianicare’, ‘McCaincare’, ‘Edwardscare’ and even ‘Hillarycare’ in Washington’s inventive health policy naming system. Coined by Republicans as a slur for what they saw as the beginnings of healthcare socialisation, it was adopted by Obama himself in 2011 when he proudly stated: “I have no problem with folks saying ‘Obama cares.’ I do care. If the other side wants to be the folks that don’t care, that’s fine with me.” Obamacare is the single biggest expansion of access to healthcare since Lyndon B. Johnson’s signature of approval on Medicare and Medicaid in 1965 (which expanded state subsidies for health insurance to the elderly and the poor respectively). Obama’s landmark 2010 legislation was designed to facilitate the purchase of health insurance for millions of uninsured Americans who fell through the cracks of the old system, by subsidising private insurance sold on state-regulated marketplaces – fostering competition, increasing freedom for both insurers and consumers and quite simply providing all citizens with access to affordable and high quality healthcare. Under the previous fractured, employer-led arrangement, many people were denied coverage and/or treatment because they were women, because of pre-existing conditions, because they made an innocent mistake on their application form, or because the out-of-pocket expenses on policies were prohibitively high and they were the wrong side of the Medicaid threshold. With little means to appeal, often those most in need of care were left out in the cold.
And that’s exactly where noble intentions for a private-sector-friendly solution to universal healthcare begin to stumble. For a start, enrolment has been lethargic and nowhere near the projected figures: in 2010, the Congressional Budget Office estimated that there would be 21 million Americans on the exchanges by 2016. The actual figure is closer to 13 million – 85% of whom would qualify for financial assistance anyway. One senior consultant who helped the Obama administration to coordinate the launch of the insurance marketplace observed that its users look “a lot like the Medicaid population” – that is, poorer, sicker, older people who drain money from insurers. There are millions of Americans on lower incomes who have undoubtedly been helped by Obamacare subsidies, but in order for a market-based system to stay afloat there needs to be enough young, healthy citizens using the exchanges to balance out the sick. Although the government introduced ‘individual mandates’, whereby those without insurance are forced to pay penalties, the fine is lower than the cheapest available insurance package, which offers little incentive for people who foresee no immediate health problems and would rather run the risk and pay the tax.
Not only is Obamacare poorly designed for attracting much-needed healthier individuals, it was also not fashioned with insurers in mind. While lofty statements about the universal right to healthcare abound, insurance companies in a private-sector healthcare system need to be able to make a profit or they will simply pull out. This is exactly what is happening as the marketplaces enter a rocky and worrying new era: according to an independent report from the Kaiser Family Foundation, it is estimated that 31% of US counties will have only one insurer by 2017. One county in Arizona is predicted not to have even a single private option available next year. Major insurance companies such as Aetna, Humana and UnitedHealth Group are slashing the quantity and quality of the policies they put up for sale, stating that they’re simply haemorrhaging money with Obamacare. This is due to a number of factors, but principally such corporations cannot handle the abundance of sick people buying up policies. The greater their monetary burden, the greater the burden passed onto consumers, pushing up premiums and reducing coverage that could potentially send the industry into a ‘death spiral’ as costs continue to rise and healthy people continue to balk. Eventually insurers will retreat from the marketplaces altogether, unable to support huge sums of ill individuals as expensive treatments for older, sicker people become less profitable under the new law, leading to less of Obama’s promised competition. Insurers who do decide to stay are restricting the coverage available on their existing policies, leading to narrow, Medicaid-style plans that cost more but deliver less. Coupled with unregulated drug prices (the USA is currently the only Western country where drug manufacturers can set their own prices without government intervention), and no financial consequences for people ‘playing’ the system by remaining uninsured and buying coverage only when they become sick, Obamacare is riddled with holes – it more closely resembles a mottled extension of existing health programmes than something new and groundbreaking in its own right.
Is Obamacare failing? No – but it all depends how you cut the cake. According to the 2015 US Census, the number of uninsured individuals currently stands at 9% of the total population – the lowest it has ever been. Gains in coverage because of the Affordable Care Act are particularly noticeable across minority racial and ethnic groups – for example, the uninsured rate among Black non-Hispanics fell by over 50% (from 22.4% to 10%), corresponding to around 3 million adults with peace of mind they didn’t have before. A 2016 report by the Department of Health and Human Servicesfound that over 20 million people gained health insurance as a direct result of Obama signing the ACA in 2010. It closed discriminatory loopholes that insurers had been using for aeons to deny insurance coverage to citizens in need, as well as scrapping fixed co-payments and excesses for stop-smoking programmes, birth control and certain cancer screenings. Studies have shown that people are now less likely to have medical debt or postpone required care because of the costs involved, more likely to see a regular doctor, and more likely to seek out preventative services such as vaccines.
While ‘quality of health’ is a prickly yardstick indeed, the President’s 2016 American Dream-esque statement on the impact of Obamacare asserted that improvements in the quality of care has successfully averted 87,000 deaths since 2010, which equates to roughly $20 billion saved by the US economy – this is linked to a 17% reduction in ‘hospital-acquired conditions’ since 2010, when the law introduced financial incentives for hospitals to endeavour to avoid them. Benjamin Sommers, Assistant Professor of Health Policy and Economics at Harvard University, describes a “huge natural experiment”, published in the JAMA Internal Medicine Journal, whereby low-income people in Arkansas and Kentucky (two states which, under Obamacare, expanded Medicaid insurance to everyone below a higher income threshold) appear to be healthier than their peers in Texas, a state which did not expand coverage. Everything seems to be rosier, or perhaps just rose-tinted – a 2016 report from the non-profit Commonwealth Fund found that 77% of private Obamacare enrolees were either ‘very’ or ‘somewhat’ satisfied with their health insurance, but, tellingly, levels of cited satisfaction correlate strongly with individual political loyalties: for example, red or blue allegiance was almost always a marker for whether people would under- or over-estimate the uninsured level.
The Affordable Care Act also managed to overturn many initial fears surrounding its implementation. It was thought that companies, no longer needing to provide insurance for their employees who could now sort it themselves, would simply dump their workers onto the marketplaces. Critics cried that a clause requiring employers with over 50 employees working 30 or more hours a week to supply insurance would slam on the brakes of hiring new blood while working hours would plummet – despite an initial surge in part time work, this later stabilised and a 2015 analysis from the Urban Institute found that the health law “had virtually no adverse effect on labour force participation”. The Congressional Budget Office found that fewer people in the workforce in 2014 was “almost entirely” down to voluntary resignations by workers who no longer felt compelled to stay in a job just because it offered health insurance. The instability of markets can arguably be attributed to their novelty – insurers, consumers and the state alike are simply still unsure where they fit into this brave new world of healthcare provision. In fact, while insurance companies with heavier clout are retreating from the markets in their droves, smaller insurers such as Centene and Molina actually got their big breaks on the exchanges, when a whole new clientele of lower income families chose to shop around for their healthcare instead of defaulting to Medicaid. And with state subsidies the pillar holding up Obamacare, at what cost does this come for the taxpayer? A June 2016 study by the Urban Institute found that the latest long-term healthcare spending predictions are $2.6 trillion lower than originally thought in 2010 – critics cried wolf about the massive, unnecessary costs the ACA would add to the national budget.
Despite this, the unsavoury fact remains that there are still 28 million non-elderly Americans without any health insurance whatsoever. The reasons for this vary from a simple lack of knowledge that insurance is needed, barriers to access such as immigration status, confusion at complex enrolment systems (the healthcare.gov homepage – the nucleus of the exchanges – famously crashed within hours of its launch), to whether or not individual states have opted to expand Medicaid provision. According to a report from the Kaiser Foundation, the majority of uninsured cite cost as their biggest hurdle, even with the availability of governmental financial assistance. Excesses and co-payments are still so often inaccessibly high because of the adverse selection of consumers in the marketplace melting pot, led in part by the requirement for insurers to cover pre-existing conditions, that even those who are covered often cannot afford to use their plan or find that it has been restricted so far that it no longer covers their current doctor or hospitals. Plans people were previously perfectly content with have been replaced with more expensive options that include legally required ‘basic care’, such as maternity provision, that many people do not need – similarly, individuals such as young, single males who would previously have benefited from being in a low risk group and paying for cheap, limited insurance now end up paying more for their premiums in order to subsidise others. And so the President’s most notorious lie about Obamacare (“If you like your healthcare plan, you can keep it”), oft parroted by critics and competitors, rounds off a list of other broken promises, such as not allowing taxpayer-funded abortions, penalties for not having insurance, or illegal immigrants to receive benefits.
Obama has been shaking things up quietly, with much of the noise coming from the ‘other side’. The Affordable Care Act is nowhere near as comprehensive as promised, but arguably its failings (of which there are many, and any Democrat successor has a monumental task to sew up the wounds) are a result of a partisan gridlock caused by a majority Republican Congress hell-bent on blocking this deeply divisive of policies, as well as insurance companies, blinded by unbridled corporate ambition, jeopardising the future of the bill. The improvements in universal health coverage, particularly among lower-income and minority groups, are not bad, but significantly more modest than that which was originally proposed. Perhaps Obamacare’s biggest legacy will be having shone a spotlight on the unhappy marriage between an inspirational leader with grand – unrealistic? – ambitions, and the practical realities of a divided government. It’s a common thread that has plagued much of Obama’s time in office, dimming the lights of hope that once glinted in his supporters’ eyes back in 2008, when he received the momentous title of becoming the first black president of the United States. A Republican Congress wouldn’t allow the restriction of haphazard gun laws, reform of immigration or the closure of Guantánamo, so it is unfeasible that they would vote for what seemed like Democrat baby steps towards nationalised health service provision. The ACA was thus passed without a single Republican vote – those in favour were afraid of being called communists and losing their seats if they openly supported it. In the 6 years since the law was signed they have tried to repeal it more than 60 times. In an interview with the New York Times, Obama described the situation as “political football”, stating that “you hit a point where if Congress is just not willing to make any constructive modifications...then you’re getting a suboptimal solution”. A shoddy workman blaming his tools? Possibly. The Obama administration cannot disappear behind barks of Republican doggedness and fail to acknowledge the severe pitfalls of their signature domestic achievement – but it is markedly apparent in the case of Obamacare that too much compromise inevitably leads to a weak and ineffectual law.
Lawmakers are treading an uneasy path between a purely market-based system, and the strong hand used by other states such as Germany and Switzerland that pushes both insurer and consumer a lot harder into the bullring of private insurance. Tough laws that force citizens to buy coverage work alongside restrictions on the price of medical services to ensure that healthcare is as near to universal as possible, but often leave a sour taste in the mouth of those fighting to retain a for-profit system in the States. Undoubtedly some groups benefit more than others, and there is no one-size-fits-all solution to solving the myriad health problems that plague our very human organisms, but do the costs of Obamacare outweigh the benefits? As state-led risk corridors expire this year and the exchanges remain unprofitable, in what form will Obamacare drag itself into 2017? The struggle for universal healthcare provision is so deeply rooted in philosophical differences about the role of the state, the individual and billion-dollar corporations in that provision that Obamacare has at times seemed like a game of table tennis played from trench to trench. In what is shaping up to be one of the nastiest, most contentious elections of all time, the Affordable Care Act is undeniably hot property – Hillary Clinton acknowledges that “we have more work to do to finish our long fight to provide ... quality, affordable healthcare to everyone”, but the outcome of that fight is as ambiguous as the ‘we’ who will be working for it.