In 2015, the United States spent a staggering $3.2 trillion on health care, or nearly $10,000 per capita–amounting to 17.8 percent of U.S. gross domestic product. Health care is one of the most expensive components of the federal budget, and health spending comes in a variety of different forms, including major public programs, direct subsidies, and a number of different provisions in the tax code.

While big insurance programs like Medicare and Medicaid tend to be the focus of most health care discussions, and account for most of the spending, the government provides and subsidizes health care in ways that many might not realize. Given the rising prominence of the health care industry in our budget and in our economy, it’s important to look at the current role played by the federal government. Read on to see how the government provides and incentivizes health insurance coverage and how much these efforts cost.

Government Health Care Programs

Two government programs account for a large portion of health care spending, and federal spending in general. Medicare and Medicaid are two entitlement programs that together account for roughly 25 percent of the federal budget. In 2016, the U.S. government spent a net total of $588 billion on Medicare, the health insurance program covering all Americans over the age of 65. Federal spending on Medicaid, which provides health insurance to people with disabilities, the elderly, children, and people with low incomes, totaled $368 billion last year. Because Medicaid is a federal-state partnership, states also account for a notable portion of health care spending. In 2016, federal funding covered about 63 percent of all Medicaid spending, excluding administrative costs. The remaining 37 percent, or about $204.5 billion, was held by the states.

It’s worth noting that along with Social Security, Medicare and Medicaid are the largest mandatory spending programs–spending that is built into existing laws and is not subject to annual appropriation bills. Forecasts predict that these programs will grow as a share of the federal budget in the coming years as the Baby Boomer generation retires. In its most recent forecast, the Congressional Budget Office (CBO) predicts, “outlays for mandatory programs increase as a share of GDP by 2.4 percentage points from 2017 to 2027–mainly because of the aging of the population and rising per capita health care costs. Social Security and Medicare account for nearly all of that increase.” Last year, Social Security amounted to 4.9 percent of U.S. GDP and spending on major health programs amounted to 5.4 percent of GDP.

In addition to Medicaid and Medicare, the government provides subsidies for people with incomes between 100 and 400 percent of the federal poverty level and who do not get health insurance through their employer. According to the CBO, the government spent $42 billion in 2016 on subsidies and other costs related to the individual insurance market.

The video below from the Brookings Institution gives an overview of health care spending trends over the past several decades:

The Tax Code

While the various provisions of the tax code that encourage individuals and companies to buy health insurance might not sound all that interesting, tax policy is a crucial part of the current health care system, and accounts for a significant amount of spending, or more precisely, foregone revenue.

Employer-provided Insurance

The government uses the tax code to encourage and discourage a wide range of behaviors. To encourage individuals and businesses to do certain things, the government uses tax expenditures, more commonly known as tax breaks. These provisions in the tax code forego tax revenue when people or businesses engage in certain activities. The largest of the existing tax expenditures deals with health care spending by employers. Specifically, the tax code excludes all spending toward employees’ health care premiums from taxation. This exclusion encourages employers to provide certain benefits to their employees because they can use pre-tax dollars to do so–if the same amount of money was given to employees in the form of traditional wages, it would be taxed. The exclusion is projected to cost about $260 billion in 2017, based on what the government would otherwise receive in payroll and income taxes. That annual cost makes the health care exclusion the third largest health care program, following Medicaid and Medicare.

The tax exclusion of employer provided health care dates back to World War II and emerged almost accidentally. In an effort to control inflation, the federal government froze wages, which prevented companies from paying their employees more. Instead, employers took advantage of an exception that applied to certain benefits–they started providing health insurance plans. Then in 1954, the IRS determined that payments toward employee health insurance are exempt from taxation. Over time, employer-subsidized health care became quite common, and today, most Americans get health care from their employer or a close family member’s employer.

While the tax exempt status of employer-provided health care has become particularly popular and politically durable–efforts to eliminate or even cap the tax benefits have not gotten very far–many economists believe that it has a distortionary effect on the health care system as a whole. The most frequent criticism of employer-subsidized health care is that it can spur growth in medical costs. Because premium payments are excluded from taxation, employers are incentivized to offer very generous health insurance plans instead of simply paying their employees higher wages. Economists argue that if more of the cost burden was placed on consumers when they use medical services, they would try to reduce those costs by searching for lower prices and avoiding unnecessary care. But when most of the cost of health care is masked by generous insurance plans, there is little incentive for individuals to cut costs.

Other criticisms of employer-subsidized health care focus on concerns about equity and progressivity. People with high incomes are more likely than those with lower incomes to benefit from health-related tax expenditures, of which employer-subsidized health care is by far the largest in value. Moreover, the nature of the tax exclusion makes it more valuable to people with high-incomes than those lower on the income scale. Because income tax is progressive–those with higher incomes pay higher tax rates–pre-tax money spent on health care is worth more to those with higher incomes because it would otherwise be taxed at a high rate. In 2015, about 45 percent of all benefits from health tax expenditures went to individuals with incomes in the top 20 percent, while just 0.5 percent of all benefits went to those in the bottom 20 percent.

Efforts to eliminate or curtail the tax preference for employer-sponsored health care date back to Reagan’s presidency, but few have made any notable progress. One notable exception is what’s known as the “Cadillac tax,” which was a part of the 2010 Affordable Care Act. The Cadillac tax, formally known as the high-cost plan tax, sought to rein in health care cost growth by discouraging employers from providing extremely generous health insurance plans. Health insurance premiums payments in excess of $10,200 for an individual or $27,500 for families will face a 40 percent excise tax. The tax was originally scheduled to take effect in  2018 but was pushed back to 2020 after widespread opposition in 2015. Both businesses and unions strongly protested the tax, which may be one issue that both Republicans and Democrats can agree on. While it is still scheduled to go into effect in a couple years, questions about its fate loom as recent health care legislation would push its implementation back even further.

Conclusion

Peter Fisher, a former under secretary at the Treasury Department, once famously advised, “Think of the federal government as a gigantic insurance company […] with a sideline business in national defense and homeland security.” When you look at the federal budget, you can see that Fisher’s comments are rooted in an important truth–health insurance is one of the most expensive aspects of the federal budget.

The government plays a large, if sometimes unnoticed, role in the American health care system. From major programs like Medicare and Medicaid, which together add up to roughly one-quarter of the entire budget, to tax provisions that encourage employers to provide insurance to their workers, the government has a hand in nearly everyone’s insurance. Rising health care costs have led to notable budgetary issues in the long term, particularly as the American population ages, which have led some to argue that entire programs need to be revamped to keep spending sustainable. While many agree that health care spending has gotten unusually high in recent years, actually controlling costs has proven challenging.

Kevin Rizzo

Kevin Rizzo is the Crime in America Editor at Law Street Media. An Ohio Native, the George Washington University graduate is a founding member of the company. Contact Kevin at krizzo@LawStreetMedia.com.

The post How Much Does the Government Spend on Health Care? appeared first on Law Street.

As the national debate over health policy unfolds, it can be helpful to take a wider look at the health insurance landscape in the United States to understand how proposed changes would affect the system as a whole. A number of different ideas have been floated to restructure parts of the health care system, but looking at the system overall helps offer some important context to the current debate.  For example, when lawmakers propose reducing spending on Medicaid or changing the subsidies for the individual market, knowing how many people would see their finances change can put things in perspective. Read on to see where people get their health insurance and who remains uninsured.

Health Insurance Coverage in the United States

In the United States, people get insurance through a mix of government programs and private companies. Most Americans have private health insurance, the largest portion of which is provided through an individual’s employer, or their family member’s employer. Government programs provide insurance to about 35 percent of the population. Two government programs account for the vast majority of all people on public insurance, namely Medicare and Medicaid. Medicare is available to all adults over the age of 65 and is intended to provide insurance coverage for people as they age. Medicaid covers a more diverse group, including people with disabilities, the elderly, children, and the poor.

The chart below uses estimates from the Kaiser Family Foundation using 2015 data from the Census Bureau (note that the numbers are rounded and therefore add up to just over 100 percent).

As the chart shows, employer-provided insurance is the single largest source of insurance for most Americans, which is important to keep in mind when debating health policy changes. Private health insurance companies sell insurance to businesses in what’s known as the group market, while those who are not able to get insurance through their employer and do not qualify for public insurance can buy it on the individual market.

Much of the debate over health insurance regulation tends to deal with coverage sold through exchanges on the individual market, which actually apply to a relatively small portion of the entire population. About 7 percent, or 21.8 million people, buy individual health insurance for themselves and their family members–which includes people who buy insurance directly from insurance companies on and outside of public exchanges. Approximately 12.2 million people enrolled in a plan sold on one of the regulated exchanges at the beginning of 2017. Those insurance plans are the ones that are affected by the vast majority of the regulations that have become the focus of many policy debates. Notable examples of these regulations include rules that prevent insurers from denying coverage to people with preexisting conditions and ones that prevent or limit the the extent to which insurance companies can charge people more based on characteristics like health status or age.

One important exception is the Affordable Care Act’s ban on annual and lifetime limits, which prevent insurance companies from cutting off coverage after spending a certain amount. These limits apply to federally defined insurance benefits and affect almost all private health insurance plans including both employer-provided and individual coverage.

Who Are The Uninsured?

In 2015, approximately 9 percent of the population did not have health insurance, or about 29 million people in total. That number comes in the wake of the Affordable Care Act’s passage and enactment, which lead to a sharp decrease in the number of people without health insurance. The ACA increased coverage by expanding Medicaid eligibility and outreach while also creating subsidies to help individuals up to a certain income afford their health insurance premiums. The law also instituted a penalty, known as the individual mandate, for people who decide not to get insurance. So even after a massive effort to increase coverage, who remains uninsured and why?

According to survey data from the Kaiser Family Foundation, the most common explanation people give for not having health insurance is the cost of coverage–46 percent of respondents cited cost as the primary reason. However other reasons–like confusion about the requirement to obtain coverage, issues getting coverage, and preferring to pay the penalty rather than the cost of insurance–also explain why people do not have insurance.

Survey data indicates that the most of the people without health insurance are low-income. About 80 percent of the uninsured population have incomes below 400 percent of the federal poverty line–which is also the income threshold to qualify for subsidies under the Affordable Care Act, meaning that some federal funding is available to help them purchase insurance. There is evidence to suggest that a portion of the uninsured are not aware that they qualify for federal subsidies, and many who are aware may still forego insurance because even with financial assistance the cost remains too high.

While a plurality of the uninsured population is white, accounting for about 45 percent of the total, people of color are disproportionately more likely to not have insurance relative to their share of the total population. Approximately 15 percent of the uninsured population is black and just over 30 percent is Hispanic. Just over one-fifth of those without health insurance are not U.S. citizens, including both immigrants with and without legal status in the United States. Legal immigrants are eligible for subsidies when buying insurance on public exchanges, and after living in the country for more than five years, can be eligible for Medicaid.

Finally, legal challenges to the law resulted in the decision to expand Medicaid resting with the states, and several states–including ones with particularly large populations like Texas and Florida–chose not to accept funding from the federal government to help cover people with incomes up to 133 percent of the federal poverty line. Currently, 32 states including the District of Columbia opted to expand Medicaid, while 19 states have not. Because of this, there is a significant “coverage gap” in non-expansion states between the people who are eligible for Medicaid and those who are eligible for premium subsidies. The Kaiser Family Foundation estimates that more than 2.5 million people fall into this gap, as they would qualify for Medicaid if their state decided to expand coverage.

Conclusion

Health insurance coverage in the United States comes from a variety of different sources. Private health care continues to be the most prominent form of health insurance, with employer-provided coverage being the largest source. But the government also plays a particularly important role in the health insurance landscape. Medicare and Medicaid together provide coverage to nearly 35 percent of the U.S. population. Medicare provides health insurance to the elderly as they age, while Medicaid has grown to cover a diverse group of Americans who would likely have difficultly purchasing private insurance.

Recent efforts to increase insurance coverage, most notably the Affordable Care Act, led to a large reduction in the number of people without insurance, but despite those efforts, many remain uninsured. For a variety of reasons, roughly 9 percent of the population continues to go without health insurance, citing the cost of coverage as the primary reason. One way to reduce that number would be for all states to expand Medicaid, which would help resolve the coverage gap where many low-income Americans are stuck.

Recently, a lot of the discussion about health care has focused on regulations that affect individuals who do not get insurance through their employers. While people purchasing health care directly from insurers on exchanges account for a relatively small share of the overall population, their concerns have become particularly important to recent legislative debates. The cost of health insurance on the public exchanges have become unaffordable for many, and lack of competition in certain markets has left some areas with only one insurer to buy from. This problem many be getting worse, and next year, the number of insurers in some places may drop to zero. Given the pressing nature of these concerns, they tend to garner a lot of attention, and rightly so. But as we debate health policy, it’s important to keep in mind where the individual market fits into the overall landscape.

Kevin Rizzo

Kevin Rizzo is the Crime in America Editor at Law Street Media. An Ohio Native, the George Washington University graduate is a founding member of the company. Contact Kevin at krizzo@LawStreetMedia.com.

The post By the Numbers: Health Insurance Coverage in the United States appeared first on Law Street.

Weeks after House Republicans passed a health care bill, GOP senators are drafting their own version of a law that would repeal and replace Obamacare. Among a variety of differences between the two Republican efforts, one is especially rankling to Democrats: the senators of the Budget Committee are cobbling together their bill in secret. According to a number of Senate aides, nobody outside that committee, including a number of Republican senators, has seen the bill’s precise language.

Influential Senate Democrats took to Twitter to pillory the secretive Republican process:

My advice today: focus 10% of your attention/outrage on Sessions testimony, 90% on the secret health care bill that is speeding to a vote.

— Chris Murphy (@ChrisMurphyCT) June 13, 2017

 Senate Majority Leader Chuck Schumer (D-NY) said Republicans “are trying to pass a health care bill in the dead of night.” He added:

If they were proud of this plan, they wouldn’t hide anything – they’d crow all about it! What exactly are they trying to cover up? 5/7

— Chuck Schumer (@SenSchumer) June 12, 2017

Republicans are hoping to vote on the bill by the July 4 recess, which gives them a window of a couple of weeks to finish drafting the bill, and send it to the Congressional Budget Office for a review. The CBO, a non-partisan analysis agency, released its evaluation of the House health care effort a few weeks after the bill was passed. It found that the bill could result in 23 million more uninsured Americans.

A CBO evaluation could take up to two weeks, so if Republicans hope to vote on the Senate bill by July 4, it would have to be completed in the coming days. But even as the bill nears completion, some high-ranking Republican senators are being kept in the dark as well.

“I want to know exactly what’s going to be in the Senate bill, I don’t know it yet,” Senator Ron Johnson (R-WI) recently told reporters. “It’s not a good process.” And Senator Lindsey Graham (R-SC) said “this is not the best way to do health care, but it’s the way we’re having to do it,” adding that the only thing about the bill he’s aware of is that “they’re writing it.”

While the particulars of the bill are largely unknown, there have been reports about some of its broad outlines. Overall, the bill is expected to be left of the legislation the House passed last month. Medicaid expansions would be phased-out over seven years instead of two, and tax credits would be offered to a broader range of low-income individuals.

Once the bill is out in the open, and hits the Senate floor for a vote, it faces a fractured chamber, not to mention a complete lack of Democratic support. To pass, the bill will need the support of a diverse contingent of Republican Senators–the more conservative members, like Senator Mike Lee (R-UT) and Senator Ted Cruz (R-TX), and more moderate ones, like Senator Susan Collins (R-ME) and Senator Lisa Murkowski (R-AK).

Meanwhile, Senator Bernie Sanders (I-VT), tweeted perhaps the most creative critique of the secretive Republican effort:

BREAKING: Senate Republicans just released the schedule of hearings, committee markups and public testimony for their health care bill. pic.twitter.com/iHtXyZqyMW

— Bernie Sanders (@SenSanders) June 12, 2017

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

The post Senate Republicans’ Health Care Effort is Cloaked in Secrecy appeared first on Law Street.

As the American Health Care Act works its way through Congress, much of the debate has recently focused on issues like health insurance regulation. While that debate reflects important issues, like protections for people with pre-existing conditions, there is another part that would arguably have even larger consequences: the proposed cuts and changes to Medicaid. The AHCA would fundamentally change the funding structure for the safety net program and could have wide ranging effects on millions of Americans who rely on Medicaid for their health care. Read on for an overview of what’s in store for the program that provides insurance to nearly 20 percent of the country.

Who is Affected

Medicaid is the largest health insurance program in the country, which combined with the related Child Health Insurance Program (CHIP), covered nearly 75 million people as of February. Medicaid covers a diverse group of people including low-income individuals and families, people with disabilities, and the elderly.

The video below explores what the Medicaid program is and how it is paid for:

To understand the scope of the proposed changes to Medicaid in the American Health Care Act, it’s important to look at how the bill it’s intended to repeal and replace–the Affordable Care Act, or Obamacare–changed health insurance coverage in the first place. Generally speaking, the Affordable Care Act sought to increase insurance coverage by expanding the Medicaid program–through both increasing outreach and eligibility–while also creating regulated insurance marketplaces and providing subsidies to make health insurance more affordable.

The Medicaid expansion was directed at the lowest income Americans, specifically, people living below 138 percent of the federal poverty level, while insurance subsidies targeted those who were slightly better off but would still have difficulty paying for health insurance, namely those with incomes below 400 percent of the federal poverty level. Regulations also ensured that individuals could buy insurance on public exchanges and that prices couldn’t vary much according to an individual’s characteristics like age, sex, or health status, which was another way to expand coverage to those who were either priced out of the market or denied insurance outright.

While several components of the ACA sought to lower the rate of uninsured Americans, the Medicaid expansion played the largest role in achieving that goal. The AHCA includes important changes for insurance subsidies and regulation–the proposed cuts and changes to Medicaid are considerably larger. The Congressional Budget Office analyzed the effects of the AHCA in March after it was initially introduced and found that overall, the law would reduce the number of people with health insurance by 24 million within 10 years. The biggest chunk of that decrease, 14 million, would come from the proposed changes to Medicaid. While the law would not technically take people’s insurance away from them–states would have to make difficult decisions about enrollment and eligibility–it would amount to a large cut in federal spending on the program. In total, the CBO estimates that the bill would lead to an $839 billion decrease in federal Medicaid spending over the next 10 years.

The AHCA includes two primary changes to Medicaid that would lead to a significant reduction in people enrolled in the program. First, the bill would phase out the ACA’s Medicaid expansion, decreasing the number of people that states would get a high percentage of federal matching funds to cover. Second, it would change the program’s funding model from an open-ended commitment to an amount per enrollee that gradually increases over time.

Ending the Medicaid Expansion

The Affordable Care Act offered states matching funds to insure a large number of people newly eligible for Medicaid. A 2012 Supreme Court decision made the Medicaid expansion optional at the state level, and since then, 31 states and the District of Columbia have chosen to take the federal funds. At first, the government would pay the full cost of insuring these newly eligible enrollees, but over time the government’s share would drop, and by 2020, it would cover 90 percent of the cost of coverage. The matching rate for the enrollees who gained coverage from the expansion is actually higher than the traditional matching rate that states have historically received for those who were already eligible.

The American Health Care Act plans to unwind the Medicaid expansion starting in 2020. While the plan will end up with an estimated 14 million fewer people on Medicaid relative to current law, the AHCA’s passage will not technically take health insurance away from these individuals. Instead, it grandfathers in all newly eligible enrollees who are already in the program by December 31, 2019–allowing states to continue to receive the 90 percent fund matching for those individuals. However, for people who sign up after that point, the funding would drop to regular matching levels. This means that states will likely decide to restrict their program’s eligibility and return to standards that were in place before the Affordable Care Act.

People on Medicaid tend to cycle in and out of the program relatively quickly, which means that even though the AHCA grandfathers in expansion enrollees, coverage numbers are expected to drop fairly quickly after 2020, when states get lower matching rates. The bill would also require people on Medicaid to re-enroll every six months, rather than every year under current law, to maintain their coverage. This requirement could make it easier for people to accidentally have a lapse in their coverage, which could make those who are grandfathered in unable to re-enter the program. Based on how quickly people have cycled out of the program in the past, the Congressional Budget Office estimates that two years after the expansion ends, fewer than a third of those who were grandfathered in will remain on Medicaid. By 2024, fewer than 5 percent will remain. While the federal government won’t technically take people’s insurance away from them, the drop in funding will likely force states to make the difficult decisions surrounding eligibility and enrollment.

It’s worth noting that politics are an important variable here, so estimating coverage changes can be more of an art than a science when the actions of state legislatures are involved. It’s likely that states will react to a decline in federal funding by reducing the number of people eligible for Medicaid benefits. They may even do so preemptively, as they know that their funding will soon be reduced. Generally, the law will sharply reduce federal funding for Medicaid, but changes will be determined at the state level as they start to shoulder more of the costs.

A New Funding Model

In addition to phasing out the Medicaid expansion, the AHCA intends to dramatically change the funding system for Medicaid. Currently, Medicaid operates as an entitlement program, meaning that the federal government has an open-ended commitment to pay for a large share of the program’s costs. This means that if more people enroll in the program, as is often the case during economic downturns, the federal government continues to bear much of the increase in costs. Similarly, if the cost of medical care increases significantly, as it has been for several decades, the federal commitment increases accordingly. The entitlement nature of Medicaid has been a target of Republicans for decades; however, this is the first attempt to restructure the program while Republicans maintain control of all three branches of government.

Under the AHCA’s per capita cap system, states will get a certain amount per person enrolled. Those amounts will vary based on the different groups eligible for Medicaid to avoid giving states an incentive to shift enrollment to lower costs. For example, the system is designed to prevent states from being pressured to drop enrollment for the elderly or disabled because they may cost more than children. Each year, the per capita cap will increase along with the changes in medical care services component of the Consumer Price Index, which tracks inflation. The medical services component is known as CPI-M. The per capita system will make funding responsive to enrollment changes, but if certain Medicaid costs outpace the overall cost growth for medical services, states will need to pay the additional amount. Generally speaking, shifting to a per person allotment will amount to a significant cut in overall Medicaid spending. The Congressional Budget Office anticipates that Medicaid costs will grow by 4.4 percent per year while CPI-M will grow at just 3.7 percent annually over the next 10 years.

Additionally, the amended AHCA allows states to opt for a block grant rather than a per person cap. This would give states a grant based on their Medicaid population and would give them a considerable amount of freedom in terms of how to use that funding. Proponents say that this would allow states to experiment with funds in order to find new ways to keep costs down and deploy spending more effectively. However, critics argue that a block grant could mean states could be forced to cover fewer people or services than under the per capita cap model, and considerably more so than the current law. This is because block grants would not respond to increases in eligibility, for example due to a recession, and like the per capita model, it would not respond to cost increases that result from new or more expensive types of care. States could charge enrollees more for their care and they could cap enrollment, which could mean even those who are eligible may not be able to join the program.

How it would Change Medicaid

To illustrate how different the system would be under a per capita cap, economists at the Kaiser Family Foundation ran the numbers for Medicaid outlays from 2001 to 2011 to see how tying funds to CPI-M would affect spending. The KFF finds that federal spending would have been $195 billion below actual spending during that period, which would amount to a drop of about 7 percent. Importantly, these changes have very different consequences for the costs involved in covering the different eligible groups in the Medicaid program. For example, spending tied to CPI-M would have been 6 percent lower than actual spending when it comes to the health care costs for the disabled, but it would have been 15 percent lower for children on the program. In both of these cases, states would have had to shoulder more of the costs, but the difference is considerably larger due to faster growth in child health care costs. There is also a lot of variation between states in terms of what they pay for the average Medicaid enrollee. In fact, spending varies so much per person, that 13 states would have actually seen an increase or no change in their overall funding if it was anchored to CPI-M. However, 37 states and the District of Columbia would have seen their funding drop. And for 26 of those states, the drop relative to existing law would have been larger than 10 percent.

Subsequent amendments to the AHCA–after the initial Congressional Budget Office analysis–increased the per capita spending for the blind, elderly, and disabled to CPI-M plus one percentage point. Those changes amount to an estimated $41 billion in additional spending over the next 10 years, according to revised CBO projections. While $41 billion is a significant increase it may not be in the scope of the overall cuts–instead of reducing Medicaid spending by $880 billion, the amended law is projected to drop spending by $839 billion. While the Kaiser Family Foundation estimates mentioned above are based on CPI-M, and AHCA increases that rate slightly for certain populations, its calculations remain instructive.

Critics of the plan argue that the proposed per capita spending caps would limit states’ ability to respond to changes and could leave them on the hook for a lot of spending if certain costs grow faster than overall medical inflation. And because these caps will effectively result in spending cuts relative to the current law, it will ultimately leave states with less funding while also reducing their responsiveness to cost changes. An example of where this could be a problem is in Medicaid’s role in addressing the opioid epidemic. Many people who joined the program after the Medicaid expansion were previously uninsured and did not have access to addiction treatment. Moreover, the entitlement nature of the program allowed the program to respond to costs related to the epidemic. This is important given the program’s role in treatment–in total, Medicaid and CHIP, the related health insurance program for children, cover thirty percent of the U.S. population dealing with opioid addiction.

Conclusion

The American Health Care Act includes a number of adjustments to the current health care system, but the most wide-ranging might be the proposed cuts and changes to the Medicaid program. President Obama’s health law led to a large increase in Medicaid enrollment and the AHCA would roll much of that back while going even further to change the funding structure of the entire program. Taken together these changes amount to an $839 billion spending cut over the next 10 years and 14 million fewer people with health insurance.

Advocates of the bill argue that it will rein in Medicaid spending levels to a more sustainable course while granting states the ability to experiment and cut costs. Critics argue that it will dramatically increase the number of people without insurance by reducing federal funding for Medicaid while not offering alternatives to those who can’t afford insurance. As Senate Republicans begin to work on their own version of the health care bill, these wide ranging changes to Medicaid will likely be an important part of the debate.

Kevin Rizzo

Kevin Rizzo is the Crime in America Editor at Law Street Media. An Ohio Native, the George Washington University graduate is a founding member of the company. Contact Kevin at krizzo@LawStreetMedia.com.

The post How the American Health Care Act Plans to Dramatically Change Medicaid appeared first on Law Street.

For most countries, health care is often a costly component of national budgets. That being said, the sheer volume of federal money spent on a nation’s health care system does not necessarily predict its efficacy. For example, the American health care system–with its rising premiums, drug costs, and glaring loopholes–could certainly be more efficient. The U.S. system has consistently ranked poorly among other industrialized nations, despite having the most expensive health care system in the world–17 percent of its GDP. As the White House grapples with how to handle health care under the new Trump Administration, American politicians may look to other countries for guidance.

One such country potentially worth emulating is the Netherlands. According to the global Prosperity Index, the Netherlands has one of the best health care systems in the world based on the country’s basic mental and physical health, health infrastructure, and availability of preventative care. Could this country’s critical health care reform and system structure be advantageous for the U.S.?

Netherlands Health Care Reform

In 1941, the Netherlands introduced a mandatory health insurance plan for low and middle income citizens. It provided most of the country’s population with basic health insurance, while wealthier citizens purchased private plans. But as the program grew, so did spending. In an effort to protect access to health care, the government passed the Health Care Prices Act in 1982 to control physician fees and revenues. Over the following decades, the Dutch started working toward creating a system that merged competition with universal access to health care.

Then, in 2006, the Netherlands passed the Health Insurance Act of 2006. This broad health reform law was intended to improve the health care system’s quality and efficiency by introducing uniform health insurance. Prior to the 2006 health insurance reform, the Netherlands health care system was comprised of four parts: long-term care insurance, supplementary private health insurance, social health insurance, and alternative private health insurance. After the reform, a new universal “private” social health insurance emerged, and long-term care and supplementary private insurance were maintained.

“Holland” Courtesy of Moyan Brenn : License (CC BY 2.0)

All people who legally live and work in the Netherlands are mandated to buy health insurance from a private insurance company. All insurers are required to accept each applicant, regardless of pre-existing conditions. Moreover, the plan is financed with individuals’ annual income-based contributions. Over half of all Dutch households also receive a subsidy from the government based on income. Since the system relies solely on a flat tax related to salary, the Dutch government does not have to shell out many resources to provide individuals with subsidies.

Today, the health insurance system appears to have more transparency than before. Consumers also have unrestricted choice between all insurance companies on the market. Interestingly, the Dutch approach is not a single-payer system. Instead, it combines mandatory universal health insurance with competition amongst private health insurers, creating more of a “risk equalization” system

Netherlands Health Care Structure

The Dutch do not aggressively regulate health care prices; instead, they’ve chosen to hone in on risk selection and primary care.  By tracking a myriad of factors such as: age, sex, pharmaceutical history, and hospital use, the government is able to determine which individuals are more risky to insure and how much it will potentially cost to cover them in the future. The government then pays more money to insurance companies taking on sicker patients. In an effort to offset these costs, each citizen is required to sign up for a general practitioner who acts as a “gatekeeper” to more expensive care and services. This allows the Dutch to cut back on unnecessary–and often costly–visits to specialized doctors. Individuals who are unhappy with their care have the option to change their insurance policy each year.

Insurers are also mandated to place all profits into a shared fund. That money is then distributed to other insurance companies whose patients are sicker than anticipated. Essentially, the Dutch have made insuring only the healthy a less viable and effective business strategy for insurance companies. The government has also set aside a health care budget, and still sets the price on most services. Since physicians are paid a lump sum each year–rather than fee-for-services–there is less incentive for them to overprescribe medications.

But no health care system is completely free from flaws. Cost-related access problems–not filling prescriptions, skipping recommended tests or treatments, or not visiting a doctor because of cost issues–still plague the Netherlands. However, timely access to health care, including elective or non-emergency surgeries, is much easier to receive in the Netherlands.

In many ways, the Dutch health care system is now an efficient “managed competition.” According to the United Nations’ 2017 World Happiness Report, the Netherlands ranked an impressive sixth out of more than 150 countries. While many factors were considered, health care coverage and life expectancy were integral in determining the overall happiness rankings.

What Can the U.S. Do?

In 2008, researchers noted that implementing a Dutch-like system in the U.S. could be attractive to many American citizens in an article entitled “Universal Mandatory Health Insurance In The Netherlands: A Model For The United States?” Consumer choice, in particular, is an aspect of the Netherlands’ health care overhaul that is incredibly desirable to Americans. The Affordable Care Act (ACA) may have been the U.S.’ first step toward implementing a health care system similar to the Dutch (insurance policy choices for consumers, attempts to insure more of the population, and coverage regardless of pre-existing conditions), but the system still has its glaring issues.

In 2014, the Commonwealth Fund produced a report that ranked the U.S. third out of 11 wealthy nations in timelines of care and effective care overall.  The Dutch, on the other hand, can provide universal coverage with very low out-of-pocket costs, while still maintaining speedy access to services. According to the study, the U.S. also ranked last on measures of equity; Americans with low incomes are far more likely than counterparts in other countries to not visit a physician when ill. Poor rankings in equity, efficiency, healthy lives, and cost-related access problems contributed to the U.S. ultimately ranking last overall in the study for the fifth time.

While the Dutch have managed to create an institutional framework to deliver universal access to health care along with market competition and consumer choice, the researchers found that the system still struggles to provide the most high-quality care. Meanwhile, the U.S. has integrated many high-caliber delivery systems, but fails to provide universal access to basic health insurance at an affordable rate. U.S. health care still remains the most expensive in the world, and yet it manages to underperform relative to other countries.

The U.S. and the Netherlands are perhaps most divided in the regulation of insurance companies. The ACA left a significant amount of diversity in the insurance marketplace, making it nearly impossible for the program to be fully transparent and simplified with the vast amount of choices. Obamacare offers four different varieties of insurance packages, while the Dutch program offers only one–which is probably most comparable to the Obamacare silver plans. Insurers in the U.S. are able to charge older customers up to three times as much as younger ones, adding even more complexity to the American system. Other researchers note that America’s “spend more, get less” model is tied to other issues–safe, affordable housing; employment prospects; reliable transportation; and consistent, well-balanced meals–that may be even more important to a population’s overall health than just specific medical care.

Conclusion

Building a perfect health care system is downright difficult, regardless of the country or government structure. However, the efficacy and success of the Netherlands’ universal system may be something the U.S. can learn from, and perhaps even integrate into its own system. While there is a lot of support for single-payer (“Medicare for all”), the Dutch system of health care isn’t too far removed from what President Barack Obama attempted to implement through the ACA. With more efficiency and management of the health insurance market, it’s possible the U.S. could save billions of dollars following a more Dutch-like system of health care.

Nicole Zub

Nicole is a third-year law student at the University of Kentucky College of Law. She graduated in 2011 from Northeastern University with Bachelor’s in Environmental Science. When she isn’t imbibing copious amounts of caffeine, you can find her with her nose in a book or experimenting in the kitchen. Contact Nicole at Staff@LawStreetMedia.com.

The post Could America Learn a Thing or Two From the Netherlands’ Health Care? appeared first on Law Street.

While on the campaign trail, President Donald Trump repeatedly vowed to “repeal and replace” the Affordable Care Act (commonly known as “Obamacare”). However, his first attempt at dismantling the federal statute crashed and burned before a single vote was even cast due to divisions among conservative and moderate Republicans on Capitol Hill. If passed, Trump’s health care bill would have slashed federal funding to Medicaid.

Now, in the wake of the embarrassing defeat, Trump’s fledgling administration is still looking to give the American people a better option for health care. Some experts believe this could still come in the form of reforms to Medicaid and Medicare, which have historically been mired in controversy.

So, lets take a look at how these health care programs, both enacted in 1965, have evolved over the years. How has the Affordable Care Act affected them? And what is the fate of these programs if a new health care bill is finally passed?

What is Medicaid?

Medicaid is a social health care program for certain individuals and families in the U.S. with limited income and resources. It was created through the Social Security Amendments of 1965–signed into law by President Lyndon B. Johnson–under Title XIX of the Social Security Act. It essentially acts as government insurance for those who are unable to pay for traditional health care costs.

The federal government matches state spending on Medicaid to enable states to provide medical assistance to residents who meet their individual eligibility requirements. While the program is jointly funded by state and federal governments, it is managed at the state level. Thus, every state has an immense amount of autonomy in determining who is eligible for the program. Since 1982, all 50 states have participated in the program–despite not being required to do so.

The Affordable Care Act (ACA) significantly expanded Medicaid eligibility, extending coverage to adults under 65 years of age who have incomes up to 133 percent of the poverty line, as well as making it available for low-income adults without dependent children. However, the Supreme Court’s ruling in National Federation of Independent Business v. Sebelius determined that states did not have to agree to the expansion. Thus, many states have continued to stay at pre-ACA funding and eligibility levels.

As a whole, Medicaid provides a variety of services for some of America’s most vulnerable populations. According to the National Council for Behavioral Health, Medicaid is the single largest payer of mental health services, paying for 25 percent of all mental health care and 20 percent of all addiction care. Four out of 10 children are treated under Medicaid, and a study published in Women’s Health Issues found that almost half of the 4 million births each year in the U.S. are covered by the program. Medicaid also often covers the costs of nursing homes and other long-term care options for elderly patients.

Medicaid Structure Explained

While poverty is a primary requirement for Medicaid eligibility, it alone does not qualify citizens for the program. Other categories, such as pregnancy, age, and disability, may also qualify a citizen for Medicaid eligibility. Interestingly, Medicaid also provided the largest portion of federal money for people with HIV/AIDS until Part D of Medicare was implemented (but more on that later). In most states, adults who receive Supplemental Security Income benefits (a federal income supplement program) are automatically enrolled in Medicaid. While state Medicaid programs are required by federal rules to cover comprehensive dental services for children, coverage for adult dental services is optional and oftentimes limited.

Some states choose to utilize the Health Insurance Premium Payment Program (HIPP). Under HIPP, a person under Medicaid is eligible to have private health insurance paid for by the Medicaid program. Essentially, the state pays the private insurance premiums for beneficiaries. States may also combine administration of Medicaid with other programs, such as the Children’s Health Insurance Programs (CHIP), for ease.

What is Medicare?

Medicare, in contrast, is a single-payer social health insurance program specifically for those aged 65 and older that has been administered by the federal government since 1966. With President Lyndon B. Johnson at the helm, Congress enacted Medicare in 1965 under Title XVIII of the Social Security Act. Medicare provides health insurance to some individuals under the age of 65 with disabilities as determined by the Social Security Administration. For example, any individuals with end stage renal disease or amyotrophic lateral sclerosis (ALS) are eligible for Medicare.

Those who have worked and paid into the system through payroll tax are eligible once they reach age 65, regardless of income or medical history. Currently, there are a number of private insurance companies across the U.S. under contract for administration of Medicare. It is funded primarily through payroll taxes, general revenues, and premiums paid by Medicare beneficiaries.

In 1966, Medicare spurred racial integration, by making desegregation of waiting rooms and hospital floors a condition of receiving Medicare funds. According to David Barton Smith, a professor emeritus in health-care management at Temple University, nearly 2,000 hospitals had integrated by July 1966 in order to remain connected to federal money for the program. Although some hospitals resisted integration, and those who complied found ways to restrict multi-bed rooms, Medicare still played an important role in integrating the nation’s hospitals.

Medicare Structure Explained

Structurally, Medicare is complicated. There are four parts: Part A, hospital and hospice insurance; Part B, medical insurance; Part C, Medicare Advantage plans; and Part D, prescription drug plans. Hospital and hospice insurance covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Medical insurance under Part B is optional, and helps insured members pay for services and products that are not covered under Part A–usually outpatient care. Patients who miss their initial enrollment period for Part B incur a lifetime penalty of 10 percent per year on the premium.

Medicare Advantage plans under Part C are Medicare plans sold through private insurance companies. These plans are required to offer coverage that meets or even exceeds standards set by Original Medicare. However, they do not have to be identical in covering every benefit. These are considered “capitated” health insurance plans, which is a payment arrangement that pays a physician or group of physicians a set amount for each enrolled person assigned to them for a particular period of time, whether that person seeks care or not. The difference between Part C plans and Original Medicare is likened to the standard HMO versus non-HMO plan decisions other citizens make.

Finally, Part D covers prescription drug plans. It was created in 2003 under the Medicare Prescription Drug, Improvement, and Modernization Act and went into effect in 2006. Anyone with Part A or Part B is eligible for Part D, though the coverage is not standardized. Plans choose which drugs to cover, though they must cover at least two drugs in 148 categories and cover substantially all drugs in six protected classes (including antidepressants, antipsychotics, anti-convulsants, immuno-suppressants, as well as cancer, AIDS, and HIV drugs).

Medicaid and Medicare under the ACA

Medicaid was expanded extensively under the ACA. Currently, 73 million people are enrolled in Medicaid, and roughly 11 million are covered under the program because of the ACA expansion. States who chose to reject the Medicaid expansion are slowly facing the consequences of that decision. Reports issued by the Urban Institute, Lewin Group, and Rand Corp. have stated that these states are slated to lose billions of dollars–money that their own residents have paid in federal taxes.

The ACA expansion also made a number of changes to Medicare; many provisions were specifically designed to reduce the cost of Medicare. It was designed to help Medicare patients afford their prescription drugs by closing the Part D coverage gap, often referred to as the “donut hole,” by year 2020.

Furthermore, premiums under Part B and Part D were restructured; as a result, the wealthiest people with Medicare had their contributions increased. More oversight, stronger standards, and provider screenings were also enacted to prevent Medicare fraud and abuse.

What’s Next?

According to a recent Pew Research Center survey, 60 percent of Americans feel that the government should be responsible for ensuring everyone has health insurance. This number increased from 51 percent last year and has now reached its highest point in roughly a decade. Those on the other side of the argument–individuals who believe the government has no responsibility to provide health insurance for all–do, however, believe that the government should continue Medicaid and Medicare.

Following the death of Trump’s heath care bill that would have repealed and replaced the ACA, some states are looking to see if participating in the federally-funded Medicaid expansion is a lucrative path to take. As of last count, 19 states have opted out. Some contend that an expansion of Medicare may be a way to improve upon the ACA. Potentially lowering the age of eligibility of Medicare to 50 may also make private individual health more affordable. Moreover, offering Medicare as an option on health insurance exchanges could bring in younger people, reducing Medicare’s overall average costs by not just insuring those who cost the most to insure.

In contrast, there is also the option of implementing a full single-payer healthcare program, considered “Medicare for All”–a system that Senator Bernie Sanders has advocated for immensely. Under a single-payer system, any links between employment and health insurance would cease, as well as expanding the net for people over 65 to all Americans. Thus, the entire spectrum of care for every American citizen would be covered: primary, vision, oral, mental health, and more. Instead of paying a premium to for-profit insurance companies, Americans would merely pay a tax and employers would also pay taxes through payroll. Senator Sanders is poised to reintroduce the single-payer plan in the Senate, on the heels of the failed Republican ACA repeal attempt.

Conclusion

Despite the problems with the current health care system, such as rising premiums and fewer choices for citizens, Medicaid and Medicare have arguably been success stories in their more than 50-year history. Providing insurance and health care to the country’s most at-risk populations–the poor, the disabled, and elderly–is something to be lauded. What lies ahead for the programs, however, is up in the air until a new health care reform bill is passed.

Nicole Zub

Nicole is a third-year law student at the University of Kentucky College of Law. She graduated in 2011 from Northeastern University with Bachelor’s in Environmental Science. When she isn’t imbibing copious amounts of caffeine, you can find her with her nose in a book or experimenting in the kitchen. Contact Nicole at Staff@LawStreetMedia.com.

The post The Evolution of Medicare and Medicaid in America appeared first on Law Street.

The average premium cost for a midlevel plan on the federal health care exchange will rise by 25 percent in 2017, the Department of Health and Human Services (HHS) said on Monday. With two weeks to election day, it’s an issue that voters will be paying close attention to, and an issue Hillary Clinton and Donald Trump will likely address in the coming days.

In addition to premium hikes, customers in some states will have a much smaller pool of insurers to choose from, as a handful of major firms–United Health Group, Humana, Aetna–have pulled out or scaled back in a number of states. Customers in the 39 states that participate in the HealthCare.gov exchange can expect some relief in the form of income-based subsidies.

President Obama successfully passed the Affordable Care Act in 2010, and the federal marketplace launched in 2013, though not without some hiccups. Obama, who has acknowledged his fix for America’s health care–and perhaps one of his legacy-defining issues–is not a silver bullet, called the 2017 forecast “growing pains,” while pushing a government-sponsored “public option” to supplement the private plans. To quell customers’ concerns about rising out-of-pocket costs, the Obama administration pointed to increased subsidies that could help offset the costs in some cases, as well as the option of switching to a cheaper plan.

Donald Trump, as well as Republican lawmakers who have long doubted the ACA, pounced on the new HHS report. The first step to improving health care affordability is “to immediately deliver a full repeal of Obamacare,” according to his campaign website. Trump’s plan is largely based on the idea of opening up the insurance market across state lines, and removing the “barriers to entry into free markets.” Clinton’s stance on health care is to “defend and expand” the ACA while creating a “public option” and increasing subsidies.

Obamacare is a disaster – as I’ve been saying from the beginning. Time to repeal & replace! #ObamacareFail pic.twitter.com/5CvoMbVceT

— Donald J. Trump (@realDonaldTrump) October 25, 2016

Larry Levitt, senior vice president at the Kaiser Family Foundation, told USA Today that the premium increases are due to “insurers catching up to the fact that the number of sick people signing up for insurance is bigger than expected.” He added, “Whether this is a one-time market correction or a sign of more problems ahead will depend in large part on how consumers react to the changes.”

Despite the price jump, the percentage of Americans who are uninsured is at a historic low; only nine percent lack coverage. In a news release, HHS said that more than 70 percent of HealthCare.gov customers will be able to find plans costing less than $75 each month after tax credits are accounted for. And although one in five customers will have only one insurer to choose a plan from, the average consumer will have 30 plans to choose from.

While premiums are projected to increase significantly, most Americans who get health insurance on the exchanges qualify for federal subsidies, which are designed to go up with premiums to reduce the effect of rising costs on consumers. However, 5 to 7 million Americans either do not get individual insurance on the exchanges or do not qualify for federal subsidies, forcing them to bear the brunt of the cost increase or switch to a cheaper plan.

Overall, competition on the exchanges has dwindled. In 2016, there were 232 insurers in the 39 participating states (insurers are counted for each state they have plans in). In 2017, that number will shrink to 167.

Open enrollment for the 2017 exchange begins on November 1.

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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In August, Aetna announced that it was dropping its participation in many of the Affordable Care Act exchanges that it had previously used to provide insurance, citing significant losses as its reason. While this decision may have been made for other reasons, it will have major implications for the president’s landmark legislation commonly known as Obamacare. This problem goes beyond Aetna, which followed UnitedHealth’s decision to leave the exchanges in 2017–also pointing to significant losses as the motivation for its withdrawal. Read on to find out the full story behind the departures from the Affordable Care Act marketplaces, why companies are pulling out of it, and what implications this may have for the law going forward.

Brief History of Obamacare

Passing and then implementing the Affordable Care Act, or ACA, was no easy feat. A wide range of politicians, including the Clintons, have made efforts to reform American health care for years, but these attempts largely failed. However, that began to change in 2009 when support for an overhaul began to swell and Democrats held the presidency and both chambers of Congress. Following the untimely death of Senator Edward Kennedy and opposition from Republicans, a complex legislative process involving a filibuster, cloture, and budget reconciliation eventually led to the Affordable Care Act’s passage in March 2010.

The health care law included a number of protections for consumers, like eliminating insurance companies’ ability to deny someone coverage because of a pre-existing condition, eliminated lifetime and annual limits on coverage, and prevented rescission. It also created an appeals process so people could challenge insurance companies’ decisions and allowed children to stay on their parents’ health plan for longer. The law attempted to cater to businesses as well by providing them a time frame to offer coverage to employees and also provided a number of tax credits. It let certain people continue with their existing coverage if purchased before a certain date and encouraged new enrollees through a tax if they did not sign up. Importantly, the legislation also allowed states to expand Medicaid coverage, which contributed to a dramatic decrease in the number of people without health insurance.

The ACA was quickly challenged in the courts and after a long fight was largely upheld by a Supreme Court decision in 2012. While this was a major victory it was not the last issue to plague the Act. It has had to endure a number of problems from the online marketplace not working when it was initially launched to repeated, high-profile challenges in the House and Senate. As of February, approximately 12 to 20 million people had enrolled in health insurance either provided by the marketplace or through coverage expansion such as the one with Medicare.

Why Providers are Leaving

Aetna is likely leaving public exchanges for many reasons, but particularly it posted a $200 million loss in the second quarter of 2016 in its individual products. While it is not pulling out of all the states it was operating in, it is leaving 11 of the 15. Aetna’s decision actually leaves one county in Arizona without any coverage at all. Some evidence suggests that Aetna’s decision to leave the exchanges may have amounted to payback for the Justice Department’s efforts to block its merger with Humana. But Aetna argues that the decision was purely based on its recent losses on the exchanges.

The following video looks at Aetna’s pullback from the marketplace in terms of the company’s possible motives and the implications going forward:

The issue might be left at that, but Aetna is not the only company leaving the exchange. Along with Aetna, UnitedHealthcare and Humana–the company Aetna recently tried to merge with–are both leaving exchanges. On top of these departures are those of smaller providers, including several government-funded carriers. For many of these providers, the biggest problem is demographics. Namely, the people signing up for the program are older and sicker than expected. Some people may also be taking advantage of insurers by waiting until they are sick or need medical help to sign up. These people require higher costs, which are not being balanced out yet by new, healthier enrollees. Because of these unanticipated developments, insurers have had a hard time setting their prices and, as a result, they are losing money.

Adding insult to injury, the Affordable Care Act is dealing with more than just the loss of insurance providers. In a recent study done by the New York Federal Reserve, one out of every five businesses in that district has reported hiring fewer people because of the law. Additionally, there are now allegations that some healthcare providers are steering patients to Affordable Care Act policies instead of Medicare and Medicaid because they receive higher reimbursements. This would raise costs for insurers because sicker patients end up on the exchanges instead of government-run healthcare plans.

Implications

While it definitely sounds bad, what exactly does the departure of major providers from ACA exchanges mean for the law? For starters, it means there will be a lot less competition in many places. In fact, 36 percent of markets now will have only one provider, which is up from just 4 percent at the beginning of the year. In five states–Alabama, Alaska, Oklahoma, South Carolina, and Wyoming–there will be only the one provider. On top of this, 55 percent will have only two or fewer providers, which is also up from 33 percent at the beginning of this year.

The biggest issue here, aside from the fact that one county in Arizona may wind up with no coverage options at all, is that competition was supposed to be an important way to cut healthcare costs. Without a competitive market, insurance providers can offer lower quality service at higher prices because there is no alternative. The accompanying video looks at what the major insurance companies are doing:

The news is not all doom and gloom, however, as other carriers are expanding in certain areas including Cigna in Chicago and a startup call Bright Health in Colorado, which was actually founded by the leaders of United Healthcare. Additionally, not all insurers are losing money either in the Affordable Care Act exchanges. In fact, many smaller insurers, who have more experience in government healthcare markets like Medicare and Medicaid, are actually thriving. They are succeeding because the experience they have gleaned has helped them operate on more moderate government-style plans than the more expansive employer-sponsored plans that larger insurers like Aetna are most familiar with.

Even if these large insurers ultimately decide to pull out of the market now that does not prevent them from reentering in the future. In fact, the opposite is true, as along with its announcement that it was leaving the government exchange, Aetna also hinted at the possibility of a return when the market was more receptive to its practices.

Conclusion

Republicans have attempted to repeal all or parts of the Affordable Care Act as many as 60 times since it was passed without success. While politicians may have been unable to sweep away President Obama’s crowning achievement, the market may have succeeded. Losing yet another major healthcare provider, such as Aetna, deals a major blow to the Affordable Care Act as it decreases competition and brings into question the viability of the entire system.

At least that is how some perceive it. To others, it is simply the result of survival of the fittest, where the companies best equipped to do business in a government exchange are and are doing well. While insurance giants balk over reported losses, these companies may fill in the gaps and grow their own brands further. Many, including President Obama, believe that the recent difficulties in the exchanges should revive efforts for a public option akin to Medicare or Medicaid. But as competition decreases in many local markets, the system has many issues that need fixing.

The Affordable Care Act is unlikely to go away entirely. Even if insurers continue to leave Obamacare exchanges, the law will have allowed for a dramatic expansion in health care coverage. Instead of revolutionizing the way health insurance is provided to individuals, the Affordable Care Act may end up looking like a traditional entitlement program that made insurance available to more Americans. After all, only 11 million Americans get their insurance through exchanges, while around 150 million have employer-provided plans. But in order to ensure that the marketplaces are viable going forward, more people will need to enroll and insurance providers will need to return to provide coverage. And that is by no means a simple task.

Resources

The Atlantic: Why Is Aetna Leaving Most of Its Obamacare Exchanges?

CNN Money: Choices Dwindling for Obamacare customers

MSNBC: On Groundhog Day, Republicans vote to repeal Obamacare

Business Insider: Obamacare has Gone from the President’s Greatest Achievement to a ‘Slow-Motion Death Spiral’

CNBC: Health Providers May be Steering People to Obamacare to get Higher Reimbursement

The Daily Caller: Another Huge Insurance Company Is Leaving Obamacare

eHealth: History and Timeline of the Affordable Care Act (ACA)

Obamacare Facts: ObamaCare Enrollment Numbers

Michael Sliwinski

Michael Sliwinski (@MoneyMike4289) is a 2011 graduate of Ohio University in Athens with a Bachelor’s in History, as well as a 2014 graduate of the University of Georgia with a Master’s in International Policy. In his free time he enjoys writing, reading, and outdoor activites, particularly basketball. Contact Michael at staff@LawStreetMedia.com.

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Premiums for the lowest and second-lowest costing health care plans sold through the Affordable Care Act exchange will rise by a weighted average of ten percent across 13 states and the District of Columbia in 2017, a steeper increase than ever before, according to a study released Wednesday by the Kaiser Family Foundation, a non-partisan health policy organization.

The study considered preliminary data filed by insurers to state insurance departments in major population centers in each state that was studied–from Denver, Colorado and Portland, Oregon to Baltimore, Maryland and Richmond, Virginia–as well as D.C. As more states release their complete premium costs for 2017, more data will be added to the study, reflecting a more accurate picture of premium price hikes for next year nationwide. Figures released from insurers are still preliminary at this point, and are thus subject to change.

The lowest and second-lowest silver plans were used in the study because they are the most popular options under the ACA, making up 68 percent of the total market share. Second-lowest silver plans are also the benchmarks on which government subsidies are based. For both types of plans, premiums in Portland will see the highest increase in 2017, up 26 percent ($240 a month in 2016 to $302 in 2017) for the lowest cost plans, and 18 percent ($261 in 2016 to $308 in 2017) for the second-lowest cost plans. On the flip side of that, insurers in Providence, Rhode Island will be offering substantially lower premiums in 2017 for both plan types: A 14 percent decrease ($259 in 2016 to $224 in 2017) for the lowest cost plan, and a 13 percent decrease ($263 in 2016 and $229 in 2017).

From 2014–when the ACA exchange opened–to 2017, premium costs for both the lowest and second-lowest silver plans increased by a weighted average of five percent. And while these findings seem to support detractors of the ACA, also known as Obamacare, the authors of the study also found that eight in ten enrollees receive government subsidies for premium costs, and retain the freedom to switch to a lower cost plan. “Regardless of tax credit eligibility, most enrollees have multiple plans from which to choose and can often save money on their premium by switching to a lower-cost plan,” the authors wrote, citing evidence that shows most people are willing to shift to a lower cost plan when premiums rise, “even though this might mean changing insurers and potentially doctors as well.”

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

The post In 13 States And D.C., Affordable Care Act Premiums Will Rise 10 Percent In 2017 appeared first on Law Street.

Every year 38,000 people in the United States kill themselves. In America, we have more people who are victims of suicide than are victims of homicide. Or car accidents. Or prostate cancer. Yet mental health care in the United States: how and whether it works, how it is funded, and  the challenges it faces, is rarely discussed. It isn’t something that we like to talk about.

In his book “A Common Struggle,” Patrick Kennedy goes into intimate detail about the alcoholism, drug addiction, and mental illness that he and his family have struggled with. As the title suggests it is a problem that is dealt with by millions of Americans–as patients, caregivers and loved ones. The book, in addition to trying to de-stigmatize mental illness, chronicles the passage of the Mental Health Parity and Addiction Equity Act of 2008. If you have no idea what that is you are not alone. According to a survey by the American Psychological Association, 96 percent of Americans have no idea that this law exists or that it requires insurance providers to treat a mental illness in the same way it would treat a physical one.

Mental Health and Mental Health Parity

Mental health care in the United States is faced with a two unique challenges: access and attitudes. The United States spends $113 billion a year on mental health care. Despite the significant investment, it is more difficult to get access to a provider for mental health services than it is to get access to a physical health provider. Nearly 90 million Americans live in a “shortage area” for mental health care providers–compared to 55.3 million Americans who live in a shortage area for primary care physicians. But an even greater barrier to treatment are the attitudes about mental health. When researchers looked into why people were refusing treatment, 71 percent said that they wanted to solve the problem on their own.

A response like that would be considered ridiculous if it was given after a cancer diagnosis. Yet, because mental illness is considered to be different from a physical illness, we don’t find this response as shocking in that context. Some people do deal with mental illness and addiction on their own, some people even do so successfully. But for individuals who want or need treatment, an attitudinal change that allows patients to believe they are entitled to receive it, and the ability to actually access it, is critical.

Take a look at this explanation of the situation given by Representative Jim Ramstad. This video was his commentary in favor of the Mental Health Parity and Addiction Equity Act of 2008. Essentially, this law requires that insurance providers treat a mental health issue the same way that they would treat a physical health issue, with the same co-pays, deductibles, and access to treatment, including treatment for substance abuse. Ramstad argues in favor of passing the law, citing himself as a success story for treatment.

The arguments dividing supporters and opponents on this issue are the same reasons that people don’t seek treatment: cost and attitude. The human cost of living with mental illness is very high but treatments for mental illness can also be extremely expensive. Treatment often includes therapy, which involves repeatedly engaging the services of a professional for hours each month. That’s a hefty price tag. When treatment involves medication, as it often does for serious mental illnesses like bipolar disorder and schizophrenia, the cost of the medications themselves can be staggering. This is often because the dosages need to be carefully calibrated, frequently adjusted, and generics are not always readily available. All of this involves more physicians and psychiatrists. Hospitalization and in-patient treatment can cost thousands of dollars for just a few days. Insurance companies are understandably reluctant to be responsible for providing these services.

The Costs of Mental Illness

It’s difficult to calculate society’s financial costs for the nearly 42 thousand deaths that were attributed to suicide in 2013. But a 2008 study by the National Institute of Mental Health attributed $193.2 billion dollars per year to lost earnings from mental health disorders in general–largely based on missed workdays because of mental health concerns. That study isn’t accounting for the lost productivity while at work or people who can’t work or are underemployed due to their mental illness. A more recent and more holistic view of the cost of mental illness would cite $444 billion, which includes treatment and the lost wages of patients but not caregivers, according to a report from USA Today. Even that isn’t taking into account the true total economic cost of mental illness.

In effect, what mental health parity does is shift some of the financial burden of treating mental illness to insurance companies, the same way that it does for physical illnesses. But it isn’t a bulletproof solution. One very key component in the bill, which Representative Ramstad addresses, is that mental health treatment would only be provided when it was considered a medical necessity. However, it isn’t clear what qualifies as a medical necessity.

Long-term therapy may be highly beneficial to an individual but may not be considered a medical necessity. A 72-hour psychiatric hold, also beneficial and potentially life-saving in terms of preventing immediate harm, might have a better chance of being considered a medical necessity. The long-term therapy, which could possibly prevent the need for the psychiatric hold, is in all likelihood the more expensive of the two options, just as physical therapy is a very expensive treatment for a chronic medical condition. Insurance companies can and do use medical necessity to thwart patients from using their insurance for treatment of mental illness.

The State of Mental Health Care in America

Mental health parity is an important step, but it does not do anything to address the problem of mental illness for the uninsured and doesn’t do enough to address mental health concerns for those on Medicare/Medicaid. It also does not deal with the much larger problems of access to appropriate treatment and the involvement of the criminal justice system.

The video below, an interview with Liz Szabo of USA TODAY about their series “The Cost Of Not Caring,” explains some of the economic costs of mental health care and how those costs are being borne by millions of Americans. The article that accompanies the series does an even better job of expanding on the concerns with the mental health care system in the United States.

Reduced investment in mental health services by state and local authorities produces a system where we still pay for the mentally ill, just in different ways than you might expect. The main effect of mental health parity is to move some of the burden from the individual to a private insurance provider. While the main consequence of reducing services for mental health shifts the burden from asylums, where the mentally ill used to go, and other institutions that were designed to deal with them, to hospitals and prisons. These already stressed institutions have difficulty coping with the added demands now placed on them, leading to a system that does an ineffectual job because it deals with the physically ill, the mentally ill, and criminals who actually need to be incarcerated as a unit–rather than dividing them into separate categories and treating them accordingly.

Better Alternatives

There are treatment options that can be tried, which may cost more at first, but produce better results in the long run for the individual with a mental illness and his or her community. To compare the problem to a physical one, if amputating a broken arm was cheaper than setting a broken bone and then using physical therapy to regain full range of motion–most of us would still not say that is the best treatment. Because in the long run, the loss of productivity to the individual and to society is much higher and the expense to fix the arm would be viewed as an investment in that person’s future. Why then, when someone comes to the hospital with a chemical imbalance in their brain, rather than misaligned bone fragments, do we not explore more expensive treatment options–ones that would be investments in that person’s most productive future given the nature of the illness.

In 2008, the National Institute of Mental Health began the RAISE project, to research Recovery After Initial Schizophrenia Episode. Researchers in the RAISE trial found that after the two-year study period was concluded, schizophrenic patients who received a model of treatment that included family counseling and help to secure a job–services that are not covered by insurance companies, which typically only pay for drugs and limited therapy for outpatient treatment–did better than patients who only got basic services.

The added cost for these services was about $3,600 a year for each patient and according to the researchers yielded a better quality of life for the patients. Which is, certainly, a difficult thing to quantitatively measure. Because the study only lasted for two years it is hard to say if, over the person’s lifetime with the illness, the initial investment will prove to actually prevent more costly complications like hospitalizations. But the initial results suggest that including this type of counseling and other services may be worth the long-term investment.

For a surprisingly cogent and unsurprisingly hilarious look at the issue of mental health and innovative treatment options, check out John Oliver’s segment on mental health:

Conclusion

Removing the stigma of mental illness by treating it in the same way you would treat a physical ailment is a positive first step towards dealing with the mental health care crisis in this country. But it is only the first step. Thousands of Americans die from mental illness every year. Millions suffer from it chronically and face the challenges of dealing with a mental disease daily.

Because it touches so many of us so intimately, mental health treatment in America is not an easy topic for most to discuss. Usually, it only becomes part of our public discourse in the wake of a mass shooting. But that’s like only talking about a disease if it is an air-born pathogen. Those diseases are the most obvious for us to see as a threat; nothing is sexier on the evening news than a flu pandemic. But it is the less glamorous food poisonings that might be more deserving of our attention. It’s messier and more embarrassing to talk about, but you are also more likely to be affected by it.

Resources

USA TODAY: Mental Health System Crisis

Goodreads: A Common Struggle 

American Psychological Association: Help Center: Parity Law Resources

Washington Post: Seven Facts About America’s Mental Health Care System 

The Kennedy Forum: Parity 

Centers for Disease Control: Mental Health 

The Huffington Post: US Mental Healthcare System

Slate: Is My Work Medically Necessary? How Insurance Companies Get Around Rules For Mental Health Care

New York Times: New Plan To Treat Schizophrenia Is Worth Added Cost, Study Says

Mary Kate Leahy

Mary Kate Leahy (@marykate_leahy) has a J.D. from William and Mary and a Bachelor’s in Political Science from Manhattanville College. She is also a proud graduate of Woodlands Academy of the Sacred Heart. She enjoys spending her time with her kuvasz, Finn, and tackling a never-ending list of projects. Contact Mary Kate at staff@LawStreetMedia.com

The post Mental Health Care: Should We Be Treating the Mind the Same As The Body? appeared first on Law Street.

The United States spends more money on health care than any other developed country. At the same time, studies find that patients in other countries enjoy better quality and more accessible health care than Americans. Why is American health care so expensive and what are the underlying issues that hold the United States back from necessary reforms? Read on to learn more about the U.S. healthcare system and how it stacks up internationally.

How does the U.S. healthcare system compare internationally?

According to the 2014 Commonwealth Fund analysis of the U.S. healthcare system in comparison to other industrialized countries, the United States ranks last among peer nations. This poor ranking is not a one-time thing, as almost all previous editions of the report from 2004-2010 also ranked the American healthcare system the lowest in terms of both cost and quality. The report compares the United States to some of the most developed and industrialized nations in the world, including Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom. All of these countries spend much less on health care and have higher-quality services.

What are the problems with the American healthcare system?

The United States adheres to a Selective Health Coverage (SHC) system, also called a hybrid healthcare system. Roughly half of healthcare spending comes from private funds, while the government covers the other half through federal, state, and local funds. The majority of healthcare costs are covered through private insurance companies that sell health coverage to employers and private individuals at different rates. The government provides coverage through Medicaid for low-income households, and Medicare for retired Americans.

High Costs 

As the United States has no universal health coverage, people mainly receive health insurance from their employers, the government, or purchase it through exchanges. The Affordable Care Act, which entered into force in 2013, made it easier to gain coverage, but 10 percent of Americans still lack health insurance.

As each insurance plan includes deductibles, co-pays, and out-of-pocket costs, even with insurance, it could be quite expensive to seek medical services. In 2014, the average household spent $8,000 in medical costs, including monthly insurance payments, taxes, lost wages, out-of-pocket care, and other costs. These prohibitive costs mean that Americans may skip physician visits, treatments, tests, or follow-up care, even if recommended by their doctor.

The American healthcare system is one of the most expensive in the world. Around 18 percent of the country’s GDP goes toward healthcare costs. The Netherlands ranks next, but spends only 12 percent of its GDP on health care. The government spends by various estimates between $8,500 to $10,000 per capita annually, and still requires high out-of-pocket costs for its citizens. Other industrialized countries spend from $3,000 to $5,500 per capita and manage to cover more people and offer better services. Overall, the U.S. ranks last on the Commonwealth Fund’s rankings for national health expenditures. There are plenty of reasons for that, including but not limited to high costs associated with administrative hassles and duplicate testing. The United States is also the only developed country where medical costs contribute toward, and in some cases directly lead to, personal bankruptcy. Even such business giants as Starbucks and General Motors have acknowledged the disproportionately high costs of providing health care to their employees.

Low Quality 

The healthcare system in the United States isn’t very efficient. While most other countries have adopted some kind of unified system of communication with patients and other providers, the U.S. system’s administrative hassles were cited as a problem by the Commonwealth Fund. The overall health of the American population is worse than that of other industrialized countries. The U.S. ranks last on all three measures of healthy living, including mortality amenable to medical care, infant mortality, and healthy life expectancy at age 60.

What types of healthcare systems do other countries have?

National Services

The most popular type of healthcare system in the developed world is a national health services system. In this type of system, necessary medical care is fully paid for by the government. Hospitals and clinics are publicly operated, but private sector institutions also exist. Private medical clinics may have specific regulations they must follow, while the government pays them certain fees. Or, private medical clinics could operate solely like businesses and profit by providing superior, more personal or elective medical care. Many countries employ this mode;, including the United Kingdom, Spain, and New Zealand.

In the United Kingdom, health care is largely supported by tax contributions that are then used by the government to cover the vast majority of its population’s medical costs. Private coverage also exists, often through employers, but these premiums are affordable as to allow competition with public health care, which is free of charge. The U.K. healthcare system ranks first on the Commonwealth Fund’s list among other industrialized countries, particularly when it comes to efficiency and access.

National Health Insurance System

In a national health insurance system, also called a single-payer system, the government pays for all costs, but doesn’t operate healthcare services. Canada, Denmark, Taiwan, and Sweden are among those countries that operate a single-payer healthcare system.

Taiwan has one of the best healthcare systems in Asia. Health providers are employed by the public or private sector, but are paid standardized fees, which eliminates price competition and adds quality competition. In 2010, Taiwan spent three times less (6.5 percent) than the United States (16 percent) in its healthcare expenditures, covering 99 percent of its population. Administrative costs are also extremely low (1.5 percent) in comparison with the U.S., which spends 20-30 percent of overall healthcare funds on administrative costs.

Multi-Payer Health Insurance System

This system of health care is operated by Germany, Japan, and France. According to this model, all physicians are paid from a special fund, which is designated for healthcare services. The rates are the same for all physicians, cutting administrative costs for government, and creating quality competition.

Germany is a great example of a system that provides quality and cost-efficiency. Health services in Germany operate through an alliance of around 240 not-for-profit insurance providers that cover about 90 percent of the total population and are paid from a specifically designated “sickness fund.” The other 10 percent are generally high-income households that prefer private health insurance with superior services and quality. Amazingly, government expenditures for health care in Germany are half those of the United States, and the quality of health care is very high. Insurance companies and medical providers are closely regulated by the government, while employers and employees assume shared responsibility to pay taxes towards the “sickness fund.” Such a system helps to decrease the government’s costs and and provide more people with health coverage.

Watch the video below to learn more about Germany’s healthcare system.

Why is health care in the U.S. so expensive?

The complexity and for-profit nature of the American healthcare system is the primary reason for its high cost. As insurance companies are concerned with profit, they are always looking for ways to minimize their expenses and make money.

Expensive Mix of Services

The United States’ healthcare system provides a very expensive mix of services:

• The U.S. sees more specialist visits than in other countries, which are two-to-three times more expensive than general physician visits.
• Specialists often order more diagnostic tests and medical procedures that rack up the total costs. In comparison, other industrialized countries offer considerably fewer MRI scans, C-sections, and other procedures that could be avoided and are not always medically necessary.
• Duplicate testing is another issue that plagues American health care. As physicians and specialists make money from procedures, they often order duplicate testing. For example, dermatologists can order  biopsies from several affected skin areas, even if only one such procedure is required  for diagnosis.
• American hospitals also contribute toward the country’s expensive mix of services. They admit fewer people and, therefore, charge higher prices for hospitalization. They treat elderly people in the intensive care units (ICUs), while other countries subscribe to more specialized, palliative care, which is less costly.

Administrative Costs

There are thousands of health insurance plans available in the market, leading to variations in coverage, deductibles, co-pays, premiums, and other features. Not only is this system confusing, but such a system increases administrative costs as all doctor’s offices, laboratories, and hospitals have to bill insurance companies and patients for each rendered procedure and each doctor’s visit. As insurance plans vary greatly, medical facilities and patients have to constantly phone insurance companies to clarify details of premiums to find out what procedures are covered by the insurance company. Such a system creates unnecessary administrative hassles and drives up overall costs. It’s estimated that the United States “wastes” half of the $361 billion spent on administrative costs by spending it on expenses that could be avoided and are not necessary.

Pharmaceutical Spending 

Medical facilities and insurance companies are not the only players in the healthcare market. Drug manufacturing companies charge higher prices in the U.S. than in other industrialized countries. For example, branded prescription drugs are twice as expensive in the U.S. than in the rest of the developed world. In 2011, the United States paid $985 per capita for prescription drugs and other medications. That’s almost double what most other high-income countries spent on pharmaceuticals. This difference is due to the fact that other industrialized countries are often able to negotiate lower prices as they purchase pharmaceuticals in large quantities to provide medications for the whole population.

Interestingly, innovations and new medical technologies also drive up the cost of health care. The United States has more high-tech medical equipment than other industrialized countries. On top of it, it also has more stand-by equipment than other countries. The need to pay for the maintenance of these state-of-the-art technologies results in higher prices for tests, scans, and analysis for patients.

More Chronic Diseases 

People in the United States are less healthy than in the majority of developed countries. Obesity and other chronic diseases are more common in the U.S. than in its peer countries. That means that insurance companies and the government will spend a lot of money on managing chronic conditions that often require constant treatment, high-tech tests, and frequent hospitalizations.

Will the American healthcare system change?

If the United States ranks so poorly in health care, why doesn’t it do something to fix the problems? The answer to that question lies in the intersection between money and politics.

Interest-Group Lobbying

Many profit from the current healthcare system, including drug manufacturers, medical equipment providers, specialist physicians, insurance companies, and others who have considerable influence on public policy. The interests of those who make a profit from the current healthcare system are well represented through lobbying. In 2009, around 4,525 healthcare lobbyists were hired by more than 1,750 companies, including 207 hospitals, 105 insurance companies, and 85 manufacturing companies. For example, Big Pharma spent $22 million on healthcare lobbying in 2011; Blue Cross Blue Shield and biotech companyAmgen spent $21 million each on healthcare lobbyingthat year. None of the players involved in the healthcare business wants to lose profits, so lobbyists are trying to block any efforts that can damage their clients, even if those efforts could bring better health care to millions of Americans.

What are the possible solutions?

Even after the implementation of the Patient Protection and Affordable Care Act in January 2013, roughly 10 percent of Americans are still uninsured. In order to fix that problem, the United States could work toward implementing another system of health care, but that’s unlikely to gain much ground.

There have also been alternative solutions offered, such as the so-called “managed competition” model proposed by Stanford University Business School professor Alain Enthoven more than two decades ago. According to this model, insurance companies, physicians, hospitals, drug manufacturers, and other actors in the healthcare industry could come together to form an entity that has the responsibility to provide care for specific municipalities based on an annual allowance. This strategy could produce higher quality and lower costs simultaneously.

Another proposed solution is based on the implementation of a universal tax credit, similar to the child tax credit, that provides a $1,000 reduction in income tax to families that have a child. Money for this tax credit could be obtained from existing health insurance subsidies, like Medicaid and Medicare.

Conclusion

The United States’ healthcare system has not served its people well, especially when looked at in comparison to its peer nations. There are many faults to the current system, including high costs, inefficient practices, and an unwillingness by many to change. In order to effectively provide health care to as many people as possible, more changes need to be made. While the Affordable Care Act was a step in the right direction, the United States is still at the bottom of the list when it comes to effective health care.

 Resources

Commonwealth Fund: How the U.S. Healthcare System Compares Internationally

CNN Money: Healthcare Lobbying Boom Continues

Department for Professional Employees, AFL-CIO: The U.S. Healthcare System: An International Perspective

Forbes: U.S. Health Care Ranked Dead Last Compared to 10 Other Countries

Forbes: Universal Coverage is Not “Single Payer” Healthcare

Forbes: Why We Should Replace Obamacare With a Universal Health Tax Credit

HealthPAC: How Other Countries Do it

Global Post: Eight Places That Do Health Care Better Than the US

Global Post: Special Report: Health Care in Taiwan

Atlantic: Why Do Other Rich Nations Spend So Much Less on Health Care?

Center for Public Integrity: Lobbyists Swarm Capitol to Influence Health Reform

Law Dictionary: How Many Americans Really Do Not Have Health Insurance?

U.S. News & World Report: Obamacare Enrollees, by the Numbers

Valeriya Metla

Valeriya Metla is a young professional, passionate about international relations, immigration issues, and social and criminal justice. She holds two Bachelor Degrees in regional studies and international criminal justice. Contact Valeriya at staff@LawStreetMedia.com.

The post American Health Care: Last Place Among Peer Nations in Latest Study appeared first on Law Street.

Law Street’s top three stories of the week ranged from the truly outrageous, to the infuriating, to the utterly baffling. Anneliese Mahoney  brought us the number one most read article of the week about a Canadian couple who dotted all their insurance i’s and crossed all their doctor’s permission t’s and still were hit with a million-dollar hospital bill when they unexpectedly had their baby while on vacation in the U.S.; Mahoney also wrote about the startling  sexual assault allegations surrounding Bill Cosby and the rape culture in which we’re immersed; and writer Ashley Shaw told the tale of the very worst neighbor you can imagine–one whose dogs dogs killed the neighbor’s beagle so she decided to sue them. I told you it was utterly baffling. ICYMI, here is the best of the week from Law Street.

#1 Meet the World’s Most Expensive Baby

A Canadian couple decided to go on a nice, warm visit to Hawaii. Jennifer Huculak and her husband Darren Kimmel were three months away from the birth of their daughter when they came to the U.S. on vacation. Unfortunately, a few days after their arrival, Huculak went into labor and gave birth to a baby girl. Because their daughter was born premature, they racked up some expensive hospital bills. Well, actually, expensive is kind of an understatement. To be more precise, they are being charged $950,000 for the medical care they received. Read full article here.

#2 Bill Cosby Allegations: A Striking Example of Rape Culture

Bill Cosby has, to many, gained the sort of “elder statesman” distinction in the acting world. For all intents and purposes, things were going well for him this year. He signed up to do a new show on NBC and announced a Netflix standup special. Then a comedian named Hannibal Buress did a bit in which he accused Cosby of being a rapist. Read full article here.

#3 Woman Sues Neighbors After Her Own Pit Bulls Kill Their Beagle

I have a quiz for you (don’t worry, it’s only one question, it isn’t math, and it’s multiple choice): If your four pit bulls break through a fence and enter the neighbor’s yard, then kill Bailey the ten-year-old beagle that resides there, what do you do? a. Apologize. b. Offer to buy the neighbors a new dog. c. Both a and b. d. Sue the neighbors for $1 million. Read full article here.

Chelsey D. Goff

Chelsey D. Goff was formerly Chief People Officer at Law Street. She is a Granite State Native who holds a Master of Public Policy in Urban Policy from the George Washington University. She’s passionate about social justice issues, politics — especially those in First in the Nation New Hampshire — and all things Bravo. Contact Chelsey at staff@LawStreetMedia.com.

The post ICYMI: Best of the Week appeared first on Law Street.

A Canadian couple decided to go on a nice, warm visit to Hawaii. Jennifer Huculak and her husband Darren Kimmel were three months away from the birth of their daughter when they came to the U.S. on vacation. Unfortunately, a few days after their arrival, Huculak went into labor and gave birth to a baby girl. Because their daughter was born premature, they racked up some expensive hospital bills. Well, actually, expensive is kind of an understatement. To be more precise, they are being charged $950,000 for the medical care they received.

Now, despite being our friendly neighbors to the North, there are many differences between the U.S. and Canada. They have poutine, their milk sometimes comes in bags, and they have free health insurance. As a result of the extreme differences in healthcare provisions, Canadian tourists are required to buy health insurance for their travels here.

That’s exactly what Huculak and Kimmel did. Before going on the trip they not only got permission from her doctor to travel, but also purchased insurance through Blue Cross.

Unfortunately, just a few days into the trip her labor was induced by a bladder infection, which was not only unforeseeable, but even her doctor in Hawaii explained that this kind of thing “just happens.” Huculak’s daughter, Reece, is now healthy, but had a lot of complications due to her premature birth. She spent two months in an intensive care unit, and Huculak spent time in the hospital as well.

Blue Cross is flat out refusing to pay the $950,000 bill, arguing that Huculak had a “pre-existing condition,” which their policy does not cover. She did not have a pre-existing condition or a high-risk pregnancy, both of which her doctor has confirmed and tried to convey to Blue Cross. Kimmel and Huculak even claim that they specifically talked to a Blue Cross Representative who told them that they were covered. Of course, Blue Cross’ response to the media has been pretty unhelpful; a representative said in response to CTV News:

We review each claim carefully and are confident that our decision to decline this claim was done in a considered manner based on the contract terms, the situation which resulted in this emergency medical claim, and a review of recent medical history.

It seems like Kimmel and Huculak are now seriously considering bankruptcy, because they really have no other choice. They simply can’t pay the $950,000 medical bill. Their other option is to continue fighting Blue Cross, but that also is tough given that they’ve been on that path for what would seem to be about a year now and clearly not much progress has been made.

A case like this comes down to the fact that insurance is a fundamentally difficult process to negotiate, particularly health insurance. Even when you think you take all the necessary steps–purchase what you’re supposed to, speak to a representative, and travel after getting advice from a doctor–it’s still possible to basically get screwed by the insurance company. Kimmel and Huculak learned that lesson a very, very hard way.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post Meet the World’s Most Expensive Baby appeared first on Law Street.

I’m going to take a break from feminist issues today and discuss something that is, literally, life or death: America’s horrible healthcare costs.

Recently, just as I had my first run-in with military dress codes, I also got to experience a military doctor’s office. I went in for a physical exam, waited maybe ten minutes all around, and ended up leaving without having to pay a cent for the appointment or prescriptions. The only thought on my mind was: why can’t everyone’s health care be this great?

Outside of the United States, healthcare is that great in several countries. Just last summer while studying abroad in London, my friend rushed herself to the hospital thinking her appendix was bursting. Turned out to be just a pulled muscle, but an ER visit didn’t cost her a pence — and she wasn’t even a citizen!

So what’s wrong with American health care? For a country whose citizens claim it to be number one, we are way behind on things that really matter. According to the World Health Organization, America ranks thirty-fifth in life expectancy and thirty-seventh in healthcare systems.

Yikes.

Why are we so low in the rankings? The answer is not simple.

American healthcare costs are alarmingly higher than in other developed countries. An MRI in the U.S. averages $1,121, while in the Netherlands it’s only $319. Need an angiogram? That’ll be $914, but you could have gotten it for $35 in Canada! Are you on the drug Lipitor? Then you know it’s around $124 a month — it costs $6 a month in New Zealand. Some may argue that we are wealthier than these countries, so it makes sense that we would spend a bit more. Sure, but the amount the United States spends on health care is way above what it should be.

Then there is the argument that countries with free health care pay more in taxes. False. The average U.S. citizen pays more in taxes toward public health care than the United Kingdom, Canada, and a whole list of other countries with free health care.

Some blame insurance. American citizens not having health insurance was a factor in rising healthcare costs, yes. Those who didn’t have it still needed care, then went bankrupt from trying to pay for it, so our tax money ended up paying for it. The Affordable Care Act has alleviated some of the problem, but it is still being fought over in congress.

Still others point to over-utilization and malpractice spending, saying that Americans simply go to the doctor more and therefore spend more, but there is no data to support that either. Plus, who would want to go to the doctor more than they need to, especially when a doctor’s visit will soon cost more than a car?

None of these issues is the one thing that has skyrocketed our health care spending. In fact, all of them are to blame. Therefore, there will be no simple solution. Reaching a fix is made harder by the fact that the topic of health care is gridlocked in our government. Republicans block Democrats because they’re not Republican, and vice versa.

A lot of people like to gripe about Obamacare.

Half of Congress even decided to throw a hissy fit over not getting their way on the subject, and shut down the government. Sure, the Affordable Care Act might not be perfect, but at least it’s something. Those people most vehemently opposing it aren’t offering up any better solutions. Until both parties can get over their pride, sit down and say “what is going to be best, and cost less, for the American people?” healthcare costs will continue to be higher than they need to be.

My opinion? Healthcare should be free and easily accessible for everyone. Period.

Data and statistics for this post came from the WHO website and this article from The New York Times.

Morgan McMurray

Morgan McMurray is an editor and gender equality blogger based in Seattle, Washington. A 2013 graduate of Iowa State University, she has a Bachelor of Arts in English, Journalism, and International Studies. She spends her free time writing, reading, teaching dance classes, and binge-watching Netflix. Contact Morgan at staff@LawStreetMedia.com.

The post Debunking Common Myths About American Healthcare Costs appeared first on Law Street.

On October 22, 2013, the New York Times ran an article describing the various problems that have accompanied the roll out of a central tenet of the Affordable Care Act (Obamacare), www.HealthCare.gov.   The gist of the article focuses on the technical issues that the public has encountered when trying to shop the online marketplace for health insurance.  Essentially, the volume of interested potential buyers has diminished the ease with which the site was to be navigated.

Because of the apparently gargantuan inconvenience of a website loading slowly, there is a large demand for apologies from all levels of the government, starting with President Obama and trickling down to Department of Health and Human Services Secretary Kathleen Sebelius.

Indeed, after our government’s united front in reopening the government (after a shutdown that was their fault) and subsequent dangerous proximity to reaching the debt ceiling, it was shocking that Speaker of the House John Boehner called for the Obama Administration to answer questions related to the flaws in the website’s launch.

That was sarcasm, friends.

Because a glitch in a website visited by thousands of people a day is totally a reason to delay or repeal the availability of health insurance.  That’s also sarcasm.

These problems are called growing pains! Are they annoying? Absolutely.  But they happen- there is no need to make a mountain out of a molehill.  Especially when you consider what Americans stand to gain from the Affordable Care Act.  With health insurance, more people can visit their primary care physicians for routine physicals and for small aches and pains.  It’s often small aches that turn into large medical problems.  Large medical problems lead to large medical bills.  Similarly, there are catastrophic events.  Nobody plans to get hit by a bus on their way to work.  Nobody plans to be in a car accident.  These catastrophes happen, and health insurance provides a buffer of security the necessity of which is not always readily apparent.  When you’re in the thick of medical debt, though, you wind up kicking yourself for not taking advantage of small monthly insurance payments.  The utility of medical insurance, and the costs of that insurance, can be exponentially less than the cost of catastrophic care.  Emergency room visits by the uninsured, for example, have frequently been cited as one of the primary reasons for high costs of healthcare.

This all seems unnecessary considering the fact that we’re in the world’s super power, and that there are concrete examples of how a government-mandated expansion of healthcare can thrive (take France or Sweden, for example).

Do you guys know what this is called?  It’s called a stall tactic.  It’s also called a diversion.  This “controversial” roll out of the website is meant to distract you from what’s really going on.

“Well, what’s really going on?”

Oh nothing, just thousands of people being presented with an opportunity to have a primary care physician for the first time.

Just decisions about your health being ripped from the sole decision of a private insurance company that is more concerned with their bottom line than a rash on your arm.

At the end of the day, the website problems are frustrating, but they are not insurmountable.  The failure of a website to run as efficiently as we would prefer is certainly not a reason to engage in protracted political debates, especially after being so closely linked to a sixteen day protracted political debate that left hundreds of thousands of people out of work.  Health care, for now is debatable (it shouldn’t be, but it is).  Two things that are not debatable are the necessity for protections against the unpredictable occurrences in life and the inconvenience of a website that will eventually help thousands of people.

[New York Times]

—

Featured image courtesy of [Daniel Borman via Flickr]

Peter Davidson II

Peter Davidson is a recent law school graduate who rants about news & politics and raves over the ups & downs of FUNemployment in the current legal economy. Contact Peter at staff@LawStreetMedia.com.

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