WHY WE HAVE GOVERNMENT HEALTHCARE (OBAMACARE, MEDICARE, MEDICAID, CHIPS, VETERANS)

What difference does it make what kind of health care we have?

It makes a huge difference and is one of the most important decisions we need to make as a country. None of us know what will happen to us personally in terms of need for healthcare. But we do know that it is a matter of life and death for many, a matter of financial ruin for many and can change lives dramatically. How do we want to be treated if we need healthcare?

The US, like all industrialized countries, has a goal of providing healthcare to its citizens. For comparison, most other countries pay half as much as the US and achieve better health outcomes for its citizens. By most estimates, the United States spends between $3 and $4 trillion on health care annually, a sizeable 17% of our GDP. The U.S. is the most expensive country for medical care. Yet when a recent report ranked 55 developed nations in terms of health care efficiency — based on life expectancy, healthcare costs per capita and costs as a percentage of GDP — the U.S. fell near the bottom, consistently ranking behind other industrialized countries. As an example, Americans’ average life expectancy (78.8 years) is lower than that of Australia, Canada, Denmark, France, Germany, Japan, the UK, and several others. And when it comes to infant mortality, the World Health Organization reports America’s rate of birth-to-five mortality is notably higher than most other OECD countries The key difference for the high cost is easy to determine. The US has a hybrid system – both private and government healthcare insurance – so the overall cost to administer, to pay for drug prices, pay for labor, to ensure profit make US costs much higher. The answer to why we have worse health outcomes is more complex and it is challenging to summarize such a complex subject.

WHAT POPULATION DOES EACH GOVERNMENT PROGRAM SERVE? (MEDICARE, MEDICAID, CHIPS, VETERANS, CHAMPUS,”OBAMACARE”)

The private, or employer-provided healthcare, insurance covers approximately 50% of the population. The public, or government provided healthcare, cover approximately 40 % of the population, including the newly insured through Obamacare. Each program is targeted at a specific population. Medicare is for people over 65, CHIPS is for low income children, Medicaid is for low income adults and families, Veterans Administration is for veterans, CHAMPUS is for the military and their families, and finally Obamacare is for individuals and small businesses, often previously uninsured. It is confusing to understand because each government program is administered differently and has different rules. That said, all have the same goal – to deliver healthcare to Americans.

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THE FACTS

Healthcare is a topic that has been rigorously studied over time so we have excellent data on costs and service. Without question, the reason that US healthcare costs so much is because of higher administrative costs, higher labor costs, higher drug costs, practice of defensive medicine and huge price variations that are not known to the consumer. There is considerable waste so that directly addressing the overall cost issues could lead to huge cost savings for both private and government programs. Many point to wasteful practices as a major part of the problem.  It is estimated that health care waste, which includes unnecessary treatments, overpriced drugs and procedures and the under-use of preventive care that can fend off more serious illness, makes up a whopping 34% of the U.S.’s total health care spending. Obamacare, launched in 2012, is a term for a comprehensive approach to government health care and it touches both the public and private sectors, not just the 20M uninsured, as often described. It affects almost all of us, including the private, employer-provided programs. Obamacare is working as expected as many more people are covered and much more.   In fact, it is “bending the curve” toward lower overall costs so we know we are on a successful track. Our one US program, Medicare, that is the closet to the single payer system used in most industrialized countries is a proven path to effective cost control and administration of healthcare.  Medicare rates increases are modest, auditing has resulted in an excellent record of fraud detection and the program has integrated well with private insurance offerings for seniors over 65.

Obamacare paid for healthcare using an integrated approach that included all who had a stake — individuals, businesses, insurance companies, healthcare providers, hospitals, local, state and Federal government. One unpopular feature is the individual mandate that requires everyone to be insured. This is the key feature that makes insurance work. To quote “If you have a house, insure it. If you have a car, insure it. If you have a body, insure it”

Employer paid health insurance plays a part in Obamacare because employers may deduct the cost of employer paid health insurance benefits AND employees do not have to pay income tax on those benefits — advantageous for both employers and employees. Republicans are considering changing those tax benefits as part of their “replace” discussions.

Congressional Republicans have vowed to “repeal and replace” Obamacare, a healthcare approach modeled after a Republican-designed program in Massachusetts. Republicans offered legislation to repeal Obamacare but could not get sufficient Republican votes to pass it. Block grants were proposed as a way to let states decide but it was clear that block grants were a strategy to transfer the problem of providing healthcare to the states.

THE THREAT

Republicans are committed to repealing Obamacare based on the fact that some premiums are higher and some insurers are leaving the field. They represent that the insurance is unaffordable, in spite of the subsidies, has created new tax burdens and is an overall failure. They have been trying to repeal Obamacare since 2012 but have not offered a replacement or better approach. Even now they do not have a plan. Essentially repealing would bring the US back to where it was before Obamacare. Most experts, even the conservative American Enterprise Institute is advising against repeal without replacement because of the chaos that is expected to arise. Proposed changes are listed below.

  1. No penalty or requirement to buy healthcare insurance
  2.  No requirement for large companies, over 50 employees, to provide insurance
  3. 20-30M uninsured small business and individuals because no more health exchange
  4.  Small business, under 50 employees, get no subsidy so have go back to paying high rates because their pool of participants is small and must be “experienced “ rated
  5.  Millions would become ineligible for Medicaid, many of them single adults with out children
  6.  Higher personal costs – premium, deductible, co-pay, drugs for Medicare enrollees
  7.  People with pre-existing conditions can again be denied coverage or only offered at exorbitant rates
  8.  Insurance companies could once again discriminate, charging women more than men
  9.  Routine, preventive care not exempted from standard deductible and co-pay requirements
  10. Roll back all improvements from Obamacare.
  11.  Remove tax provisions that were designed to pay for Obamacare. See list of tax provisions.
  12.  Rely on the idea of competition to yield lower costs instead of addressing the specific causes such as high administration costs, high drug costs, practice of defensive medicine, mix of high cost treatments and lack of consistent, transparent pricing.

THE WAY FORWARD

  • Obamacare is not perfect and should be updated. Both Republicans and Democrats have proposed a number of improvements that should be made.
  • We should send this topic back to Congress, where laws are made by our elected Representatives and Senators, and let the issues be resolved in the normal bi-partisan way.
  • We should not go through the back door, balloon the deficit, or do anything as irresponsible as “repeal and delay” that would be so devastating to so many Americans.

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Common Ground
We don’t need to search any further for common ground in our country. We have it.
We all want the same things – a safe, prosperous, free, democratic nation with opportunity for all. At the same time, we will all be harmed if our democracy, our free press, our Constitution and our core American values are threatened. We will all certainly be harmed if reckless behavior triggers any number of potential armed conflicts.

None of us know how this will all play out so let's make a deal. Let’s get up to speed on the issues, establish some facts, take action and watch what happens together . . .