The Economy and the 2016 Election Health Insurance & The Affordable Care Act. Michael Potepan Department of Economics, SF State

Transcription

1 The Economy and the 2016 Election Health Insurance & The Affordable Care Act Michael Potepan Department of Economics, SF State

2 Introduction Three central issues with health care in the US: 1. Excessive cost 2. Lack of coverage (the problem of the uninsured) 3. Fiscal strain on government health insurance

3 Introduction 1. Excessive Cost the US spends 19% of GDP on health, more than any other country as % of GDP Australia 8.5% Canada 10.9% Germany 11.3% United Kingdom 9.3% Japan 8.3% yet our health outcomes are worse than any other high-income country

4 Introduction

5 Introduction 2. Lack of coverage (the problem of the uninsured) most Americans get health insurance through their jobs. Others get it from the government (Medicare, Medicaid) but until the Affordable Care Act (ACA) was passed in 2010, about 49 million remained uninsured today this is about 33 million the uninsured still receive care, but later than they should, and the costs are shifted over to others

6 Introduction

7 Introduction 3. Fiscal strain on government health insurance Medicare and Medicaid spending has been growing at unsustainable pace Spending has increased for several reasons aging of the population higher demand for services by aged health care inflation

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9 Introduction

10 The overall health insurance market Most Americans receive private sector health insurance through employment based group insurance Others purchase it directly on their own Employment-based group insurance can be offered at a lower price than similar insurance purchased individually Employees receive this group insurance as an untaxed employment benefit

11 The overall health insurance market

12 Problems with individual (non-group) health insurance The main problem of the uninsured can be traced to problems with individual (non-group), directly purchased insurance The uninsured have lower incomes on average Many work in low paid jobs where employers do not provide group health insurance The price of insurance is a relatively large portion of these consumer s relatively lower incomes

13 Problems with individual (non-group) health insurance

14 Problems with individual (non-group) health insurance Many young, healthy persons chose not to purchase insurance because they don t think they ll need it Because the price of individual insurance is higher than similar group insurance, the young and healthy often decided insurance wasn t worth the expense This puts relatively more older and sicker people into the insurance pool, making it even costlier

15 Approaches to health care reform Single Payer favored by Bernie Sanders and others on the left fundamental reform completely replaces the existing insurance system government becomes the sole provider of health insurance Medicare is an example of single payer. The government acts as the insurance company

16 Approaches to health care reform Obamacare the Affordable Care Act (ACA) favored by Hilary Clinton and more centrist Democrats incremental reform retains the key features of existing system of private insurance providers new rules for how insurers do business provides mandates and incentives to increase coverage for the uninsured

17 Approaches to health care reform Repeal & Replace Obamacare favored by Paul Ryan and establishment Republicans Donald Trump s replacement proposals are unclear also incremental in that it relies primarily on existing system extend Health Savings Accounts: tax breaks for individuals to purchase insurance on their own allow insurers to extend the difference between rates charged to older vs. younger people from 3 : 1 to 5 : 1 allow insurers to sell identical insurance across state lines funnel the costliest uninsured persons into subsidized highrisk insurance pools

18 Single Payer health insurance reform Government insures all citizens by placing everyone in a government run insurance system Government taxes are used in lieu of premiums Costs are contained through an explicit health care budget using a prospective payment structure Doctors, hospitals, other providers still operate as private providers who bill the government insurance plan (the single payer) for their services Insurance companies would be put out of the health insurance business

19 Single Payer health insurance reform: Pros Solves the problem of the uninsured and underinsured directly by covering everyone in one system Reduces administrative costs significantly Controls costs comprehensively Reduces inefficiencies like job lock, uncompensated care, etc.

20 Single Payer health insurance reform: Cons Spending that now goes through the private sector would be incorporated into the public sector significantly increases Government as spending as a portion of GDP what were once premiums now become taxes Politically entrenched economic interests resistant to losing their economic advantages under the existing system Administered health budgeting may choke off innovative technological research & application

21 Affordable Care Act Accepts basic structure of employer-based private insurance & tries to build on it Expands both private & public insurance to cover the uninsured (Marketplaces & Medicaid)

22 Affordable Care Act Three legged stool of the ACA: 1. individual mandate: all consumers must purchase or pay a tax penalty 2. standard package for all: no denial of coverage 3. subsidies to increase affordability: no one pays more than 9.6% of their income for coverage

23 Affordable Care Act Pros: less disruptive: most people who already have employer-based insurance are not directly affected less political resistance: private insurers & health care providers benefit from selling to new customers Cons cost containment dealt with less directly than Single Payer higher administrative costs than Single Payer

24 Affordable Care Act Individual mandates everyone required to purchase insurance $2,085 penalty by 2016 (scaled by income) Employer elements large employer (50+) play-or-pay small employer (25-) tax credits

25 Affordable Care Act Insurance rules no lifetime caps on spending no screening for pre-existing conditions children remain on parent s insurance until age 26 Standard essential benefits package Insurers must offer a standardized package of coverage to every consumer

26 Affordable Care Act State-based health insurance exchanges function as marketplaces to buy & sell individual insurance Subsidized premiums for low to moderate income families Medicaid expansion to cover low income families Prevention programs & cost containment experiment pilots

27 Affordable Care Act Subsidy structure for family of four income levels under $32,319 (133% of poverty) eligible for Medicaid Income levels between $32,319 - $97,200 (133% - 400% of poverty) are eligible for subsidies median household income is $53,6574 for family of four (2014) National average for family of four, heads 40 years old: $10,739 estimated annual premium

28 Affordable Care Act: Subsidy example for silver plan in San Francisco, 2016

29 Affordable Care Act: Accomplishments 20 million more Americans are now insured (13 million through exchanges, 7 million through Medicaid) most are satisfied with their plans health outcomes have increased, though doctor visits have decreased improvements in prevention, hospital infection, & hospital readmission suggest medical care is better, safer end of insurance practices such as bans on pre-existing conditions & lifetime caps modest improvements on cost containment

30 Affordable Care Act: Accomplishments

31 Affordable Care Act: Accomplishments

32 Affordable Care Act: Accomplishments

33 Affordable Care Act: Problems Premium increases higher than expected. An average increase of 26% for 2017 Consumers are paying higher deductibles Some insurers have lost a lot of money Younger, healthy consumers have not signed up enough to keep overall costs lower Insurers are exiting a number of state marketplaces, leaving consumers with fewer choices, higher costs Aetna, United Health, Humana all have exited state marketplaces

34 Affordable Care Act: Problems

35 Affordable Care Act: Problems

36 Affordable Care Act: Problems

37 Affordable Care Act: Problems

38 Affordable Care Act: Reforming Health Reform Enhance subsidies to buttress affordability & compensate insurers for higher than expected costs Fix the family glitch Improve subsidies to reduce the cost-sharing burden (high deductibles) Improve marketplace experience for consumers Raise tax penalty for not purchasing insurance On Medicaid, give states an offer they can t refuse Offer Medicare to those 60 to 65