As we approach the election this fall, it seems like the news media report on little else. Unfortunately, too little news coverage addresses health care reform. This is ill-advised because there is still much to be done to improve the cost, quality, and access for patients within the US health care system. In this post, I will attempt to cover most of the major issues related to health care coverage that US consumers face.
The Cost of Health Insurance, Especially in the Exchanges
In recent years, we seem to have heard fewer complaints about health care spending in general. This is partially because health care spending has grown more slowly than anticipated, especially within Medicare. But premium costs have been increasing more rapidly this year, especially in the Affordable Care Act (ACA) insurance exchanges.
In 2017, most economists expect that increases in the premiums in the exchanges will go up more than they have in the past few years. This is partly because the cost of medical care has gone up. But some of these likely increases are the result of the law’s provisions, baked into the cake of the ACA. Some of the programs that protect insurers from the consequences of underestimating expenses are ending this year.
Congress could act to increase subsidies so that monthly premiums hit fewer US consumers hard. But this merely shifts the expense onto taxpayers as a whole. They could also work to bring healthier individuals into the exchange pool, which would lower premiums overall. This might be accomplished by strengthening the individual mandate. Such changes would be extremely unpopular, however.
Additionally, more competition in the exchanges could theoretically result in lower premiums, but that brings us to the next problem.
Fewer Choices in the Insurance Exchanges
The last year has brought news of a number of large insurers leaving the exchanges in many states. This has significantly reduced the number of choices available to those who purchase insurance there. It’s estimated that 17% of people who might shop on the exchanges may have only 1 available option next year—no choice. Currently, Alaska, Alabama, North Carolina, Oklahoma, and Wyoming only have 1 insurance plan signed up to sell in the entire state.
There are a variety of reasons insurers are exiting the marketplace, but they all coalesce around a general cause: they’re having difficulty making money there. This is partially because they have found that patients require more and costlier care than predicted. It’s also because saving money often involves negotiating deals with physicians and hospitals at a local level. This is more difficult for national companies than it is for local ones.
The lack of competition in many areas has led to renewed calls for “the public option.” Before the ACA’s passage, public option proposals called for each exchange to set up a government-run nonprofit insurance program that could compete with private plans. By eliminating certain administrative costs, such a plan might be cheaper than private plans, which could help drive down the cost of premiums. It would also increase choice.
However, it’s important to remember that 1 of the major ways that insurance companies reduce spending is by setting up networks. This might be hard for public insurance plans to do. Additionally, creating the public option would be politically difficult and would require a major push by the president and Congress.
Fewer Choices in Types of Coverage
Many of the national companies, which tend to offer broader coverage, are the ones exiting the exchanges. The companies that are left are those that tend to offer narrower networks, which constrain who beneficiaries can use for care.
From 2014 to 2016, the share of competitively priced silver plans that were preferred provider organizations (PPOs, which typically offer some coverage for out-of-network providers) decreased from 50% to 27%. The percent that were health maintenance organizations (HMOs, which typically offer no coverage for out-of-network providers) increased from 35% to 51%. With respect to national companies, the percent of silver plans offered that were PPOs dropped from 58% to 7%, with HMOs increasing from 12% to 50%.
In 2016, in 7 states, no PPOs were offered at all in the exchanges.
Lack of Access to Affordable Insurance for Many
The biggest gap in coverage remains in states that have refused to participate in the Medicaid expansion. Because the ACA did not provide subsidies to families earning less than the federal poverty line, people in states that did not expand Medicaid have few options available to purchase insurance.
Recent observational studies have shown that in participating states, the expansion is associated with better and increased coverage, as well as improved quality of health. It’s even associated with lower insurance costs for those who buy private insurance.
The quickest way to fix this issue would be to expand Medicaid in states. Barring that, Congress acting to grant subsidies to poor individuals in such states so they can shop for insurance on the exchanges would be more expensive but would also reduce the uninsurance rate.
Grasping the Concept of Tradeoffs
In a previous piece I wrote for the JAMA Forum, just before the last presidential election, I discussed how health care reform is all about tradeoffs. For example, one way to make an insurance plans cheaper is to offer narrow networks (reducing access to high-cost services or allowing access only to physicians who agree to accept lower payments in return for the promise of higher volume). That’s a tradeoff. Community ratings and government regulation lead to improved access for some but fewer options for carriers (worse access). Weak mandates allow for more freedom in deciding whether to purchase insurance but lead to increased rates for others and fewer carriers participating.
We should not lose sight of what has improved. An additional 20 million US residents who lacked health coverage are now insured. Spending has slowed to below what was predicted. But there is still much work to do. Calling for blanket repeal of the ACA and a return to the status quo is not an improvement. But failing to recognize shortcomings in reform and working to ameliorate them would be a failure as well.
About the author: Aaron E. Carroll, MD, MS, is a health services researcher and the Vice Chair for Health Policy and Outcomes Research in the Department of Pediatrics at Indiana University School of Medicine. He blogs about health policy at The Incidental Economist and tweets at @aaronecarroll.
About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.