On March 9th, Paul Ryan proposed the long-promised health care bill to replace Obamacare. Bates Democrats, Bates Republicans, Bates Health Initiative and Crystal Williams, the Associative Vice-President at Bates College organized a talk to educate students about the Affordable Care Act, and what it would mean to replace it.
The talk featured a panel of experts across the political spectrum. The first speaker was Dr. Dervilla McCann ‘77, a cardiologist and executive in the Accountable Care Organization at Central Maine Healthcare. “Before 1965 about half of all elderly patients in the United States had no health insurance,” began Dr. McCann, “But today, after the passage of Medicare and Medicaid about one in every three Americans are covered by one of those two health insurance systems.” Medicare is federally funded by taxpayers and was originally designed by President Lyndon B. Johnson for older adults. It is responsible today for 50 million patients and pays for hospitalizations, vaccines, drugs, and office visits. On the other hand, Medicaid was a program designed for children and low-income adults. It is dually funded by the state and the federal government. Medicaid gives states a burden of cost, and what Paul Ryan’s plan proposes to do is to provide fixed block grants to states to cover the burden of Medicaid. However, what happens when the block grants are insufficient? Medicaid currently insures 70 million patients. LBJ intended for Medicare and Medicaid to insure the most vulnerable citizens. The rest of society used competition between insurance companies to keep the cost of premiums down.
“Poor President Johnson’s fatal mistake when he wrote into law Medicare and Medicaid was to trust health systems and physicians to self-govern. The result of this naiveté was runaway health costs. By receiving government insurance, patients were insensitive to the actual cost of their care—they never paid their bill, somebody else paid it for them…Hospitals and doctors saw the government as de-pocketed and generous patrons, so the cost of American health care skyrocketed, but the increased price did not come with increased quality,” said Dr. McCann.
Since 1965, the government has scrambled to find ways to expand insurance while keeping costs low. According to Dr. McCann, Richard Nixon had the most comprehensive, universal health care systems. However, he was unseated before it was written into law. Obama’s Affordable Care Act bill (ACA), otherwise known as Obamacare, was passed in order to better the health care system that left many Americans in need of affordable health care. Dr McCann explains, “Two key decision points happened with the implementation of the ACA. One was the creation of state run exchanges. An area where inexpensive insurance could be paid for by the individual. The second, key element was the expansion of the Medicaid program a cost that was shared by the federal government and the state.” Even though the states were given the burden of cost to insure more people through Medicaid, the federal government was going to underwrite a lot of it.
Before The Affordable Care Act, Insurance companies could deny people with pre-existing conditions. The Affordable Care Act made it illegal to deny people insurance based on pre-existing medical conditions. It also made preventative screenings free for everyone and created marketplaces where people could shop for insurance with potential subsidies. Under Obamacare, more than 20 million people, some of whom had never been insured, gained health insurance. But where does the government get sufficient funds to cover this? “Taxes were placed on the wealthiest Americans, there were payroll taxes, Medicare was changed a little bit, and taxes were newly imposed on medical devices. There were also fines imposed on individuals who refused to buy insurance, all of this is what funded the ACA,” explained Dr. McCann. What she is referring to is the Individual Mandate—a wildly unpopular proponent of the ACA.
“Part of the genius of Obamacare is instead of expanding Medicare which is federal, he expanded Medicaid which is state. So he played into the Republican desire for States’ rights. And state rights are critical, I mean, what’s right for people in Mississippi is not necessarily right for the people in Maine” said Dr. McCann.
Obamacare is not perfect by any means. As Dr. McCann put it, “From the perspective of a hospital administrator and a public health physician. Despite being in effect since 2012, 30 million people in America still don’t have health insurance. Those who have coverage are experiencing sharp strikes in health insurance cost. In Maine insurance premiums increased by about 22% last year.” As some may recall, Healthcare.gov broke the first day it was released. Some plans have deductibles so high that they cannot be used. People are frustrated that the act does not guarantee keeping the same physician and health insurance— as Obama promised.
Professor Nathan Tefft, an associate professor of economics at Bates, spoke next about the economics involved in the ACA. Essentially, the system stands on what economists call “the three-legged stool.” The first leg is restriction on health insurance companies, which is called community rating. This is the idea where, “you need to charge premiums within a narrow band across the risk pool…. And Guaranteed Issue which is the other restriction is that you are going to give somebody health insurance regardless of pre-existing conditions.” Subsidies are the second leg that supports the ACA. Because low income households who are not eligible for Medicaid cannot afford health insurance, the government must provide tax cuts or subsidies to provide incentive of buying health care. However, there is a sliding scale in regards to subsidies which introduces high marginal taxes that dissuade people from working as much as they would like. Ryan proposes to fix the sliding scale through a flat tax credit system based on age. It increases the age rating band from 3:1 to 5:1, meaning that the oldest in the population will be exposed to five times the premiums as opposed to the younger population. Now younger people who make minimum wage get significantly less coverage as rich older folks. The last leg is the individual mandate that charges people for not purchasing health insurance, “Without the individual mandate we’d have the issue of adverse selection, what adverse selection is if you don’t require healthy people who otherwise don’t need health care to pay premiums regularly in case they get sick eventually, then the premiums for the sick pool is going to need health insurance no matter what is going to be higher and unaffordable.” The ACA works because of this three-legged stool, and what the American Health Care Act— if written into law— proposes is removing or altering one of the legs.
The last speaker was Shannon Banks ‘85, president of the board of Oasis Free Clinics and an advocate for universal health care. Her clinics provide free primary care and mental care to low income residents of the mid-coast maine area. This short term she will teach a practicum course on health care administration. Oasis free clinics provide, “Primary care, dental care, mental care to the poor and the uninsured,” these typically are part of the the 30 million Americans who are uninsured. A huge problem with Medicaid is that it does not cover the working poor, who work long hours and multiple jobs but cannot afford private health insurance. She reflected, “We’ve had patients come into our clinic who haven’t had dental care in decades, have multiple abscess teeth, get their teeth pulled and go back to bagging groceries that afternoon. Theses are folks who are working hard and who have been left out of the system we currently have in the United States.”
Even if most people believe the American Health Care Act was dead upon arrival, there is reason for concern that it may be a precursor to permanent health care changes. Republicans are passing the health care act as a budget bill to avoid filibuster, and thus cannot have anything in the bill that is not related to a budget policy— which leaves out a lot of what Trump promised with his healthcare bill. As Kevin Lewis said, “It does save a trillion dollars, two thirds of which go to tax cuts for the one tenth of one percent” Kevin Lewis. Indeed according to the Tax Policy Center Analysis the top one tenth percent would receive $197,000 in tax cuts.” Although Trump promised to cover everyone with this plan during his campaign, it only increases the deficit of uninsured Americans who face a growing need of health care.
“With healthcare is a bellwether issue,” said Dr. McCann, ” how we manage this phase our extraordinary challenge with health care will impact me and certainly all of you as you leave this place and go on to marry, have children, and possibly face illness or injury.”