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August 14, 2017
August 2017 | Sara Rosenbaum | Online Exclusive
The spectacular failure of the “repeal and replace” Obamacare saga that collapsed in July offers an opportunity to reflect. A political and policy debacle of epic proportions, the entire experience represents the GOP’s breathtaking failure to grasp how deeply health reform has permeated the US social fabric and the extent to which the public has come to expect that government will assure them access to affordable health insurance. To paraphrase Chief Justice John Roberts in King v Burwell,1 people want government to improve coverage, not destroy it.2
Another lesson of the summer is the folly of ignoring facts. Advocates of repeal and replace deluded themselves into believing that they could simply trash-talk out of existence the Congressional Budget Office (CBO) estimates—presented through nonpartisan analysis accompanied by dense tables—documenting the harm that the House and Senate proposals would cause millions of people,3,4 especially older low- and moderate-income Americans who make up a crucial part of Republicans’ own political base. In its typical low-key but thorough fashion, CBO made it clear that the legislative strategy for bringing down the cost of coverage meant cutting off access to affordable insurance among the people most in need of health care while degrading the value of private insurance for the rest of the population.
For those who have not followed US health policy over decades, the size and strength of the outcry over Medicaid may have come as a shock. Anyone who paid close attention to House Speaker Paul Ryan’s writings, speeches, and public statements over the years knew that, in his view, unraveling Medicaid was the centerpiece of the repeal and replace effort. This meant more than eliminating the health reform’s Medicaid expansion for poor adults, now in place in 32 states. In order to generate the necessary savings to give tax breaks to wealthy individuals and corporations while also breaking the back of the nation’s largest means-tested legal entitlement, the proposals would have undone the underlying Medicaid program itself, destroying the federal funding base on which the program has rested for over half a century. According to CBO, by 2036, federal Medicaid spending would have declined by one third.
The battle over Medicaid’s future revealed the extent of GOP policy ignorance regarding Medicaid’s reach in the health care system. Along with its smaller companion Children’s Health Insurance Program (whose future funding will become a front-burner issue when Congress reconvenes in September), Medicaid today reaches nearly 75 million people.5 But beneficiary numbers alone don’t convey Medicaid’s importance.6 Its reach reflects a national policy response to many social, economic, and public health factors: child and family poverty; an aging society coupled with the absence of a long-term care policy; public health threats, both naturally occurring and man-made; and a rise in the number of people living with major disabilities and chronic illnesses. Medicaid pays for nearly 1 in 2 US births, 2 in 5 children, half of all nursing home care, and the lion’s share of home and community-based services and supports. Particularly in medically underserved communities, Medicaid keeps clinics and pharmacies open. Medicaid is the principal source of funding for the neonatal intensive care units, children’s hospitals, and visiting nurse programs on which we all depend.
Another lesson found in the collapse of repeal and replace is just how much direct government involvement actually is necessary to make private health insurance markets work. Medicaid is a hardy perennial; as a legal entitlement to coverage, Medicaid acts like insurance, but it relies on broad public health principles. Resting on general funding, Medicaid is built to embrace risk rather than avoid it. Its beneficiaries are the poorest and sickest among us; the services it covers are the highest cost. Medicaid is what we turn to when hurricane survivors need access to care, when an opioid crisis consumes communities across the nation, when a deadly pandemic strikes low-income communities whose living conditions place them at heightened risk for the rapid spread of infection.
By contrast, private insurance, especially the individual insurance market, is more akin to a hothouse flower. In order to survive, this market needs a great deal of government gardening. As a nation, we have decided—as reflected in the Affordable Care Act—that we want individuals to have access to private health insurance when their employers don’t offer workplace health benefits, when workplace health benefits are unaffordable to workers or their families, when people lose their jobs because of underlying economic shifts or for health reasons, or when a life change such as a divorce creates a sudden need for an individual coverage policy.
To accomplish this goal, conditions need to be exactly right. A predominantly young and healthy pool of people must support the market’s backbone. This group needs to be economically incentivized to buy coverage and keep themselves continually covered. Premiums need to be affordable. Policies must provide good coverage and enough of the cost of covered services to keep care affordable and make people feel that buying the policy was worth it to begin with. Insurers need to be backstopped against unanticipated cost surges arising from a less healthy risk pool or a higher-than-expected rate of high-cost illnesses and disabilities among policyholders and their families. Insurers must have sufficient flexibility over benefit, network, and cost-sharing design to avoid cost risks, especially those posed by long-term health problems.
Assuring these conditions demands nuanced and close attention and a more considered, bipartisan approach toward creating the circumstances that will allow the market to stabilize: creating enrollment incentives; providing income-based premium assistance; active outreach to get people to enroll; subsidies that keep health care affordable; and backstopping insurers against unanticipated costs. And as the insurance industry itself would be the first to say, preserving the individual insurance market also means preserving Medicaid to do all of the heavy lifting that we simply cannot expect a form of coverage as delicate as the individual insurance market to do. Private insurance may be able to substitute for Medicaid to a very modest degree; we may see states increasingly interested in testing the use of Medicaid to buy private insurance policies—but only for their very healthiest enrollees.
But if we want the hothouse flower to flourish, we need the hardiest of perennials to remain strong.
Sara Rosenbaum is the Harold and Jane Hirsh Professor of Health Law and Policy and founding chair of the Department of Health Policy at the George Washington University School of Public Health and Health Services. She also holds professorships in the Schools of Law and Medicine and Health Sciences. A graduate of Wesleyan University and Boston University Law School, Rosenbaum has devoted her career to issues of health justice for populations who are medically underserved as a result of race, poverty, disability, or cultural exclusion. Between 1993 and 1994, Rosenbaum worked for President Clinton, where she directed the drafting of the Health Security Act and designed the Vaccines for Children program, which today provides near-universal immunization coverage to low-income and medically underserved children. Rosenbaum is the leading author of Law and the American Health Care System (Foundation Press, 2012) and has received many national awards for her work in public health policy. She is past chair of AcademyHealth and a member of the Institute of Medicine. Rosenbaum also has served on the CDC Director’s Advisory Committee and as a Commissioner on the Congressional Medicaid and CHIP Payment and Access Commission (MACPAC), which she chaired from January 2016 through the expiration of her term in April, 2017.
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