Only thing worse than Obamacare is … what?

DC

David Crisp

The most important issue before Montana legislators this session isn’t really even on the agenda. And it’s not their fault.

The fate of health insurance for millions of Americans, and for tens of thousands of Montanans, rests in the hands of a Congress dominated by Republicans, who have vowed to repeal the Affordable Care Act, or Obamacare, as one of their first items of business when Donald Trump takes over as president.

The GOP also has vowed to replace Obamacare, but that could take years. In the meantime, uncertainty could damage or even destroy insurance companies, and millions of people could lose insurance.

This has left Montana lawmakers in a quandary. Gov. Steve Bullock wrote a letter to U.S. House Republican leadership warning that repeal would throw the entire healthcare system into chaos. Montana Senate President Scott Sales, R-Bozeman, doesn’t disagree.

“It would add chaos to chaos,” he told the Flathead Beacon. Even House Speaker Austin Knudsen, R-Culbertson, although eager for repeal, told the Beacon, “They’re not going to pull the plug on this thing tomorrow.”

When Obamacare passed, Montana refused to set up its own insurance exchange, and it even put off expanding Medicaid coverage until 2015. But the law has many impacts on the state, some of them subtle.

For example, Obamacare cut the cost of Medicare and prescription drugs for senior citizens, and its provisions extended how long Medicare can last without major reforms. The ACA made free contraceptives, mammograms, colonoscopies and cholesterol tests available, and it provides funding for community health centers.

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Also, some projected nationwide disasters have not occurred. Employer-provided health insurance has remained relatively stable. The job market has remained solid, if not spectacular. States that set up their own healthcare exchanges, as the act envisioned, are generally doing better than states that didn’t. People can no longer lose their insurance just because they need it. Insurance companies, although they say they are losing money on the healthcare exchanges, remain quite profitable.

Total healthcare costs have increased under Obamacare because so many more people have access to care. But costs per person have declined, and could decline further as cost-saving provisions in the law take hold.

In Montana, the percentage of nonelderly citizens without medical insurance fell from 20 percent in 2013 to 14 percent in 2015, a 30 percent drop. The number of adults who went without medical care because of costs in the last year fell more than 20 percent. The percentage of adults without a routine doctor or dental visit in the past year also fell slightly.

That’s good news, and presumably it will have long-term benefits if Obamacare survives. When sick people can go to the doctor when they need to, instead of just when they can afford to, they are likely to live longer, healthier lives and reduce medical costs in the long term.

But because Montana has many people with multiple jobs or who run tiny businesses, the state also has a high percentage of people who can’t get insurance through employers. Consequently, a lot of Montanans are stuck in the individual healthcare marketplace, where costs have risen dramatically in the last two years. Only Arkansas had a greater percentage of citizens under age 65 who had high out-of-pocket medical expenses in 2014-15.

I heard from some of those people last week when I put up a blog post reporting that U.S. Sen. Jon Tester was soliciting comments from Montanans in hopes of beating back repeal of Obamacare.

One reader wrote that, in spite of qualifying for a subsidy, “This is our third year and our rates have gone up over 50 percent each year. Not only have the rates gone up but so have the deductibles and out of pocket expenses. It has also reduced our care options.”

Those who complained didn’t provide enough details to carefully examine the validity of their claims. But too many people are telling similar stories to doubt that it’s a problem.

I get that. I don’t mind shelling out a few extra bucks every month to help poor sick kids get the medical care they need to survive. But my attitude changes fast if paying for them means I can no longer afford care for myself.

Still, there is evidence that big premium increases in the last two years were an anomaly, and that costs may moderate. Premium increases were abnormally low in the first years of Obamacare—just 1.6 percent in Montana in 2015—as insurers grasped for a share of the market. In 2016, the 83 percent of Montanans in the insurance exchanges who get subsidies actually saw their average rate drop slightly, despite average rate increases of up to 34 percent.

The rate shock for others the last two years may generate enough revenue to stabilize the markets. And increased penalties for those who fail to buy insurance could push more healthy young customers into the exchanges.

None of that will matter if Republicans repeal Obamacare without a substantive replacement. Unfortunately, despite dozens of votes in Congress to repeal ACA, the ideas most popular among Republicans are unlikely to help much.

Healthcare savings accounts don’t mean much to people who are scraping by from paycheck to paycheck. Modest tax credits don’t help families with incomes so low they aren’t paying federal taxes. Even the American Enterprise Institute, a conservative think tank, acknowledges that allowing the sale of insurance across state lines is unlikely to make much of a dent in healthcare costs.

Nor is tort reform likely to make much difference. Doctors don’t order all of those expensive tests just because they are afraid of being sued. They order the tests because they don’t want a doctor’s bad diagnosis to kill a patient.

Calling for a return to the old system of medical insurance would just make things worse. We would still have the most expensive medical care in the world, with millions more uninsured and mediocre health results.

That helps explain why Republicans haven’t had much luck coming up with a replacement plan. Healthcare just doesn’t respond well to ordinary market forces. McDonald’s will sell you a Big Mac whether you need it or not, but insurance companies don’t like selling insurance to sick people, and sick people are in no position to be picky consumers.

Also, certain provisions of the law depend on other provisions. Take, for example, a part of the law that almost everybody likes: the provision that says everybody can buy insurance, even those with pre-existing conditions. But with that provision, nobody needs to buy insurance until they are diagnosed with a serious illness.

So you have to have some way to make even people who aren’t sick buy insurance, which leads to a mandate. And if you have a mandate, you have to set minimum insurance standards so people can’t just skate around the law. If you set minimum standards, it makes sense to set up exchanges so people can compare prices. Pretty soon, you end up with Obamacare.

That’s the trap Republicans are trying to avoid. If they get it wrong, they will hurt a lot of people.