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Global Affairs

The US Government Leaves Health Care Reform to the States

 6 min read / 

A companion piece to The US Health System: Not The Cheapest And Not The Best

In 2010, US President Barack Obama fulfilled a longtime Democratic Party dream of starting the nation on the road to universal health care with the Patient Protection and Affordable Care Act (usually referred to as the ACA or, more familiarly, Obamacare). The current president wants to retrace those steps and go in a different direction: Let the states do it. Some are already trying.

The goal of the ACA was to get more Americans in the health care system, including those who had so-called “pre-existing conditions” for which the law allowed private insurers to either deny coverage or hike up the premiums. Alcoholism, drug addiction, substance abuse and mental illness in general also are considered pre-existing, and coverage was made mandatory along with other essential health benefits under the ACA.

It was a first faltering step, and no one believed it was perfect, but Obama hoped that, once started, any problems or hiccoughs could be fixed with new legislation. Unfortunately for that dream, in the midterm elections later that year, Obama’s Democratic Party lost its majority in the House of Representatives, and the new Republican majority was uninterested in fixing Obamacare, only in “repeal and replace.”

Replacing Obamacare

The Congress actually couldn’t repeal Obamacare, let alone replace it, since the Democratic Party retained its majority in the Senate, and Obama easily won re-election in 2012. Still, in the first four years of their majority, they took largely symbolic votes to repeal, postpone or change Obamacare 45 times.

Now with Republican majorities in both the House and Senate and a Republican in the White House, repeal and replace should be possible. The House, under the leadership of Rep. Paul Ryan, has already passed the American Health Care Act (AHCA) – which almost no one is calling Trumpcare or Ryancare – while the Senate is working on its own plan.

The two plans won’t be identical, and may not even be acceptable to both houses. The Republican majorities in both chambers are small, there are fractious factions in both, and they can expect no support from the Democratic Party, particularly because they have not included them in the planning sessions.

Mixed Signals

While Trump campaigned on replacing the ACA, he offered few specifics. Even those have been contradicted not only by Congress but by Trump’s own cabinet.

Trump promised increased use of anti-addiction drugs. But in a public appearance, Health and Human Services Secretary Tom Price – a medical doctor – said he was more in favour of faith-based rehab programs than medication-assisted treatment (MAT). Faith-based rehab programs rely more heavily on 12 step programs such as Alcoholics Anonymous and Narcotics Anonymous – a support group supplement to rehab – than evidence-based programs. MAT, such as methadone and suboxone used to replace more harmful opioids, are sometimes used in evidence-based programs.

State autonomy is longtime Republican principle, and Trump said he planned to leave cannabis legalisation up to individual states. But to combat the drug epidemic, Attorney General Jeff Sessions wants to be able to prosecute medical marijuana providers, regardless of state laws. Actually, the drug epidemic involves overdoses from prescription pills and stronger opioids, not cannabis. There even is some analysis that the opioid overdose rate is lower in states with legal marijuana. In 2012, Harvard economist Jeffrey Miron estimated that enforcing marijuana laws costs the $7.7bn annually while legalising and taxing it would generate between $2.4bn and $6bn, depending on whether it was taxed like most consumer goods (i.e. alcohol and tobacco).

AHCA doesn’t repeal and/or replace all of ACA’s provisions, but it does change the central goal from providing everybody with health care to reducing costs for health care. Almost everybody may have access to health care, provided they can afford it. The particulars will be determined by the 50 individual state governments, who will get block grants from the federal government.

Transferring Authority to the States

The rationale behind placing authority for health care with the states is that the states will act as incubators, each trying a different approach, tailored to its particular needs. States would be able to opt out of the existing essential benefits, including dropping basic pre-existing conditions coverage in favour of high-risk pools and possibly denying mental health and substance abuse treatment.

States have been such incubators before. The ACA itself was strongly influenced by the health insurance plan signed into law in the state of Massachusetts by Gov. Mitt Romney – Romneycare – the success of which encouraged Romney to run for president in 2012. (In that campaign, he opposed implementation of any similar plan nationwide for reasons he was never able to articulate clearly.)

California – the largest U.S. state in terms of population, the third largest in terms of area, and one of the most innovative – is now contemplating single-payer universal health care insurance. As proposed, “the Healthy California Act” will provide “comprehensive universal single-payer health care coverage and a health care cost control system” within California, including mental health and substance abuse treatment services.

An initial analysis of the cost of the plan by the California Senate Appropriations Committee found that it would double the cost of health care to the state – from $200bn to $400bn – but economist Gerald Friedman says that doesn’t take into account that money currently paid by taxpayers to insurance companies and projected health care cost savings.

Nevada’s Democratic majority state legislature has proposed a “Medicaid for all” bill (similar to former Democratic socialist presidential candidate Sen. Bernie Sanders’ Medicare for all proposal) that would allow all of its citizens to buy into the public health insurance option for the poor and disabled.

Winners and Losers

According to the Congressional Budget Office (CBO) – a non-partisan agency that attempts to honestly and accurately determine the costs/benefits of legislation – while AHCA would result in a $119bn reduction in the federal deficit by 2026, it also would increase the number of people without health insurance (compared with ACA projections) by about 23 million. A later report by the federal Centers for Medicare and Medicaid Services estimated an increase of 13 million Americans without health insurance if AHCA becomes law. About seven million people could lose coverage through their employers because AHCA would repeal the small business tax credit, reducing the businesses’ incentive for providing coverage.

Neither the House or Senate versions of AHCA is likely to contain what Trump plans his Obamacare replacement to cover: health care for everybody, better and cheaper than Obamacare. Maybe that’s why despite his former effusive praise, he reputedly told senators that the House bill was “mean” and they should make it “more generous.”

Don’t forget – the Senate has set a self-imposed deadline for its bill of July 4. The Republicans better have their act together by then.

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