Obamacare death spiral? As the bill for misleading rhetoric comes due, it’s time to reset the discussion

About 0.2 percent  (of 4%, so really, 0008%). Or  38 out of 3,143 counties.  Or 24,525 people in a nation of 325 million people.  Might not have access to Obamacare subsidized health insurance next year (though they may very well be able to buy un-subsidized health care plans)

That’s your death spiral right there.

You’ve heard a lot about Obamacare failing.  That’s a generic term which can mean a lot of things, and it might feel accurate for you, if your insurance costs are skyrocketing. But the implied meaning is that around the country, insurers are pulling out of exchanges, leaving consumers with no options to buy insurance. Given the numbers I just cited, that might be the exaggeration of the century.

It’s ok; lots of what people think they know about health insurance is wrong.

As of now, according to the Kaiser Family Foundation, no-option exchanges are predicted in only 38 of more than 3,000 counties across America. And there’s still a possibility that another provider will enter those markets before the end of the year.  And there’s also a simple fix for it (read on for that).

It’s just one of countless “data points” we’ve been fed to scare Americans into one agenda or another.

So much rhetoric is thrown around about U.S. health care that we are all in danger of losing grasp of the basics.  Let’s consider what happened this week as a chance to reset — a time-out on health care reform. Half-time, perhaps.

Now seems a good time to wrap our collective national brains around the topic once again. This is serious business.  Our archaic health care system is a crushing load on entrepreneurship, creativity, American businesses, old people, young people, and of course, the sick.  Once upon a time, Americans got together to take on enemies and grand ambitions alike. Health care is, in some ways, like World War II and the Moon Shot all in one.  So let’s take this moment and appeal to our better angels and help each other get to a better place.

Sadly, as we all now know, health care is really complicated.  So in the heat of the moment, plenty of separate issues have been conflated.  Let’s begin there.

Obamacare,  meaning No. 1

Obamacare tends to mean two things simultaneously, which is part of the problem.  It means health care reform in general, which changed the way health insurance works across America. In short, it meant a lot more people getting coverage, millions of them thanks to government subsidies that meant higher taxes for some Americans.  It also meant guaranteed services, like coverage for individuals with pre-existing conditions — people who were unable to buy insurance on their own before.  Unfortunately, but predictably, not enough healthy people signed up to balance out all the sick people who signed up, so insurance companies have raised premiums on everyone to make up the difference (don’t worry, insurance companies are still making massive profits).

If you are like most Americans, you pay dramatically more for health insurance than you did a decade ago, and you are getting less for it (that is, despite the premiums you pay, you end up paying a lot for services, too, thank to high deductibles and co-payments). For that, you might blame Obamacare. The law required that policies offer new features, like maternity care, so that contributed to higher prices. There’s plenty of dispute about how much of that is to blame on the Affordable Care Act, and how much on health insurance inflation, however.

Obamacare, meaning No. 2

Obamacare also means “the exchanges,” or any other way you care to refer to the way individual middle- and low-income Americans now buy insurance through a website that lets consumers shop for plans and determines the ‘discount’ they get thanks to government help. What’s often missed in this discussion is that while a hearty 13 million Americans get insurance “through Obamacare,” — that is, through the exchanges with a subsidy — it’s only 4% of the total insurance market.  Another 2% buy insurance privately, but without subsidies. That dwarfs the groups of folks who get insurance through their employer (57%) or through Medicare and Medicaid (37%).

So, to review, only 0.2% of U.S. counties face the no-insurance option on the subsidized exchanges, and that imperils only that group of 4% above.  And those folks still might be able to buy individual plans that aren’t subsidized.  And, as Republican Lamar Alexander has proposed, there’s a pretty simple fix: Let them use their government subsidies to buy plans on the private (non-subsidized-exchange) market.

So, no death spiral. But the situation is pretty bad in some places.  

Here’s a fair question: If insurance is offered, but the price goes up 30% or 40% or even 50%, isn’t that almost the same thing as making it unavailable? Sure it is.  And last year, in 8 states, insurers asked to raise premiums on private individuals by 30% or more. Meanwhile, there might be 1,000-plus counties with only one insurer next year, which could make them function like a cable TV monopoly.   We won’t know until the end of the year if competition shows up in any of those places. So yes, that’s bad.  But again, recall we are only talking about the individual market, that 4% of the total health insurance market.

Obamacare could be killed, however 

Why isn’t competition showing up in these under-covered counties?  Well, that’s a billion-dollar question. But certainly, uncertainty is a factor. If you ran an insurance company right now, would you have been prepping to expand your exchange offerings right now?

There’s two levers the current administration has that could really put pressure on the individual exchange market. For one, it has signaled that it might not continue to make promised cost-sharing payments to insurance companies, meant to offset co-pays and lower deductibles for subsidy-eligible consumers.  That’s obviously a huge disincentive for insurance firms to participate.

Even worse, it has suggested that it won’t enforce the requirement that all Americans buy health insurance.  Starting last year, the penalty was $695 or 2.5% of income.  I’ve already mentioned that Obamacare’s larger problem was not enough healthy people paying premiums to cover all the sick people who are newly covered.

Let’s pause for a quick thought about the way insurance works.  Yes, yes, freedom, blah.  Some folks think they should have the right not to buy health insurance.  I don’t get it.

You can’t drive a car without buying insurance. That stinks, because you and I both know we are great drivers, and we have to pay extra for all the bad drivers out there. But that’s how insurance works. It’s pooled risk. The many pay for the few. Why? Because you and I may very well, despite our amazing driving skills, end up accidentally in an accident some day and needing $250,000 we don’t have to pay for the fallout. We grumble, but we do it.

If you are healthy, you are very, very lucky!  But if you want to drive, and if you want to live, You still have to join the pool. So fixing health in America requires that everyone pay in.

Back to killing Obamacare through neglect. If the incentive for healthy people to get insurance (to insurance companies, those are “cheap” customers) goes away, only sick people will get it (“expensive” customers), and sure, you could imagine a death spiral there.  The very concept of insurance is being murdered.

Now what? Bad for individuals, a ? for others

So what happens now?  Well, if the administration wants to, it can really put pressure on that 6% who buy insurance on their own.  It’s easy to imagine rates for those folks skyrocketing as uncertainly reigns. (Full disclosure: I buy individual, un-subsidized insurance, and my provider has asked for 50% increases next year. That’s awful. On the other hand, even though I don’t qualify for a subsidy  — lucky me — Obamacare guarantees I can buy insurance, which is the single biggest reason I took the leap to becoming an independent journalist).

Most people who get insurance through their employer — which is most people — won’t be impacted much.  In truth, while health premiums keep going up way faster than the rate of inflation, the pre-Obamacare and post-Obamacare increases are roughly the same.  It’s pretty hard to disentangle what caused what.

Plenty of intelligent folks will tell you that health care’s biggest problem is the random prices that providers charge, and anyone who’s seen an explanation of benefits recently would be hard pressed to disagree.   As plenty of observers said by way of criticizing Obamacare (fairly) and Trumpcare (fairly) — where is the discussion about cost?  Where is the bully pulpit focus on medical bills? We’ve all seen stories about MRI prices ranging from hundreds to thousands of dollars. Where is the solution for that?

At health care reform half-time, it’s time to redirect the discussion.  “Repealing” Obamacare always had all the feelings of settling a score to me.  The time for that is past.

As a result of all this uncertainty, insurers will tell you, they aren’t even sure what to offer next year. Real people hang in the balance.   The time for poisonous rhetoric is over.  Fix the Affordable Care Act so people can get on with their lives for the next year or two, even if that means more double-digit rate increases. Just tell us the truth about what’s coming so we can plan for it.  Then start over with big ideas that truly lower costs. Block insurance megamergers.  Make health providers publish prices.  Clean up particularly onerous billing practices like  out-of-network anesthesiologists at in-network hospitals (called Surprise balance billing).  Then there’s perhaps the biggest problem of all: Not enough primary care doctors, and their increasing tendency to not take health insurance, leading to the absurd situation of consumers paying high premiums for insurance that can’t really use.

So stop talking about Trumpcare, or Obamacare, or death panels, or death spirals.  We didn’t get to the Moon with campaign slogans and we won’t fix health care that way either.

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