(Bloomberg View) — The U.S. health care system has been squeezing the country’s middle class for years. The passage of the Patient Protection and Affordable Care Act (PPACA) has relieved some of the pressure, but there’s much more to do.
With or without Obamacare, the issues are the same: access and cost. If losing your job also means losing your health insurance, you face a whole new kind of economic insecurity. And even if you have good insurance through your employer and aren’t afraid of losing it, the ever-rising cost of health care is steadily eating away at your wages. The assurance of adequate coverage and better cost control would make a real difference to Americans of ordinary means.
Far more than its critics acknowledge, Obamacare has helped a lot. To widen access, it pays for states to expand Medicaid; ensures private insurers accept all customers and cover a range of care; and provides subsidized insurance for those who earn up to four times the official poverty level. The reform has cut the share of American adults without insurance to 12 percent from 17 percent since the end of 2013. That’s a notable achievement.
Even so, about 30 million adults remain uninsured. Three-quarters of them lack access to coverage that meets the government’s definition of affordable. An estimated 10.5 million people whose incomes are low enough to qualify for subsidies are deemed ineligible because they decline their employer’s coverage — in many cases, presumably, because it’s too expensive. Many older Americans are in a similar fix: They make too much to qualify for subsidies but can’t find insurance they can afford.
Turning to cost, the average premium for job-based insurance last year was $16,834 per family, 69 percent higher than a decade earlier. That’s money that can’t go toward wages, pensions or other benefits. Granted, premiums have grown more slowly since the law was passed, but it isn’t yet clear how much of that slowdown is due to greater efficiency as opposed to the recession and its aftermath.
Also, slower growth in premiums needs to be weighed alongside changes that hit consumers in other ways. For instance, employers and insurers are requiring bigger out-of-pocket payments. Obamacare capped these but at a high level. A family of moderate means can still face payments amounting to more than a fifth of its income each year. And the caps don’t apply to out-of-network providers, a pitfall that may come as a very expensive surprise to many patients.
In short, the system needs further reform. Safeguards against unforeseen out-of-network expenses, similar to a law that just went into effect in New York state, would be a good place to start. Limits on out-of-pocket payments should be tightened.
But any serious fix must also address the underlying issue of cost. In avoiding duplication and needless procedures, better coordination of the care that different doctors provide would go a long way. The health care law started pilot programs to explore the possibilities — admittedly, with mixed results so far. That doesn’t mean giving up on the effort. On the contrary, it calls for more ideas and more experiments.
Reducing the quantity of care delivered to patients by eliminating waste is necessary, but it won’t be enough. The per-unit price of care has to be forced down, too. That means freeing the Medicare agency to negotiate drug prices; measuring the cost-effectiveness of individual treatments and acting on the results; and maybe setting global budgets for hospitals. The case for outright regulation of prices is strong. Medicare, after all, already does that.
Nobody said the politics would be easy. Nonetheless, Obamacare was just a beginning. Without further reform, the U.S. health care system will continue to hobble America’s middle class.