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The 7 biggest problems with our healthcare system that Obamacare didn’t fix (and ideas for how it still might)

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On Obamacare’s fifth anniversary a few months ago, we noted that so far it’s doing exactly what supporters claimed: between 16 and 17 million more Americans now have coverage, spending on healthcare has slowed dramatically, and the quality of care we get seems to be improving.

That said, the Affordable Care Act was never going to solve every problem with our healthcare system. Now that we know the law is here to stay (thanks Supreme Court), it’s past time we look at some of the biggest gaps in our health system post-Obamacare, and how we might fix them.  

1. We still don’t have universal coverage

How the ACA helped: Thanks to the ACA, around 17 million people who would have been uninsured now have coverage– some through private plans purchased both on and off the exchanges, some through the Medicaid expansion, and some by staying on their parents’ coverage. That number should continue to increase as the individual mandate penalty is phased in; by 2020 around 25 million people will have gained coverage, cutting the number of uninsured in half.

But… That will still leave around 27 million people without coverage.

How to fix it: About 3 million of the remaining uninsured should be covered by Medicaid, but they live in states who choose not to expand the program under the new law. Convincing those states to expand would help. Another 8 million or so are undocumented immigrants. Covering them would mean either changing their legal status through immigration reform, or changing our policy toward the undocumented.

Everyone else is in a weird grey area: they could get affordable coverage if they wanted it, but they’re choosing not to. As long as getting coverage is optional, some people will remain uninsured, leaving them screwed if they get sick, and the rest of us on the hook for their emergency medical bills. To avoid that, and achieve truly universal coverage under the ACA, we could tweak it so that anyone who’s uninsured and doesn’t choose a plan during open enrollment is automatically enrolled in a plan. The individual mandate penalty would also need to be set higher– at least the cost of the cheapest plan, so that it would cover the cost for those who don’t pay their premiums.

2. Unaffordable out-of-pocket costs

How the ACA helped: Before the ACA, there was no limit to your potential out-of-pocket costs. Many plans had lifetime or annual limits, meaning any care beyond that a certain dollar amount was your responsibility. If you couldn’t get a plan because of pre-existing conditions or because you couldn’t afford it, then everything was out-of-pocket. Obamacare eliminated pre-existing conditions and capped out-of-pocket costs at the same limit as employer-based high deductible plans. If you purchase an silver-level Obamacare plan and your income is below 250% of the poverty line, your out-of-pocket maximum is even less; and if you qualify for Medicaid, your only out-of-pocket costs are small copays, if that.

But… These out-of-pocket limits, while better than before, are still a problem for many families. According to an analysis by the Kaiser Family Foundation, less than half of all households above the poverty level have enough assets to cover an out-of-pocket maximum of $3,000 to $6,000, which is much less than the ACA’s max of $6,600 for an individual, and $13,200 for a family plan. Also, it’s not just a problem on the exchanges– even before the ACA, employer-based policies were shifting more and more of their costs onto their workers.

How to fix it: Higher deductibles and out-of-pocket costs are meant to give patients some “skin in the game”– the idea is that they’ll shop around for better deals, and think twice before demanding expensive, but likely unnecessary tests and procedures. The problems with that thinking are two-fold: (1) it’s almost impossible to get accurate price information from any provider, so shopping around doesn’t work; and (2) the out-of-pocket costs are so high that many families are forced to skip care that they really do need.

We could lower maximum out-of-pocket costs, or even better, put them on a sliding scale for everyone, not just those making less than 250% of the poverty line who buy ACA policies. A family making $200,000 a year can probably handle $13,000 in total out-of-pocket costs if there’s an emergency– a family making $40,000 will struggle.

Another interesting idea would be to require insurers to personalize policies through something called “value-based insurance design.” Under this sort of scheme, if you had a chronic condition like diabetes, the deductible wouldn’t apply to the care needed to manage your disease and prevent a big, expensive crisis, but it would apply to care that you should probably think twice about (like arthroscopic knee surgery).

3. Buying health insurance is incredibly confusing

How the ACA helped: When you bought coverage on the individual market under the old system, insurers would ask for a lengthy medical history. You had to remember every time you or someone in your family had seen a doctor, been to the hospital, or gotten medical tests, and what the results were:

But… While you don’t have to provide medical information anymore, you do have to provide your estimated income, which can be difficult if you’re someone whose income jumps around a lot, like if you’re a freelancer or self-employed. You also have to know when to apply. Under the ACA, open enrollment for health plans only lasts a couple months, but you may be eligible for a “special enrollment period” following certain major life events.

Also, under both the old system and the ACA you have to know how deductibles, co-pays, co-insurance, and out-of-pocket maximums work, and– more confusingly– how they interact with each other. When a researcher at Carnegie Mellon gave people with insurance a multiple choice quiz, he found that only 14% of respondents could identify what all four terms meant. If you’ve never had insurance, it’s a steep learning curve. On top of that, the lists of which doctors, hospitals, and drugs are covered by which plans can be hard to find, hard to understand, and are often out of date.

How to fix it: Under the law, there are specially trained navigators to help people get through all this stuff, but there are big discrepancies in how many are available in different states, many people still don’t know they exist. Training more navigators and making them more widely available, especially in high need areas, would be a huge step. We should also make information about provider networks and drug formularies clearer and easier to find on the exchange websites would help too. (For 2016, the Obama administration has already required that insurers post public, up-to-date, and plan specific info on provider networks and drug formularies on their own websites.)

George Lowenstein, the CMU researcher who gave that test on health care terms, also suggests eliminating deductibles, coinsurance, and every other form of cost-sharing except for copays. The co-pays would be higher, but, he says, a least consumers would know what they’re getting.

4. Narrow networks

How the ACA helped: Before Obamacare, millions of uninsured Americans had a network of exactly zero providers.

But… One of the ways insurance companies are holding down premiums is by offering plans with very limited networks– often the bare minimum of what the law will allow. This means that some patients are having trouble finding specialists who will take their plans.

How to fix it: The government could require that insurers offer a wider network of providers, and indeed that’s what new regulations from HHS have said. The larger problem though is that the only leverage insurers have when negotiating rates they pay doctors and hospitals is eliminate those who charge too much. If insurers are forced to include more providers, premiums will go up.

The solution here is one we’ve mentioned before— all payer rate setting, which would eliminae the need for networks altogether. Andrew Sprung, of the healthcare blog Xpostfactoid, commenting on a New York Times piece on narrow networks, puts it succinctly:

“What the story suggests to me is that U.S. healthcare system will always be subpar — more expensive, less efficient and less equitable than that of almost any other wealthy nation — until we find some way of imposing uniform rates, or at least a narrow rate range, on all payers.  Either the government needs to set rates, or it needs to oversee negotiations in which all payers do so, whether on a state or national level.”

5. Price gouging by providers

How the ACA helped: It helps that more Americans now have health insurance, since if you’re in-network, providers won’t charge you their outrageous sticker prices– they’ll charge the much lower rate they’ve negotiated with your insurer, who will then pay anything above your out-of-pocket costs. Also, the ACA says that insurers can’t charge higher copays or co-insurance for out-of-network emergency room services.

But… There are all sorts of shady ways you might find yourself being treated by out-of-network providers. For example, the doctor you see in the ER might not be in-network (and who you might have no choice over), meaning you’d pay whatever they decide to charge. There’s also what’s known as “drive by doctoring”– that’s when you go to a hospital and see a doctor who are in-network, but an out-of-network doctor who also works there is called in to consult, often without your knowledge. There’s also balance billing, which is when your insurer pays what it considers “usual, customary, and reasonable” to out-of-network providers, who then charge you the balance of the full sticker price. All of this is enraging, but in most states also totally legal.

How to fix it: Again, all-payer rate setting– if every payer is paying the same price, which has been negotiated ahead of time, no one gets gouged.

6. Lack of dental coverage

How the ACA helped: For families purchasing coverage on the exchanges, dental coverage for children is considered an essential benefit that plans have to offer… sort of. (In most states, medical plans don’t have to cover dental services for children if there is also a stand-alone dental plan available on the exchange, and families aren’t required to purchase dental coverage for kids). Medicaid now has to cover dental services for kids and in some states adults are covered as well.

But… Everyone else is out of luck. If you’re an adult who doesn’t get dental coverage through an employer, the Obamacare exchanges do sell stand alone dental plans, but they’re not regulated in the same way as medical plans. The website Obamacarefacts.org points out that  “not everything is covered, maximum amounts that will be covered are low, benefits may take up to a year to kick in, and in general most experts we’ve heard from recommend simply paying out-of-pocket.” However, many lower income Americans simply can’t afford to pay for dental care out-of-pocket. For example, when the Washington Post reported on a temporary free health clinic in 2010, it found that most of the 2,300 people in line came for dental care.

How to fix it: Make dental coverage an essential benefit that all plans have to cover. Seriously, it’s bizarre that dental services are considered an optional luxury in this country. (For more info, check out our earlier post on the state of American dental care here.)

7. Insurer drug discrimination

How the ACA helped: Before the ACA, insurers got out of covering expensive conditions by either not selling you a policy at all, or selling policies that left out important, but expensive benefits, like mental health, pregnancy, or prescription drugs. The ACA says that insurers can no longer exclude or charge more to those with pre-existing conditions, and plans have to cover those essential benefits.

But… Insurers really only want to cover healthy people, so while they’re no longer able to exclude certain individuals or services outright, they’re finding more subtle ways to discourage sick people from signing up. One way is by moving drugs for costly and/or chronic conditions like HIV or chemotherapy drugs into their highest price tiers, even if they’re generics. So while the drugs are still technically covered, patients end up paying most of the cost out-of-pocket until they hit the year’s out-of-pocket maximum– usually thousands of dollars.

How to fix it: Basically, insurance regulations  just have to keep up with their shenanigans. For drug discrimination, one possible solution was suggested by Balloon Juice’s Richard Mayhew:

Take a regulation from Medicare Part D, “protected classes” and require all insurers to offer at least all chemical/bio-equivilant compounds for HIV, diabetes etc at a “reasonable” formulary tier. If there is a brand and a generic chemical available, the insurer could offer the generic at the “protected class” rate and the brand at a worse tier. The goal would be to force all insurers to not compete on avoiding the sickest people by forcing them to offer the same formulary at roughly the same rates of attractiveness for identified high cost diseases.

A way to fix all of this at once

One solution to all seven of these problems that we haven’t mentioned would be a move to a single-payer system. Every American would be covered, it would be much easier to navigate, we could set out-of-pocket costs at a reasonable level, and patients wouldn’t have to worry about their doctor being in-network or getting gouged on crucial care.

It also seems unlikely any time in the near future. The single-payer movement has never really figured out a good pathway from our current system. Even Vermont, the most liberal state in the country, had to abandon its single payer push, which is why we wanted to point out that there other, albeit somewhat less efficient, ways to achieve many of the same goals.

{ 2 comments… add one }
  • Bob Hertz August 17, 2015, 12:08 pm

    Thanks for a great post! Sorry it took me some time to get to it.

    I will send some comments shortly!

    bob hertz

  • Bob Hertz August 18, 2015, 5:24 am

    The out of pocket cost problem is very troubling to me also. I have looked at both of the solutions that you proposed, but I think that each of them would raise insurance premiums. If the paitent liability is capped at $3000 due to income and the bill for a hospital stay is $15,000, somebody has to pay the other $12,000. In the case of value based insurance, the patient liability might be zero. If the insurer has to make up the difference, the insurers will have to raise premiums..

    I also agree with you about all payer rate settings. But I see no evidence that any part of American government has the strength to bring this about.

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