There has been a huge change in American thinking in the last five years. Americans now believe that health care is a human right. Conservative politicians may not have caught up with it, but their constituents are enjoying health care – often for the first time.

A mere 17-percent of the country supported the Republican heath care bill (AHCA) last week because it would take health insurance away from 24,000,000 people.  People who were not directly affected care deeply about what would happen to those twenty-four million.

Trump voters believed him when he said “We’re going to have insurance for everybody.”

There is a national mandate for health insurance for all.

On Friday, Congressman Paul Ryan withdrew his American Health Care Act when he realized he would not have enough votes to pass it. Conservative Republicans hated it because it perpetuated government involvement in providing health care; moderate Republicans and Democrats hated it because it would cause at least 24,000,000 Americans to lose health insurance, and thousands of directly-related deaths.

After the announcement, the president blamed the Democrats, and suggested that he and his party would do everything they could to make the 2010 Affordable Care Act fail. They can do this in several ways – first by not enforcing the individual mandate (a requirement that everyone have health insurance), and second by not advertising or supporting, the website where many Americans sign up for insurance.

A more frightening possibility suggested in today’s Wall Street Journal is that the president will simply order the cost sharing subsidies to stop, which will result in millions people being unable to use their insurance because they can’t pay the higher deductibles. At that point, a large percentage of healthy people will stop paying premiums and drop out of the insurance market, especially if they expect their penalties for going without insurance will be ignored.

(Note – the White House has directed the IRS to ignore the penalties, but as it stand now, that merely means that the rest of the tax form will not be held up; taxpayers will still owe the penalty for being uninsured, but they will not also owe penalties on the rest of their taxes, nor will refunds be delayed. This has been widely misreported.)

Quick Background Overview

What is Cost Sharing?

Last year, 12.7 million people had insurance through the market place, and 10.5 million received income-based subsidies for the monthly insurance premiums. Of those, six million people received additional support through cost-sharing, which reduced their deductibles and co-pays.

What is Medicaid Expansion?

The ACA was based on the idea that states would expand Medicaid to all Americans and legal residents earning less than 138% of the Federal Poverty Line, but many (all Republican) states decided not to do so.  Medicaid is a joint federal/state program, administered by the individual states, for the lowest-income Americans. Prior to expansion, one needed to be “poor and …” (disabled, a child, etc.) in order to qualify. After expansion, states were expected to base qualification requirements solely on annual income, without additional qualifiers or asset tests.

The states that didn’t expand Medicaid left people in the Medicaid “coverage gap” — too poor to qualify for subsidized insurance on, but too rich for Medicaid. Later, that was fixed for some people, and they were able to buy insurance on the Federal Marketplace, but it was expensive, and many people did not bother to try after being rejected the first year.  About 2.5 million people were left out entirely in the “coverage gap.” It left many people uninsured and bitter — and all of them were from Republican States. They blamed “Obamacare” for their woes, but in fact, it was their state legislature’s choice to reject expansion that left them uninsured.

What are Risk Corridor Payments?

The second Republican stumbling block came when Senator Marco Rubio led a movement to defund the “risk corridor” payments to insurance companies during the first years of the Affordable Care Act.

Everyone knew that when insurance companies were forbidden to decline people for pre-existing conditions, subsidies were handed out, and insurance companies had to cover the ten essential benefits, that the costs would go up. People with long- term health problems would access insurance for the first time, and use it immediately.

The ACA handled that by a promise to subsidize the insurance companies to cover their losses, so that they didn’t have to increase rates.  This was known as “risk corridor” payments. Rubio called it an insurance company bail out, and managed to lead Congress to renege on the promise.

This led to the initial rate increases in many markets.  In Alaska, the rates were increasing 40% a year when the state stepped in to pay the costs of the sickest 500 people in the pool. This stabilized the market for the moment; in essence, the Alaska legislature took over the ACA risk corridor.

Why isn’t Insurance Sold Across State Lines?

It’s worth noting that US insurance was previously regulated through the individual state legislatures. The laws were wildly different – some states offered consumer protections, some offered almost none. Because of this, insurers tailored their products to the individual states. When the ACA came into law, it standardized insurance requirements across the country, but the insurers kept selling insurance within state pools. Small-population states, especially those with high costs of care and a history of relatively-unregulated insurance, saw their rates increase dramatically.  Like the decision to Expand Medicaid, the states that previously hadn’t legislated consumer protections were also all Republican states, so once again, the populations hit hardest by the rate increases after the ACA were also Republican.

How Americans Access Health Care Now

2010 2013 2015
Employer 51%* 50% 49%
Medicaid 7% 18% 20%
Medicare 13% 14%
Other Public 2% 2%
Individual 4-5% 4% 7%
Uninsured 19% 13% 9%

Source: Kaiser Family Foundation. (See my blog Talking Points on Heathcare for more information.)

By far the biggest shift in insurance happened in Medicaid Expansion – Medicaid went from covering seven percent of the population to twenty percent. The Individual Market nudged up and the Employer Sponsored Insurance dropped by about the same amount. Many of these people were probably the same individuals — the ACA let many people escape “job lock” and start their own businesses after years of staying with an employer because it was the only way they could be covered for pre-existing conditions.

Much of the Medicaid Expansion population were those who had not previously had health insurance. Those in the Coverage Gap make up another 2.5 million or roughly another 1% of the population.

health insurance pie - Copy
2015 Health Insurance

If you add the uninsured into the Public slice of pie, you have almost a 50/50 divide. The Individual slice would not be as large as it is without subsidies.

A Compromise Solution

Politicians such as Bernie Sanders are advocating Medicare for All, which sends shivers down the spine of those with excellent Employer Sponsored options.

I propose that instead of “Medicare for All,” Congress should offer Medicare Expansion. This  would provide the public access for those who needed it, but allow those who enjoy good Employer Sponsored insurance to retain their policies. In the future, should they decide to escape job lock, lost their jobs, or had a disabling illness, Medicare would be there for them. By leaving the Employer-Sponsored insurance alone, costs would be significantly less than Medicare for All.

The expansion would have to come in Medicare, not Medicaid, because Medicare is already federally administered.

Medicare is insurance for senior citizens, who were uninsurable in the general market on the basis of age-related risk. Most people qualify for it by paying into the fund during their working years, but there is already a provision for buying in if one hasn’t worked enough years to qualify. There is also a precedent for qualifying if you have certain terminal diseases and have not yet reached retirement age or have not paid in during your working years.

A sliding-scale premium, based on percentage of income would decrease costs further. Premiums could be readjusted on federal taxes, so that if someone had a windfall year they might pay more; if they earned less than expected, they might receive a refund.

People in this income band often work multiple jobs, or depend on seasonal employment, and their incomes often fluctuate year-to-year in unpredictable ways.

Most insurance companies would be delighted to rid themselves of their individual markets, and they’d still have their corporate customers.

Democrats and Moderate Republicans should be working on this together. If the president decides to destroy cost-sharing subsidies, the individual market will be on its way to collapse – lawmakers need to have a bill in place ready to go. As Peggy Noonan writes in the Wall Street Journal, both citizens and insurors are terrified by the uncertainty.

This isn’t abstract: people are worried about dying while Washington waffles.

Thirty-three moderate Republicans said they were going to vote “no” on the AHCA. A further nine moderates had concerns or “leaned no,” according to the New York Times. If the Democrats could craft a Medicare sliding scale buy-in option that brought some of those forty-two Republicans across the aisle, there would be enough votes to pass legislation in the House.

The Senate would need 60 votes in order to override a filibuster.  There are twenty Republican senators from states who pursued Medicaid Expansion. If the some of those joined with the 46 Democrats and two Independents in the Senate, they would have a filibuster-proof caucus.

We haven’t had that many members of Congress cross the aisle in years, so it may be wishful thinking, but we won’t know unless we try. The Quinnipiac poll that condemned the AHCA last week showed that people care about health care, they care about others, and they worry about their lack of safety nets.  Now is the time to fight for a sliding-scale Medicare Expansion.

[Image Wil C Fry]