ObamaCare's Inelegant Design
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By Peter J. Pitts
UnitedHealth Group, the nation's largest health insurance company, announced it will likely stop selling insurance plans in the Affordable Care Act's exchanges after 2016 due to a lack of profitability. Other big insurers are reporting huge losses as well.
With ObamaCare facing headwinds due to insurer defections, regulators need to boost enrollment numbers by improving the quality of exchange plans. Failure to do so will only embolden those who wish to see it replaced with a single payer healthcare system.
Under current ACA regulations, there's a stark difference between "having insurance" and "having access to health care."
To get around caps on how much they can charge in premiums, insurers have imposed higher out-of-pocket costs for many specialty drugs. The absurdly high co-pays mean that many patients can't afford their medicines.
Just look at silver plans (the most popular category). In five of 20 drug classes for conditions from cancer to HIV, at least 20 percent of plans require patients to pay 30 percent or more of the medicine's cost. Over half of Silver plans place all multiple sclerosis medicines in the "specialty tier" with the highest level of cost-sharing.
In short, patients with such plans lack a single affordable treatment option. That has serious negative consequences for patients, the healthcare system in general, and Obamacare in particular.
High costs cause moderate to low-income patients to skip prescriptions. Non-adherence increases hospitalization rates and overall health spending, thus burdening all taxpayers and healthcare consumers. ObamaCare itself won't have much of a future if healthy people (particularly healthy young people) continue to avoid exchange plans -- and the skimpy coverage they offer -- like the plague.
If regulators limited cost sharing, people would find exchange plans more attractive, since the plans would provide real rather than illusory coverage. Higher quality plans would bring more healthy people into the exchanges. And more healthy people would make the plans more affordable.
Unfortunately, rather than upgrade the quality of exchange plans to make them more attractive, ACA backers have turned on a much easier target -- the pharmaceutical industry. Their narrative goes like this: co-pays are high because of steep increases in drug prices.
The facts tell a different story.
After taking manufacturer rebates into account, brand name drug prices increased 5.5 percent last year -- the slowest pace in 5 years, according to pharmaceutical industry research.
But facts haven't deterred the true ideologues, many of whom would be delighted to throw in the towel on ObamaCare and instead impose single payer health care on Americans.
Activists in several states, including California, Colorado, and Ohio, have advanced ballot initiatives that would impose outright single payer systems or de facto ones.
Despite the repeated failures of single payer programs, they believe that more government control is the solution to America's healthcare woes.
Again, the facts tell a different story.
Consider the problems besetting the Veterans Affairs system, which fixes prices for all medicines. Because the government refuses to cover certain newer medications, veterans can't access about 1 in 5 of the most common medicines. Or consider the United Kingdom, where the single payer National Health Service explicitly rations treatment.
Until exchange plans are made legitimately attractive, healthy people will continue to avoid them, and insurers will follow UnitedHealth's lead and stop offering plans that only lose them money. But rather than face the music, ACA supporters are playing the blame game -- while those who support a more complete government take-over of health care are waiting in the wings.
Peter J. Pitts, a former FDA Associate Commissioner, is President of the Center for Medicine in the Public Interest.