By APRIL KELLY-WOESSNER
As a general rule, government programs are easier to create than to dismantle. Cutting benefits or services is political suicide.
The Affordable Care Act, or “Obamacare,” provided health care coverage for previously uninsured Americans. The Pulitzer Prize-winning fact check organization Politifact estimates that although 20 million people gained coverage, about 14.5 million of them were under Medicaid or the Children’s Health Insurance Program. And between a quarter and half of those who moved onto Medicaid were previously eligible but had not enrolled. Thus, “Obamacare” conservatively provided about 13 million people with insurance coverage.
While passing Obamacare was no easy task, what the Republicans face in trying to repeal, replace or reform the law appears to be insurmountable.
The latest draft of the Senate’s health care bill received a devastating report from the nonpartisan Congressional Budget Office, which estimated that the new law would create 22 million more uninsured Americans by 2026 compared to Obamacare. The news caused several moderate Republicans to withdraw their support for the legislation. Even President Donald Trump, a man known for flinging insults via Twitter, called the legislation “mean.”
In focusing on repealing Obamacare in order to win political points, Republicans are missing a real opportunity to both lower America’s health care costs and market conservative principles to a country that seems to have lost sight of reasoned ideological differences.
Rather than fueling class warfare and debating who deserves coverage and who pays for it, Republicans should focus on reducing costs of services by enhancing free market competition.
The cost of U.S. health care is increasing at a rate greater than the rate of inflation. The Department of Health and Human Services projects that costs will continue to grow at a rate of 5.8 percent every year through 2025.
According to the Kaiser Family Foundation, a nonprofit organization that tracks health care costs, America spends far more on health care than other wealthy industrialized nations, with little added value. For example, last year the U.S. spent $9,237 per person while the United Kingdom spent $3,749 per person. Yet, life expectancy in the U.K. is actually slightly higher than in the U.S. In fact, while the U.S. spends the most of any nation on health care, our life expectancy ranks 12th among developed nations.
There are many reasons why our costs exceed those of other nations. The U.S. does spend more on research and development than other countries, which then benefit from advances paid for by our dollars. But there are also market failures. A study by Zack Cooper, Martin Gaynor and John Van Reenen — economists at Yale, Carnegie Mellon University, and the London School of Economics, respectively — concludes that lack of competition and poor transparency in hospital costs are driving up U.S. health care prices.
According to the authors, prices for hospital services vary greatly in the U.S., with the most expensive health care markets charging many times more than the least expensive markets. For example, the authors found that the most expensive hospitals charged more than 17 times as much for a knee replacement as the least expensive hospitals. The most expensive hospitals are also charging nine times more for MRIs than other hospitals, even though the procedure does not vary among them.
In fact, the authors find little relationship between cost and quality of care and conclude that market share, rather than quality, drives prices. Hospitals in “monopoly markets” are charging considerably more than those in competitive markets. This means that the growing number of hospital mergers may be contributing to price increases, as large hospitals with little competition can set arbitrarily high prices.
Consumers also have little incentive under the current structure to shop around or compare costs from alternative providers.
Cooper and his co-authors argue that transparency in hospital costs would be a first step in combating high prices. If hospitals publicized their fees, consumers and insurance providers could make more responsible choices.
Cooper cites an example of one insurance provider offering incentives for people to opt for a less expensive facility. In fact, paying for people to travel to less expensive markets for treatment might be more cost effective than using local providers.
Although conservatives are often divided on antitrust laws, in this case transparency and better consumer information alone would go a long way toward promoting free market competition. Reducing health care costs through transparency and competition would be a winning talking point for most fiscally conservative politicians.
Cutting people from coverage is clearly not the way to remarket the Republican Party to the working class.
April Kelly-Woessner is a professor and chairwoman of the political science department at Elizabethtown College. She also is a correspondent for LNP, where this column first appeared. She can be reached at firstname.lastname@example.org.