President Obama has published an essay on Obamacare in The Journal of the American Medical Association. While it hit a lot of the Affordable Care Act’s high points, it was also pretty frank that the health law has some weaknesses that need to be fixed. Margot Sanger-Katz and Reed Abelson, two New York Times reporters who have been covering Obamacare, discuss the policy changes that the president wants.
Margot: Were you surprised by his acknowledgment of problems? I know I was.
Reed: I thought he was pretty realistic in talking about the need to make various fixes to the law. That’s been an issue since it was passed in 2010. There is a fairly broad consensus that the law could be changed to make it work better, even among its supporters. What did surprise me was the president’s admission that affordability remains a real concern for many people, even with subsidies.
Margot: But the president wasn’t talking about little tweaks. I feel that he recommended at least two pretty substantial policy changes. The idea of offering more subsidies to buy health insurance has been talked about before, but certainly not by the Obama administration. His essay seems like a real acknowledgment that health insurance still isn’t affordable enough for some people. We’ve talked before about hearing from higher-income people who still can’t afford health insurance. Between premiums and deductibles, some people are spending more than 25 percent of their incomes on care, according to an Urban Institute report.
Reed: Some of that problem with high prices was supposed to be solved by more competition among health insurance companies. Which gets to the second important change, I think: adding a Medicare-like public plan in areas of the country where there remain too few companies offering plans on the state marketplaces. (I notice the president didn’t dwell on the increasing number of failures among the co-ops, the nonprofit insurers created by the law to serve as something akin to the so-called “public option.”)
The fact that the president admitted that the law had not succeeded in increasing competition everywhere was an important concession. But what do you think of the idea of having a government-operated plan compete along with private insurers, something along the lines of what Medicare does today with the private Medicare Advantage plans?
Margot: I think the public option was definitely the biggest headline out of the president’s piece. And it’s interesting to see so many Democrats converge around this policy idea, which was talked about when the Affordable Care Act was being written, but was ultimately axed from the law because of lack of support. Hillary Clinton just came out strongly for something similar over the weekend, though she’s expressed milder support before. And Bernie Sanders was also cheering for a public option during his Clinton endorsement speech Tuesday. Seems like a real shift leftward for two out of three of them. Considering that a public option has almost no chance of passing in Congress, it’s unclear why it is having such a moment. I guess it’s a good political halfway point between Obamacare as it exists, and a single-payer system, which excites a lot of Democratic voters.
But even if it didn’t have political problems, do you think a government health plan could work the way the president described it? His essay said that it would become a sort of fallback, operating only in places where competition is limited. It’s hard to imagine a public plan that jumps in and out of the market in places every year.
Reed: I confess I have a hard time envisioning a government plan available in only certain places. Traditional Medicare is always an option everywhere. A lack of competition is a signal that the economics don’t work for a private insurer in a given geographic area, and I’m not sure how a public option in those markets changes things, although it does offer someone more choice. Another possibility would be that you could increase subsidies for those areas or try other ways to make it more attractive for insurers to sell policies in those markets.
Margot: When you talk to people who advocate a public option, the theory is that it’ll help keep insurers honest by providing some competition from low-cost plans. But I wonder how that will work in practice. One big advantage that a Medicare-like plan might have is the ability to pay less to doctors and hospitals than many commercial plans. But if the public option is really able to underprice the private options by a lot, why would they stay in the market?
Reed: When it was first floated, the insurers objected because they simply don’t have the pricing power of Medicare, which essentially dictates prices rather than negotiates with hospitals and doctors. They thought it was a path to single-payer because it would eventually drive all of them from the market. Maybe Bernie Sanders would approve, but I’m not sure there is any real political support for the idea. Karen Ignagni, who was the chief executive of the trade association representing the insurers, argued at the time that if we wanted a government-run system, we should have that discussion.
Still, Congress’s current position of just saying, “No, let’s overturn the law,” hasn’t helped fix any of the shortcomings that exist.
An area where I thought the president might be giving the law too much credit was in saying the law had managed to successfully control costs and improve quality. What do you think?
Margot: Cost control is one of those great unanswered questions in health policy. There are many theories about what is going on. But nearly all of the rigorous analyses say that Obamacare gets, at best, partial credit for why health spending growth has been slow. I can see why the president might want to congratulate himself for this welcome trend. But I think he’s on firmer ground touting a reduced uninsured rate than cost control as the legacy of Obamacare.