As Americans, we need some form of health insurance, because it is too expensive for many of us to afford without help. The challenge for the American federal government is to curb the tremendous increases in the cost of health care and at the same time give those people, who are not insured, access to affordable health insurance – this is what Obamacare is and was supposed to do, but that is not what is happening.
Obamacare was successful in increasing the number of people signing up for Medicaid by 11 million. The way Affordable Care Act (ACA) did that was easy. The federal government agreed to pay the states 100% (gradually reducing to 90% in 2020) of the cost of raising the eligibility for qualified citizens to sign up for the program. It was like signing people up for a free lunch.
Our focus on health insurance may cause us to forget that the federal government does have other national priorities, including a crushing trillion-dollar national debt and a multiple billion-dollar annual budget deficit. We can’t keep throwing money at every problem we have, without having some rational plan to handle the risks. How do we fix ACA (Obamacare) so that this time we get it right, without having to pay for a government takeover of the entire health care system – a move that will certainly and severely damage our quality of health care?
We have approximately 43 million citizens that need help from the government. These people include the ACA enrollees (9 Million), the low-wage uninsured and unemployed workers (28 million), and segments of the Medicaid eligible population (5 million). In order to “fix” the problems, we must figure out an economical way to help about 10% to 13% of our total population. The problem is manageable.
The FIRST thing that Congress needs to understand is that the ONLY way they can lower the cost of health insurance, without doing anything about the health of the population, is to use the power of leverage in a REAL insurance plan! President Trump told the Senators, he wants, “a REAL bill – NOT Obamacare.” Congress must stop throwing good money after bad and make it possible to use the power of leverage in a “REAL” actuarially underwritten insurance contract. The power of leverage in health insurance, is the ability for health insurance carriers and HMOs to charge a low premium rate (less than one would normally have to pay on their own) to a large number of people and when the little premiums are all added together, the total amounts to enough money to pay for the health care expenses of those few in the group that actually get sick.
The only other “real” actuarially underwritten federally sponsored health insurance program (besides FEHB) that covers “We the People” is our Medicare Part C – Medicare Advantage. The Medicare Part C operates under the principals of “REAL” insurance. Medicare Part C – Medicare Advantage programs cover approximately 17 million of our most vulnerable elderly citizens. The program’s popularity has increased due to ACA. For the participants in Medicare Part C, the federal government does an annual evaluation on the actuarial equivalency of cost for Original Medicare. This means that they determine how much the government would have to pay an insurance carrier if they were going to produce an insurance program that was actuarially equivalent to the traditional Medicare program in a particular county. Therefore, CMS annually determines what capitation fee the federal government is willing to pay for health insurance in each county in the United States. The health insurance carriers and health maintenance organizations take these rates and design health insurance benefits programs, with CMS approval, to cover the participants within the margin of the prospectively determined capitation (per person dollar amount) rate. The federal government agrees to pay that rate and the insurers (insurers and/or health care providers) take the risk and assume the responsibility of administering the programs. There is no confusion about how much the carriers are to be paid. There are certain requirements that the insurers must meet to satisfy the Centers for Medicare and Medicaid Services and these are met in strict but collaborative and rational interactions characteristic of this successful Public-Private Partnership. This is the way it should be done and is unlike the turmoil that ACA has created in some markets.
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