The Affordable Care for America Act: A Failure to Count what Counted
On June 29, the Supreme Court upheld the Constitutionality of the Affordable Care Act (ACA). Within it, there were three main drivers:
- the large number of uninsured;
- the comparison of the U. S. with other national health systems; and
- the high healthcare expenditures in the U. S. relative to GNP in other developed countries.
How relevant were these issues to the need for reforming 1/6th of the U. S. national economy?
Firstly, how do most Americans get health insurance? The number of uninsured constantly shifts. During the Clinton Administration, it was 37 million. Then during the Administration of George Bush, it was 50 million. Earlier in 2007, according to estimates of the US Census Bureau, about 45 million people under the age of 65 lacked health insurance. In that same year, nearly 85 percent of Americans had some form of health insurance and more than two thirds of those people received coverage through an employer.
About two-thirds of the uninsured (24 million) have incomes below 200 percent of the poverty level ($44,100 in 2007 for a family of four), according to an analysis of the Census data by the Kaiser Family Foundation. Millions of low-income uninsured people—mostly children and parents—are not enrolled in public programs for which they qualify. The National Institute of Health Care Management Foundation, which put the number at 12 million in 2006, says: “Some may be unaware of the programs or not know how to enroll. Others may be reluctant to participate because of stigma.”
Young adults make up a disproportionate share of the uninsured. Those aged 19-29 make up 29 percent of the uninsured and have the highest uninsured rate, 30 percent, of any age group. Kaiser says many young people lack coverage because “few are full-time students or full-time employees, few have jobs that offer employer coverage, and few have access through their parents.” Childless adults are generally not eligible for Medicaid, the public program. In particular, many recent university graduates are in this category of young adults.
Secondly, did the Congress and the Administration critically review the history of national health systems in such countries as the U. K. as an exemplar for ACA? In 1948, the U. K. socialized medicine with its National Health Services (NHS). All service delivery was to be via public providers from publicly owned health facilities. The NHS is a model for the single payer system, once favored by advocates for the ACA, then abandoned in favor of a mandate. For many decades, the NHS was able to operate at a health expenditure under 8% of GNP, while the US expenditures were at 15.2% of GNP. Then, during the Tony Blair administration, health expenditures increased to 9.4% of GNP, though productivity by physicians fell inexplicitly. While health spending increased, their was a corresponding increase in the number of people leaving the NHS. By 2012, approximately 22% of all British citizens opted out of NHS to join the privately operated British Union Provident Association—even though they had to continue their payroll tax payments into NHS.
During the national healthcare debate, advocates of the ACA pressed home the point that the U. S. was now expending 17% of its GNP on health expenditures. This was an effective strategy in building support for the ACA, particularly when the Obama Administration stipulated that ACA would “bend the cost curve downward”, citing independent findings from the Congressional Budget Office. However, was this was a comparison of apples to bricks. Since GNP is the sum total of all goods and services in any one sector of an economy, when comparisons between nations are being made, how valid are they?
The U. S. counts these items as components of its GNP in healthcare: mandatory mal-practice insurance; the accelerated depreciation of all plant and equipment; employers and employees contributions to 401 (k) retirement programs; capital construction of healthcare facilities; healthcare employers and employees payroll contributions to Social Security, Medicare, and Workmen’s Compensation; payroll deductions for health and life insurance premiums; and, a myriad of miscellaneous expenses, e.g., parking, airline tickets for business travel, business lunches, etc. In countries which finance healthcare from general tax revenues, these same costs aren’t attributed to healthcare expenditures. For instance, capital development of plant is in the domain of ministries of public works rather than health.
Taken together, if the items included in the U. S. GNP were added to the GNP of countries like the U. K., then the comparison would have some statistical validity—and they would show that they are relatively similar in terms of percentages expended. As it stands today, these comparisons are misleading and fraught with ambiguities.
The largest number of uninsured, the 24 million with incomes below the poverty line, could have been enrolled in Medicaid. The second largest number, young adults, typically have low utilization of health services, and many are highly educated. Should their right not to pay for a health care premium be the responsibility of the commons! If the U. K.’s NHS is a model, does it pave the way for what ACA would look like ten years hence? And, government being government, in order to demonstrate that ACA is “bending the cost curve”, many of the components that now constitute expenditures on healthcare in our GNP will migrate to other portions of the Federal Budget, bringing us more in concert with other developed nations.
Perhaps in casting the deciding vote on the ACA, Chief Justice Roberts said it best: “It is not our job to protect the people from the consequences of their political choices”. The deciding factors on ACA were political and emotive rather than reflective of the composition and true nature of the uninsured—who always had access to free healthcare on an emergency basis. Those things that should have counted in three critical areas during the run-up to the ACA were never counted. We will now have to live with that political choice and its unintended consequences for decades.