Dissecting Obamacare
Alan Sager: new law expands coverage but ignores cost control
To paraphrase Joe Biden, just how big a @#%ing deal is the new health law President Obama signed last week?
Hard to say in a quick phrase, says Alan Sager, a professor of health policy and management at the School of Public Health; the law tackles the problem of the uninsured but does almost nothing about health care’s ruinous cost.
“Half of health care spending is wasted on unneeded care, paperwork, excess prices, and theft,” says Sager, codirector of SPH’s Health Reform Program. “If we could save 10 percent of that this year, it would be enough to finance coverage for all uninsured people.”
BU Today: Do the specifics of the bill justify supporters’ euphoria?
Sager: More than 30 million uninsured people will be covered, almost all by 2014. That is a big step. But for many people, the coverage will be incomplete. For others, premiums may be hard to afford. The bill provides subsidies for people whose incomes are below about $72,000 for a family of three. In the Massachusetts law, subsidies go up to $54,000 but are more generous, so you pay nothing if your income is below one-and-a-half times the poverty level. Under the federal law, at that level, you might have to pay up to 4 percent of your income.
So we may revisit coverage?
To satisfy Congress’ requirement of pay as you go, you had to have enough revenue in the bill to cover new spending. There’s an increase in the Medicare tax of almost 1 percent on families making more than $250,000 and a new tax on unearned incomes, about 3 percent, for high-income people.
There’s also an excise tax on high-cost insurance premiums, but it’s premised on foolish ideas that people buy expensive insurance because they want to use a lot of health care. It’s true that when people lose insurance, they use less health care, but they’re as likely to cut vital care as unnecessary care. The best instrument is to have their doctors decide whether they’re really ill and how to treat their problem.
On turning patients into kamikaze pilots in the cost-control war: there’s no functioning free market anywhere in health care, except for eyeglasses or contact lenses, where you’re typically spending your own money, you know you have a problem — you keep missing exits on the highway — and you make a choice between $10 frames and $100 frames. It’s like buying a toaster. The rest of health care is nothing like that.
An influential New Yorker article studied relatively cost-effective, high-quality care, where doctors are on salary and integrate care along the spectrum. Is there anything in the bill that encourages this?
There’s some interest, but right now, most doctors don’t want to work for salary, and most patients don’t want to join organizations that limit their choice of doctors.
The bill includes a provision that young people may stay on their parents’ plan until age 26. How will this affect University-provided health insurance?
The provision kicks in come September, so long as they’re not married. Under Massachusetts law, all full-time college students, undergraduate and graduate, have to have health insurance. That was enacted in 1988. Some individual student policies are a good deal, and some are not. Some focus on low premiums, and coverage is skimpy. Others have higher premiums, and coverage is better. Regardless, low shares of the premium dollar get returned in real health care, as low as 15 or 20 percent, which is abominable. In other wealthy democracies where marketing costs are held down, as much as 90 or 95 percent of the premium goes to care. This reform bill is moving toward 80 percent for individual policies, and that’s way too low.
The big change under this law is that you can stay on your parents’ policy if you’re older than 22, and that will probably mean better coverage at lower cost. The majority of parents have group policies through an employer, so premiums tend to be lower.
The University will probably continue to offer a policy, because some students will be over 26 and some will be married. They’re required to have health insurance if they’re taking nine credits or more per semester.
Overall, will the bill improve or worsen the quality of health care?
The chance of benefiting from care will certainly go up for the 30-plus million people to be covered. People who are already covered are not going to pay more, unless we have incomes over $250,000 a year. I’m not worried about that.
People in Medicare Advantage plans will see a reduction in the excessive subsidies they’ve enjoyed over ordinary Medicare; the law ends that discrimination.
There are people in one political party who have declared their intention to repeal the law. We have four decades of failure containing costs; generally, that’s easier to do once you deal with coverage, taking one step at a time.
In all the world’s wealthy democracies, there’s only one political party in one country that is opposed to universal coverage. That’s — peculiar.
Rich Barlow can be reached at barlowr@bu.edu.
Comments & Discussion
Boston University moderates comments to facilitate an informed, substantive, civil conversation. Abusive, profane, self-promotional, misleading, incoherent or off-topic comments will be rejected. Moderators are staffed during regular business hours (EST) and can only accept comments written in English. Statistics or facts must include a citation or a link to the citation.