Baseball, Hot Dogs, Apple Pie, and Inequality

June 12, 2017

The official name of Obamacare, the Affordable Care Act, is actually a bit of a misnomer. The goal of the legislation was not to lower the cost of health care.  Rather, it was to expand coverage for millions of people without insurance.  It achieved this goal, in part by expanding Medicaid, the government program primarily for the poor, and in part by providing subsidies to individuals purchasing private insurance on newly established exchanges.  And these subsidies did make insurance more affordable for those receiving them.  Thus the ACA sharply reduced income-based disparities in coverage.  But while the exchanges, spurring competition among plans, did temporarily drive lower prices for those plans offered on the exchange, the law did little to address the underlying drivers of high health care spending, and prices are now again on the rise.  So for all the good it accomplished, “affordable care” is something of a stretch.

On the other hand, the American Health Care Act, passed by the House and now being rammed through the Senate under cloak of secrecy, fully lives up to its name.  It is as American as it gets.  In rolling back Obamacare, it will restore the vast inequalities in health care that are frankly a hallmark of the American health care “system.”  It not only rolls back the Medicaid expansion, it sharply reduces Medicaid spending to below pre-ACA levels (a report done for the Children’s Hospital Association estimates the negative impact on Medicaid funding for children alone at $48-72 billion).  Moreover, it reduces the subsidies, shifts the remaining subsidies toward those with higher incomes, and gives the rest in the form of tax cuts for higher income individuals.  A foundation of the AHCA is to shift decision-making to states.  Medicaid would take the form of block grants, which states would have great latitude to distribute as they wish.  States could also opt to eliminate many of the coverage requirements of Obamacare, which prevent insurers from discriminating against people with pre-existing conditions, mental health disorders, and women, among others.

A study from the Urban Institute underscores the risk of this policy.  It showed a strong inverse correlation between the African-American population of a state and the coverage of its antipoverty programs.  For example in Vermont, which has one of the lowest populations of African-Americans (1%), 78% of poor families receive benefits under the Temporary Assistance to Needy Families (TANF) program, compared with only 4% of such poor families in Louisiana, which is 32% black.  When decisions about helping the needy are made at the state level, old patterns of inequality re-surface.

Such disparities in health insurance coverage and in support for addressing needs related to the social determinants of health lead, not surprisingly, to disparities in health outcomes.  These have been well documented for some time, but lest we need to be reminded of it yet again, a study in JAMA Pediatrics demonstrated that children living in areas of high income inequality had higher rates of preventable hospitalizations.  Another recent study, in Health Affairs, showed the gap in health between the richest and poorest Americans is among the largest in the world.  Of 32 higher-income countries studied, only Chile and Portugal had a wider disparity.

The Senate leaders may be using stealth in getting their program passed (knowing how very unpopular it is), but by calling it the American Health Care Act, they are making very clear their intentions: less health care for more people.

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