For years, conservatives have warned that rapidly rising health care costs require the United States to repeal the Affordable Care Act, gut Medicaid and privatize Medicare. Now, the American Enterprise Institute cheerfully insists, the recent slowdown in that rate of the growth argues for precisely the same Republican policies. But far from happily revealing new "marketplace disciplines on the demand for medical care" in which "consumers are finally getting more involved in managing and paying for their own care," the slower pace of growth in national medical expenditures reflects something else. Instead, thanks to the erosion of the employer-based health insurance system and the dramatic cost-shifting to workers, more and more Americans are simply doing without the medical care they need.
The moderation has been driven by cumulative improvements in medical care and by insurers, and by marketplace disciplines on the demand for medical care. Consumers are finally getting more involved in managing and paying for their own care...A failing market, that is. After all, with over 50 million people uninsured and another 25 million underinsured, so-called "consumer driven health care" remains beyond the reach of large swaths of the American public. But it's not just those at the losing end of the health insurance "income gap" who are doing without. Millions more are self-rationing by delaying or deferring altogether needed medical care. And while President Obama's Affordable Care Act will help alleviate the crisis of the American health care system, Republicans and their allies would make it much, much worse.
Combine all these new medicines, information channels and business compulsions with the slow, steady transfer of economic responsibility for health care--from corporate and government bureaucrats to consumers and their families--and suddenly health-care starts to look almost like an actual market.
At the heart of the problem is the rapid deterioration of the employer-based insurance system. As the data show, that process was well underway before the onset of the Bush Recession in December 2007. A September 2010 analysis by the Economic Policy Institute found that employer-sponsored coverage plummeted from 68.3% of those under 65 years old in 2000 to just 58.9% in 2009. That translates to 7.3 million more people without workplace coverage in less than a decade. In September 2011, the U.S. Census Bureau put the percentage of Americans covered by employer health care plans at 55.3 percent, down from 64.1 percent in 2000. While the Census announced last fall that the ranks of the uninsured jumped to 16.1 percent, a recent Gallup poll put the figure as high as 17.1 percent.
(It's worth noting that these grim figures would be grimmer still without the actions of President Obama and his Democratic allies in Congress. The Affordable Care Act has lowered the uninsured rate among young adults by enabling parents to add 2.5 million of their children to their existing policies. And as EPI rightly notes, "The only reason why the drop in employer-sponsored insurance (ESI) did not translate into an even larger increase in the total share uninsured is because 4.9 million more people under 65 were covered by Medicaid/SCHIP in 2009.")
A year ago, the Commonwealth Fund revealed that since the start of the recession, almost 60% of Americans who lost a job and their health insurance - 9 million people - could not afford to regain coverage. Medical costs pushed four million more into bankruptcy. But that tragedy doesn't even capture the dramatic shift of costs from employers to workers underway for years.
The 2011 Annual Survey of Employer Health Benefits by the Kaiser Family Foundation highlighted the growing burden on working families. With the economic recovery starting to take hold, the average annual cost of a family premium jumped by 9 percent to $15,073 after slower increases in previous years. As the New York Times explained, more and more of that cost is being borne by workers:
Over all, the cost of family coverage has about doubled since 2001, when premiums averaged $7,061, compared with a 34 percent gain in wages over the same period...About three-quarters of workers now pay part of the bill when they go see a doctor, and nearly a third have a deductible of at least $1,000 if they have single coverage, up from just one in 10 in 2006, according Kaiser.As the Kaiser chart below shows, over the last decade employees' share of health care costs has not only grown faster than their employers' premiums, but has risen at more than triple the rate of wage gains.
Surveys in 2010 by Kaiser and the National Business Group on Health found that the situation is quickly worsening. The NBGH sampling of 507 firms each with over 1,000 employees revealed that 56% would hold workers responsible for a greater share of health care costs the following year. The Washington Post summed up Kaiser's dire findings:
Forty percent of employers surveyed said they are likely to increase the amount their workers pay out of pocket for doctor visits. Almost as many said they are likely to raise annual deductibles and the amount workers pay for prescription drugs.
Nine percent said they plan to tighten eligibility for health benefits; 8 percent said they plan to drop coverage entirely. Forty-one percent of employers said they were "somewhat" or "very" likely to increase the amount employees pay in premiums -- though that would not necessarily mean employees are paying a higher percentage of the premiums.
And those are costs Kleinke's health care "consumers" already can't afford. In August 2010, the New York Times reported on a study from the National Bureau of Economic Research which found that "among Americans responding to the survey, they said, 26.5 percent reported reducing their use of routine medical care since the start of the global economic crisis in 2007." A year earlier, Thomson Reuters reported that "21 percent of U.S. adults expected to have difficulty paying for health insurance or healthcare services in the next three months." And as McClatchy reported in October 2009, a Consumers Union survey revealed that due to skyrocketing costs and reductions in coverage, Americans are being forced to deny themselves needed medical treatment. Among the findings of CU's poll of a 1,002 respondents:
In the new poll 59 percent said that the cost of their health care had increased more than their other expenses over the past two years. Fifty-one percent said they had faced difficult health care choices in the past year. The most common responses were putting off a doctor visit because of cost (28 percent), not being unable to afford medical bills or medication (25 percent), and putting off a medical procedure because of cost (22 percent).Nevertheless, whether America's national expenditures rise quickly or slowly, the prescription for Republicans and their water carriers is unchanged. "If we really want to tame the health-care cost beast and make insurance 'affordable,'" AEI's Kleinke declared, "We would double down on all of the positive developments":
Twenty-eight percent said they had lost or experienced cutbacks in their health care coverage in the past year. The greatest concerns about health care expressed by respondents were a major financial loss or setback from medical cost due to an illness or accident (73 percent), not being able to afford health care in the future (73 percent), necessary care being denied or rationed by health insurance companies (73 percent), and the prospect of rising costs forcing them to choose between health care and other necessities (64 percent).
"We would liberate people with their own money from layer upon layer of arcane, localized insurance rules. We would fix the tax code to uncouple health insurance from employment and let people purchase their own mix of services and coverage."But we already know how this story ends. Health care is not a market in which consumer and provider meet as equals, free of coercion. The asymmetry in knowledge, the compulsion to buy (i.e. the sick patient cannot walk away) and exorbitant prices in the private insurance market virtually guarantee the self-rationing Americans experience today. (Note that both Medicare and Medicaid are significantly less expensive than comparable private insurance.)And the policies Republicans would pursue - repealing the Affordable Care Act, gutting Medicaid, privatizing Medicare and giving tax breaks for high-deductible plans and health savings accounts - would only make things worse.