Senator Lamar Alexander opens hearings next month on healthcare, specifically, on how to stabilize the teetering individual market.
Rather than a car see-sawing on the edge of a cliff or unfortunates sliding down a death spiral, Alexander’s analogy of choice is a housefire.
“When the house is on fire, you got to put out the fire,” Tennessee’s senior senator explained in Nashville on Tuesday. “And the fire is in the individual market.”
But what’s a fireman to do when confronted with a one-alarm blaze breaking out on the tumbleweed outskirts of a city and a five-alarm conflagration raging through the densely-populated downtown?
That’s the dilemma faced by congressmen. Strangely, the smoke from the smaller flames shields eyes from the dangers of the massive inferno.
Far fewer than ten percent of Americans obtain insurance policies through the individual market. Far more than ten percent of media attention fixates on the individual market.
A miss-the-forest-for-the-trees quality engulfs the healthcare debate. We obsess over the tens of millions in the individual market rather than the hundreds of millions on employer plans, Medicaid, and Medicare. We fixate on the few without coverage rather than the many facing out-of-control costs. We worry whether the president continues to pay a $7 billion subsidy to keep individual markets afloat but seem aloof to the $3 trillion-plus annual healthcare bill that sinks our economy.
We collectively spend more on healthcare than every country in the world save three spends on everything. This annual tab exceeds $10,000 per person and devours nearly one in every five dollars in the American economy. For the sake of the economy’s health, healthcare reform — and reform focused on controlling costs — needs to happen.
“My goal is that the 350,000 Tennesseans and 18 million Americans who buy their insurance on the individual market can be able to do that in 2018 and at a price they can afford,” Senator Alexander says of his September hearings. There is nothing inherently wrong (and much right) in attempting to fix a broken part of the healthcare system. But the problems in the individual market serve as a symptom rather than the disease. And to the extent that Obamacare catalyzed the disease (it certainly didn’t cause it), Alexander, who voted against it, to repeal it, and to repeal and replace it, does not bear responsibility. But as the chairman of the committee responsible, Health, Education, Labor, and Pensions, Alexander shoulders a tremendous weight of responsibility to get this wrong right.
Obamacare requirements forcing insurers to cover “essential” health benefits that few find essential, to guarantee insurance no matter the preexisting condition, to limit gaps in costs between young and old, and to abide by community rating that forbids different prices for consumers with different lifestyle choices (obesity, smoking, alcoholism, etc.) means that the vast majority overpay for healthcare to cover the costs for a small minority who benefit from this setup.
But none of this appears as open to debate. Instead, journalists and politicians devote attention to whether or not the Trump Administration continues to pay cost-sharing reductions unauthorized by Congress and deemed illegal by a federal judge.
“I would recommend that we continue the cost sharing payments from the government for another year,” Alexander told the press on Tuesday, “and two, give states more flexibility in the kind of policies they can offer.”
The feds currently subsidize about six million Americans in the individual market by injecting about $7 billion into it to prevent a mass exodus of the young and healthy that would lead to the much talked about “death spiral.” As it turns out, the very politicians seeking to extinguish the fire in the individual market set it by imposing unworkable stipulations on insurers, such as essential health benefits and community rating. Rather than reconsider onerous regulations, DCthink imagines the solution as artificially propping up the untenable individual market with billions of dollars that Congress did not agree to spend and many insurers regard as insufficient to coax them to remain in the individual market in certain states and counties.
One hopes that Senator Alexander’s Health, Education, Labor, and Pensions Committee explores these structural deficiencies in the individual market. Not doing so means the committee reconvening every few years, with unwitting arsonists strategizing to extinguish the fires they set.
Hunt Lawrence is a New York-based investor. Daniel Flynn is the author of five books.