The collapse of Repeal and Replace Has Some Latent Opportunities

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Analysis by Reporting San Diego

Leader Mitch McConnell was unable to get the Senate legislation across the wire. The Affordable Care Act remains the law of the land, for the foreseeable future. This campaign to take away an entitlement after it was granted ran against the shoals of reality. It is near impossible to do so. Why many Republicans warned that the passage of the ACA would mean some form of socialized medicine, their true fear, in the future.

There are reasons for this failure.  The Republican caucus is fractured along lines that separate moderate from tea party and even along economic and ideological lines. Just because they call themselves Republicans, does not mean they are a united front. For the record, Democrats are just as fractured, but for the moment they do not have to run the country. Republicans do and seem to have no idea how to do it.

However, with this failure to repeal and replace the ACA Republicans have an opportunity, if they chose to grab it. In their quest to repeal the ACA they have identified the major issues with how the legislation works at a policy level. Just repealing the ACA, which is a path that McConnell
The first problem that the Republicans have identified as an unstable maker place, the second is growing premiums, especially in the individual market. The effort to repeal has been part of the problem. It has inserted uncertainty into the mix.

Uncertainty has not helped and insurers have proposed higher rates than they would otherwise. Some insurers might simply not do that. Taking that uncertainty off the table will help.

Before the ACA this is how the insurance market looked like, according to the Commonwealth Fund:

  • Most people who tried to buy plans on the individual market could not find affordable plans that met their needs and instead went uninsured.* In 2010, an estimated 9 million people who had tried to buy a plan on their own over the prior three years were turned down, charged a higher price, or had a health problem excluded because of their health status.
  • Many who had health plans and developed health problems were at risk of having their coverage cancelled.
  • Pregnancy in most states was a preexisting condition and coverage for maternity care was rare.* Many health plans provided bare bones coverage where a health emergency could trigger serious financial problems and even bankruptcy for individuals and families.

 

So at this point, we can go back to that, or there can be work done to stabilize the marketplace. One factor at play is to increase outreach. The other is to keep insurance affordable, which has been the second problem. We have seen a spike in cost in the individual market, affecting middle-class Americans who do not qualify for Medicaid. However, some of the Senators that voted against repeal did so because their states have benefited greatly from this Medicaid expansion. Among them Maine.
In order to stabilize the market place, however, and lower costs, efforts to create balanced risk pools must be undertaken. Special high-risk pools have failed in the past and served patients poorly.

We have the most expensive medical system in the world. One reason: Drug prices. Only in the United States are medications such as Narcan (Naloxone is the generic name) had the following price increase:

Each formulation of naloxone — two injection doses, Narcan nasal spray, and Evzio auto-injector — essentially has one supplier. Though there are three manufacturers with FDA approval for 0.4-mg-per-milliliter-dose injections, the vast majority are sold by Hospira, which has increased the price by 129% since 2012 (see table). Only Amphastar manufactures 1-mg-per-milliliter injections, the dose used off-label as a nasal spray, which currently costs $39.60 after a 95% increase in September 2014. Newer, easier-to-use formulations are even more expensive. Narcan costs $150 for two nasal-spray doses. A two-dose Evzio package was priced at $690 in 2014 but is $4,500 today, a price increase of more than 500% in just over 2 years.

This is a very effective option medication. As a medic I used it in the field. I have witnessed how effective it is. When I was a medic, we only had one route for administration, and this was intravenous. So having new delivery systems that allow none trained lay people to use it, is great, However, it is so expensive that it is out of reach and some EMS systems are considering no longer using it. In rural areas it is used less, never mind this is the heart of the opioid epidemic.

Part of this is cost. Never mind that this drug is dirt cheap to make. Market acolytes may say this is supply and demand at play. However, there are medico-legal issues at play, as well as ethics. Are we pricing a drug so high that we are placing it out of the reach of the people who need it? And it is not just heroin addicts. If you are prescribed a long term pain medication that is an opiate, you might be given a prescription for Narcan for emergency use.

This is just one example. At a personal level we have seen the costs of American drugs to be outside any logical value. Tobradex, an eye ointment, costs in the US $220, and in Mexico same drug, same lab, same dosage runs $20.it is not just Mexico. Canadian drugs are also cheaper. At least in Mexico, part of the reason is that the Health Secretariat has imposed price controls. Meaning, pharmacies cannot charge more than a certain price, which is stamped on the box. Moreover, labs cannot arbitrarily raise prices. Therefore, what happened with Narcan, or the Epipen in the United States, cannot happen in Mexico.

There is more. Under classic economic theory, competition works when there are several competitors in the market. The patent drug market is a monopoly, and the generic market works as one. There is no competition. Prices do not have any natural limit. The United States has the highest medication costs in the world. This contributes greatly to medical inflation. The same applies to devices. There is a limit through fee schedules for providers. These schedules have to be expanded to both devices and drug manufacturers. In the short term Congress should;d authorize the importation of cheaper drugs from Canada, as Senator Bernie Sanders (VT-I) has proposed
There is more. Aetna left exchanges not because it was not profitable, as they originally claimed, but to punish the government for not allowing a merger to occur with Humana.

This power to scuttle a program, out of spite, is similar to the too big to fail in finance. Allowing people to buy insurance across state lines will only exacerbate this problem. Here is where ideology clashes with good policy, and we hope Republicans can find a way out of ideology.

What is clear is that the ACA is not perfect. No legislation this size ever is from the get go. Both Social Security and Medicare have required significant reforms. However, the current medical system is not sustainable long term. The Republicans, in their obstinacy, have discovered that governing is harder than just being the opposition party. They also were unable to vote for a simple repeal, because this president would sign whatever legislation came out. Throwing 22 million people off insurance rolls was hardly a good political move.

They might still pay a political price. After all, since the ACA was enacted they have run against it. Perhaps, the reform package could have a new name for the sake of the base. However, if they decide to sabotage it, the consequences will be severe as well.

As the saying goes, they are like a dog that caught its tail. They have no idea what to do now. For once, they are facing a United Democratic Party front. But Democrats are willing to fix the ACA, not scuttle it. The question is whether Republicans will go that route, or surrender to the destructive politics of the last 7 years.

Finally, we are not saying Democrats are better or worst, but they are not going to just allow the ACA be dismembered without a significant fight. Republicans are also discovering how hard it is to get rid of entitlements. Hopefully, this will be a lesson for the upcoming Social Security and Medicare fights.

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