Amidst all the confusion, broken promises, false starts, delays, changes and mounting costs, 2014 is the year the president and Congress must rethink the Affordable Care Act, aka Obamacare.
Millions of people have lost their individual coverage and the administration has predicted that tens of millions more will lose their employer-sponsored coverage when the postponed employer mandate is triggered in 2015. Millions more are experiencing sticker shock because of higher premiums and deductibles.
Now, as we enter 2014, the Obamacare taxes and fees are kicking in.
Individuals who fail to purchase insurance will pay a “tax” of one percent of their income – around $450 for the average Washington wage earner. Insurers will pay $8 billion in new taxes in 2014, as well as a $63 per person “fee” on group policies – all of which will be passed on in higher premiums.
Obamacare will greatly accelerate government health care spending.
According to the Medicare’s Office of the Actuary, the nation’s health care tab will hit $4.6 trillion in 2020 – $13,710 for every man, woman and child – more than double what we pay today.
Government, already the dominant player because of Medicare and Medicaid, will become an even bigger force in the future. By 2020, federal, state and local government health care spending will account for just under half the total tab. As Obamacare takes effect, "health care financing is anticipated to further shift toward governments," the report said.
So, what do we get for all this spending? Not much.
Last summer, Bloomberg ranked 48 countries on health care efficiency. The U.S. ranked 46th, outpacing just Serbia and Brazil. We were less efficient than China, Algeria and Iran.
According to Bloomberg, the U.S. is the world’s top spender in terms of health care cost relative to GDP, but we get less “bang for our buck.” In other words, the world's richest country spends more on health care while getting less for it than almost every other nation.
Why? The answer is complicated, but it could be our approach.
For example, Singapore – among the top performers in the Bloomberg study – introduced Medisave in 1984 as a national medical savings system. The system requires workers to put aside part of their income in a Medisave account to pay for future medical costs.
Under this system, employees contribute 6-8 percent (depending on age group) of their monthly salaries to a personal Medisave account. The savings can be withdrawn to pay the hospital bills of the account holder and his or her immediate family members.
Singapore’s Medisave system is similar to one of our most affordable types of health plans: Health Savings Accounts (HSAs).
HSAs are high-deductible health plans that let people “bank” money – pre-tax – to pay for future health care costs. The money accumulates year after year. The individual draws on the account for day-to-day medical expenses, backed by a catastrophic policy that covers major accidents or illness.
A 2012 "Open Web Site" study by the RAND Corp. projects that annual health-care spending could be reduced by $57 billion if HSAs were expanded from their current 13 percent share to 50 percent of employer-sponsored plans.
But Obamacare regulations make HSAs less attractive to employers. They cut HSA benefits, drive up premiums and give the Secretary of Health and Human Services the discretion to gut HSAs in the future.
We need to make changes this year as the new law phases in. It is time to find solutions that have been tested – even if they are not perfect.
There is no “walk-off, grand-slam homer” as they say in baseball. We need to put together a succession of base hits – one of which is finding ways to encourage, not discourage, health savings accounts.