Editorials

Obama’s giant step towards universal health insurance

BMJ 2010; 340 doi: http://dx.doi.org/10.1136/bmj.c1674 (Published 24 March 2010) Cite this as: BMJ 2010;340:c1674
  1. Gavin Yamey, lead
  1. 1Evidence to Policy Initiative, Global Health Group, University of California San Francisco, 50 Beale Street, Suite 1200, Box 1224, CA 94105, USA
  1. yameyg{at}globalhealth.ucsf.edu

    The health reform bill extends insurance to 31 million Americans

    In 1912, Theodore Roosevelt, the 26th president of the United States (1901-9), formed the short lived Progressive Party, which campaigned on a promise of national health insurance. “What Germany has done in the way of old age pensions or insurance,” he said “should be studied by us, and the system adapted to our uses.”1 So began the story of successive American presidents trying and failing to achieve comprehensive health reform. On Sunday 21 March 2010, at 10.45 pm in Washington, DC, after a year of rising and falling political fortunes, Barack Obama, the 44th president, brought the story to an end with the passage of a bill that achieves near universal health insurance. The bill will be his legacy.

    Three policy imperatives shaped the landmark legislation. The first was to expand health insurance coverage. The US is the only major industrialised nation that fails to guarantee coverage for all its citizens.2 More than 46 million Americans are uninsured, and a recent study estimated that about 45 000 deaths a year are associated with lack of insurance.3 4 The second was to end the unfair practices of the private health insurance industry, such as denying coverage to anyone with a “pre-existing medical condition” or rescinding coverage when a patient gets ill. The third was to curb the spiralling costs of health care, which were threatening to explode the federal budget.

    Tackling these policy imperatives was a huge challenge because it meant spending money to expand insurance while simultaneously making savings. Although far from perfect, the Patient Protection and Affordable Care Act,5 due to be signed into law on 23 March, is a giant step towards meeting this challenge. It will be further improved if the Senate passes an additional package of fixes (Reconciliation Act 2010) that has already passed the House.

    The bill represents “comprehensive reform with an incremental soul.”6 Although it will expand coverage to 31 million uninsured Americans by 2019, tackling the first policy imperative, it does so largely by preserving the existing private insurance system. From 2014, nearly all US citizens and legal residents are mandated to have health insurance or else pay a penalty. Individuals and employers will be able to shop for insurance through new online exchanges—the key innovation in the bill—where they can compare the prices, benefits, and consumer rated quality of different plans. People on low and middle incomes will receive generous subsidies to purchase a plan, and small businesses will be given tax credits to buy insurance for their employees. Large businesses that refuse to offer employer based insurance will pay a penalty. Insurance coverage will also be expanded by widening the eligibility criteria for Medicaid, the social insurance programme for people on very low incomes.

    The bill tackles the second imperative through far reaching regulations on the insurance industry. Within six months of enactment, it will be illegal for insurers to deny coverage to children on the basis of pre-existing conditions or to rescind coverage when a person becomes ill or injured. Once the exchanges become operational in 2014, the ban on discriminating against people with pre-existing conditions will apply to everyone.

    Finally, the bill makes inroads into cost control (box). It more than pays for itself, partly through new taxes on high cost insurance plans and on wealthy Americans. The non-partisan Congressional Budget Office estimates that the bill will reduce the federal budget deficit by $118bn (£78bn; €87bn) in the next 10 years.7 Healthcare quality experts are encouraged by the bill’s support for comparative effectiveness research tied with pilot studies in Medicare, the social insurance programme for people aged 65 and over. These pilots will test ways of paying providers on the basis of the quality and not the quantity of care.

    Major cost controls in the Patient Protection and Affordable Care Act

    • Insurance exchanges: Competition between plans offered on the exchanges is expected to reduce premiums

    • Mandate: The mandate brings millions of people, both healthy and sick, into the insurance pool (the exchanges), which keeps premium costs down

    • Excise tax: From 2018, employers and consumers will be discouraged from purchasing, high priced insurance plans (“cadillac plans”) through an excise tax—a 40% tax on every dollar spent on any insurance plan costing above $27 500 annually

    • Medicare commission: An independent 15 member advisory board will submit proposals to Congress, containing recommendations to reduce the per capita growth in Medicare spending if spending exceeds a target growth rate

    • Medicare “bundling” pilots: The bill supports pilot studies of “bundling,” in which providers get paid for a whole episode of care (for example, a stretch of care for a patient with diabetes) rather than each individual medical procedure or visit

    The biggest winners will be the working poor, who currently fall through the cracks of the welfare system. They have jobs, but their employers don’t offer insurance. They earn a little too much to qualify for Medicaid and are too young for Medicare. Their wages are too low for them to afford the exorbitant costs of health insurance in the individual marketplace. The bill gives them subsidised access to insurance for the first time.

    The bill will have a smaller effect on people who already have insurance through their employer, although it will give them peace of mind. From 2014, if they lose their job they will be able to purchase a plan on the insurance exchanges, regardless of any pre-existing condition, and will receive subsidies based on a means test.

    This is the most important social legislation since the 1965 creation of Medicare and Medicaid. Many had hoped for more radical reforms, such as the option for people under 65 to buy into Medicare (“Medicare for all”), or the inclusion in the exchanges of an insurance plan run by the government (a “public option”). But there were not enough votes in the Senate to pass such reforms. The bill represents what was politically possible.

    Of the many shortcomings in the bill, two are particularly troubling. Firstly, proof of citizenship is required to purchase insurance on the exchange, leaving at least 5.6 million undocumented immigrants uninsured,8 which is an affront to the notion of health care as a fundamental human right. Secondly, women on low incomes who receive federal subsidies to buy insurance on the exchanges are barred from using them to pay for an abortion, which arguably curtails poor women’s reproductive rights.9

    Despite these caveats, the bill should be celebrated for moving America’s health system in the right direction, by extending insurance to 94% of US residents.10 It begins a process of reform that can be improved on over time. It rejects Ronald Reagan’s claim that government is the problem, reasserting the notion that government can provide solutions to our big challenges. The bill is a triumph of compassion towards the uninsured over the fear mongering stoked by President Obama’s Republican opponents. As such, it is already being talked about as “the civil rights act of the 21st century.”11

    Notes

    Cite this as: BMJ 2010;340:c1674

    Footnotes

    • Competing interests: GY volunteered for, and donated to, Barack Obama’s 2008 presidential campaign, and donated to the congressional campaigns of several Democrats. He is a member of Organizing for America, a community organising project of the Democratic National Committee, and of Planned Parenthood, a sexual and reproductive healthcare provider and advocacy organisation. He receives employer based health insurance from the University of California San Francisco.

    • Provenance and peer review: Commissioned; not externally peer reviewed.

    References