Repeal and Replace with What? An Alternative to Obamacare

by Emily Clarkson

Hi, my name is Emily Clarkson. I’m an 18-year-old college student with absolutely zero authority to inform on health care policy, but here’s my two-cents anyway.

With Trump pushing for an overhaul of our healthcare system, the primary question has become how to replace it. Nobody would argue that Obamacare is the perfect system, but what’s the alternative?

The Costs:

It’s easy when debating healthcare to focus on insurance companies. After all, our premiums and deductibles are the numbers we know, and maybe the only ones we know in a market lacking any cost-transparency. Despite Obamacare’s efforts to make healthcare more affordable, premiums have only continued to increase since its implementation. We know this. Well, maybe I don’t, but you probably do. It’s the only reality that’s understandable in this whole mess of a healthcare system.

What’s less understandable is why the prices are so high. Corruption in healthcare extends far back—way past the painted villains of our story and back to the heroes themselves. Drug companies, testing clinics, medical equipment suppliers, and even supposedly non-profit hospitals are driving up the costs of those steadily increasing monthly bills. 

Hospitals

At best, hospitals increase profits through a plethora of scans, lab tests, and consultation fees, which may or may not be necessary, but are unfortunately protected by medical-malpractice litigation. Even if one blood test or CT scan will equal the effectiveness of two, doctors are pushed to order a second, not only for the profit incentives, but also for legal protection. At worst, hospitals rack up costs through double-charges and over-charging.

Simple items such as gauze pads, Tylenol, or saline solution can add hundreds in a bill already stretching into the thousands from overpriced tests and procedures. I can buy a 500-count bottle of Acetaminophen, a generic brand of Tylenol, for $7.90 off Amazon, but emergency rooms may charge $30 or more for a single pill8.

Such a dramatic price jump is not unique. Patient bills are determined through price lists called “Chargemasters,” which differ for every hospital. These lists are not only off limits to the public, but also seem to be arbitrarily decided. Medicare ignores Chargemaster prices, instead paying hospitals for the direct cost of services and equipment through a formula it calculates.

Although Medicare has the power to bypass such ridiculous expenses, the same cannot be said for most insurers, which lack the influence to go head-to-head against practices that dominate the market1. The reason Medicare is so successful as a negotiator is because of the leverage it enjoys through servicing 15 percent of the population2.

Obamacare exchanges were based on the notion that more people would mean more leverage against the high prices of insurance companies—a notion that works even if the exchanges have not. Since that is the case, then wouldn’t the most leverage come from banding together the entire nation? Extending Medicare, or employing a similar program, would force hospitals to do away with expensive Chargemaster bills.

Drugs

The same can be said for exorbitant drug prices. The United States, on average, pays two to six times as much as other countries for prescription drugs4. Yet, unlike these other countries, the American government is limited in regulating drug prices. The price Medicare pays for drugs, therefore, is the expense drug manufacturers charge5. However, undoing this legislation would have undesirable results, as it would decrease the incentive for research and development in drug companies, likely leading to a shortage of new drugs. The risks of failed R&D projects are high, and, unfortunately, the majority fail, but high profits in America provide the incentive for companies to pour billions into an industry with a large basis in chance13. The truth is we’re footing the bill for world access to new medicines, and although it’s not an especially desirable responsibility, the consequences of doing away with it altogether would be even worse.

Easier targets for regulation are the companies such as Turing Pharmaceuticals and Mylan that employ a system of price gauging on necessary medications. After three decades on the market, Mylan, the manufacturer of EpiPens inflated prices for a two-pack from less than $100 in 2007 to $608 by 20169. A more than 600% cost increase for no explainable reason should be subject to closer scrutiny.

Equipment

Expensive medical technology serves as yet another driving factor in escalating healthcare costs. This market shares a similar problem to other technological fields: a drive toward newer versions of a product, which—much like the iPhone 7—may not necessarily be an improvement over the old. Typically, we want the newest, shiniest equipment, even if it’s not particularly necessary or cost-effective. Additionally, as in the case of certain medical testing, the benefits of some technology may be negligible.

For example, the implantable cardioverter-defibrillator, a device originally intended for those who had survived a heart attack, is now implanted in patients facing some risk of cardiac arrest—exposing them to risk of infection and shocks—even though primary prevention trials indicated 90% of ICDs will never save a life10. Although regulating preventive technology and opting for older models is controversial—when exactly does the risk necessitate the cost when dealing with human lives?—utilizing a cost-benefit analysis of products could lower expenses without great detriment.

Villains are Villains

We may have painted the knights a little darker, but they aren’t the only ones driving up prices. Insurance companies are certainly not victims in the healthcare system—they too, have consolidated, wielding high deductibles and costly premiums over the average American’s head. Our current health insurance system is basically an oligopoly, where a few companies—notably Aetna, Cigna, Humana, UnitedHealth, and Anthem—dominate the market. Because they hold market power with relatively little competition for low prices, individuals, and even companies, have no leverage to bargain against them. Proposed mergers between Anthem and Cigna as well as Humana and Aetna, which have so far been blocked on antitrust grounds, would further shrink the market, leaving even fewer insurance options11.

Yet, there’s no reason to believe that expanding private insurance options would be much better. The profits would simply switch from insurers to hospitals, drug companies, and medical technology suppliers, which would take advantage of the insurers’ decreased negotiating power to inflate prices. Privatized health insurance seems a vicious cycle without solution.

Free market as a solution? Not.

The alternative commonly proposed to Obamacare and government regulation is a free market system. However, healthcare is ineffective as a free market system for a few reasons, first of which is the very nature of the product, healthcare, itself.

  • When customers, or loved ones of the customer, are in an emergency situation, they are not in a position to price shop.
  • The lack of cost transparency makes it difficult for patients to be informed shoppers.
  • Monopolies, especially in the drug industry, leave consumers with only one option no matter how informed they may be.

So what the hell do we do now?

I guess here is the part where I admit that I’m not sure exactly and you all turn away in disgust without reading the rest of what I’m about to say. The truth is trying to make over 300 million people healthy is insanely complicated. Our current controversy over healthcare isn’t something that started in 2009 but stretches back to George Washington’s administration, when the right to quarantine was debated between federal and state jurisdiction12. Every advance since then has been hotly contested, including the Medicare/Medicaid programs that for us seem commonplace. The problem is I’m not sure there is such a concrete solution, and if that seems hopeless then remember that 100 years ago we didn’t even have Penicillin. If we have to move slowly then we’ll just move as fast as we can.

Although I don’t have anything more than vague proposals, here’s my alternative to our current system:

  • A public option: The only way to combat the bargaining leverage the hospitals, drug companies, and equipment suppliers enjoy is through an entity with equally large or greater market power—and this one happens to prioritize its customers’ health over profits. Extending the Medicare system would probably be the simplest method with patients paying premiums and deductibles according to their income and age—benefits for the retired still applying. While the government should guarantee basic coverage, patients can supplement with private insurance—like many Medicare beneficiaries do now.
  • Reform medical malpractice litigation: Instead of encouraging excess through policies that overly punish doctors we should reward them for quality care with low costs.
  • Impose limits on price gauging: Although the exorbitant costs of new drugs are too complex for me to tackle, such unnecessary escalation of already marketed drugs should be curbed so patients can receive life-saving medicine at an affordable rate.
  • Encourage cost transparency: Hospitals don’t list prices, and finding the expenses for anything proves nearly impossible. While the significance of cost transparency would be somewhat negated by a public option, it might still lower costs for the gaps covered by private insurance by increasing competition among hospitals, which vary widely in costs. One way to do this would be to incentivize patients’ understanding of medical bills through lower deductibles in private insurance.
  • Cost-benefit analysis of medical technology: Promote medical technology that provides results at low cost, and decrease prevention measures in the lowest-risk patients.

Affordable healthcare should be and is generally recognized as a right belonging to every American citizen. We hold ideals of it as a right belonging to every global citizen. While it seems a relatively modern phenomenon, Aristotle wrote, “of a citizen’s absolute right to the measure of good health that society is able to give” in the fourth century B.C., and the idea has gained credence since.6 Although achieving a global health standard seems like an impossibility even further away than rectifying our failed system, how can we lead the charge toward international human rights without those rights guaranteed for our citizens? Ever since the Declaration of Independence declared our rights to “life, liberty, and the pursuit of happiness” we have considered ourselves as proponents of that cause7. So, it is essential that we first forward that cause for our own people by achieving a healthcare system on par with our status as an industrialized nation.

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