The real healthcare problems Republicans need to fix

The Republican narrative on healthcare reform casts Obamacare as the problem: Costs supposedly soared after the law passed in 2010, insurers bailed out of markets where they couldn’t make a profit, innocent Americans suddenly got fined if they didn’t buy expensive healthcare they didn’t feel they needed.

Obamacare certainly has its flaws, but the wrangling over a GOP replacement plan obscures something much more important—the US healthcare system was failing long before Democrats passed the Affordable Care Act in 2010. That’s the whole reason Obamacare came into being—too many Americans were unable to get care, or paid so much that it ravaged their finances.

Getty Images. The House is scheduled to vote on the leading GOP replacement bill on Thursday.
Getty Images. The House is scheduled to vote on the leading GOP replacement bill on Thursday.

As Republicans struggle to pass the American Health Care Act—their Obamacare replacement plan—the myth is that they need to fix what Obamacare broke. The reality is that they need to address fundamental problems in the US healthcare system that existed way before Obamacare, including skyrocketing costs, opaque pricing, overuse of care by some doctors and patients, obesity and diabetes epidemics, and especially the difficulties faced by working-age adults who aren’t covered by an employer plan. Simply undoing Obamacare will leave all those problems intact and make some of them worse.

If there’s one single underlying problem, it’s probably the cost of medical care, which has been rising far faster than overall inflation since the mid-1980s, as this chart shows:

Source: St. Louis Federal Reserve Bank
Source: St. Louis Federal Reserve Bank

It’s probably fair to say the Affordable Care Act is misnamed, because it did little to arrest the skyrocketing cost of healthcare. But it didn’t cause the problem either, as many people seem to think. If anything, it made more Americans aware of how expensive healthcare can be, by bringing them into the paying system where they have to deal with deductibles, co-pays and unexpected costs for things like using out-of-network providers.

The ACA undoubtedly did some good, compared with the situation before it went into effect. David Blumenthal and Sara Collins of the Commonwealth Fund recently pointed out that before 2010, insurance premiums for people without employer- or government-provided insurance were rising more than 10% per year, on average. Insurance companies were allowed to deny coverage for pre-existing conditions, effectively rendering coverage meaningless. In the three years before 2010, an estimated 9 million people who tried to buy a so-called individual plan were either turned down flat, charged more because of a health problem, or denied coverage for a pre-existing condition.

From 2001 to 2010, the number of working-age, uninsured Americans rose from 38 million to 52 million, which was 28% of the working-age population. The deep recession that started in 2007 was particularly brutal, since many of the 9 million people who lost their jobs also lost insurance coverage—at the same time their income plummeted, making it hard or impossible to buy coverage on their own.