The Case for a Third Party Health Care Agenda

Abstract: Despite enactment of the ACA, many people lack access to affordable comprehensive health insurance in the United States. Progressive and moderate Democrats sharply differ on the way to expand and improve health insurance coverage. All Democratic proposals rely on additional government spending, which is easily eliminated when Republicans take power. People with comprehensive coverage are facing higher levels of financial uncertainty and limited access to some services for a number of reasons including higher levels of cost sharing, narrow provider networks, surprise medical bills and claim denials. Neither political party has been able to build on the success of the ACA and permanently expand access to comprehensive health insurance coverage, improve coverage and insulate health insurance outcomes from the political process.

The ACA, by creating state exchange health insurance markets for people without employer-based coverage, by facilitating coverage for people with pre-existing conditions by creating new subsidies and by expanding Medicaid, reduced the number of uninsured. However, the objectives of the ACA -- universal coverage and reduced financial uncertainty stemming from improved insurance, have not been achieved and neither political party appears to have a roadmap towards these goals.

Most discussion of health care reform revolves around the number of uninsured, which is impacted by the availability of Medicaid and government subsidies for private insurance. Democrats tend to spend more on insurance subsidies and Medicaid than Republicans and this difference in spending does impact the number of uninsured. According to the CBO, the recently enacted Republican tax bill is projected to lead to an increase in 10 to 12 million uninsured Americans. The current political system in the United States has failed to provide access to affordable comprehensive health insurance, which is unaffected by the political process.

Many people find they cannot afford comprehensive health insurance even when subsidies are relatively generous. This problem becomes more severe during economic downturns when many working-age people and their families lose access to employer-based insurance.

Financial uncertainty for people with comprehensive health insurance is increasing for a variety of reasons.

· Cost sharing from deductible and coinsurance is increasing

· Higher cost sharing has caused people to forego necessary treatments, reduce savings for retirement, or take on medical debt

· Narrow network health plans often limit access to top hospitals and specialists

· Surprise medical bill persist despite enactment of the No-Surprises law

· Insurance companies increasingly deny claims and delay treatments

· People still seek short term health plans that do not provide adequate coverage.

Neither the Democratic nor Republican party have any idea at all on how to expand and improve health insurance coverage in the United States.

A third party is needed to move the nation forward on health care.

There are deep divisions in the Democratic party on how to proceed on health care.

The “progressive” wing of the party offered two competing plans for health care reform in 2020. One, Medicare-for-all, would have eliminated private health insurance entirely. The other, Medicare-for-America, would have largely replaced private insurance with a federally funded health insurance plan. (Medicare-for-America would allow continuation of employer-based coverage but would incentivize most people and employers to choose the new federal plan.)

The centrist wing of the party of the party offered several plans which maintained the dominance of private employer-based health insurance but offered additional public health insurance options inside state-exchange health insurance markets.

This chart, created by the Kaiser Family Foundation, summarizes the major Democrat health plans offered during the 2020 campaign.

The progressive wing of the party is likely to reintroduce either the Medicare-for-All plan or the Medicare-for-America plans in 2028. Neither plan is politically or economically attractive.

· Neither proposal included a reasonable transition plan.

· Government control of most or all health insurance is problematic under current factious political environment.

· A dominant public health plan would subject all health insurance to the annual budget process.

· Government closures and debt limit disputes could impact health insurance for entire population.

· All health insurance could be impacted by a future DOGE effort.

· All insurance payments on abortion and reproductive rights would be controlled by future Congresses and Administrations.

· Both plans substantially reduce payments for providers. The budget process might move payments towards the Medicaid level rather than the Medicare level.

· Wait times for procedures and specialists would increase for many households.

The progressive Democratic proposals make the existence of affordable health insurance coverage more exposed to political changes.

Moderate 2020 health care proposals called for additional low-cost health care options in state exchanges instead of a single or dominant public payer. The single payer health plan proposals and new ACA options are not under current active consideration. Most of the health care discussion since 2016 have involved expansions to Medicaid, the premium tax credit for state exchange health insurance and some ACA rules.

The Biden Administration expanded Medicaid spending through additional matching funds and expanded and more generous coverage. The recently enacted Trump tax bill eliminates matching funds, Medicaid expansions and places a work requirement for the receipt of Medicaid. Most of the Trump changes to Medicaid begin at the beginning of 2027.

The Biden Administration enacted a temporary expansion of the premium tax credit, which decreased household share of premiums for state exchange insurance and eliminated the phase out of premium subsidies at 400 percent of the FPL. This tax credit, slated to sunset at the end of 2025, has not been renewed.

It is very difficult to understand why the Biden Administration did not attempt to make the expanded premium tax credit for state exchange health insurance permanent even if that negotiation entailed some reduction in other spending programs. The elimination of the tax credit combined with Medicaid reductions will make it substantially difficult for low and middle income people to afford comprehensive health insurance.

The Trump Administration will likely soon respond to the increase in the number of uninsured from its tax bill by expanding the use of short term health plans through an executive order. The allowable use of short-term health plans is another variable that depends on election outcomes. (The original ACA had limited short-term health plan use, the first Trump Administration expanded their use, the Biden Administration contracted their use, and the second Trump team will soon expand their use.)

Short term health plans provide limited benefits, and their use often results in substantial medical debt for insured households.

The lucky people have comprehensive employer subsidized or state exchange health insurance. However, the quality of comprehensive health insurance coverage is falling and neither party has an approach to reducing financial uncertainty stemming from changes in comprehensive coverage.

The Trump Administration has raised contribution limits for health savings accounts and flexible spending accounts, but these changes do very little to assist the low-income and middle-income people who are having the most difficult time saving for health care.

Neither party is addressing issues caused by narrow-network health plans, which do not provide access to specialists and top hospitals.

Neither party is addressing problems caused by increased denials of medical claims.

Neither party has a plan to address the myriad problems with incomplete private health insurance.

Both parties seem to be enjoying a political process which leaves both the access and quality of health insurance highly affected by the political process.

Only a third party can expand and improve health insurance outcomes in the United States and hopefully reduce the role of politics in shaping health insurance outcomes. The third-party health care reform plan will be available shortly. Subscribe for immediate updates.