It’s no secret that there are plenty of problems with health care in America. We all know health care still costs too much and delivers too little. Consumers are rightly fed up with the health care status quo, and are demanding action to contain costs and improve care. But the big new health care legislation introduced in Washington, D.C., this week, known as the “American Health Care Act” (AHCA) has us worried that things are about to get worse, not better. Instead of taking on the high cost of health care and other urgent problems for consumers, Congress may be on the verge of severely damaging the nation’s health insurance markets, raising costs and degrading care for millions of Americans.
Lord knows American consumers need urgent action on health care. Today, over a third of every dollar we spend on health care is pure waste. For years, U.S. PIRG has been pushing for real action on health care costs, and there’s plenty of work still to be done. If Congress and the President want to deliver results for American consumers, there are countless steps they can take that would make a real difference, including:
- Tough action on skyrocketing prescription drug costs—currently the fastest-growing cost driver in health care. A few common-sense reforms in this area could make a huge difference, like allowing Medicare to negotiate drug prices, requiring drug manufacturers to explain the basis for drug prices, and stopping anti-competitive practices by big pharmaceutical corporations.
- Price transparency for health care services. The very least we can do about rising health care costs is make sure consumers can get prices up front, to enable more informed decisions about value and encourage price competition that could help keep costs in check.
- Changing the way we pay for health care. Today, we mostly reward hospitals and doctors for performing as many procedures and prescribing as many drugs as possible, instead of paying them to keep us healthy and out of the hospital. Despite some promising small-scale efforts, there’s still far too little being done to change this.
- Making health care better and safer for patients. Even though Americans pay through the nose for health care, the quality of care we get is often surprisingly sub-par. Nowhere is this clearer than in the area of patient safety. Experts say that medical errors are the third most common cause of death in America, yet we do surprisingly little to prevent them.
The AHCA does nothing to address any of these concerns, which are shared by Americans across the political spectrum.
Of course, the President and his party ran on the promise to repeal and replace the Affordable Care Act (ACA), the health reform law also known as Obamacare, and the AHCA is their effort to follow through. There’s been a lot of debate about the potential impact of ACA repeal on Americans who are enrolled in the law’s coverage programs, and legitimate disagreement about the role of government in providing access to health care. However, there’s been less attention to the potential impact of the new replacement health plan on health insurance costs and the stability of the health insurance markets millions of Americans count on for health coverage.
The AHCA contains a number of provisions that will most likely have the effect of shrinking enrollment in health insurance markets.
To take just one example, the AHCA replaces the ACA’s individual mandate tax penalty with a provision that allows health insurers to charge consumers as much as 30% more if they have a lapse in coverage. This provision is intended to enable the AHCA to continue the popular protections prohibiting insurers from denying coverage for people with pre-existing conditions by providing an incentive for healthy people to enroll, so their premiums can help cover the cost of providing treatments for sicker enrollees.
There’s plenty of legitimate debate about the merits of the ACA’s individual mandate, but this proposed solution is unlikely to work as intended and is very likely to destabilize health insurance markets and raise premiums for everyone. The problem is that while a continuous coverage rule may provide some incentive for people with coverage to stay covered, it also makes it harder and more expensive for people to re-enter the health insurance market, which will tend to keep healthier people out—sick people are far more likely to be willing to pay extra, since they have a much greater need.
By shrinking the whole health insurance market while disproportionately driving healthy enrollees away, the AHCA will spread the cost of covering medical services for sick patients over a smaller number of people, and premiums will go up for everyone. In fact, it’s quite possible that rising premiums will create a self-reinforcing cycle known as a “death spiral” that drives even more healthy people out of the market. Health insurance markets may even seize up altogether, with millions losing access to options and competitive markets for coverage—whether they are covered through Obamacare or not.
It’s hard to predict what might happen in a “death spiral” scenario, but if insurers pull out of markets, millions could lose coverage options, or lose coverage altogether. If insurers decide to pull out of markets instead of working to contain costs and improve care, health costs could escalate even faster for all American consumers.
U.S. PIRG has very serious concerns about the AHCA because it does not seriously address the most pressing consumer concerns in the American health care system. In its current form, this bill not only won’t address the real problems in our health care system—it is likely to make them worse.
Americans need a comprehensive solution to rising health care costs. There’s a lot of work to do, but at this point the AHCA isn’t even a starting place for this important work. Please join us in calling on Congress to put together a real plan to make health care work better for American consumers.
 See, for example, Health Affairs, “Reducing Waste in Health Care”
 For example, the practice known as “pay for delay”: http://www.uspirg.org/reports/usp/top-twenty-pay-delay-drugs