WEBVTT - 35: Why Are We Still Fighting About Obamacare? 0:00:00.120 --> 0:00:03.920 This episode of Bloomberg Benchmark is sponsored by HSBC, winner 0:00:03.960 --> 0:00:07.800 of Trade Finance America's sixteen Company Award for best Supply 0:00:07.880 --> 0:00:12.360 Chain Finance Bank in North America HSBC where ambition connects 0:00:12.360 --> 0:00:16.280 with opportunity. I have to applaud you for not calling 0:00:16.320 --> 0:00:19.880 it sibelious group. It really seemed there like every former 0:00:19.920 --> 0:00:33.080 official was adding group after their name. Hi, and welcome 0:00:33.120 --> 0:00:36.239 back to Bloomberg Benchmark, a show about the global economy. 0:00:36.320 --> 0:00:40.519 It is Thursday April. I'm Tori Stiwell and economics reporter 0:00:40.600 --> 0:00:43.320 with Bloomberg News in d C. And I am joined 0:00:43.360 --> 0:00:46.560 by my co host Dan moss Are, Executive Economics editor 0:00:46.640 --> 0:00:50.920 in New York. Cadien. Hi, Tory, Great to be here. Yeah. Well, 0:00:50.960 --> 0:00:53.680 I'm not sure if everyone has seen the headline s lately, 0:00:53.880 --> 0:00:56.840 but the Patient Protection and Affordable Care Act a k 0:00:57.040 --> 0:01:01.160 Obamacare is back in the news. United Health Group, which 0:01:01.200 --> 0:01:04.440 is a health insurer, last week announced that it will 0:01:04.520 --> 0:01:08.280 drop out of the government organized health insurance markets in 0:01:08.319 --> 0:01:11.039 at least twenty three states because it's losing too much 0:01:11.040 --> 0:01:14.360 money on those policies. And United Health had about almost 0:01:14.360 --> 0:01:17.520 eight hundred thousand a c A customers as of March one, 0:01:17.600 --> 0:01:19.800 so there are a decent number of people who will 0:01:19.840 --> 0:01:22.559 have to shop for new plans or be left for 0:01:22.720 --> 0:01:26.440 with fewer options for coverage. And Obamacare has also remained 0:01:26.480 --> 0:01:30.720 a hot issue during this election cycle. A Kaiser Family 0:01:30.760 --> 0:01:35.720 Foundation pole last month showed seventy eight of registered voters 0:01:35.800 --> 0:01:39.960 say health care is very or extremely important to them 0:01:40.000 --> 0:01:42.800 when it comes to deciding who they'll vote for. And 0:01:42.920 --> 0:01:45.600 that was second only to you guessed at the economy 0:01:45.680 --> 0:01:49.880 and jobs. With the law staying squarely in the spotlight 0:01:50.040 --> 0:01:52.800 some six years after its passage, we thought this was 0:01:52.840 --> 0:01:56.200 a great opportunity to break down exactly what it is, 0:01:57.000 --> 0:01:59.960 what it's supposed to do, and how that's been work 0:02:00.000 --> 0:02:02.840 hang out and because so much of the debate centers 0:02:02.880 --> 0:02:08.360 on economic issues, the impact on businesses, on employment, on healthcare, inflation, 0:02:08.840 --> 0:02:11.800 Benchmark is the perfect forum for a discussion that's right. 0:02:11.800 --> 0:02:13.560 And I can't speak for everyone else, but I do 0:02:13.639 --> 0:02:17.000 feel like every time I hear a discussion about the 0:02:17.040 --> 0:02:20.760 Affordable Care Act, it's usually very one sided. Um and 0:02:20.800 --> 0:02:24.360 so we have a solution for that here on Benchmark. 0:02:24.639 --> 0:02:27.160 We have two guests here with me in the DC 0:02:27.280 --> 0:02:30.360 studio to help us make sense of it all. First off, 0:02:30.400 --> 0:02:34.080 we have the former US Health Secretary, Kathleen Sibelius. She 0:02:34.160 --> 0:02:37.359 helped President Barack Obama. Shephard the law through Congress back 0:02:37.400 --> 0:02:40.760 in and she oversaw the writing of tens of thousands 0:02:40.800 --> 0:02:44.639 of pages of regulations and traveled regularly to persuade Americans 0:02:44.680 --> 0:02:47.320 to sign up for coverage through the new online market places. 0:02:47.960 --> 0:02:50.640 After resigning two years ago, she now runs her own 0:02:50.639 --> 0:02:54.440 consulting firm, Sibelius Resources. I have to applaud you for 0:02:54.520 --> 0:02:57.920 not calling it Sibelious Group. It really seemed there like 0:02:58.040 --> 0:03:02.600 every former official was adding group after their name. We 0:03:02.680 --> 0:03:05.639 also have Jim Capretta, who spent more than two decades 0:03:05.680 --> 0:03:10.040 studying American healthcare policy, and lately he's specifically been looking 0:03:10.080 --> 0:03:14.440 at market based alternatives to Affordable Care Act. He's a 0:03:14.480 --> 0:03:17.840 senior fellow at the Ethics and Public Policy Center and 0:03:17.880 --> 0:03:21.560 a visiting fellow at the American Enterprise Institute. Now, Jim, 0:03:21.600 --> 0:03:24.640 I hope you won't mind me placing the American Enterprise 0:03:24.680 --> 0:03:28.200 Institute on the spectrum of think tanks that are clustered 0:03:28.240 --> 0:03:32.440 around d C. How would you characterize that think tank? Well, 0:03:32.480 --> 0:03:35.200 I think it's fair fair to say that mostly it's 0:03:35.200 --> 0:03:37.840 an independent organization. People can take their own point of view, 0:03:37.880 --> 0:03:39.680 but most of the people there tend to be on 0:03:39.760 --> 0:03:43.000 the on the conservative side of the spectrum or to 0:03:43.040 --> 0:03:46.600 some degree. Good to have you both here, Thank you, 0:03:46.840 --> 0:03:48.720 Good to be with you. Dan and I are going 0:03:48.760 --> 0:03:51.160 to start out with a brief overview of a c 0:03:51.480 --> 0:03:53.760 just to give all of our listeners sort of a 0:03:53.800 --> 0:03:56.400 foundation to work off of for the rest of the show. 0:03:57.160 --> 0:04:00.000 So it had the sweeping goals of both giving more 0:04:00.080 --> 0:04:03.680 people health insurance and reshaping a medical system that spends 0:04:03.720 --> 0:04:07.360 more and delivers less than any other wealthy country. It 0:04:07.400 --> 0:04:11.520 was signed into law on March and took full effect 0:04:11.520 --> 0:04:15.600 in October, and it has a few key features that 0:04:15.680 --> 0:04:19.600 you've probably heard about at some point or another. First off, 0:04:19.800 --> 0:04:22.840 the law requires most US citizens and legal residents to 0:04:22.880 --> 0:04:25.320 have health insurance, so if your employer doesn't offer it, 0:04:25.560 --> 0:04:27.080 you need to go out and find it on your own, 0:04:27.160 --> 0:04:28.800 or else you have to pay a fine. So when 0:04:28.800 --> 0:04:32.039 you hear individual mandate, that's what we're talking about. And 0:04:32.040 --> 0:04:34.200 the goal behind that was to make sure we had 0:04:34.320 --> 0:04:36.920 enough healthy customers signing up to balance out the cost 0:04:37.040 --> 0:04:39.760 of sicker ones. And if you meet certain income limits, 0:04:39.800 --> 0:04:42.600 the government also provides subsidies to help you pay for 0:04:42.640 --> 0:04:48.320 that insurance. The law also created state based health insurance exchanges, 0:04:48.760 --> 0:04:52.240 these websites that are sort of like a Kayak dot com, 0:04:52.320 --> 0:04:57.240 but for comparing health insurance packages from different providers. States 0:04:57.240 --> 0:05:00.680 can run their own exchanges, but in many cases they've 0:05:00.720 --> 0:05:04.600 deferred to the federal government to do so. Thirdly, employers 0:05:04.640 --> 0:05:07.760 who don't provide health coverage and have the equivalent of 0:05:07.839 --> 0:05:11.400 fifty or more full time employees will be fined. Those 0:05:11.400 --> 0:05:14.320 who do offer coverage have to pass an affordability test, 0:05:14.480 --> 0:05:17.680 and employers with more than two employees have to automatically 0:05:17.800 --> 0:05:20.640 enroll their employees into plants, with an option for employees 0:05:20.640 --> 0:05:24.279 to opt out. The law also introduced separate exchanges for 0:05:24.320 --> 0:05:27.760 small businesses to purchase coverage for their employees. And lastly, 0:05:27.960 --> 0:05:31.360 the law expanded the number of people eligible for many kite, 0:05:31.680 --> 0:05:34.640 though not all states have chosen to do so. And 0:05:34.680 --> 0:05:37.279 I know that we've just thrown a ton of information 0:05:37.279 --> 0:05:39.960 at everyone, but hopefully our guests here can help us 0:05:40.000 --> 0:05:42.520 digest it all and come up with some answers about 0:05:42.600 --> 0:05:45.479 what's been working and what hasn't. So to start, I 0:05:45.520 --> 0:05:47.640 thought it'd be good for our listeners to get a 0:05:47.640 --> 0:05:49.440 sense of where each of you stand on the issue, 0:05:49.960 --> 0:05:52.680 so succinctly if you could, if you had to label 0:05:52.720 --> 0:05:55.960 the law grantly, I guess a success or a failure, 0:05:56.120 --> 0:05:59.240 which would it be? And why do you want to 0:05:59.279 --> 0:06:04.039 start a self CAVI? Well, sure, I think overall it's 0:06:04.080 --> 0:06:07.720 done pretty well. There are some fragile parts of the 0:06:07.839 --> 0:06:11.920 law that are still evolving. But um, we have the 0:06:11.960 --> 0:06:17.000 lowest number of uninsured people that we've ever had in 0:06:17.040 --> 0:06:20.000 this country, so access to insurance for a part of 0:06:20.000 --> 0:06:23.760 the population who didn't have affordable insurance is definitely working. 0:06:23.839 --> 0:06:29.200 About twenty million new lives are enrolled in either Medicaid 0:06:29.200 --> 0:06:34.360 expanded programs or in the marketplaces. Health costs in spite 0:06:34.360 --> 0:06:39.880 of all of the I would say noise and conflicting 0:06:40.080 --> 0:06:45.760 reports out there, overall health inflation for expenditures across the board, 0:06:45.839 --> 0:06:49.280 government health inflation for the two big programs Medicare and 0:06:49.320 --> 0:06:53.440 Medicaid and what individuals are spending is rising at the 0:06:53.560 --> 0:06:58.200 slowest level in fifty years. And that continues to happen, 0:06:58.360 --> 0:07:01.839 so that while um, no one can say costs have 0:07:01.920 --> 0:07:06.000 gone down, they have been rising at a much slower pace. 0:07:06.760 --> 0:07:11.440 And I think for the first time ever. Health providers 0:07:11.480 --> 0:07:17.920 tell me there is a real um revolution underway in 0:07:18.000 --> 0:07:21.760 terms of how health care is being delivered by providers 0:07:22.280 --> 0:07:27.160 because the government has chosen to use its enormous pay 0:07:27.280 --> 0:07:30.960 lever about a trillion dollars a year to move as 0:07:31.000 --> 0:07:34.200 quickly as possible from fee for service payments, which meant 0:07:34.320 --> 0:07:36.680 the more stuff you do, the more dollars you get 0:07:36.680 --> 0:07:42.480 paid into a more quality based, outcome based payment system, 0:07:43.040 --> 0:07:48.080 better care, lower costs, more improvements along the way, and 0:07:48.160 --> 0:07:52.080 that is beginning to show some very promising results. Jim, 0:07:52.160 --> 0:07:55.720 what do you think, Well, I would say that the 0:07:56.040 --> 0:08:00.880 law in general has and you'll be surprised, this succeeded 0:08:00.920 --> 0:08:04.640 in the ways that we're fairly easy to succeed at 0:08:05.320 --> 0:08:07.520 and but is not doing well and all the things that, 0:08:07.560 --> 0:08:11.520 of course are harder and more difficult to to do. Um. 0:08:11.560 --> 0:08:16.560 The law basically expanded medicaid to many millions of more people. 0:08:17.160 --> 0:08:20.640 That didn't take too much. The eligibility processes are already 0:08:20.640 --> 0:08:23.680 in place all around the country. Uh, it's difficult politically, 0:08:23.720 --> 0:08:25.600 as you can see, there's a lot of resistance to it. 0:08:26.000 --> 0:08:29.080 But essentially what they did is they changed the income 0:08:29.160 --> 0:08:31.560 levels to a higher level and started signing up a 0:08:31.640 --> 0:08:34.880 lot more people in advertising and through the outreach system 0:08:34.920 --> 0:08:37.320 that we're already in place, brought them more into the 0:08:37.320 --> 0:08:40.800 Medicaid program. So of the people, the Congressional Budget Office 0:08:40.800 --> 0:08:45.560 says that in the law likely reduced the people who 0:08:45.559 --> 0:08:49.559 are uninsured or otherwise would have been uninsured by about 0:08:49.600 --> 0:08:53.360 seventeen million people on a base of probably around fifty 0:08:53.440 --> 0:08:56.440 million or so. That is not a small matter. So 0:08:56.600 --> 0:08:59.880 let's all stipulate that they the law has done a 0:09:00.800 --> 0:09:03.280 that part of it um. But I would say if 0:09:03.280 --> 0:09:05.719 you look at the exchanges, which are also supposed to 0:09:05.720 --> 0:09:09.720 be a big part of covering and insured and changing 0:09:09.720 --> 0:09:14.760 how insurance is delivered and establishing a news insurance system, 0:09:14.800 --> 0:09:18.559 I think they're it's largely it's limping along, but it's 0:09:18.559 --> 0:09:21.520 got a lot of problems. First of all, the number 0:09:21.559 --> 0:09:24.280 of uninsured that have gone into the exchanges is probably 0:09:24.400 --> 0:09:27.040 quite low. You don't have an exact estimate, but it's 0:09:27.080 --> 0:09:30.000 probably in the low single digit millions. So most of 0:09:30.000 --> 0:09:32.800 the people that ended up in the exchanges were either 0:09:32.960 --> 0:09:36.839 insured and maybe not so great insurance before, or we're 0:09:36.840 --> 0:09:40.400 in the individual market that essentially got closed down by U. 0:09:40.520 --> 0:09:43.720 The a c A, and they were forced into this market. Uh. 0:09:43.840 --> 0:09:46.960 People who can voluntarily decide to move into the exchanges 0:09:47.040 --> 0:09:49.640 or not, especially if they're paying their own premiums, are 0:09:49.679 --> 0:09:52.640 deciding and huge numbers not to do it. They don't 0:09:52.640 --> 0:09:55.600 find the products attractive, the premiums are too high, the 0:09:55.679 --> 0:09:59.000 deductibles are far too high. Settling for a fine, they 0:09:59.080 --> 0:10:01.480 end up paying the fine, or they stay uninsured, or 0:10:01.520 --> 0:10:04.040 they try to find a way into the employer marketplace 0:10:04.080 --> 0:10:08.079 if they can. If some of this was so easy, 0:10:08.520 --> 0:10:12.640 relatively easy, as you mentioned at the stop, why wasn't 0:10:12.640 --> 0:10:17.839 it done sooner? Oh? For the political circumstances weren't right. 0:10:18.080 --> 0:10:20.120 I mean, I didn't say that it was easy politically. 0:10:20.120 --> 0:10:22.679 I meant it was easy administratively, in the sense that 0:10:23.160 --> 0:10:26.400 we did many Medicaid expansions over the last forty years. 0:10:26.440 --> 0:10:28.600 This was a large one, but another one in a 0:10:28.640 --> 0:10:31.199 long line of Medicaid expansions that brought more people into 0:10:31.240 --> 0:10:35.720 the program. Frankly, we did a huge expansion and Medicaid 0:10:35.800 --> 0:10:39.000 like coverage for children in the nine nineties of almost 0:10:39.040 --> 0:10:43.480 comparable size, and so this wasn't unprecedented in terms of 0:10:44.120 --> 0:10:47.480 bringing more people into a publicly subsidized insurance system. It 0:10:47.600 --> 0:10:49.840 was sort of a well known path to how to 0:10:49.880 --> 0:10:53.080 do that. The difficult part is trying not to have 0:10:53.120 --> 0:10:56.440 as many people on publicly subdidized insurance, having a stable 0:10:56.440 --> 0:11:00.400 insurance market that is outside of publicly running rance it 0:11:00.480 --> 0:11:03.320 is more like a private system there. I think the 0:11:03.400 --> 0:11:06.080 law is having a lot of difficulty. Frankly, well, Jim, 0:11:06.120 --> 0:11:08.360 you mentioned the Congressional Budget Office, and we're going to 0:11:08.440 --> 0:11:11.040 get back to that in a sak. Let's just take 0:11:11.040 --> 0:11:14.760 a step back and consider one of the primary goals 0:11:14.880 --> 0:11:18.120 of the Affordable Care Act, which is to make healthcare 0:11:18.760 --> 0:11:23.000 insurance accessible to more people. Now, as of the end 0:11:23.000 --> 0:11:25.920 of the third open enrollment period under the a c A, 0:11:26.160 --> 0:11:29.760 twelve point seven million had signed up for coverage in 0:11:29.760 --> 0:11:34.160 those marketplaces, up from eleven point seven million last year 0:11:34.240 --> 0:11:37.240 and eight million in twenty fourteen. Now, while that's in 0:11:37.400 --> 0:11:41.760 line with the target the Health Department announced the head 0:11:41.760 --> 0:11:44.760 of this year's open enrollment, it's short of the twenty 0:11:44.800 --> 0:11:49.520 one million the CBO projected for back in March of 0:11:49.640 --> 0:11:53.320 last year, and as I think you mentioned, CBO recently 0:11:53.400 --> 0:11:58.320 lowered its forecast, and which, as Kathleen mentioned, is the 0:11:58.360 --> 0:12:02.240 first full year of Obama's coverage expansion, the percentage of 0:12:02.280 --> 0:12:05.480 people without health insurance was ten point four percent, or 0:12:05.559 --> 0:12:08.760 thirty three million people, according to the Census Bureau. And 0:12:08.800 --> 0:12:12.680 that's down from forty one eight million people. So it 0:12:12.760 --> 0:12:16.280 looks like the law has achieved that goal of providing 0:12:16.320 --> 0:12:19.800 more people with health insurance. But at what sort of cost? 0:12:19.880 --> 0:12:23.600 How has this affected households, and how has this affected 0:12:23.679 --> 0:12:26.280 the US budget? Do you want to start well, I 0:12:26.320 --> 0:12:31.040 think again, what we're talking about is a slice of 0:12:31.440 --> 0:12:35.760 the overall insurance market. The President really had a couple 0:12:35.760 --> 0:12:39.200 of choices and Congress had choices going into this. Do 0:12:39.240 --> 0:12:42.800 you start all over, wipe the slate clean and do 0:12:43.440 --> 0:12:47.600 as some people suggested? And one of our Democratic candidates 0:12:47.720 --> 0:12:50.800 is still suggesting kind of a medicare for all, everybody's 0:12:50.840 --> 0:12:55.840 in a single payer public plan. That was Sanders, That's 0:12:55.880 --> 0:12:59.760 Bernie Sanders. But that was a lively debate in Oh 0:12:59.800 --> 0:13:02.360 No Mine when this whole law was being looked at. 0:13:02.559 --> 0:13:04.800 Or do you and this is the path that the 0:13:04.840 --> 0:13:07.800 President and the majority of Congress chose at the time, 0:13:08.240 --> 0:13:10.560 do you try and fill the gap, so leave in 0:13:10.640 --> 0:13:15.800 place the employer plans worth here there and ninety of 0:13:16.000 --> 0:13:21.360 larger employers offer health insurance continue to offer health insurance. UH. 0:13:21.600 --> 0:13:25.040 Veterans have their own insurance plans, those over sixty five 0:13:25.160 --> 0:13:28.880 have a separate insurance plans, those low income Americans. So 0:13:29.400 --> 0:13:32.040 there was a portion of the market, the individual market 0:13:32.280 --> 0:13:35.440 and some small groups that was really on their own. 0:13:35.880 --> 0:13:39.679 Everybody was medically underwritten, so your own health issues were 0:13:39.720 --> 0:13:43.520 taken into account. You could be totally locked out by 0:13:43.520 --> 0:13:46.480 an insurance company, you could be locked out for the 0:13:46.480 --> 0:13:49.760 conditions which caused you to be sick in the first place, 0:13:50.120 --> 0:13:53.960 and you could be priced pretty much anywhere over the boards. 0:13:54.480 --> 0:13:57.400 That's the portion of the market that the Affordable Care 0:13:57.440 --> 0:14:01.680 Act addressed. And UM there has always been a lot 0:14:01.720 --> 0:14:03.720 of churn in the market, people in and out. If 0:14:03.720 --> 0:14:06.319 they get a job at Ford Motor Company, they dropped 0:14:06.360 --> 0:14:08.679 their own insurance and joined the Ford plan. If they 0:14:08.760 --> 0:14:11.440 leave that job because they retire early, they're back on 0:14:11.480 --> 0:14:14.199 their own. And also some people just signing up for 0:14:14.240 --> 0:14:16.760 plans and then canceling it. You bet, um, and that's 0:14:16.800 --> 0:14:19.440 always happened in the individual market. People moved in and 0:14:19.480 --> 0:14:22.160 out about six months at a time. So some of 0:14:22.160 --> 0:14:25.720 what we're seeing in the new marketplaces is very familiar, 0:14:25.920 --> 0:14:28.560 lots of churn, lots of folks coming in and out, 0:14:28.600 --> 0:14:34.640 incomes change, job circumstances change, um. Not surprisingly, people who 0:14:34.640 --> 0:14:39.760 were older and sicker, we're desperate for some coverage, particularly 0:14:39.800 --> 0:14:43.760 comprehensive coverage where their medical conditions would not be blocking 0:14:43.800 --> 0:14:46.160 them from getting insurance. They were the first ones in 0:14:46.200 --> 0:14:48.440 the door, they were the first ones in the gate. 0:14:48.520 --> 0:14:52.480 They are older and sicker than a lot of people 0:14:53.440 --> 0:14:56.400 who have not chosen yet to come into that market. 0:14:56.440 --> 0:15:01.600 So I think some of what we're seeing is was predictable. 0:15:01.960 --> 0:15:04.280 This is a more expensive popular and when you put 0:15:04.320 --> 0:15:06.800 everybody in the same pool, which is what insurance is 0:15:06.840 --> 0:15:10.760 supposed to be balancing risk, you get sick and I 0:15:10.840 --> 0:15:13.320 don't one year, and then I get sick the next 0:15:13.400 --> 0:15:15.760 year and you don't. That's that's a risk pool. You 0:15:15.760 --> 0:15:18.960 don't need everybody to get sick at once um or 0:15:19.080 --> 0:15:21.800 you can't afford it. So some of what we're seeing 0:15:21.840 --> 0:15:25.640 I think was able to be predicted at the outset 0:15:25.840 --> 0:15:29.840 and able to be looked at. There is more competition 0:15:29.880 --> 0:15:33.520 in this market than there has ever been before. Uh, 0:15:33.560 --> 0:15:36.560 there are more choices that consumers have than they've ever 0:15:36.640 --> 0:15:39.280 had before. But it's still a brand new kind of 0:15:39.320 --> 0:15:43.480 fledgling risk pool that needs to be developed, and we 0:15:43.520 --> 0:15:47.400 need more younger and healthier people to join that market. Yeah, 0:15:47.440 --> 0:15:49.680 and Jim, before we go to break, what do you 0:15:49.720 --> 0:15:51.880 think is the scope for that? Do you think younger 0:15:51.920 --> 0:15:54.920 and healthier people will actually join the market, what its 0:15:54.960 --> 0:15:58.120 future enrollment prospects look like? Well, I mean, I think 0:15:58.200 --> 0:15:59.960 I think it's going to be tough. Frankly, I think 0:16:00.120 --> 0:16:02.640 the the view of the plans that are being offered 0:16:02.640 --> 0:16:06.440 on the exchanges is starting to harden because look, I mean, 0:16:06.480 --> 0:16:10.160 anybody who's blow about two hundred or two the federal 0:16:10.200 --> 0:16:13.120 poverty line and income which for a single person is 0:16:13.240 --> 0:16:15.120 you know, twenty five thousand dollars a year up to 0:16:15.160 --> 0:16:17.360 about thirty dollars a year, they're going to get a 0:16:17.440 --> 0:16:19.760 very large subsidy from the federal government that makes the 0:16:19.800 --> 0:16:24.240 premium relatively attractive inside the exchanges. For anyone who has 0:16:24.280 --> 0:16:27.040 to pay the premium themselves slightly higher incomes where it's 0:16:27.040 --> 0:16:30.760 phased down, the products are looking quite unattractive to them. 0:16:31.120 --> 0:16:33.360 You can look in pulling data and see it. And actually, 0:16:33.360 --> 0:16:34.440 if you just go on on and look at some 0:16:34.440 --> 0:16:36.800 of the offerings you'll see, yeah, actually did it this week. 0:16:36.880 --> 0:16:39.080 You know, a bronze plan or silver plan with a 0:16:39.400 --> 0:16:42.400 with a you know, very large deductible for a single 0:16:42.400 --> 0:16:44.960 person and still a premium of six or seven or 0:16:45.000 --> 0:16:47.440 eight hundred dollars a month. You know, people are gonna 0:16:47.440 --> 0:16:49.960 start to say, I can't afford that, right because I'm 0:16:49.960 --> 0:16:52.400 gonna pay a lot of premium before and a deductible 0:16:52.400 --> 0:16:55.880 before I see any coverage. So I think the the 0:16:55.920 --> 0:16:59.560 attractiveness of the policies is really dependent on the amount 0:16:59.600 --> 0:17:02.560 of federal subsidy a person is getting. And that's the difficulty. 0:17:02.560 --> 0:17:05.960 It's really bifurcated the market for people with incomes in 0:17:06.000 --> 0:17:08.359 the eligibility cut, where they big subsidy, they are finding 0:17:08.359 --> 0:17:12.480 the products relatively attractive. Above that not not so much. 0:17:12.680 --> 0:17:14.880 The only thing I would say before we go to break, 0:17:14.960 --> 0:17:19.080 just so people have what Jim said close at hand. 0:17:19.960 --> 0:17:25.040 I think there is a some misguided view that somehow 0:17:25.080 --> 0:17:30.120 this subsidy is an unusual thing. And virtually every employer 0:17:30.200 --> 0:17:35.679 plan offered, the individual employee has a major share of 0:17:35.720 --> 0:17:40.720 that plan paid by his or her employer. And that's 0:17:40.800 --> 0:17:44.640 the mindset that really this plan was constructed under. Since 0:17:44.760 --> 0:17:49.080 these folks are often mom and pop operators working on 0:17:49.119 --> 0:17:53.359 their own. Entrepreneurs have two or three jobs, they don't 0:17:53.440 --> 0:17:58.439 have an employer paying a share. So the subsidy really 0:17:58.600 --> 0:18:02.040 is the sub institute for an employer plan. I'm gonna 0:18:02.040 --> 0:18:05.639 share most people in any insurance plan could pay a 0:18:05.720 --> 0:18:09.120 hundred percent out of their own paycheck, out of their 0:18:09.119 --> 0:18:13.080 own pocket, and I think that some people have looked 0:18:13.080 --> 0:18:16.879 at the subsidy as something unusual. It actually mirrors what 0:18:17.080 --> 0:18:20.399 happens each and every day in workplace plans, where the 0:18:20.400 --> 0:18:23.199 employer picks up a major share of the tab, and 0:18:23.200 --> 0:18:26.600 then the employee kicks in for him or herself for 0:18:26.680 --> 0:18:30.000 their dependence and moves on. Well, we're going to take 0:18:30.040 --> 0:18:32.359 a quick break for a word from our sponsor, but 0:18:32.440 --> 0:18:35.000 when we come back, we will continue our discussion on 0:18:35.040 --> 0:18:37.240 what's working and what's not with the Affordable Care Act 0:18:37.640 --> 0:18:40.080 and what this year's election may mean for the law 0:18:40.320 --> 0:18:47.680 after this break. This episode of Bloomberg Benchmark is sponsored 0:18:47.680 --> 0:18:51.760 by HSBC, with over eight thousand global relationship managers on 0:18:51.760 --> 0:18:55.040 the ground in over sixty countries. HSBC makes your global 0:18:55.080 --> 0:19:02.880 ambition their local business. HSBC. Let's turn to healthcare costs. 0:19:03.080 --> 0:19:08.640 Healthcare inflation as measured by the personal consumption expenditures that's 0:19:08.640 --> 0:19:11.800 a gauge of the Federal Reserve looks at closely, has 0:19:11.880 --> 0:19:17.359 trailed overall core inflation for three consecutive years now. Economists 0:19:17.359 --> 0:19:20.560 say at least part of that slowdown may be attributed 0:19:20.560 --> 0:19:25.399 to Obamacare, which encourages shorter hospital stays and limits on 0:19:25.640 --> 0:19:30.320 unnecessary procedures. But from what we gather, healthcare costs are 0:19:30.440 --> 0:19:37.400 broadly expected to start re accelerating. Jim Wiser, Well, first 0:19:37.440 --> 0:19:41.680 of all, they did re accelerate. So if you look 0:19:41.680 --> 0:19:44.680 at the national Health Expenditure accounts, the accounts that are 0:19:45.119 --> 0:19:47.920 looked at and run by the government, they announced the 0:19:48.080 --> 0:19:52.240 last year that those costs went up nationwide by five 0:19:52.280 --> 0:19:58.119 point three the highest level and I think seven years Uh. 0:19:58.160 --> 0:20:01.760 The expectation from those same p people is that the 0:20:01.800 --> 0:20:07.000 increase will be similar in and sixteen and beyond. I 0:20:07.040 --> 0:20:11.160 think this notion that the Affordable Care Act is related 0:20:11.200 --> 0:20:15.080 to the broad slowdown in health spending, this is one 0:20:15.119 --> 0:20:18.680 area where I think I will disagree with the secretaries 0:20:18.720 --> 0:20:21.560 that this I don't I don't believe that's the case. 0:20:23.240 --> 0:20:25.760 If you go back to two thousand and two, healthcare 0:20:25.760 --> 0:20:28.359 inflation in the United States was about nine point six percent. 0:20:28.960 --> 0:20:31.720 It fell to four point eight by two thousand and eight. 0:20:32.520 --> 0:20:34.480 So if there was something associated with the A C 0:20:34.680 --> 0:20:38.119 A that brought and then trend continued then into two 0:20:38.160 --> 0:20:40.680 thousand nine, ten and eleven, you'd be hard pressed to 0:20:40.720 --> 0:20:43.640 say people were in anticipating. You know, back in three 0:20:43.640 --> 0:20:45.560 and four and five, you know that the A C 0:20:45.680 --> 0:20:47.320 A was going to be enacted and therefore, you know, 0:20:47.440 --> 0:20:50.879 resulted in this broad slowdown. Moreover, there's been a global 0:20:50.920 --> 0:20:54.919 slowdown in health spending across the entire industrialized world of 0:20:55.000 --> 0:20:58.320 comparable amounts that has occurred in the United States. Now, 0:20:58.320 --> 0:20:59.639 I know, we think the A C A did a 0:20:59.640 --> 0:21:02.000 lot of eight things, but it probably didn't slow down 0:21:02.040 --> 0:21:06.040 health spending global. And yet this period does coincide with 0:21:06.320 --> 0:21:10.000 you mentioned two thousand a night a rather apocalyptic economic 0:21:10.119 --> 0:21:15.080 environment followed by a recovery certainly within the G seven 0:21:15.200 --> 0:21:20.520 that's been okay but not super awesome. Now, could that 0:21:22.119 --> 0:21:24.760 not be driving this rather than anything to do with 0:21:24.800 --> 0:21:26.879 the A C A. If you don't mind, I'll just 0:21:26.920 --> 0:21:29.520 say one more word about this, and I of course 0:21:29.600 --> 0:21:33.000 that's the case. The government actuaries that look at this 0:21:33.119 --> 0:21:36.040 for the government, for the executive branch, have reached that 0:21:36.160 --> 0:21:40.120 exact conclusion. They run a regression analysis several times going 0:21:40.160 --> 0:21:43.080 back decades, and the slowdown that has occurred in recent 0:21:43.160 --> 0:21:47.199 years is very predictable based on the economic conditions that 0:21:47.200 --> 0:21:50.200 occurred in the United States at that time. So look, 0:21:50.240 --> 0:21:52.960 I'm not trying to dismiss entirely everything that is in 0:21:53.000 --> 0:21:56.800 the a c A. Some of those provisions are having 0:21:56.840 --> 0:21:59.560 I think a marginal effect, but by and large, the 0:22:00.000 --> 0:22:04.520 notable care organization phenomenon, the bundled payments, the readmission policy. 0:22:04.560 --> 0:22:06.760 If you look at the estimates that were done both 0:22:06.800 --> 0:22:09.240 at the time they were enacted and since they are 0:22:09.359 --> 0:22:13.159 minor events in a trillions and trillions of dollar health system, 0:22:13.280 --> 0:22:15.080 and let me just push a little let me just 0:22:15.119 --> 0:22:17.439 push you a little bit, there could have not also 0:22:17.600 --> 0:22:20.399 reflect except can I get in this conversation before you 0:22:20.440 --> 0:22:22.960 move in a different direction, because I think I think 0:22:23.000 --> 0:22:27.200 it's important to have a baseline of what we're talking about. 0:22:27.320 --> 0:22:30.560 I don't think there's any question nor any dispute that 0:22:31.160 --> 0:22:37.400 the economic downturn had a significant impact on health expenditures. Overall, 0:22:37.480 --> 0:22:40.080 everyone agrees to that. What I think there is some 0:22:41.320 --> 0:22:47.200 dispute about and now I have seen gather differing reports 0:22:47.240 --> 0:22:51.000 than Jim is reading. A lot of economists are beginning 0:22:51.000 --> 0:22:56.240 to also say, now in twenty sixteen, eight years after 0:22:56.520 --> 0:23:01.639 the economic downturn, that there's a continued slow down in 0:23:01.800 --> 0:23:06.440 health costs. The five percent increases above what was seen 0:23:07.240 --> 0:23:10.800 in prior years, but it's significantly below what the trend 0:23:10.840 --> 0:23:14.760 line was before the turndown. So we're still in a 0:23:14.840 --> 0:23:20.000 period of compressed growth. And in spite of the fact 0:23:20.040 --> 0:23:23.400 that Medicare has more people coming into the program each 0:23:23.400 --> 0:23:27.040 and every day than they've ever seen larger enrollments, Medicaid 0:23:27.040 --> 0:23:30.960 as larger enrollments, their overall health inflation costs are at 0:23:30.960 --> 0:23:35.159 about one point three percent. So we're still seeing a 0:23:35.400 --> 0:23:39.400 change in costs, not necessarily due to, as Jim said, 0:23:39.520 --> 0:23:43.840 some of the new ways of paying providers organizing providers, 0:23:43.880 --> 0:23:48.160 but I think there's a very significant change underway within 0:23:48.200 --> 0:23:52.280 the health system, understanding that the payment system is going 0:23:52.320 --> 0:23:54.320 to look very different in the future, and that money 0:23:54.400 --> 0:23:57.000 is actually coming out of the system for the first time. 0:23:57.640 --> 0:24:00.280