In theory, Congress is currently grappling with how to bring down the rising costs of health care. In reality, as Republicans debate their health care plan, the main drivers of health costs are not being discussed at all. Instead, politicians are largely fighting over how existing costs should be paid.
Republicans say they need to repeal Obamacare because costs are skyrocketing. They argue that loosening burdensome regulations will increase competition and bring down costs.
Here’s a look at the path the country was on before Obamacare. As shown below, costs have been surging compared to other countries for many years.
Both before and after President Obama signed the Affordable Care Act into law in 2010, Americans paid much more in health care costs and received lower health outcomes for their money than people in other advanced Western countries. Regardless of how the Democrats' Obamacare law and the Republicans' plans compare to each other, neither would change this situation.
"I think a few things are pretty indisputable. One is that we spend a lot more than anyone else does on health care," said Timothy Jost, a health policy expert at the Washington and Lee University School of Law in Virginia.
"And second, we don’t use a lot more health care than everyone else, in fact in some cases we use less. We pay a higher cost.”
Around the world, countries are trying to find ways to rein in health costs. These include changing how doctors are paid, limiting patents for prescription drugs, bulk-buying medication, and outright price controls. But in Congress, these and other measures are not even on the table.
There are, broadly speaking, three ways Americans pay off their health care tab. One is through premiums, another is through taxes (which in turn go to subsidies and social programs), and the third is through out-of-pocket costs.
Both Republicans and Democrats agree that one specific method — premiums — is too expensive. But rather than focusing on the underlying issues that have raised those costs, they're debating where to shift them.
Democrats want to lean more on the tax base, through federal subsidies and social programs. Some want to go even further and institute full universal health care.
The latest GOP bill before the Senate would do the opposite, shifting the price of health care toward out-of-pocket costs. It would do this in a few ways, by letting insurance plans cover a lower share of health care expenses, and by allowing them to stop covering certain expensive services such as maternity care. And it would arguably make it easier for healthy people to forego buying insurance altogether.
Keep in mind that all of this involves the individual marketplace, which insures just 7% of Americans.
“All of the talk, all of the rhetoric, is about the premiums for a very, very small percentage of the population," said Robert Berenson of the Urban Institute. “The big bulk of spending, which is in private insurance and in Medicare, isn’t being talked about.”
The Senate bill would manage to move costs away from both premiums and the tax base. It would lower individual market premiums by 20% in 2026, despite cutting a net $317 billion in public subsidies designed to lower premiums, according to the Congressional Budget Office.
The catch is that the costs of actually using the health care system would rise. Insurance plans would generally cover a smaller share of health care, with deductibles and other out-of-pocket costs making up the slack. People who rely on expensive procedures would be hardest hit, because the bill would give states the freedom to let insurers offer cheaper plans that don’t cover (or have cost caps on) things like maternity care, mental health services, substance abuse, and prescription drugs.
The CBO projected that a pregnant woman enrolled in a program that doesn’t cover maternity care could face an extra $1,000 a month in direct costs. Others could face annual or lifetime costs on drugs they rely on.
Big picture: Health care costs are going to keep rising.
Whatever happens on the individual market, health care costs overall should continue to go up.
Americans pay higher drug prices than people in other countries. Doctors are paid more. America's network of competing private insurance industries means higher overheads and less purchasing power than in single-payer systems, like the one in Canada. Conversely, consolidation of hospital networks has led to quasi-monopolies, with providers routinely marking prices up to 300% of the cost of a procedure or more — all the way up to 1000% markups in some cases.
But any structural reform of the US health care system would be immensely difficult and controversial. By definition, lowering costs for one group means taking money away from another.
"One person’s health care costs is another person’s income or profit," said Jost. "It’s a very, very hard thing to pull off.”
Slowing the growth of doctors' salaries would mean drawing the ire of doctors. Reforming drug patent law would mean taking on the pharmaceutical industry. Breaking up provider networks or imposing price controls would mean battling with the hospital industry. Introducing single-payer health care would be an existential threat for the insurance industry and the hundreds of thousands of people it employs.
Republicans are currently struggling to pass their health care bill — even without having to go to war with any of these well-funded lobbying groups.
When Wisconsin Sen. Ron Johnson was asked by a reporter last week why Republicans don’t add provisions to tackle the availability and costs of prescription drugs into the bill, he recoiled.
It wasn't out of indifference. Johnson lost a relative to a fentanyl overdose, and in the same conversation spoke passionately about the need for education reform to warn young people about the dangers of prescription drug abuse. Rather, his point was that Republicans are already so divided on Obamacare repeal that adding more hugely complex issues into the mix would make it practically impossible to pass a bill.
“We’ve got, right now, enough issues on the plate," he said.
Paul McLeod is a politics reporter for BuzzFeed News and is based in Washington, DC.
Contact Paul McLeod at email@example.com.
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