My quiet afternoon was interrupted Tuesday by an outburst of blather on CNN about a gaffe that Bill Clinton had uttered, supposedly calling the Affordable Care Act "the craziest thing in the world." There followed lots of speculation about how Hillary Clinton would tamp down the controversy, lots of chortling over whether the time had come to put a leash on the ex-president lest he embarrass his wife again, etc., etc.
You know the drill.
So I felt obligated to hunt down Clinton's remarks. Imagine my surprise to discover that he hadn't called Obamacare "crazy," but had applied that label to elements of the entire U.S. healthcare system, and that he was speaking up for a reform that supporters of the law have been advocating for years and that his wife actually has proposed. This is what happens when news commentators are let loose on a law they don't understand. So let's examine what really happened.
First, Clinton's remarks at a campaign appearance in Flint, Mich. (the video is below):
"We've got to figure out what to do now on healthcare. Our opponents say just repeal it all, the market'll take care of it. That didn't work out very well for us, did it? We wound up with the most expensive system in the world, and we insured the smallest percentage of people. On the other hand, the current system works fine if you're eligible for Medicaid, if you're a lower-income working person, if you're already on Medicare or if you get enough subsidies on a modest income that you can afford your healthcare.
"But the people that are getting killed in this deal are small business people and individuals who make just a little too much to get any of these subsidies. Why? Because they're not organized, they don't have any bargaining power with insurance companies and they're getting whacked. So you've got this crazy system where all of a sudden, 25 million more people have healthcare and then the people that are out there busting it ― sometimes 60 hours a week ― wind up with their premiums doubled and their coverage cut in half. It's the craziest thing in the world."
Clinton closed with a suggestion that individuals be permitted to "buy in to Medicare or Medicaid" at a fixed, affordable rate.
Let's compare that to the healthcare platform on Hillary Clinton's campaign website and in her recent essay for the New England Journal of Medicine. In both places, she acknowledged that out-of-pocket costs threaten to make mandated insurance unaffordable for many families. In the New England journal, she advocated "enhanced tax credits to make coverage affordable." She specified "a refundable tax credit of up to $5,000 per family for excessive out-of-pocket health costs" — that is, a credit available even to low-income families exempt from the federal income tax. In both places, she calls for letting "Americans over 55 buy in to Medicare." She also calls for a public option — a government-sponsored program that would compete with the private plans offered through the Affordable Care Act.
Even though Bill Clinton was pretty much in tune with his wife's view of the ACA, that didn't keep Republicans from piling on to the notion that he had uncovered some secret flaw in the program. They were led by Donald Trump, who tweeted, "Wow, did you just hear Bill Clinton's statement on how bad ObamaCare is. Hillary not happy. As I have been saying, REPEAL AND REPLACE!"
Let's leave aside that Trump's proposal for repealing Obamacare offers no replacement that would safeguard the insurance acquired by 20 million Americans for the first time under the program. The truth is that the inadequacy of the ACA's tax subsidies has been acknowledged by its supporters virtually from its inception. I took note of this in November 2013, just six weeks into the first open-enrollment period for ACA exchange plans, and reported on proposals to fix this flaw and others in January.
ACA subsidies are available on a sliding scale for families with household income up to 400% of the federal poverty level, or $97,200 for a family of four this year. At that level, the law aims to limit premiums for a region's second-lowest-cost silver plan — the "benchmark" plan — to 9.69% of household income. Buy a cheaper plan, and the subsidy covers more; buy a more generous plan, and you'll pay more of the premium yourself.
Families earning up to 250% of the poverty guideline — that's $60,750 for a family of four — are eligible for additional subsidies to cover deductibles and other out-of-pocket expenses.
More than 80% of ACA enrollees receive some subsidy, the government says, but these are sharp cliffs; earn a dime over that 400% ceiling, and the subsidy disappears. Of the 20 million, according to the assiduous ACA enrollment-tracker Charles Gaba, 11 million receive their coverage via the ACA's Medicaid expansion and 9.1 million receive subsidized insurance via the ACA exchange. In addition, 8 million participants in the individual or small-group insurance market receive no subsidies, presumably because they earn too much to be eligible. Of that group, the government announced on Tuesday, as many as 2.5 million would be eligible for subsidies if they bought their insurance through the exchanges rather than off-exchange, and 1.1 million might even qualify for the cost-sharing subsidies as well.
Just over a year ago, Linda Blumberg and John Holahan of the Urban Institute proposed a detailed restructuring of the subsidies by pegging them to more generous coverage and reducing the maximum that low- and middle-income families would be expected to pay. As they observed, "the ACA was passed under tight budgetary constraints given its ambitious coverage goals, and it is essentially underfunded in multiple ways."
Plainly, more people could become eligible for subsidies if Congress chose to expand the program. Its reason for not doing is entirely political. President Obama, in his recent interview with Jonathan Chait of New York Magazine, cited the inadequacy of subsidies as one of the "eminently fixable problems" of the law, a "suboptimal solution" made necessary because "you hit a point where if Congress just is not willing to make any constructive modifications and it's all political football."
Bill Clinton obviously was applying the label of "the craziest thing in the world" not to the Affordable Care Act itself, but to the sharp drop-off in help for middle-income households. While his reference to "coverage cut in half" is mystifying — because nothing in the law reduces insurance benefits — he's right in pointing at the relative powerlessness of the middle class in achieving more affordable care. As he observed, these are people who don't receive insurance through their employers, aren't poor enough to be eligible for Medicaid or rich enough to afford the best plans, but are on their own in dealing with insurance companies and overlooked by our political system.
Hillary Clinton's platform would at least start the conversation to address those flaws. But the GOP and Trump wouldn't. Their plans call for removing all the consumer protections and subsidies provided by the ACA while giving insurance companies more power to offer substandard benefits at higher prices. Even some conservative healthcare experts think that's the wrong course.
As James Capretta of the American Enterprise Institute put it this week, "Although Trump's health care plan is a moving target, it's pretty clear he wants to get rid of the ACA's key coverage-expanding provisions and would not replace them with anything that would come close to achieving the same result."