Obamacare's slippery slope to single-payer system

UnitedHealth Group, the nation's largest health-insurance company, has threatened to pull out of the Affordable Care Act's exchanges in 2017, thanks to red ink. Other big insurers are reporting losses as well. The Affordable Care Act, either on purpose or through faulty construction, (depending on your taste for conspiracy theory) was designed to fail.

With Obamacare facing serious headwinds, it's imperative that regulators improve the quality of exchange plans to boost enrollment numbers. Failure to do so will only embolden those who wish to see it replaced with a single payer health-care system.

Members of the Single Payer Action group opposed to the Affordable Care Act hold a sign outside the Supreme Court building in Washington, D.C.
Andrew Harrer | Bloomberg | Getty Images
Members of the Single Payer Action group opposed to the Affordable Care Act hold a sign outside the Supreme Court building in Washington, D.C.

What's becoming obvious to patients, physicians, and payers is that under current ACA regulations, there's a stark difference between "having insurance" and "having access to health care."

To get around caps on how much they can charge in premiums, insurers have imposed higher out-of-pocket costs for many specialty drugs. The absurdly high co-pays and co-insurance mean that, in practice, many patients with exchange plans can't afford their medicines.

Just look at silver plans (the most popular category). In five of 20 drug classes for conditions from cancer to HIV, at least 20 percent of plans require patients to pay 30 percent or more of the medicine's cost. Over half of silver plans place all multiple sclerosis medicines in the "specialty tier" with the highest level of cost-sharing.

In short, patients with such plans lack a single affordable treatment option. That has serious negative consequences for patients, the health-care system in general, and Obamacare in particular.

High costs cause moderate to low-income patients to skip prescriptions. Non-adherence increases hospitalization rates and overall health spending, thus burdening all taxpayers and health-care consumers. Obamacare itself won't have much of a future if healthy people (particularly healthy young people) continue to avoid exchange plans — and the skimpy coverage they offer — like the plague.

If regulators limited cost-sharing, people would find exchange plans more attractive, since the plans would provide real rather than illusory coverage. Higher quality plans would bring more healthy people into the exchanges. And more healthy people would make the plans more affordable.

Unfortunately, rather than upgrade the quality of exchange plans to make them more attractive, ACA backers have turned on a much easier target — the pharmaceutical industry. Their narrative goes like this: co-pays are high because of steep increases in drug prices.

The facts tell a different story.

After taking manufacturer rebates into account, brand name drug prices increased 5.5 percent last year — the slowest pace in 5 years, according to pharmaceutical industry research. With prescriptions accounting for just 10 percent of total health-care spending, and with hospital spending expected to grow at over 6 percent a year for the next decade, according to the Centers for Medicare and Medicaid Services, it's obvious that medicines aren't the fiscal threat some claim.

But these facts haven't deterred the true ideologues, many of whom would be delighted to throw in the towel on Obamacare and instead impose single-payer health care on Americans.

Activists in several states, including California, Colorado, and Ohio, have advanced ballot initiatives that would impose outright single-payer systems or de facto ones by prohibiting state health-care programs from paying more for medicines than the price paid by the single payer Veterans Affairs system.

On a national level, presidential candidate Bernie Sanders has called for a "Medicare for all" single-payer system. Hillary Clinton has previously expressed support for single payer. Even Republican front-runner Donald Trump has praised single-payer systems.

Despite the repeated failures of single-payer programs, they believe that more government control is the solution to America's health-care woes.

Again, the facts tell a different story.

Consider the problems besetting the Veterans Affairs system, which fixes prices for all medicines. Because the government refuses to cover certain newer medications, veterans can't access about 1 in 5 of the most common medicines. Or consider the United Kingdom, where the single payer National Health Service is known to ration treatment.

When it comes to health insurance available through Obamacare, the only thing that seems to be "universal" about it is disappointment. Patients don't like it. Payers don't like it. The uninsured young population doesn't like it — or want it. It's fair to say that the foundational design flaws are becoming evident. Until exchange plans are made legitimately attractive, healthy people will continue to avoid them, and insurers will follow UnitedHealth's lead and stop offering plans that only lose them money.

But rather than face the music, ACA supporters are playing the blame game — while those who support a more complete government takeover of health care are waiting in the wings.

Commentary by Peter J. Pitts, a former FDA associate commissioner, who is currently president of the Center for Medicine in the Public Interest, a nonprofit that gets funding from the pharmaceutical industry.