The one incredible thing we must do to fix the ObamaCare crisis

ObamaCare is on the ropes, and everybody knows it. President Obama knows it. Hillary Clinton and Donald Trump know it. Our 535 members of Congress know it. The millions of health care providers and insurers who are dedicated to providing quality health care for all of us know it. And the 20 million people who signed up for the program and now are seeing plans disappear and premiums skyrocket on those that remain know it.

Even Bill Clinton knows it. Speaking in Flint, Mich., on Monday, the former president called ObamaCare “the craziest thing in the world.”

“You’ve got this crazy system where all the sudden 25 million more people have health care, then the people are out there busting it, sometimes 60 hours a week, and wind up with their premiums doubled and their coverage cut in half,” the former president said.

So while President Obama can proudly say that the Affordable Care Act — the signature achievement of his eight years in office — has provided health insurance to millions of people who previously didn’t have it or couldn’t get it, he has to recognize that it is hemorrhaging badly, and that it won’t take a Band-Aid to stop the bleeding. It will require a tourniquet.

The most serious concern right now is the “risk corridors” that were created to cover the health exchanges’ losses if they underestimated the costs of providing insurance. According to the law, the government is supposed to reimburse the exchanges for their shortfall.

But nobody envisioned that the risk corridors would be underfunded to the tune of $2.5 billion in 2014 and a still-undisclosed amount in 2015, and that 175 health plans would be lining up to be compensated for their losses. And nobody envisioned that ObamaCare’s opponents in Congress would call the refunds a “bailout” of the insurance industry, and that they would block the Department of Health and Human Services from paying the bill.

The math behind the Affordable Care Act was flawed from the start, and the equation needs to be fixed immediately.

Now, according to a report in The Washington Post, the “administration is maneuvering to pay health insurers billions of dollars the government owes … through a move that could circumvent Congress” — refunding the exchanges not through HHS but through a rarely used “Judgment Fund” that the Treasury Department can tap to cover federal legal claims.

But even if the administration does this, it will be just a short-term fix. Whether it’s HHS or the Treasury Department that pays the bill, it will only kick the can down the road a bit. It won’t solve anything long-term, because the problems that got us here will remain.

As things stand now, the people getting health coverage through ObamaCare are older and sicker than we anticipated. And the younger and healthier adults who were expected to offset their elders’ high costs aren’t buying into the program. Instead, they’re choosing to pay a small fine and gamble that their good health will continue.

So refunding the insurance companies for their losses will keep ObamaCare afloat for another year, but it won’t provide long-term relief, because:

  • Some major insurers are pulling out of the system in many states due to their huge financial losses, effectively reducing the number of plans available to consumers in those states. Some of those major insurers are also seeking mergers, which would limit competition.
  • The insurers still haven’t figured out how to calculate exactly what coverage they need to provide, and what they must charge consumers who need it.
  • The government has failed to hold insurers accountable in terms of their efficiency, which is critical not only for providing quality care but for managing their own operations.
  • Nobody seems inclined to address a problem that led to the failure of many new companies and co-ops: ObamaCare’s Medical Loss Ratio mandate, which prevents insurers from spending more than 15 or 20 percent of their income on administrative costs. This has crippled the insurers — especially the startups — because the money they spend on getting accredited, putting their provider networks in place, examining their efficiencies and reaching out to potential customers is not included in their administrative costs.
  • The administration and the insurance companies are squabbling over fixed indemnity plans, inexpensive supplements for people with high-deductible plans that are exempt from ObamaCare's minimum criteria on what health care plans must include. The administration contends that people who buy these plans think they meet the minimum criteria and often aren’t aware that they must also buy a health care plan.

Until all these problems are fixed, paying back the health exchanges for their losses won’t change a thing. We’ll be throwing good many after bad, and we’ll find ourselves right back in the same old boat, taking on water again, next year and the year after that and on and on.

The bottom line is that the math behind the Affordable Care Act was flawed from the start, and the equation needs to be fixed immediately.

There are many proposed solutions. One is single-payer, the “Medicare for all” plan that that was touted by Bernie Sanders.

Another is adding a “public option,” that would empower the government to provide Medicare-like policies that people can compare with private insurance, even if it’s only in counties where only one policy or sometimes none at all is available. Such a plan has the support of Hillary Clinton and President Obama.

Another proposed solution is to repeal the law entirely, to toss ObamaCare into the fireplace and light a match. This is Donald Trump’s approach. He advocates creating a new system that would allow insurance policies to be purchased across state lines and permit everyone to set aside funds for the inevitable rainy day in tax-exempt health savings accounts.

But whatever the solution, some things won’t change. Americans will no longer tolerate denying coverage to people with pre-existing conditions; they won’t stomach yanking young adults off their parents’ policies on the day they turn 18, or on the day they graduate from college; and they won’t stand for the adoption of a health care system that tells poor people they are not entitled to receive the quality health care their more fortunate neighbors get. Not in this country. Not in this millennium.

There’s only way to save ObamaCare, or to replace it with something better. Immediately after taking office, our next president must bring together representatives of the new administration, Congress, health insurers and health providers and read them the riot act. They must sit down and get to work — as a group — on hammering out a health care plan that is solvent and sustainable. And they must be made to understand that failure to compromise is not an option.

But why wait until January? President Obama and Congress can demonstrate their willingness to stanch the bleeding right now by working together to address the Medical Loss Ratio. They can — and should — immediately pass an amendment to the Affordable Care Act that allows insurers to factor the costs of consumer marketing and building provider networks into their refundable losses.

That sort of cooperation would go a long way toward clearing the three-way stalemate that exists among Congress, the insurance companies and the White House. And it would set the stage for the harder work that is essential to achieving a lasting solution that ensures quality, affordable health care for everyone.