A Look At US Healthcare Spending As President Trump Tries to Repeal Obamacare
Anthem Inc is one of the biggest insurers selling plans on the individual exchanges and may see shares affected by news of rules that could affect who enrolls in insurance.
US President Donald Trump and fellow Republicans in the House of Representatives have proposed a healthcare law to kick off their promise to repeal and replace Obamacare.
Following are some questions and answers about healthcare spending and health insurance coverage in the United States (US) as Republicans try to throw out former President Barack Obama's signature piece of domestic policy, the 2010 Affordable Care Act.
Who is covered by what insurance?
The majority of America's 323 million people are covered by either government or private insurance. Less than half of US spending on healthcare is publicly financed, a contrast to the 72 per cent average among member countries of the Organisation for Economic Co-operation and Development. A core goal of Obamacare was to cut into the numbers of uninsured and some 20 million people gained coverage under the law.
- 155 million people are covered by employer-based health plans
- 70 million people are in the publicly funded Medicaid program for the poor, including 32 million children
- 56 million older or disabled people receive Medicare
- 15 million people are covered by military healthcare
- 12 million people buy individual insurance on the online shopping exchanges created by Obamacare
- 9 million people purchase unsubsidised health insurance directly
- 6 million people are covered by the Indian Health Service, student health plans and other sources
- About 28 million Americans remain uninsured
The figures are government estimates. They do not add up to a total of 323 million because some people have more than one type of coverage.
How much does the country spend?
Spending on healthcare in the United States is about $3.5 trillion a year, representing about 18 per cent of US gross domestic product. Current US government estimates are for that spending to outpace economic growth and rise to 20 per cent of GDP by 2025. Healthcare spending has been rising faster than inflation. The government estimated it to have risen 4.8 per cent in 2016 and that it will increase at an average rate of 5.6 per cent through 2025.
What does America get for its money?
While US healthcare spending as a percentage of GDP ranks higher than for any other OECD country, Americans' life expectancy is near the bottom in a ranking of other OECD countries, behind countries such as France, Germany and Britain. The country's obesity rate is the highest.
What was the impact of Obamacare?
As the Affordable Care Act was implemented over the past six years, it made sweeping changes to the health insurance system and implemented new taxes, so gutting the law will affect most Americans at some point.
The law set a series of minimum standards. It introduced free preventive care coverage, mandated most employers to offer insurance and individuals to buy it, expanded the Medicaid program to include people with higher incomes and created income-based subsidies for individuals to draw them into buying insurance. It prevented insurers from denying coverage to people based on their health status and allowed young adults to stay on their parents' health insurance policies.
What sectors are feeling the impact now?
Republicans will tackle repealing Obamacare in multiple steps because while they control both chambers in Congress, they do not have the 60 seats in the 100-seat Senate needed to simply undo the law.
The first step focuses on insurance sold to individuals and the Medicaid expansion, which could mean diminished payments to hospitals and doctors who benefited from the 20 million people covered by the ACA. They now face uncertain revenues and the possibility of increased bad debt as they lose paying patients.
The impact on insurers is twofold: uncertainty over who will buy insurance could lead to them mispricing insurance plans and suffering financially as soon as this year. In the longer term, the retrenchment is changing the outlook for the growth rate of publicly backed healthcare.
Which publicly traded companies does this affect?
There are only a handful of publicly traded hospital companies, and the biggest one, HCA Holdings Inc, is not focused on states where Medicaid expanded, so it tends not to be involved. Tenet Healthcare Corp and Community Health Systems Inc are smaller hospital chains with high debt loads and their shares do tend to be affected by news about potential cuts to the numbers of Americans with publicly funded healthcare.
The insurers that specialize in Medicaid and government healthcare such as WellCare Health Plans, Molina Healthcare Inc and Centene Corp are small but tend to move on news that the Medicaid expansion may be repealed and on proposed changes in how the federal government pays its share of all Medicaid costs to the states. Anthem Inc is one of the biggest insurers selling plans on the individual exchanges and may see shares affected by news of rules that could affect who enrolls in insurance.
Sources - Congressional Budget Office, U.S. Census Bureau, Centers for Medicare and Medicaid Services