How does one go bankrupt? Slowly, at first, and then all of a sudden, to misquote Ernest Hemingway.
As this year ends, Congress is allowing health care subsidies for the Affordable Care Act to expire, concluding the messy politics around this fall’s government shutdown. There is still hope with congressional action possible in early January.
This loss will be a blow for many of the 4 million Texans who depend on this coverage. It will likely cement health care costs as a major contributor for personal bankruptcy in our time and health care costs as a huge stressor associated with anxiety and delayed or forgone care. This could lead to thousands of preventable deaths annually, as research shows.
How did we get here? And what does it mean for you if you don’t depend on an ACA plan?
Our country spends nearly twice as much per citizen on health care as other wealthy industrialized nations and we don’t get what we should for all those dollars. Life expectancy, infant mortality, obesity and diabetes are all worse here than in most other wealthy countries. There are some organic factors: We work more, exercise less, eat more processed food and regard sidewalks and parks as amenities.
But there are idiosyncratic features of our care delivery system, structured around profit generation, that are uniquely counterproductive. The third-party payer system was born accidentally during World War II, and for decades, it grew into a big administrative infrastructure for prosperous Americans working for large organizations.
A substantial share, about 15% to 30%, of all our health care spending is on nonclinical activities, such as prior authorizations, billing and insurance administrative costs. In 2010, when the ACA was signed into law, the already inefficient system was tasked by the federal government to accommodate millions of additional working-class Americans, many of whom we now plan to leave behind.
As COVID-19 showed us, socioeconomic status and occupation are intertwined with health. If you are poor, you stand a good chance of becoming sick. If you’re sick in America, you are about to be poor. Our growing economic inequality means that more people are working harder at multiple low-paying jobs, exercising less and eating more processed foods. An employment-based health insurance scheme is not a good fit, given that working-class Americans frequently change jobs. Thus, the very individuals most vulnerable to personal bankruptcy caused by a health condition are the same ones most likely to go without health care.
So what does this all mean for you? No man is an island. Health care costs are shared throughout the system. If large numbers of Texans lose coverage, they will start relying on ERs for care, and those costs will be passed on and worsen the affordability crunch for all of us. Republicans who talk about health savings accounts completely miss the point that working-class people need a backstop, not another bank account. Without a safety net, personal bankruptcy from health care will continue to rise.
Have we gone bankrupt? It depends on who is asking. The health insurance industry made $25 billion in profits in 2023, according to the National Association of Insurance Commissioners analysis. It is in terms of our leadership where we have gone bankrupt morally and intellectually, with no national political figures willing to invest the time and capital to make incremental improvements in the quality and efficiency of American health care delivery.
Could this political moment enable a downsizing of health insurance? Could we envision a more direct relationship between patients and doctors while reducing costs through advances in informatics, artificial intelligence, and pharmaceuticals? Could we reposition hospitals as meaningful and efficient care providers, ban private equity from health care, and regulate the administrative costs of health insurance? We’ll see.
In the meantime, Congress must step up and extend subsidies while searching for a new and superior delivery paradigm for American health care.
Richard Fuquay is a practicing nephrologist in southern Dallas County.
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