Economics

Ask the Experts

Excerpt from article published in the Kearney Hub Monday, July 2, 2012 by Mary Jane Skala Hub Staff Writer

Kearney - It's not about politics, and it's not about emotion.Allan Jenkins

Last week's Supreme Court ruling supporting the Affordable Care Act is about economics, said Allan Jenkins, professor economics at the University of Nebraska at Kearney. "This isn't like football scores. It's not like someone won or lost," said Jenkins, referring to some of America's anger about the ruling. "We are starting to treat the Supreme Court as an appendage of our political parties." In an hour-long interview, Jenkins steered clear of politics. He said he's "not a big fan of Obamacare," but he realizes that walking into health care reform is a political minefield. Jenkins, who teaches health care economics to UNK upperclassmen, sees three benefits of the Affordable Care Act. The first: All americans must have health insurance by 2014. Our System encourages people to gamble that they won't need insurance, but if they do - and 20 million Americans don't have insurance - someone else picks up the tab," he said. The second: Young people can stay on parental insurance policies until age 26. The third: People can't be denied coverage for pre-existing conditions. "This means you won't be afraid to take a new job," Jenkins said. Jenkins knows that health care coverage is ballooning out of control. For example, the cost of medical coverage for employees at UNK has quadrupled in the past 12 years from $4,000 per person in 2000 to $16,000 per person at the end of 2011. For nearly a century, "all U.S. presidents have tried to do something about health insurance," he said, from Teddy Roosevelt to Franklin Roosevelt, Dwight Eisenhower and Richard Nixon, whose effort was shot down by U.S. Senator Ted Kennedy because it didn't go far enough. "Our efforts began clumsily and have been groping ever since," Jenkins said. "Even Ronald Reagan tried to make changes to Medicare, but he had to pull back" Jenkins said. Only President Lyndon B. Johnson succeeded when he established Medicare and Medicaid. Hospital insurance began during the Great Depression when hospitals were going broke, he said. Baylor University developed a pre-paid plan to keep doors open, and other hospitals adopted it. That evolved into Blue Cross. Also during the Great Depression, companies couldn't afford to raise wages, so they added benefits, he said. Health insurance became part of job packages. "But what happens if you lose your job?" Jenkins asked. "At every step, someone figured out how to make a lot of money off health care," he said. Administrative costs of third-party payers have leaped from $64.2 billion in 2000 to $137.8 billion in 2008 and keep rising, he said. Federal reforms will limit this by holding the increase to 20 percent each year and requiring insurance companies to give customers refunds if their costs exceed that. Jenkins said, however, that the American health care supply-and-demand system shoves costs up. "Finding something that works for all 325 million Americans isn't going to be easy, but what we're doing right now isn't working."