Why not just repeal the ACA?

Since beginning this column I have consistently referred to “the Affordable Care Act, ACA (aka Obamacare)”. In my insurance practice I avoid using the term “Obamacare” for one simple reason. I believe it is important to avoid politicizing the concept of health care reform, particularly when people in this country are often so politically polarized.

The fact that both our health care delivery and health care financing systems needed reform is undeniable. Our performance compared to other industrialized nations is embarrassing. The fact that the US performs poorly in standards such as infant mortality, life expectancy and primary care is compounded by the fact that we pay more for our medical care than any of these countries.

The ACA is far-reaching: expanding Medicaid (our safety net for the poor), mandates effecting the individual and employer sponsored group insurance market, tax increases effecting higher earning citizens, insurers and medical device manufacturers. The taxes were put in place to fund the bill.

So what happens if Congress simply repeals this law? Will Congress also repeal the law that requires Emergency Rooms to treat a patient regardless of their ability to pay? The underlying policies reflected in the platform demanding repeal of the ACA purport to support personal responsibility and less government involvement. So removing the requirement that hospitals treat the uninsured would certainly make sense. The question is whether or not we are prepared to let them suffer or die outside the hospital doors?

“Repeal!” has been the battle cry and certainly is a great soundbite. It presumes that a simple repeal will fix everything. Much like the fantasy of returning to the 50’s will solve our social issues, it’s not supported by the facts. I am not interested in returning to a society with “white only” drinking fountains.

Pre-ACA, individuals were denied coverage due to pre-existing conditions. Even if insured on a group plan, pre-existing conditions were not covered until the person was 90 days treatment free or one year on the plan. This can be a little tricky for the diabetic who takes daily insulin.

What will happen in the individual market? Insurers are trying to find a way to keep this market profitable. Many of the people that are supported by premium subsidies will consider dropping coverage, unless of course, they are sick. Thus begins the dreaded “death spiral’ for any insurance pool. If only the sick people stay, the costs for the group skyrocket to cover them.

Will employers simply drop the group insurance they are now mandated to provide for their employees?

Absent the taxes charged to insurers, as well as no requirement to meet minimum loss ratio (MLR) standards, will insurance companies reduce their rates, or better yet reinstate my commissions that were cut by about 75%? (wink, wink). MLR required insurers to pay out about 85% of premiums directly to medical care and allowed only 15% for administration costs. Any excess was to be refunded to policyholders. Insureds have received more than $2.4 Billion since 2011 from MLR rebates.

States that expanded Medicaid with the help of the Federal Government will likely retract the coverage, leaving about 1/3 of the population or about 107 million Americans with reduced or no health care coverage. Community Health Centers will need to reduce their services. Shasta Community Health Center is no exception.

The Congressional Budget Office (CBO) estimates that up to 25 million people will be without coverage or negatively affected. Mitch McConnell defends this by stating that people really didn’t want the insurance anyway, they only bought insurance because they were forced to buy it. The facts simply do not support this assertion. But let’s assume that 10% of the 25 million would not have purchased insurance without the mandate and we can now say 22.5 million people will be negatively affected if the ACA is repealed.

On the upside, “Repeal” will also remove all the taxes that were created to fund the ACA. Don’t forget, those paying the taxes are earning $250,000 yearly and represent about 2% of the population (not 1%) or 6.5 million people. Investors will happily skip the extra tax on investment income. Medical device companies and insurers will be grateful for their return to a lower tax rate.

I can’t help but wonder as I reflect on this strategy. Will the high earner’s income increase change their lifestyle in any meaningful way? How will investors’ lives change with the additional 3% of income?

Then I reflect on how the other 22.5 million peoples’ lives will change with reduced or no health care.

In so doing, I simply can’t find a result that supports the repeal of the ACA without a comprehensive replacement. Who in their right mind would propose such an action?

Margaret R. Beck
Margaret Beck  CLU, ChFC, CEBS started her insurance practice in Redding in 1978. As an insurance broker/consultant,  she represents businesses and individuals as their advocate.  She assists in choosing proper products, compliance with complex benefit laws and claims issues once coverage is placed. All information in her column is provided to the best of her knowledge, subject to final regulation by the respective agencies. Questions to be answered in this column can be submitted to info@insuranceredding.com. Beck's column is also published in the Redding Record Searchlight.
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7 Responses

  1. william r Arnold says:

    Finally..a ‘sane’ mirror of reality , thanks for your time*

  2. Hollyn Chase says:

    Once again, you are the voice of reason. Thank you.

  3. Gary Tull says:

    The GOP plan before the Senate “provides tax cuts for the very wealthy” at the expense of health care for children, Feinstein recently told an audience at UCSF Benioff Children’s Hospital San Francisco. 
    “Repeal!” has been the battle cry and certainly is a great soundbite. It presumes that a simple repeal will fix everything. Much like the fantasy of returning to the 50’s will solve our social issues, it’s not supported by the facts. I am not interested in returning to a society with “white only” drinking fountains.
    Thank you, Margaret Beck for your excellent insight.

  4. Joanne Lobeski Snyder says:

    Thank you for this excellent article.  I am currently researching home style remedies for snake bite.  A friend was billed $80,000 for his rattlesnake bite last year.   Send the kids to college, or go to the ER.  Again, thank you.

     

  5. Tom says:

    As the congressional break ensued for the Independence Day holiday, the buzz went from “repeal and replace” to simply “repeal.” The logic was, if they can’t agree on a new bill then just dropping the old one, without a replacement, was the next best thing. Not for the country, or the people in it, mind you, but the best thing for Republican politicians who promised a repeal as soon as they had the power (and the president) to do so.

    But there is no plan. One congressman (I can’t remember which one) said that the reason this whole process is so disorganized is because, well, they hadn’t expected to win last year. Apparently, they expected to be fighting Hillary, not babysitting Donald.

    When the “repeal now, replace later” became the mantra, though, I was horrified. It’s akin to saying that 25 million people may indeed lose health care in the next ten years but, shoot, we got 10 years to figure that out, right?

    No.

    No, we need to worry about that now, before the repeal. Before the replace. There are no “acceptable losses” in this game and, furthermore, it is not a game. It’s people’s health.

    I am not a huge fan of the ACA, but we’re better now than we were then, so to speak. Let’s refine it. Let’s do that with one thing in mind: health care for everyone.

    Start with that basic thought and we’ll go from there.

    Great article, by the way!

  6. KATHLEEN RAVEN SURBAUGH says:

    I’ve long wondered why “single-payer” has become a “hot button,” much like “communism” or (until Bernie Sanders started saying it out loud) “socialism” used to be.  Nobody that I know bitches about the Federal Government running Social Security, or, for that matter, the Coast Guard, Air Force or the Marines.  People like the lady who writes this useful & informative column work on commission (as she just said,) which she earns through providing excellent service to her clients (much like real estate agents do) so the measure of her income is her knowledge and grasp of the insurance options available and her ability to match those to people’s individual needs.  I don’t see any reason that people like herself might not be fitted into a system which eliminated the role of Wall Street in setting up those options.  The specter of a giant faceless bureaucracy is, of course, what everyone quite reasonably fears and loathes, but thoughtful, sane people could, indeed, solve this dilemma.  America used to be known for its “can do” style of problem-solving.  We (the Americans) are still here.  What we need to do is to tune out the “you can’t do it” bullpucky that tells us otherwise — mainly from New York City, which has long made a living exploiting immigrants by means of fear and privation.  Thanks for the courage and sanity — and the leadership!  You’ve made this dialogue quite possible in Redding-region, if damned difficult, in general.  Politics used to be done by public-spirited individuals, not all of them just slimy would-be future lobbyists.   Let’s Make America Great Again by cutting loose the hysteria they’ve introduced.  We Can Do This.

  7. Steve Murray says:

    Thanks again Margaret. Your articles are welcome, well written, and useful; qualities in very limited supply in the general press. The Northstate is lucky to have you.

     

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