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?
