Coalition of the Willing
The Affordable Care Act continues it’s world domination, or at least American domination, of media outlets and government pundits. Rolling out next week, everyone is abuzz trying to predict the result of “Obamacare”: salvation or destruction of the world as we know it.
The most prominent thing about the ACA, and the only thing most people really know about it, is the insurance exchange program that is supposed to be open to people who don’t have insurance. These insurance plans have certain requirements about coverage limits, access to preventive care, pre-existing conditions, and coverage for dependents up until age 26. The exchanges are supposed to offer low-rate plans and subsidies for the premiums of those with lower incomes.
The most important thing to understand about this aspect of the ACA is that IT’S SUCCESS OR FAILURE DEPENDS LARGELY UPON THE WILLING PARTICIPATION OF HEALTHY PEOPLE. Which is odd, it being a law and all. Remember that healthy people’s premiums, because the whole system is still built on private insurance companies, subsidizes the care that less healthy people will require. It looks more and more like healthy people aren’t going to think this is much of a deal for them. Robert Hackey, professor of Health Policy and Management at Providence College and author, most recently, of Cries of Crisis: Rethinking the Health Care Debate, thinks enrollment of these folks is going to be a hard sell. In his blog competing diagnoses.wordpress.com he recently used the Rhode Island exchange system as an example. The cheapest plan there would provide “coverage” for about $170 per month. Awesome. Low income folks might get some of that subsidized. But the deductibles for that plan are staggering: more than $5000 for an individual and $10,000 for a family. And those deductibles aren’t subsidized. This makes the insurance good for catastrophic health problems but won’t help most people otherwise. Why would young healthy people want to pay $170/month and then still pay for their health care up to the deductible? Because of the penalty at tax time? $100 bucks. Because it’s the right thing to do? It might be, but you’ll never base an economic system on that.
The private insurance company bit is the problem. These are of-profit companies. If they find they are losing money because healthy people aren’t signing up, they will raise the rates on the people who are insured until the loss goes away. Dr. Hackey tells me there are no cost or rate controls here, so if healthy people don’t buy in, rates rise for the people in the exchanges who do buy in but who might be older or sicker. Remember the ACA does not claim to reign in cost, only to insure more people. The world will not end as the Republicans say, but it might not get much better as the Democrats say.