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Obamacare: No Good Options


I recently had a conversation with a friend about the Affordable Care Act (“Obamacare”) which made clear to me the level of frustration a lot of people have experienced with it. It also helped me realize how poor our health coverage options are, in general.

The marketplace plans available to single young people with modest incomes bring either large premiums or large deductibles, running up an overall expense that can be several thousand dollars a year. Someone making $30,000 or so a year cannot, for instance, easily afford to come out of pocket $8000 for health insurance premiums and a deductible. Insurance through one’s employer is usually a much better deal, but many employers have dropped coverage because of the expense. Healthcare expenses do become tax deductible once they exceed 10% of one’s adjusted gross income, but that doesn’t soften the blow up front.

I say all this to set the stage for the broader problem, which is the poor overall perception of the ACA. “I used to be able to afford decent coverage, and now I can’t. Thanks, Obama.” But that was in a world with rescission, denial for pre-existing conditions, no community rating, and other limitations and caveats that made it hard for many people to get decent care. Plenty of people had healthcare plans which they thought were adequate, but in reality didn’t cover much. Overall, what we’re talking about are a series of tradeoffs and political issues. For a young, single person to get a better deal would necessitate lots of other people getting a worse one. Putting that aside for the moment, what does the ACA do well? How does it improve on what we had before?

  1. A combination of the Medicaid expansion (where applicable) and the subsidized marketplace plans have brought coverage to millions of people who didn't have any previously.
  2. Elimination of rescission and pre-existing condition clauses considerably improved the options for people who are chronically or very seriously ill.
  3. Elimination of coverage-in-name-only plans that could still stick people with five- or six-figure bills.
  4. Free preventive care, which I have discovered a lot of people still don't even know about. In case you aren't aware, all preventive care visits (and most prevention-oriented medications) are free at the point-of-service/sale.

That list is by no means exhaustive, but those likely represent the high points.

On the other hand, what are its major drawbacks?

  1. There are absolutely losers, in terms of who now has to pay more. Healthy, single young people seem to get hit particularly hard, because they end up paying a lot of money for coverage that they use very little. In effect, they are subsidizing everyone else. Rich people with high-end plans are also burdened, but they can afford it. But young people who are already struggling and facing various career and financial instabilities make a good case that putting so much of the cost on them is not reasonable or fair.
  2. Republican obstructionism has dealt many subtle but damaging blows to the program's financial supports. The short version is that rates are skyrocketing because Congress is holding back money previously promised to insurance companies. Those companies are left with few options but to raise rates or go out of business. Such hikes are politically advantageous to Republicans since they help build resentment against the ACA. It doesn't help that employers and insurers are directly blaming the law, as well, even when the law has nothing to do with a particular increase.
  3. The holes blown in the law by the Supreme Court leave a lot of people without (adequate) coverage. Again, a problem that could be fixed if not for Republican intransigence.
  4. The requirements placed on insurers, while very good from a standpoint of being humane, ultimately make for poor business. Republicans were probably right when they claimed the ACA will ruin insurance companies. Insurers are now called on to cover much, much more than they did in the past, and the large influxes of sicker, poorer people to the insurance rolls is no doubt driving up costs and eating into (already rather thin) profits. Insurance companies, maligned as they are, actually do have relatively lousy profits in the low single digit percentages. The real money in healthcare is in durable medical equipment and pharmaceuticals. The ACA demanded very little of the latter, mostly in the form of the Part D coverage gap discount.

I realize that few would weep for the death of our health insurance industry. Indeed, the way private insurance works is terribly inefficient and overly complex. But letting it fall apart will have consequences. People still need medical care. Sending the system into a death spiral is not good for anyone.

In considering possible options and alternatives, I determined the following choices:

  1. Keep the ACA-based system and adjust it as needed. There are plenty of adjustments it should've already had, but thanks to the GOP, we probably won't get anytime soon. Nevertheless, that is probably the most direct path forward.
  2. Go to a single-payer or public option system augmented by private insurance. This is, again, unlikely. Despite popular claims to the contrary, it's also unlikely to be much cheaper than the ACA system, at least for a long time. Sick people are expensive, and we have a lot of them. It will take decades to improve public health enough to realize the kinds of cost savings enjoyed in places like Germany and Scandinavia.
  3. Return to the pre-ACA regime in which large numbers of people have no coverage and no options for obtaining it, and many of other people have no _real_ coverage, but those who can afford it get stellar coverage.

Option 3 means giving up and going back to a system that we know for a fact will inflict needless suffering on millions of people. When I explain this one-on-one, it usually leads to a change of subject. It’s an uncomfortable realization to have: the ACA is not a panacea for everyone, but it would be a disaster for millions of people if we were to get rid of it. And with Congress in such hopeless disarray, we can’t make much forward progress, either. It’s frustrating to be faced with such a stalemate, and to have no practical options for forward progress.

To be clear, I am not suggesting that the ACA is a disaster or that we should get rid of it (unless it’s to replace it with something better). The public perception is poor, which I think matters, but what matters more to me that it still puts too many people in the position of being unable to truly afford and use their insurance. They are required to have it (or pay a tax penalty), but their premiums plus deductibles (and sometimes, copays/coinsurance) are so high they cannot afford to actually use it when they get sick, which leaves us in a similar situation to what we had before, just shifted to different people.

I don’t think these problems are insurmountable, but they are extremely difficult to address so long as the GOP has a chokehold on Congress. This is all the more reason to get out and vote this year, to break the deadlock.