(The ACA, commonly referred to “OBAMACARE”) Last updated June 24, 2017
Let’s start with the basics:
Currently, there are 4 basic types of insurance:
Employer– based Insurance- both the employer and the employee contribute to the payment of the premium . 49 % of Americans are in this category
Individual market insurance– patient pays the entire premium. 7% of Americans are in this category
Medicare- for people over 65. 15% of Americans are in this category
Medicaid- For people living below federal poverty levels. 20% are in this category
Perhaps the best way to address this is to offer responses to FAQ’s and arguments against the ACA
They promised me the premiums wouldn’t increase under the ACA, but they did. WHY?
In short, more coverage= more expense. But note: In the pre-ACA 8-year period 2000-2008, individual market (non-employer) insurance premiums increased 97%— nearly doubled. In the 8-year period after the ACA (2008-2016) they grew but at HALF THE RATE PRIOR TO THE LAW (43%)
Why have they gone up at all?
Under the ACA, insurance companies have new demands on them, all of which require them to provide more services (coverage), which cost money. These demands include:
- Cannot deny coverage based on pre-existing conditions—so now, they must cover people who actually utilize services (cost them money)
- Cannot charge a higher premium for pre-existing conditions (slight variations on rate are allowed based on family size, geographic location, tobacco use, and to a lesser extent, age) Since they can’t charge the sick (expensive) patients more than the healthy (inexpensive), they recoup their loss by increasing EVERYONE’S premium.
- Must provide preventive care with no co-pay (no out-of-pocket cost to patient) Again, the insurance company is having to pay doctors and hospitals for this care and cannot require the patient share the cost, so they recoup the cost through higher premiums. In addition, since sicker patients are now enrolled, one would expect an exponential increase in utilization (more doctor visits), which further drives up costs. Economists predicted that there would be an initial uptick in utilization, followed by a plateau. This has turned out to be true.
- Cannot impose lifetime limits on benefits— under the old system, if you hit your policy’s lifetime cap ($100,000, $500,000, or even $1 million) that was it. All of your bills for cancer treatment or chronic conditions were yours to pay. This is no longer true, so premiums must be raised to spread the cost around.
- Must allow kids to stay on parents’ policy until age 26- again leading to greater utilization
- Must allow re-insurance of early retirees (people who are too young for Medicare)
- Must provide basic levels of coverage known as “essential benefits,” —whereas insurers used to be able to provide “bare-bones” coverage that was essentially catastrophic coverage, they now must cover preventive care, maternity care, etc.
- UPDATE for 2019: The Republicans eliminated the individual mandate. These means the healthest people may not buy insurance and that decreases the insurance companies’ revenue without a compensurate decrease in their payouts. To make up revenue, they raise premiums.
Why should I pay for somebody else’s healthcare?
Well, because you already did before the ACA, but you did it in a way that was
a) invisible to you,
b) very expensive, and
c) very inefficient.
If someone without insurance goes to the emergency room for their medical care and can’t pay the bill, that costs the hospital money. Those costs are invisible to you because those medical costs are passed along to you in two ways:
- Hospitals raised prices for paying patients (charge $10 for Tylenol)
- Hospitals demand a higher rate of reimbursement from the insurance companies (who in turn, hike up premiums—you don’t see this as “paying for someone else’s healthcare”—you see it as the insurance companies as “being greedy”. Well, they ARE, but that’s for another day.)
Those emergency room costs are not only often unnecessary but also unnecessarily expensive. It’s far cheaper to go to a doctor’s office (around $75) than to go to the ER (hundreds of dollars), but if you have NO money and NO insurance, you can’t go to a private doctor. So, you go to the ER, which takes you back to the explanation above.
Finally, that emergency room care is wildly inefficient. Take, for example, the homeless patient who has no dental insurance and has a dental abscess. It would cost about $75 to go to the dentist and get a prescription for a $10 course of antibiotics. However, since he doesn’t have $75 dollars, he will wait and let that abscess fester until the swelling is closing off his windpipe and he requires an emergency tracheotomy and winds up in the intensive care unit for two weeks on IV antibiotics and a ventilator. But remember, he’s homeless and CAN’T PAY. Guess who does? Answer: See above.
So, pick which pocket you want to pay out of, but either way, you’re going to pay. Personally, I’d rather pay a little more each month and extend care to everyone. It also means I’m paying less overall. (Oh, and then there is that compassion thing: Everyone should have access to care.)
Insurance companies are leaving the market because of Obamacare, right?
Well, yes and no.
You have to start with the understanding that every single insurance company negotiates a separate contract with every single hospital and every single doctor’s practice in their market. In a market where everyone cuts their own deal, the Big Kahuna Insurance Company with 75,000 members can demand discount prices from hospitals and doctors because the hospital and doctors can’t afford to lose all those patients. The Small Fry Insurance Company with only 1000 patients doesn’t have as much leverage. The hospital can afford to let go of those patients. Thus, Small Fry Insurance Company winds up paying more money than Big Kahuna for the same services, in the same city, at the same hospital. That’s how the hospital recovers the money that it lost in its deal with Big Kahuna.
The ACA makes the same demands of Small Fry as Big Kahuna. But Small Fry has fewer customers to extract money via increased premiums, and they begin to lose customers. Those customers move over to Big Kahuna, whose negotiating power increases as more customers join their ranks. Eventually, Small Fry goes out of business.
HOWEVER, this has happened for decades before the ACA. Back in the 90’s insurance companies got really good at lowering costs. They began shoving very aggressive contracts down the throats of hospitals and doctors, to the point where hospitals, especially small rural hospitals, had a tough time. They had become Hospital Small Fry. So, they merged together and formed huge healthcare systems (think Banner Health), increasing their negotiating power. In response to the bargaining strength created by of hospital and doctor group consolidation, there was even more consolidation in the healthcare insurance industry. All of this was happening before the ACA.
Insurance companies find it difficult to plan or set rates in the midst of the uncertainty created by the Republican threats to repeal or replace the ACA. When insurance companies face uncertainty, they respond by raising rates or withdrawing from markets.
What does the ACA do for me, since I have employer-based or individual market insurance?
It LOWERS your costs— remember— the growth rate of premiums is HALF what it was before the ACA. That’s a saving, but it doesn’t FEEL like it because, of course, your premiums are going up even though they are going up half as fast. This growth change is a DIRECT result of lower rates of UNREIMBURSED CARE.
Medicaid Expansion States saw a 9% increase in insured adults. Non-expansion states saw a lower rate of newly insured people. MORE people with insurance = LESS lost revenue to hospitals=less need to pass that loss on to insurance companies= less cost passed on to YOU via higher premiums.
It does this because under the ACA, more people qualify for Medicaid. Before the ACA, people only qualified for Medicaid if they lived below federal poverty level (FPL). Under the ACA, 39 states (including Arizona) elected to allow Medicaid expansion. Under current law, Medicaid provides enhanced federal matching funds to states to cover the cost of expanding coverage to adults aged 19-64 with income less than 138% of the federal poverty level.
- If someone is between 100-400% of FPL in ALL STATES, that person qualifies for a premium tax credit for a marketplace plan (e.; not employer-based)
- Below 138% of FPL: If you live in a state with expanded Medicaid, you qualify for Medicaid based solely on your income
- If below 100% FPL in a state that hasn’t expanded Medicaid, people don’t qualify for income-based medical savings on a marketplace plan, but they might qualify for state Medicaid
What is “single-payor” insurance?
Single-payor coverage means there is no competition among insurance providers to sell insurance to consumers of a particular type of healthcare. Instead, the government or a non-profit administers payment to healthcare providers. While administrative costs remain, of course, the profit slice of health insurance cost is absent. Moreover, administrative costs for providers are lower because they need to comply with only one payor’s requirements. Medicare is single-payor coverage for those over 65 years old, but Medicare is limited to certain types of health care, so many people carry a Medicare Supplement Insurance Policy to cover the other things. Medicare Supplemental coverage is sold by commercial insurance companies.
Most European countries and Canada have single-payor coverage for all ages and most types of healthcare. In most of those countries, people are free to purchase coverage for additional healthcare needs and private companies do sell such policies.
The Arizona Democratic Party, on May 20, 2017, endorsed House Bill 676, which would provide single-payor Medicare for All. Read more about this from Physicians for a National Health Program. UPDATE: On April 13 2019, the State Committee again endorsed a bill pending in Congress to provide Medicare for All.
Shareable Videos: A Flagstaff Doctor Explains Our Healthcare System
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- The Senate Version of TrumpCare Destroys Medicaid As We Know It
An excellent source for statistics related to heath care coverage, costs, and insurance is the Kaiser Family Foundation. http://www.kff.org/health-costs/