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What’s the Post-ACA Future?

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The election and the Supreme Court’s decision to hear an Affordable Care Act case put Republicans several steps closer to their wish to scrap Obamacare.

Let’s say the court does agree that the federal government can’t subsidize coverage in its own exchange in states that did not set up their own.  That undermines the individual mandate, because lower-income people would not be able to afford coverage and opt for the fine. It would throw millions of people, quite a few young and healthy folks, out of the risk pool.

Also, let’s suppose a Republican Congress successfully undermines the ACA. Or perhaps in 2016, Republicans hold onto their majorities and get a president. Then the road is pretty wide open to throw the ACA out.

What happens then? Republicans have not offered many alternatives and one plan earlier this year. It would rely primarily on tax subsidies, cost control and purchasing groups.

Tax subsidies constitute government spending because something has to replace the funding lost in a subsidy. Apparently, that subsidy is acceptable over the ACA subsidy. Cost controls are certainly laudable, and are in the ACA also, but those by themselves won’t lower premiums significantly.

Then there the purchasing groups that would allow groups to get together and increase their bargaining power. That has been advocated for many years and would help small businesses and groups. But a look at how large corporations have been struggling for the past few decades with rising health care premiums shows that bargaining power goes only so far.

An essential element is dumping the individual mandate while maintaining coverage requirements. For example, this plan would not allow insurers to account for pre-existing conditions if a person already has coverage but is moving to a new company. They could not medically underwrite the coverage but could price according to age and location, which the ACA also allows.

So, companies would have less underwriting control than they had before ACA and no individual mandate. Insurers demanded the individual mandate in exchange for universal coverage to ensure a wide risk pool. Many will not survive covering the sickest in the population without being able to account for it in their underwriting.

Fewer companies would be solvent to offer the competition essential to ensuring lower rates. It is a fundament of capitalism that less competition leads to less price pressure. Some people advocate allowing insurers to operate easier between states. Again, there would be fewer, but larger, companies available to do that. That scenario would diminish the bargaining power of groups and also the power of states, which is the opposite of anti-ACA aims.

Health insurance was an enormous problem for middle– and lower-class Americans before ACA. That is what led to decades of efforts to reform the system. Rates had been rising by double-digit percentages and health outcomes were stagnating.

There is plenty to dislike in the ACA. For example, the allowance of extremely high deductible plans – up $5,000 for individuals and $10,000 for families – basically gives people catastrophic coverage and discourages visits to the doctor for anything less than an emergency. Many families will have difficulty affording a premium and relentless, steep fees. This trend will help ensure an unhealthier America.

Obamacare opponents seem to be advocating a return to pre-ACA with tweaks, some of which would doom insurance companies. That is not a brighter future for Americans or the health insurance industry.

If Republicans are successful in killing the ACA, we will need to have better answers on what happens next.

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Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. Connect with Steve →

  • sunforester

    What part of the “free market” do you not understand? What part of “no more freeloaders” do you not understand? Just because you don’t want to hear what freedom-loving Americans say doesn’t mean we aren’t saying them.

    When will our journalists start listening to the American people? When will our journalists STOP acting like Democrat shills and finally wake up to smell the nationwide rebellion against Big Brother Big Government? Will our journalists ever start helping the American people to rebuild our freedom, or are they going to be discarded along with their now despised and distrusted Democrat masters?

    • http://www.insurancenewsnet.com Steve Morelli

      Thanks for your input. I am not sure about the freeloader part because
      the only Republican proposal includes tax credits. Others have included
      vouchers. The ACA’s subsidies are basically credits. So, it seems like
      there is not a whole lot of difference there.

      Also, Obamacare is based on Romneycare, put forth by the obviously Republican Romney as governor of Massachusetts. That program was crafted out of ideas from Republican circles to preserve insurance companies and the free market.

      The individual mandate was part of Romneycare, again proposed by Republicans, to ensure a risk pool for insurance companies. So, not sure
      if that’s what you meant.

      If you mean that rules were imposed on the health care and insurance market, well, there already were regulations and always will be. Rates and underwriting were already controlled to some degree by states.

      If you would be able to itemize your argument a little bit and perhaps offer alternatives, I think it might help move this issue past name-calling and
      actually help Americans with their health care.

      • sunforester

        OK, here’s an item: Jonathan Gruber, MIT professor and chief Obamacare architect, bragged about how the law was written so incomprehensibly that it succeeded in its intent of fooling the American people and the CBO into supporting the bill. He was delighted that he was able to hide the intent of the bill so that the “stupid” people who vote would not understand what they were getting.

        So how’s that for name-calling? How’s that for being transparent? And not a single Republican voted for that bill. What garbage you Democrats make us swallow.

        • http://www.insurancenewsnet.com Steve Morelli

          I agree that’s awful. In fact, the Obama administration has been pretty terrible on transparency all around. We don’t need more of that behavior. So, what would you do moving forward, once the ACA were killed?

          • sunforester

            Get government OUT of health care. Government should provide only those things that we the people cannot provide for ourselves: our national defense, our system of justice, our public health service, roads, bridges, etc. The free market is what we the people must use to provide for ourselves: food, clothing, shelter, health care, etc, if we are to remain a free people.

            We must return to paying our way with our own money, not relying on socialist/communist central redistribution of wealth under duress of law. We need to return to charity donated personally to people, not making government the chooser of who gets charity. No more free lunches for freeloaders on the government dime — that kills our freedom, kills our economy, kills the future of our children.

            Get rid of Obamacare, get rid of entitlements, get rid of everything that our government has done over the past century to hand out free stuff to privileged voters in exchange for their votes. Allow the free market to flourish, allow insurance to be bought across state lines, and NEVER allow pre-existing conditions to be given a free ride.

            If you have pre-existing conditions, even genetic markers for illness, you must act responsibly and pay for them yourself with higher premiums, or from funds (like charity and family) that come from outside insurance if you are uninsurable. GINA is pure corruption and sleaze, the arrogant redistribution of risk by government that forces healthy people to unfairly pay for those who are far riskier.

            Nobody has a “right” to free health care, period. No government should ever be allowed to pick winners and losers according to political favor. The sooner we acknowledge that, the better our economy and our freedom to prosper.

          • http://www.insurancenewsnet.com Steve Morelli

            I don’t know if abolishing everything improves health outcomes. But it’s a theory.

          • sunforester

            Abolishing government interference with our lives will indeed improve our health and our futures. The current state of affairs with government controlling our lives cannot be allowed to continue. Restoring our freedom, putting government back in its rightful place is no longer theory — it is an overwhelming demand by the American people that the past election makes very, very clear.

  • edwlh

    I am an analyst for an insurance company. Identify the ROOT CAUSE of a problem. Then change as little as possible to solve the problem. The dems threw that approach out, so now we have this mess called NObamacare. Private sector could have solved all the issues, if we had been allowed to market across state lines and a few other items. Government is wasteful and inefficient.

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