What’s the Post-ACA Future?
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.