The ACA is a tax. 100% true.
Let’s be clear: the ACA is a tax. If you have been led to believe otherwise, and believed otherwise, then you are entirely mistaken. When the Supreme Court affirmed the legality of the ACA, it said so in a very elegant way. Basically, the Supreme Court majority opinion boiled down to “The ACA is a tax, and the government has the Constitutional right to tax. Repealing taxes is not a court’s issue, it is the issue for elections.” Does the tax have a rationale? Yes, in much the same way that the requirement to purchase auto insurance has a rationale, the requirement to purchase health insurance has a rationale. The difference, however, is that the cost of the financlal downside to not having health insurance is MUCH larger, on average, than the cost of not having auto insurance. Simply ask a person with an incurable disease that has health insurance, “What would’ve occurred if you had not had health insurance?”
(NEW) ACA Repeal Would Allow Insurance Companies to Run Amok. Untrue.
The problem with the hysteria is the fact that people are taking an inch and stretching it a mile. The idea that insurance companies would get fatter is untrue.
- Simply keep the Medical Loss Ratio intact, to limit the profit margin and require a rebate of premiums that was not used for claims. That is the system currently in place.
- Ever hear of competition? By the way, the prospect of repealing or substantially modifying the ACA (and Medicare) probably makes the mega-mergers among health insurance carriers unlikely, because that would potentially reduce competition, precisely at the wrong time (that is a new opinion by me).
A tax credit can fix this. Uncertain.
The question is whether or not the proposed tax credit will create an incentive enough for people to purchase health insurance. For those who have severe medical conditions, the answer will be yes, because they are a buyer at almost any price. For those that are healthy, however, the answer is entirely uncertain, and it will depend on the rest of the tax code, the person’s understanding of the financial downside, and his/her financial situation.
No “pre-existing condition” clause has made health insurance more expensive: 100% true.
Sellers (health insurance carriers) had to establish a price, stick to it, and it didn’t matter how sick someone was, the seller had no choice but to accept every new policyholder. For those with astronomic medical expenses, this is a guaranteed loss for the seller. Even if 64.5 years old, a premium of $2000 a month would pale in comparison to the amount of benefits that the health insurance company would have to pay to doctors and/or hospitals. The problem here is that there were not enough healthy buyers to offset this loss. Whoever wrote the ACA didn’t properly incentivize the healthy enough, so that they would buy health insurance, i.e. if anything, the tax penalty for not purchasing health insurance was too low.
We can fix this with “high-risk pools” or “reinsurance.” Maybe, and 100% False, in that order.
This illustrates the inconsistency of logic. A “high-risk” pool would be created so that those with pre-existing conditions could still purchase health insurance. Really? If sellers are withdrawing from exchanges because they don’t want to sell to those that “may be” sick, then why would they want to sell to those that are certainly sick, i.e. the people applying under the high-risk pool? A tax credit will not be high enough for these people. The same complaints about the ACA (high cost, narrow networks) will occur. The exact same complaints that “prove” the opponents’ points. The fact is that high-risk pools have existed in the past, and the problem with them was that the networks were narrow, and the cost high. That said, will that allow the healthy to purchase health insurance at lower premiums? Yes. Since the answers vary here, the answer is maybe.Reinsurance cannot work. To review, reinsurance is “insurance on insurance.” A health insurance company would itself buy insurance, to limit the downside to itself. The reason this cannot work is that if it could’ve worked, then it would’ve already existed. Why do we know this? The reason is that Wall Street would’ve created an investment (an asset-backed security), where the asset is the reinsurance. There are no natural buyers of this risk, because if there were, then Wall Street would’ve found them, re-packaged the risk, and would’ve already sold it to them. The mere fact that it doesn’t already exist is all the evidence required.
The only conceivable exception would be for the largest national carriers to execute this, because they already have people in place to reach out to healthcare providers. Even then, it isn’t clear that the healthcare providers would agree in a scale large enough to create competition among multiple carriers.
The Number of Uninsured is Lower. True.
Does this matter? To hospitals, no doubt. They are required to serve patients, and fewer uninsured means a greater chance of being compensated. We can debate about the trees, but this is the forest. The unanswered question is: has the lower number of uninsured meant that the costs to the system are lower? The problem that the supporters of the ACA have is that they cannot answer this question, which is an important one, because since the ACA is a tax, the question a taxpayer should rightfully ask, “what did I get for paying the tax?” The idea is that few uninsured will “bend the cost curve” so that overall, systematic healthcare costs will decline. Here is a question that the supporters have not answered.
Medicaid Expansion Has Been Helpful for Many. True.
This cannot be a debate. For those that live in states that implemented Medicaid expansion, the ACA has, in certain cases, made health insurance affordable to those that would not have been able to purchase it. For those who live in states that have not implemented Medicaid expansion, they have not reaped the obvious benefits. Medicaid expansion recipients have received a) lower premiums, and sometimes, b) lower cost-sharing responsibilities (deductibles and out of pocket maximums). Point b) here is under immediate threat, with an answer coming in February (as of this writing).
- IRMMA has resulted in higher Medicare Part B and Part D premiums for high-income earners
- The ACA has mandated a narrowing of the Part D coverage gap, aka “donut hole.”
- Funds have been taken out of Medicare to pay for the ACA, will they be returned?
- Proposals exist to overhaul Medicare by introducing “premium support,” which is a voucher system, where individuals would use vouchers to privately purchase health insurance.
- “Premium support” proposals would also dismantle the ability of the CMS to assign a price structure across healthcare services, i.e. Medicare Advantage would lose its ability to push down systematic healthcare costs. If you did this, we could have a quite a mess. It is impossible to determine what will happen in this instance, because we don’t know how much healthcare providers will be compensated under this structure, and if the CMS isn’t governing the entire matter, then the outcomes here will be highly unpredictable.
Socrates Is Right: This War is PoliticalT
he logic runs that “The ACA is making Medicare go broke, so we need to look at everything together.” That presumes that the solution will be better, and as you can read from this article, it is entirely unclear that a simple repeal of the ACA will make things better.HERE IS THE PROBLEM. WE CANNOT GET AROUND THIS DIFFERENCE. “People Should Individually Decide” Presumes This:
- People understand the risk they face
- People understand the effect their choice has on others
The question is whether the general population is qualified to understand these points, to make the proper determination? What is entirely rational for the healthy (to not buy, at almost any price), is not necessarily what will help the systematic healthcare cost structure. The problem here is that an unqualified decision here has costs to the overall system, the effect is NOT ONLY on the individual him/herself. The result is the vicious cycle we have at the moment. There is NO WAY to isolate these sides. NO WAY. The healthy go to the same physicians as the ill. The healthy go to the same hospitals as the terminally ill.Those who cannot afford to pay, those who rely on government assistance go to the same hospitals. So the end result is that those that cannot pay, but require assistance, receive Medicaid. Medicaid is severely restrained, and therefore hospitals and doctors do not receive full payment for their services. Who do they charge? The ones that can afford it.For those that believe that government exists to protect those that cannot decide correct for themselves, the ACA, warts and all, is necessary. For those that believe that people should be left alone to decide, the ACA must go.
The healthy go to the same physicians as the ill. The healthy go to the same hospitals as the terminally ill.Those who cannot afford to pay, those who rely on government assistance go to the same hospitals. So the end result is that those that cannot pay, but require assistance, receive Medicaid. Medicaid is severely restrained, and therefore hospitals and doctors do not receive full payment for their services. Who do they charge? The ones that can afford it.For those that believe that government exists to protect those that cannot decide correct for themselves, the ACA, warts and all, is necessary. For those that believe that people should be left alone to decide, the ACA must go. Both supporters and opponents are unlikely to convince the other. Whether either side has completely, correctly understood the ramifications of their respective positions? That would be very difficult to believe. My future recommendations on how people and companies will need to deal with the ACA, and its potential repeal, will be available only on GH2 Unfiltered.
P.S. I am not affiliated with either political party, so don’t attempt to pin that label here.