Let’s face it, our health insurance system was broken long before the ACA. Premiums were rising faster than inflation, people with pre-existing conditions had trouble getting coverage, individual plans didn’t cover important services like maternity and mental health, and 50 million people were without health insurance. Something had to be done.
The Affordable Care Act was supposed to fix these problems. Obviously, it does a lot more than that; the ACA is nearly 2,500 pages long, and there are thousands more pages of regulations to implement the law. The truth is, though, that most of the provisions are intended to correct these four big problems, either directly or indirectly.
Cost: There are plenty of things in the ACA that are meant to make health coverage more affordable. The minimum MLR requirement and premium justification, while ineffective, were intended to keep premiums under control. New non-profit “co-ops” were meant to increase competition and “keep the big insurance companies honest.” New out-of-pocket maximums were supposed to limit people’s overall exposure. And the premium tax credits and cost-sharing subsidies were designed to help lower- and middle-income families pay for health coverage and for health care.
Benefits: Clearly, the essential benefits requirement was meant to make plans more robust, to make sure people could get the services they need. All plans must now cover preventive care, and today’s individual policies cover the same benefits that group plans do. Sure, there are some loopholes—large group and self-insured plans can carve out most of the essential benefits, for instance—but regulators admitted that they never expected employers to take advantage of those loopholes.
Guaranteed Issue: This, more than anything, was the intent of the law: to make sure that anyone who wants health insurance can buy health insurance. Everything else was secondary, and many of the most controversial provisions were put in place to make guaranteed issue work. Of course, group plans were already guaranteed issue for employees and their dependents, who could not be turned down or charged more because of a pre-existing condition. That was a result of HIPAA, which was signed into law back in 1996. The ACA, though, makes individual plans guaranteed issue as well.
But, as we all know, you can’t require insurance companies to take every sick person who wants to sign up unless you also send them some healthy people. That’s the reason for the individual mandate. And you can’t require people to have health insurance if they can’t afford it. That’s the real reason for the premium tax credits. Unfortunately, you can’t give tax credits to everyone—someone’s actually got to put in more than they take out. That’s why they set the cutoff at 400% of the FPL and blocked family members who are eligible to enroll in a group plan from getting a subsidy. And because many of the folks who aren’t receiving a government handout can no longer afford health insurance, the government provided an exemption from the individual mandate to people who would have to spend more than 8% of their income on qualified coverage.
The uninsured: To reduce the number of uninsured, the government created a website where people could compare their options, standardized and categorized individual and group health plans so they’d be easier to understand, required large companies to provide health insurance to their employees, bribed small employers with tax credits, spent millions on advertising, and hired and trained “navigators” to sign up people who weren’t already being targeted by health insurance agents.
And guess what? Almost none of it has worked. Seriously, this is the biggest mess most of us have ever seen.
Yes, plans are now guaranteed issue. People with pre-existing conditions can now buy health insurance, and that’s a huge accomplishment. But most of them could have done that before the ACA was signed into law: HIPAA required every state to have a guaranteed purchasing option, and while there were a small handful of states that still hadn’t complied, most had either guaranteed-issue individual plans or a high risk pool for people who couldn’t qualify for individual coverage.
The individual mandate is ineffective. Yes, it’s getting stronger and will be a bigger incentive for people who are subject to it, but that vast majority of the population either has health insurance already or is exempt from the mandate. If the law was actually working and healthy people really were signing up for coverage, we wouldn’t see the huge rate increases in the individual market, enormous losses from major insurance companies, carriers like UHC threatening to pull out of the market, and co-ops failing right and left.
The premium tax credits also aren’t doing enough to encourage healthy people to sign up. To begin with, most people don’t qualify for financial assistance. Millions do, sure, but the number of people below 400% of the FPL who don’t have access to minimum essential coverage through an employer or government plan is still a minority. And a pretty big percentage of those who are eligible for the tax credits has failed to take advantage of them, just like millions of people who were eligible for Medicaid before the ACA was passed had failed to sign up.
And premiums, which really control whether people are able to purchase coverage or not, are through the roof. Nobody can look at the current state of the individual market and say that it’s affordable. We all know why: because a lot of sick people are signing up for coverage that’s more comprehensive than it was in the past, and healthy people aren’t biting, probably because of some combination of being exempt from the mandate, being ineligible for the subsidies, and not considering health insurance a priority.
In the past, we would have called these people who choose not to purchase comprehensive coverage irresponsible. I’m not so sure that’s the case anymore, and it’s largely because the value of the available coverage options has declined so significantly. In an attempt to keep costs under control, insurance companies have taken some drastic actions, all of which make the plans less and less desirable for people who don’t have an immediate health need. Here are the big four:
- Increased out-of-pockets. The law allows a maximum OOP of $6,850 for single coverage and $13,700 for family coverage (with an embedded individual OOP) in 2016, so that’s what many plans are going with. Yes, it’s important to have a stop-loss on an individual’s exposure, but this is a higher limit than most plans had before the law was signed.
- Fewer copayments. Many plans are increasing doctor and prescription copayments, making them subject to the plan deductible, or getting rid of them altogether. This means that, other than the provider discounts, most people receive no actual benefit from their health plans; they must spend thousands and thousands of dollars before the insurance company pays a dime.
- Limited drug formularies. Not only is the cost-sharing on most drugs, including generics, going way up, a lot of prescriptions are being moved to higher tiers or being dropped from the formulary altogether. And some of the higher-tier and non-formulary drugs require members to pay a coinsurance percentage rather than a fixed dollar copayment—if they’re covered at all prior to the deductible.
- Narrower provider networks. This is probably the most annoying development this year for both brokers and their clients. Many insurance companies have ditched their out-of-network benefit altogether in favor of a narrow-network HMO or EPO plan. People who see more than one doctor or who have a favorite hospital are having difficulty finding a plan that works with all of their providers. This is creating huge issues for people with chronic conditions who may now have to choose between keeping their providers and continuing to receive financial assistance.
This sucks. Seriously. The number of brokers selling individual plans actually increased during the first two open enrollment periods as agents saw the huge potential of the individual market, but, one month into this year’s OEP, I haven’t heard a single broker say anything positive about today’s options. Selling an individual plan requires a ton of work, and lot of agents no longer think it’s worth the trouble. To quote Donald Trump, this is a disaster, and I don’t see any way that it’s going to improve anytime soon.
So what’s the answer?
Even if I knew how to fix this mess, it wouldn’t really matter. Lawmakers certainly didn’t ask agents and brokers what we thought before they passed this law, and they’re not likely to ask us how to fix it. But it definitely needs fixing. Yes, some people who couldn’t get health insurance before are now able to purchase coverage and get help paying for their plans, but it’s been at the expense of millions of other previously insured individuals who can no longer afford to protect their families.
I do think there are two ways we can go with this. One is to do what the Republicans suggest: repeal and replace. But what can we replace it with? Nobody’s really offered any good suggestions to this point, and they’ve had plenty of time. Maybe the answer is to repeal but not replace it. We could just go back to the way things were, enforce HIPAA and make sure all states have a high risk pool, and then subsidize the risk pool coverage for those who can’t afford it. Wouldn’t that accomplish the same thing as guaranteed issue, but without all of the mandates and tax credits and compliance headaches?
The other route we could take is to go single payer—Medicare for all or something similar. It was a serious proposal just a few years ago, one that twenty percent of the House of Representatives signed their name to. And it’s what the conspiracy theorists thought was the ultimate goal of the ACA: a lot of people say it was purposely designed to fail. Bernie Sanders believes we should have a single-payer system, and most of us wouldn’t be surprised if Hillary took a similar stance at some point. I know all the arguments against it, and I don’t really think it’s the right answer for this country, but in the absence of any other good ideas, it’s becoming harder and harder not to at least consider it.
(Yes, I put in that last line to get people riled up because I’d actually like to hear your thoughts. Fire away.)
This article was originally posted on LinkedIn.