Dear Reader,
I have been receiving a lot of questions and unfounded concerns following the
Supreme Court’s ruling about the Affordable Care Act aka Obamacare. I decided to
write an open letter addressing some of the things that I have been hearing and other
points not being mentioned.
Want Insurance… Get A Job
In order to understand why this is a policy issue we have to understand where this
problem originates from. Health insurance in the United States is primarily the
responsibility of American employers and this is by accident. During the Second World
War employers, in order to attract workers to handle the workload of providing
products for the war effort started providing basic health insurance as a perk to attract
workers. This concept stuck after the war and overtime we added patchwork solutions
to holding on the core concept that employers should bear the main responsibility in
your health care. Attaching your health insurance to employer has its own set of
shortfalls but nonetheless it is the system we have to date.
The Creation of the Free Rider Problem
In 1986 something known as the Emergency Medical Treatment and Active Labor Act
of 1986 (EMTALA) was passed and signed by then President Ronald Reagan as part of
the Consolidated Omnibus Budget Reconciliation Act (COBRA). In a nutshell this law
requires hospitals to provide care to anyone needing emergency health care treatment
regardless of citizenship, legal status or ability to pay. There are no reimbursement
provisions. Participating hospitals may only transfer or discharge patients needing
emergency treatment under their own informed consent, after stabilization, or when
their condition requires transfer to a hospital better equipped to administer the
treatment. Whether you agree with this policy position or not the reality of this law
basically enforces the Hippocratic Oath doctors takes and provides basic emergency
care to anyone who needs it. While this is a very novel concept to want to help people it
creates a very obvious free rider problem. People under this law can receive
emergency care without insurance and the hospitals under federal law have to treat
them. The hospitals then pass these costs onto their insurance company and in turn
the insurance companies increase rates in order to cover the costs of care. The states
have responded to this with a variety of mechanisms, using Medicaid, Medicare, but
the most famous of them all is Health Connector, or better known as Romneycare.
The States Respond
The Massachusetts plan that Governor Romney signed into law about 6 years ago is
fairly successful. 98% of residents are covered under this plan 100% of children are
covered, and 90% of doctors in the state say care has improved. The bottom line is
what Romney did works and the ACA is modeled off of that which kind of upsets me
Romney is running away from it, i really thought we could have a great discussion on
health care in this election. Some of the costs controls on this are forcing residents
who can afford to buy insurance make sure they do buy health insurance. Those
citizens that make 150% below the federal poverty level are provided at costs health
insurance through tax subsidies.
Among its many effects, the law and its amendments established an independent
public authority, the Commonwealth Health Insurance Connector Authority, also
known as the Health Connector. Among other roles, the Connector acts as an
insurance broker to offer private insurance plans to residents. The reform legislation
also included tax penalties on residents for failing to obtain an insurance plan and tax
penalties on employers for failing to offer an insurance plan to employees. In 2007
Massachusetts tax filers who failed to enroll in a health insurance plan which was
deemed affordable for them lost the $219 personal exemption on their income tax.
Beginning in 2008, the penalty became pegged to 50% of the lowest monthly premium
for insurance available from the Connector Authority
It offers for purchase health insurance plans for individuals who:
● are not working
● are employed by a small business (less than 50 employees) that uses the
Connector to offer health insurance. These residents will purchase insurance
with pre-tax income.
● are not qualified under their large employer plan
● are self-employed, part-time workers, or work for multiple employers
As you can see this is not a particularly or scary government takeover and quite
frankly it works. It is arguably the greatest political and policy achievement any
Governor has ever accomplished in regards to expanding health insurance. 100% of
children COVERED, 98% of all residents COVERED, and a 90% approval rate among the
state’s doctors. This very idea that has produced Health Connector is what President
Obama and Congress modeled the Affordable Care Act of 2009.
The Affordable Care Act and the Lies It Produces
In 2009 President Obama signed into law the Affordable Care Act of 2009 better known
today as Obamacare. What is Obamacare and how does it affect me? Will my taxes go
up? Do people get free health insurance? Will it work?
Some of the misconceptions of this are as followed: While this is labeled a
“government” program the health care will not actually be provided through the
government rather it is regulated through a series of tax regulations and compliance
oversight to ensure free market insurance companies are lowering costs and providing
services that you the consumer are paying for. In essence what this law does is end the
fre rider problem created in 1986 under EMTALA.
Some examples of the positive effects the law has are requiring insurance companies to
use 80-85% of your premium fees for actual health care as opposed to bonuses or
administrative costs. Surely everyone can agree that if you pay for a services 80-85% of
your payment should go to actually providing that service not to some executive who
is finding ways to cut costs and maximize profits. This of dining at a restaurant, when
you get your bill 15-20% of the bill goes to the waitress or waiter for their service and
hospitality but 80-85% of the total bill goes into the restaurants pocket for providing
the service (your meal). Why should healthcare be different?
The only way that this policy works though is that everyone purchases healthcare the
mandate will ensure that people who can afford health care are buying it. While there
are provisions to pay a tax or a penalty for not buying health care this will actually only
apply to very few Americans. Since most people have some form of health care either
through their employer, Medicare, Medicaid, SCHIP, or COBRA sadly 33 million
Americans fall into the gaps not covered by any of these services. Think of it this way.
Why should someone who is financially able to buy health insurance, but simple
chooses not to buy healthcare be allowed to suddenly buy it when they get sick?
Avoiding paying premiums until you start using healthcare shifts the burden of the
cost to people who already have health care.
There is a lot of talk about “free healthcare” or “hand outs” while low income people
will be provided pro-rated or even free healthcare in some instances they will need to
be below 130% below the poverty level (similar to Health Connector in MA). It is also
important to remember these people are already getting subsidized health care
through medicaid. Setting up the health insurance exchange combined with the
increase in premium payments through more people buying insurance through the
mandate the rolls in Medicaid will be reduced lowering overall costs. Again this is not
radical in any sense. All the mandate does it make people who can buy insurance and
simply don’t do it.
A myth that is being perpetrated now is that the government can’t make you buy a
product or service you don’t want. This is the famous Scalia broccoli argument ( I will
have another piece on this later this weekend). If the Supreme Court upholding the
mandate is not good enough for you think about this… whether you are licensed driver
or not you still pay taxes that fix roads and bridges, you may be against war or defense
spending you still have to pay taxes for defense and a military, or you might not have
any children but you are still required to pay taxes that purchase books and desks for
schools. The US Congress has broad taxation powers and this is just another example of
that.
Some additional features of this law are common sense approaches to care and are not
considered radical by anyone with a basic understanding of what government is for.
● Provides Coverage to Americans with Pre-existing Conditions: You may be
eligible for health coverage under the Pre-Existing Condition Insurance Plan.
● Protects Your Choice of Doctors: Choose the primary care doctor you want from
your plan’s network.
● Keeps Young Adults Covered: If you are under 26, you may be eligible to be
covered under your parent’s health plan.
● Ends Lifetime Limits on Coverage: Lifetime limits on most benefits are banned
for all new health insurance plans.
● Ends Pre-Existing Condition Exclusions for Children: Health plans can no longer
limit or deny benefits to children under 19 due to a pre-existing condition.
● Ends Arbitrary Withdrawals of Insurance Coverage: Insurers can no longer cancel
your coverage just because you made an honest mistake.
● Reviews Premium Increases: Insurance companies must now publicly justify any
unreasonable rate hikes.
● Helps You Get the Most from Your Premium Dollars: Your premium dollars must
be spent primarily on health care – not administrative costs.
● Restricts Annual Dollar Limits on Coverage: Annual limits on your health
benefits will be phased out by 2014.
● Removes Insurance Company Barriers to Emergency Services: You can seek
emergency care at a hospital outside of your health plan’s network.
There is a lot of talk of repeal and changing this law and that is a perfectly valid
argument to have in a democracy. Once programs are implemented those advocating
for full repeal will need to answer the following questions…
1. Why should an insurance company be allowed to cap my coverage costs simply
because I suddenly got sick and now need the care?
2. Why should my child be kicked off my health insurance plan if I am willing to
pay for it?
3. Why should I be forced to buy from the few insurance companies that are
offered in my state? Why can’t I buy insurance from the best provider with the
lowest costs that I determine is best for me?
4. Why should I only be able to go to hospitals that are in my network without
incurring additional fees?
5. If I pay my premium why should less then 80-85% of that premium go to
coverage? Why should executives at health insurance companies be allowed to
use my premium for bonuses and not apply it to care?
6. If I have a child born with a disease why should insurance companies be
allowed to deny me coverage even if I am willing to pay? If I lose my insurance
and get sick and try to buy insurance why should I be denied?
While I am sure there are many more questions I hope this provides at least enough of
a base to peak your interest to learn more about the ACA outside of talking heads on
Fox News and MSNBC.
