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Obamacare: This Time It’s Personal

November 17, 2016
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Would allowing insurers to sell policies across state lines really solve this problem?

With the election over, many industry executives and analysts are trying to discern how the new administration would approach health insurance and payment reform efforts, and what this will mean for health IT.

Most of these commentaries urge people to remain calm and expect change to be gradual. For instance, John Halamka, M.D., writing on his popular “Life as a Healthcare CIO” blog, notes that “change in Washington happens incrementally.  There is always an evolution, not a revolution, regardless of speechmaking hyperbole.”

And with regard to the health insurance marketplace, Halamka writes: “Although much has been said about replacing the Affordable Care Act, it’s likely that it will simply be amended to reduce the focus on Health Insurance Exchanges. There will be no ‘public option’ for health coverage.  Private payers will be encouraged to offer products across state lines. Pre-existing conditions will still be covered.  Children will be covered on their parents health plans until age 26.”

I wish I could be as sanguine about the possibility that the Republicans are likely to repeal most elements of the Affordable Care Act. But I can’t, because for me, it’s personal. I buy health insurance through the exchange. Although people like me are a small minority of the insured population, there are still millions of us who depend on there being “affordable” insurance without penalties for pre-existing conditions or lifetime caps. 

When people talk or write dispassionately about how Republicans plan to repeal the law and eliminate the federal subsidies, I assume it is because they get their own insurance through an employer and are not facing the prospect of losing their coverage or being forced to pay thousands a month for coverage. If the Republicans repeal the subsidies in the ACA, but cover people with pre-existing conditions, that would leave people paying the full price that insurers have been charging since the implementation began several years ago. And since many people wouldn’t be able to afford it and the individual mandate would disappear, only the very sickest people would remain in the individual market, and the premiums would skyrocket even more.

Here is my experience with buying health insurance on the open market the last few years: Before the ACA, my wife and I could buy insurance with no deductible for less than $450 per month. That didn’t seem cheap, but it was affordable, in part because we were healthy and the insurer was individually rating us based on our own health experience, which is not allowed under the ACA. (Nevertheless, those premiums were increasing at a double-digit annual rate before the ACA passed.)

When the ACA began, premiums would have doubled if we kept the same plan, so we switched to a plan that had a $2,500 deductible, higher co-pays and “co-insurance” for things like hospital stays. Our premiums have risen sharply to close to $800 per month over the past few years for that plan. Without a subsidy, however, it would be twice that much. Now for 2017 we are told our premiums will jump more than 20 percent again. Without the subsidy people in my situation will soon be working two or three days a week just to pay the health insurance company for a policy that doesn’t seem to cover very much.

Is it logical to assume that allowing insurers to sell policies across state lines is going to solve this problem? Or going back to allowing companies to sell cheap policies that don’t really cover much at all?

Isn’t there a reason that despite the years of promises by Republicans to repeal the ACA, they have never said what they are going to replace it with? I heard a health insurance industry analyst being interviewed on NPR this morning. His prediction was that the Republicans would allow the exchange and subsidies to continue for 2017 and perhaps 2018 and then pull the plug on them, with nothing to replace them, thereby intentionally creating a crisis that would have to be solved with their “free-market” solutions.

As James Hamblin, M.D., recently wrote in an article in The Atlantic, we can see the shape of what Republicans are likely to do, because they got a bill through Congress in January of this year. President Obama vetoed it.

And what they passed “would likely trigger a new death spiral: We’d be back to where we were in 2009,” Hamblin wrote. “Relatively healthy people could buy a lousy plan for an affordable price. Sick people would be excluded. People in between would pay a lot. When people are uninsured, they’d go to the emergency room for care. The hospitals shift costs to people who are insured. Insurance companies shift costs to employers. Employers shift costs to employees.”

Maybe experts such as John Halamka are right and everything Donald Trump has been saying on the campaign trail the last two years about health insurance was just bluster. Maybe when it comes right down to it, the Republicans will balk at eliminating health insurance coverage for close to 20 million people. Or maybe the health insurance lobby in Washington will be so strong as to block many of these changes.

Hamblin quotes Michael Sparer, chair of the department of health policy and management at Columbia University:  “The worst case scenario for the insurance industry is the conditions that were put in place—that you can't discriminate against people with preexisting conditions, you can't have lifetime annual limits—the nightmare for the industry is that those stay but the mandate goes. That would be fiercely opposed by the insurance industry.”

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David - A very thoughtful perspective on this most important issue. A question I keep coming back to however is this. If no changes are made, what will stop the cost of insurance from continuing to spiral upward? I am in the same situation as you. Healthy, but having to acquire insurance with high deductibles of many thousands of dollars, with ever increasing premiums regardless of my usage pattern. One hopes for an improved and bi-partisan conceived solution while recognizing the complexity of most alternative adjustments in the ACA.

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