OP-EDS

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November 8, 2013

The Act, after the fact

Problems surrounding the Affordable Care Act are just now springing up.

Just over four years ago, at the start of Obama’s first term, the President made a bold promise to provide millions of uninsured Americans with affordable healthcare. In response to opposition fear tactics by the Republicans, Obama emphatically issued the most specific commitment of his presidency when he said, “Let me be exactly clear about what health care reform means to you. If you’ve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.”

After four years of dismissing Republicans who argued that Obamacare would be a failure, I am now stuck in a state of cognitive dissonance as I reconcile the liberal hopes I had for health care reform and the level of counter-productiveness with which it has been implemented. Like most, I’m concerned about the much-publicized $394 million we spent  to have a website that still doesn’t work and was insufficiently tested. I’m concerned that it was built by a massive team of government contractors, the leader of which was the same Canadian company whose $46.2 million contract to create Ontario’s health care medical registry was canceled after three years of missed deadlines. But that’s just the tip of the iceberg. The greater issue with Obamacare is the very real possibility that it might end up causing the unthinkable: a net loss of health insurance.

Obamacare fines people who don’t have health care. To prevent people from skirting this regulation by buying mini–health care, it requires stringent standards for what is considered a sufficient plan, including maternity and newborn care, mental health services, and outpatient accommodations. In fact, these requirements are so high that 16 of the 19 million people currently in the individual health insurance market are at risk of losing their health care because their plans have insufficient coverage to grandfather them past the implementation of the health care requirements.

Generally, individuals buy the type of health care they potentially need instead of the more comprehensive, one-coverage-fits-all plans that employer-based insurance companies provide. For example, senior women paying for their own insurance plan don’t generally pay extra for maternity care coverage. Under the Affordable Care Act, this means insurance companies need to either drop these 16 million insured or roll them over into significantly more expensive plans. As a result, since August, hundreds of thousands of Americans have found out that they’re losing their insurance. Florida Blue sent out 300,000 cancelation notices, or 80 percent of its individual coverage policies, and Kaiser Permanente of my home state California has canceled 160,000, or half, of its policies. Because the Affordable Care Act legally voids these contracts, insurance companies are effectively given a renegotiation freebie.

In total, three times more people (2 million so far) have lost their health care insurance than have signed up for Obamacare. What’s even worse is that given the delays in the website, it’s a very real possibility that those who are losing their health care will remain uninsured for weeks or months before they can actually enroll in Obamacare. That means that those who couldn’t afford health care in the first place will be stuck paying penalties for not obtaining it through exchanges that were not functionally available to them. Not good.

What’s worse is that the business model of Obamacare simply doesn’t work because other parts of Obamacare have made it impossible to enroll a large enough amount of healthy people. A CBS analysis of 15 states shows that most people enrolling in Obamacare are doing so through the expansion of Medicaid rather than through the private markets. By the numbers, of the 35,000 in Washington who enrolled in Obamacare, 87 percent did so through Medicaid. In Kentucky and New York those numbers are similar at 82 percent of 26,000 and 64 percent of 37,000. The study concluded that if that trend continues there might not be enough healthy people buying health insurance for the system to work.

More fundamental to the success of Obamacare is the enrollment of not just healthy people, but specifically young people who are less likely to get sick and infrequently need regular check-up services like prostate exams. So far, the massive campaign to enroll young people into the health care exchanges has done better than expected, with some states reporting enrollment proportions just below the administration’s goal for 2.7 million of the 7 million estimated new enrollees to be between 18 and 35. However, in the long term these projections are unsustainable for two reasons. First, due to the same campaign for health care exchange awareness efforts that got so many young potential enrollees to apply so soon, early statistics are almost certainly biased. Second, children up to the age of 26 have the option to be covered by their parents’ plan—even if they’re married, not living at home, attending college, or are financially independent. This will remove the healthiest eight percent or so—the super-healthy 18-26-year-old portion of the desired semi-healthy 18-35 demographic—from the patient risk-sharing pool. This could shock premium prices into a free-rise that could create a positive feedback loop: The higher prices rise, the more people find the no-insurance tax a cheaper alternative to paying for rising health care costs. This would then cause the next healthiest group, who now derive the least value from their health care, to drop out, and so forth.

There’s no easy way to fix the healthcare system in the U.S., but frankly the Affordable Care Act was a pretty dumb way to go about it. Then-Speaker Nancy Pelosi (D-CA) famously told Congress during the health care debate in 2010 that it had “to pass the bill [to] find out what’s in it.” Well, we passed it, we’re implementing it, and it appears we’ve gotten around to finding out what’s in it—and if I were a betting man, I’d say Pelosi is just as unpleasantly surprised as everyone else.

David Grossman is a first-year in the College.

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