Is The ACA As Big A Mess As Everyone Says?

 

Affordable Care Act – Image of pills and coinsMaybe. But many of the problems the Affordable Care Act (ACA) is now encountering – insurance companies on the exchanges pulling out, large premium increases in some states – are not unexpected given the design of the program.

Major problem? The Patient Protection and Affordable Care Act bill set the penalties for not having insurance too low. Far lower than the cost of the insurance to begin with. So there is little incentive for healthy people to enroll. Without healthy people enrolling, it was only a matter of time before the death spiral began.

It’s a simple equation: Sick people + no preexisting condition restriction – healthy people = high spending that outstrips existing premiums.

To add insult to injury the government was too lenient in allowing people to sign up outside of open enrollment, ie, when they got sick and needed the insurance. Plus, as The New York Times explained in a recent editorial, insurers set premiums too low in the beginning in order to attract enrollees.

Is the ACA dead? Should we scrap the whole thing? Absolutely not. Do that and 20 million people lose their health insurance.

The ACA needs fixing, something Congress could do, could have done, if it were functional. Raise the penalties, increase the income level required for subsidies, institute a reinsurance risk corridor for health plans to protect them from unexpected costs, improve communication to the estimated 5 million people who are eligible for subsidies but haven’t signed up.

At the end of the day, however, rising premiums (and deductibles) are happening to all of us, regardless of where we get our insurance. Our healthcare system is bloated; cost is ridiculous; waste is endemic. We need to get at the root of the problem and stop trying to treat the symptoms.

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