The current political situation makes it probable that changes will be made to the Affordable Care Act (ACA), if it is not repealed. Although some ask why the government cannot simply get out of health care and allow market forces to regulate the industry, the history of U.S. health care is the best explanation of why this strategy does not work. The government did stay out of the individual market until it passed the ACA in 2010 at a time when millions could not obtain health insurance and costs were skyrocketing at an unsustainable pace.
In 2014, when the bulk of the ACA became effective, a market that did not previously exist was created: one that insures sick people. It was a market failure that the health insurance industry historically would not cover those who most desperately needed insurance. If everyone is to have access to affordable health insurance, the government must be involved. Otherwise, millions of people are left uncovered and unable to access affordable health care. In passing the ACA, the government acknowledged the American public opinion and the economic reality that having a vast number of uninsured, with only limited access to health care, is undesirable. Repealing the ACA will not address the necessary role of government in health care.
A big problem with the ACA…
A big problem with the ACA is insurers opting out of its marketplace, which leaves fewer choices for people trying to purchase policies through the health insurance exchanges. Following the laws of supply and demand, fewer choices translates into higher insurance premiums. Many insurers are leaving the exchanges because forecasting regarding the subsidies to the industry and taxpayer assistance with premium prices were faulty; many insurers are not seeing the revenue they expected from participating in the exchanges.
Whether insurers continue to participate in the exchanges really depends on the math. The more uncertainty injected into insurers’ decisions to participate, the more likely insurers will opt out. Then, instead of having even one insurer in some locales, there will be none. Some assurance must be provided to the insurance industry that it makes sense for them to participate. Adjusting the subsidies and correcting the forecasting for the exchanges would go a long way toward reassuring insurers and thus addressing the consumer choice and higher premiums issues. Another fix could entail directing state insurance regulators to experiment with selling insurance policies across state lines, which was originally envisioned by the ACA but never came to fruition.
The ACA’s reforms are intertwined throughout the entire health care system; changing or repealing one provision will affect other parts of the whole, creating the potential for unintended harm. The ACA contains a number of beneficial provisions, including closing the gap in Medicare prescription coverage and increasing federal subsidies for states that chose to expand coverage under their Medicaid programs. The pre-existing condition provision that requires insurers to charge the same premiums regardless of health status has benefitted thousands who were previously unable to obtain insurance. However, mayhem in the form of continued escalating costs could ensue unless significant changes are made in the law whereby people are required to maintain continuous coverage, and premium adjustments are made for those who choose to lead unhealthy lifestyles.
The law penalizes those who do not purchase health insurance. Yet, there are a number of people who choose to pay the penalties because it still costs less than insurance. Many who choose the penalty are healthy and willing to risk not having insurance. But this affects premiums because insurance works best by balancing the costs of high and low risk customers. Further, nearly everyone accesses the health care system at some point, whether voluntarily or not.
Moreover, with more than 50% of health status determined by lifestyle choices, perhaps it is time that premiums be imposed proportionately, based on the lifestyle choices of every member of society. If insurers are obligated to cover everyone, they could charge some people more for their health insurance if, for example: they do not comply with treatment regimens, fail to maintain healthy weights or other measures of good health such as low blood pressure and cholesterol numbers, have unsafe sex, fail to wear seat belts or drive safely, refuse vaccinations, smoke tobacco, or abuse drugs or alcohol. Many people who make these choices are healthy at present, and therefore willing to forego insurance. But these choices result in higher health care costs down the line, arguably justifying a more strident requirement to maintain lifetime coverage.
How will the United States develop a sustainable health insurance market?
Healthy people must be part of the risk pool. The individual mandate is unpopular because there is resentment over subsidizing others who fail to maintain continuous coverage or who choose unhealthy lifestyles, but then expect coverage once they become sick or injured. There must be some compromise mechanism; perhaps the answer is not to charge higher premiums for irresponsibility, but to charge lower premiums for responsibility. This is possibly the reform that is most consistent with American individualism.
These are certainly not the only avenues for change under the ACA. Revisions could be made to small business and maternity coverage requirements, and the tax exemptions granted to many health care entities in return for little or no real community benefits could also be examined. With these concentrated changes, proponents of the ACA could maintain they rescued the law under tough circumstances, and opponents could maintain they rehabbed the law with a plan that retained its best elements and improved its long term prognosis. Either way, both sides would be protecting the populations that finally obtained coverage and the ability to pursue happiness to its fullest extent, as our Founding Fathers originally envisioned.
Donna Hammaker is Director of the National Institute of Health Care Management and Law and a former Adjunct Professor of Health Law in the MBA Program in Biotechnology & Health Industry Management at Penn State University. She is also the former President and CEO of Collegiate Health Care Corporation.
Ms. Hammaker holds a Masters of Governmental Administration from the University of Pennsylvania Wharton School of Business and a JD from Temple University School of Law. She was also a Fellow at Hebrew University Faculty of Law and London School of Economics.
Follow Donna Hammaker on LinkedIn at https://www.linkedin.com/in/donna-k-hammaker/
She is the lead author of two titles from Jones & Bartlett Learning: Health Care Management and the Law, 2nd Edition, which just published in March, and Health Care Ethics and the Law, 1st Edition which published in February of 2016.
Complimentary review copies of both titles are available for instructors who would like to consider the text for course use.
Here are some additional resources on this topic:
Centers for Disease Control and Prevention. (2013). Preventing chronic disease: Public health research, practice, and policy. Atlanta, GA: U.S. Department of Health and Human Services, National Center for Health Statistics. https://www.cdc.gov/pcd/
Hoffman, S. (2015). Citizen science: The law and ethics of public access to medical big data. Berkeley Technology Law Journal, 30, 1741–1806. https://www.law.berkeley.edu/…/Sharona_Hoffman_Citizen_Science-1_2015-04-08.p…
Shepherd, H. R. (2016). It saves to be healthy: Using the tax code to incentivize employer-provided wellness benefits. Indiana Law Journal, 91, 597–616. www.repository.law.indiana.edu › JOURNALS › ILJ › Vol. 91 › Iss. 2 (2016)
Synderman, R., & Williams, R. S. (2013). Prospective medicine: The next health care transformation. Academic Medicine, 78(11), 1079–1084. https://www.ncbi.nlm.nih.gov/pubmed/14604864
Wiley, L. F. (2014). Access to health care as an incentive for healthy behavior? An assessment of the Affordable Care Act’s personal responsibility for wellness reforms. Indiana Health Law Review, 11, 639–713. https://journals.iupui.edu/index.php/ihlr/article/download/18891/18831