What we have seen so far under the Affordable Care Act, are fewer choices, some companies in some markets eliminating the Preferred Provider Organizations (PPO). Some carriers have narrowed their PPO networks, we have had plans cancelled, doctors and hospitals lost, mergers and consolidations of both insurance companies and hospital groups. Those in the middle class who do not receive subsidies have had to encounter higher premiums.
The law went wrong from the beginning, partially because those who wrote the law did not look at what some states were doing that were working well. I think the politicians were also under the impression that of the 40 million Americans who did not have insurance, that it had to be because of pricing or medical condition, and never considered the possibility that many just chose to go uninsured. Also I do not think any of those who wrote the law really ever read the HIPAA law. Everyone seemed to be under the impression that insurance companies could cancel you because you got sick. HIPAA already protected you from that.
So how do we fix it?
First we need to realize that there is a difference between being uninsured and not being able to qualify medically for insurance. While we need to find a way to insure those, insuring six to eight million is a different strategy than insuring fifty million. I have studied what some other states did prior to the enactment of the Affordable Care Act, and I think I have found the answer.
If I were in charge of reform in this country this is what I would do. First I would keep an open enrollment period every year, however, I would make this only for the people who cannot medically qualify for insurance. I would force every insurance carrier in the stat to participate in this enrollment, but have a cap on how many they could take. I would guess about 5% of the company total number of policyholders could be in this category so once a carrier got to 5% they were closed for the open enrollment. I would also say you need to have a slight rate increase on the non healthy block of business, but have a cap of 30% of what the standard rates are. This would offset some, but not all of the medical expenses incurred by this block of business.
The rest of the business is written year round and underwritten. This will keep the rates down for two reasons, one no one is getting bombarded with the chronically ill, also you could offer a more affordable rate to the “young invincibles.” Allowing people to change plans during the year if they can pass underwriting, is beneficial as if you get a rate increase you can look around, if you have a bad experience with your carrier you can move.
The next part would be to extend HIPAA to the individual market so if you have had insurance for eighteen consecutive months, you could not be denied or rated and have the ability to change plans outside of open enrollment. That really solves a lot of issues on the uninsured market. I have always kind of believed the reason we had pre-existing conditions in the first place was due the way that part of the law was written.
In either repairing the law, or replacing the law, we need to understand what drives up the cost of insurance. Premiums are based on the cost of claims. So the privilege of having a co-pay for doctor visits and prescription adds to the cost. Covering all of the preventive care adds costs. Also if you consider how other insurances work. Your auto insurance does not pay for brakes or oil changes, things you can pay for, so to speak. If all plans were made either with a high deductible health savings account, in which you had a say family deductible of $5,000 and you paid for everything up to that, then that would drive stop going to the doctor for every little thing. Also Americans would shop for a better value almost like they shop for a car. We currently, have under the ACA Advanced Premium Tax Credits or a subsidy. We hear the republicans want to replace that with a tax credit. What if everyone could have an HSA account and the tax credit went into the HSA so you could get say $2500 per year or $5000 per year to fund the HSA. That might lower premiums, still give everyone access to care, and have the American people taking an interest in their health care spending. If people took more time to research the cost of care, they way the shop for everything else. I believe the cost of care would drop. If you look at cosmetic surgery. That is not usually covered by insurance and the pricing is known and it is competitive between facilities. If we study what has worked in this country, we do not need to look at what works in other countries.