I have been studying the Affordable Care Act for quite some time and I have studied various state insurance laws and plans prior to the passage of the Affordable Care Act. Lastly, various politicians and policy experts have offered up solutions. I think if you want to really fix our broken system, you need to look at everything and then fix it bit by bit.
In the words of the great Mick Jagger…
“You can’t always get what you want, but if you try sometimes, well you might find, you get what you need.”
In the ideal world you want everything covered, well that would be what at $0 deductible and probably an $800 -$1000 per month premium for an individual, but maybe what you need is a $5000 deductible and you do not need all of the bells and whistles. Before the ACA you tried hard enough you could find what you need.
When you look at the Affordable Care Act, people like the preventative care coverage, though maybe that is a want and not a need. Most people agree that the fact that insurance companies can no longer deny coverage is a good thing. This does increase the cost of insurance to provide the guaranteed issue. Many people do not like the fact that you can only get coverage in most cases for a few months a year. This, of course, is a requirement so people do not only buy insurance once they get sick. Most people would like a lower premium and a lower deductible or at best a lower out of pocket maximum. People who qualify for the advance premium tax credit ( subsidy) if it is calculated correctly. If calculated incorrectly you could owe money at tax time.
So this brings me to the question how do we can the best of what we want and what we need? Is there a way to accomplish this? Well, here we go.
Prior to the ACA, the state of Ohio, had a pretty good idea, and as far as I could tell worked well. They did not have a high-risk pool per say. They did yearly have an open enrollment in which you could get coverage if you had a pre-existing condition. Every insurance company had to participate, but there was a cap on how much “risky business” they had to take. I do not remember the exact amount, I want to say it was 4%. For purposes of the example, we will use 5%. Once the insurance company has 5% of its business as a risky business, they are full and do not have to take anymore. I would guess Anthem and Aetna might fill first, but by the time you got to United Health Care, maybe not so much. This is only during open enrollment. Again during this time, the insurance companies could not deny, also they had a cap on how much they could charge above standard premium. Let say it is 40% more. Forty percent is not a crazy amount prior to the ACA it was not uncommon to see policies rated up to 200% for health issues if they were even excepted.
The rest of the year was underwritten business. This would help offset the cost of the risky business by having a healthy business. You could be denied coverage after the open enrollment for health issues. To me, this seemed like a fair system for everyone. The insurance companies could make money. The sick could get insured, the healthy could get a more preferred rate. Seems to cover what you need. And prior to the ACA, there were different companies with different options so often times you could get what you want.
Now let us tackle cost, for those who qualify for a subsidy often times their cost of insurance is affordable. But what about those of us who do not qualify. The cost is very high and unsustainable. Republicans for years have entertained the idea of tax credits for insurance. John Goodman from the National Center for Policy Analysis calls it a Universal Tax Credit. Something like this… A credit for every one of somewhere around $2500 per individual and $8000 for a family of four. The credit could be refundable, like on a tax refund. You could get it in the form of an advance like the subsidy is now so you would not have to wait until April 15th to collect it. I like this idea so it is the same for everyone and you can take it when you need it. I also like the fact that there is no calculation or formula to see how much tax credit it is a flat amount the same for all.
So with the tax credits and underwriting back in place most of the year we have addressed the cost issue.
The last part we need to look at is what the Affordable Care Act Calls essential health benefits. These are the things that all plans must have, such as hospitalization, prescription, emergency room and things like that. Most of the EHB’s were in all plans prior to the law. Some that were not in all plans were maternity coverage and mental health coverage. The problem now they are in all plans, not everyone has a need for maternity coverage. Many are beyond childbearing years, some are single men who do not need it. To solve this issue what if we made every company offer the EHB’s, but you were not obligated to take it? Could that work? If you choose not to purchase it at the time maybe if you added it the future you had to wait 12 or 18 months ( so you would not be adding maternity during a pregnancy).
These are the common-sense reforms we need. We do not need to make it mandatory. We do not need to penalize you if you do not buy it.