Consensus Forms on the Future of the Affordable Care Act – but It Isn’t Pretty
:::::::::::::::::: California Broker Magazine :::::::::::::::::
You heard the president. He said Obamacare was going to fail. It’s already failing. He doesn’t want it to fail. But it will fail. He said so. Alas, the president says a lot of things.
A quick consensus has emerged regarding what will happen now that Obamacare remains “the law of the land,” in the words of House speaker Paul Ryan, who decided to do replace and repeal the Affordable Care Act by budget amendment so his bill could go through a shorter- than-normal legislative process. (Have you ever noticed how technocrats always outsmart themselves? I mean always?)
We can ponder the conventional wisdom while awaiting for the ACA to fail. And the conventional wisdom contains many statements that you have heard repeated in the past few days.
The failure of repeal and replace is a good thing, because if it had passed, millions of people would have fallen off the insurance rolls. True or false? Don’t know. Obamacare has problems. Even its supporters acknowledge those problems. It needs modifications. It can’t get them in this partisan environment. People hope for a bipartisan solution. I hope to win SuperLotto Plus.
Premium costs must be contained, otherwise few people will be able to afford the Affordable Care Act, which will cause premium costs to rise as the number of insured diminishes. True or false? True. That’s the mechanics of the community-benefit model of insurance. The more people in the pool, the lower the premiums. How to get more people, especially the young and healthy, into the pool? Here we get to the crux of the problem.
The mandate is problematic, as no one likes having the government tell them to buy insurance and penalize them for not doing so; and the penalties aren’t high enough to push the young and healthy into the risk pool. True or false? BANG! That’s where we are. The mandate was supposed to phase in. But before it did, the insurers began losing money because the pool was quickly formed of membership that required more health care. That meant the insurers were paying out claims faster than they were taking in premiums. I’m not an expert, but even I can grasp this problem.
Minutes after the bill was pulled, I heard a Democratic legislator tell the anchor desk of CNN that he knew what was coming next: The administration would order that the mandate be lifted but that the guarantee for access would stay in place. This would lead to higher premiums next year, as insurers would need to raise them in order to make sure there was enough money coming in to cover the payments going out. Thus the death-spiral prophecy self-fulfills.
Lastly, and certainly not leastly, as an Obama administration expert who participated in the drafting of the legislation said on public radio: The bill was called the Affordable Care Act. It offered access to insurance. It did not address the exorbitant cost of care. Care is still not affordable. And if things keep going the way they are, insurance won’t be, either, Obamacare shmobacare.
What happens next? Yogi Berra could tell you this: “It’s tough to make predictions, especially about the future.” But even Yogi could read the writing on the Obamacare wall.
– Steve Silkin