Over the last four years, I’ve spent more time than I wanted exploring health insurance and, especially, the impact of the Affordable Care Act (the “A.C.A.”). The A.C.A. was never entirely settled, though most people were resolved to its future. Then, following the last election, the nation erupted in debate with Republicans threatening to make good on campaign promises to “repeal and replace.” Given that debate, I thought it might be helpful to write an entry on the issue, to take courage and offer my opinion. I ask only that readers consider my arguments carefully. I’d be happy to hear from anyone who’d like to discuss it more, and I’m even willing to change my mind.
That said, regardless of campaign rhetoric, I think Congress and President Trump should rethink their promises and keep the Affordable Care Act. I don’t mean they shouldn’t include some much-needed changes, making it more effective and sustainable, but the A.C.A. sought to address an important tension inherent in our healthcare system. Despite imperfections, the A.C.A. addressed: (1) vital humanitarian concerns, even as it sought to accommodate (2) the profits of healthcare providers and insurance companies. Those two values both seem important for the future of American healthcare.
When someone goes to the doctor, whether they know it or not, they enter into a financial transaction. Patients exchange money for services. In order provide the very best resources for care, doctors and other providers must set a price high enough to cover their own costs and hopefully, to create a profit. On the other hand, doctors take an oath that sounds almost religious, even Methodist, in its vow to avoid harm to those served. Doctors, even the highly paid, almost always imagine themselves in service to humanity. I’m certainly grateful for their work. Unfortunately, healthcare systems sometimes get caught between serving people and generating profit. Anyone who’s been to the doctor or, experienced a hospital stay, knows this tension first hand. We are all grateful for care, but less than enthused to experience attempts to cut costs and worse, to see the bill.
Health insurance complicates the situation even more. Insurance companies offer to pay a portion of medical expenses for participants in their plans. In exchange, the participants pay a fee called a “premium.” This introduces a second level at which a business seeks to make a profit, but because the business is related to healthcare, the desires and feelings associated with humanitarian concerns don’t go away. After all, people without health insurance have less access to care. When they do get care, they must pay significantly more out of their own resources than those who have health insurance, especially those for whom employers pay all or a share of the premiums. That doesn’t seem fair, especially when we consider that health often lies just beyond our personal responsibility and control, especially given that many uninsured Americans are also those who struggle at lower incomes and with worse health.
By all accounts, Congress and President Obama created the Affordable Care Act as a response to those who lacked health insurance. They sought to make things fairer. Aging Americans and individuals with the least resources already had assistance in the form of Medicare and Medicaid. Others, however, still struggled to adequately provide for their families’ health. Children, expecting mothers and sick Americans didn’t always get the care they needed. Describing the need for the A.C.A. in these terms, as Democrats often did, suggested the law was meant to address humanitarian concern, to expand coverage. But, Congress didn’t simply address those concerns. In fact, they had much more direct options to do that. Our Medicare and Medicaid systems provide examples. The government could have created its own agency to become the insurer funding benefits with a new tax. The media commonly refers to examples of this type of system as “single-payer,” and several other countries have put it into practice.
Most Congressional leaders, not to mention several healthcare providers and health insurance companies, opposed this, arguing that profits in healthcare and health insurance drove competition, which, in turn, drove higher qualities of care. Such claims might be debatable, but no one wants to risk the quality of care to which we have grown accustomed. Because of that, Congress attempted to create a law that expanded care while attending to the profits of insurers and providers.
To expand coverage, the A.C.A. incentivized the expansion of Medicaid in the states to include more people, while also setting out requirements for any insurance plan sold to Americans. Those requirements increased the minimum level of benefits available to participants and prevented companies from taking certain actions to save costs. For example, insurance companies were no longer allowed to preclude people with “preexisting conditions.” The A.C.A. then created a system of tax credits, paid in advance and directly to the insurance company, for those individuals, meeting certain income requirements, who purchased plans on the federal or state-created exchanges.
All of these characteristics sought to expand and improve the coverage available to Americans, but the law also ensured that private insurance companies would still be selling the insurance. The A.C.A. created (or incentivized) the creation of “exchanges” through which people without other forms of coverage could purchase from those companies. More insurance meant the potential for more profit for insurance companies, but also for providers who were now more assured of collecting payments from patients. The law went even further in encouraging the purchase of insurance through the exchanges. Because the A.C.A. increased the benefit requirements and disallowed certain cost-cutting actions, companies selling in the exchanges had higher expenses and thus, required greater numbers of participants to create profit. To push more people to the exchanges, the A.C.A. set a tax penalty, commonly called the “individual mandate,” for those failing to obtain insurance from an employer, government exchange or company in the private market.
Some question whether the system worked. The individual mandate rankled people. And, health insurance companies have struggled to make a profit by selling insurance on the exchange. Many people signed up, but not enough to offset the increased costs associated with new minimum benefit levels. In some places, only one insurer offered any plans, and in a few, beginning in 2018, no plans will be available on the exchange. The companies who continue to offer plans have constantly increased premiums, though the tax credits still make the plans affordable for Americans under certain income thresholds. Compounding the problem, many Republican-controlled legislatures refused to expand Medicaid, leaving some people in a hole, failing to qualify for either Medicaid or the A.C.A.’s tax credits. Maybe most frustratingly, healthcare costs continue to rise faster than prices in other areas.
These issues need to be addressed. They should have already been addressed. Unfortunately, the political climate in Congress, the White House and state legislatures has made that impossible. And, Republicans, now in control, have long campaigned to simply repeal the whole law. I just don’t think that’s a good idea.
I don’t say that out of loyalty to the Democratic party. I’d be pleased for the Republicans to pass legislation that offered solutions to the problems I’ve outlined, to celebrate the victory and use it to gain political points.
Proposals to repeal the law, however, risk great harm to millions of Americans. They also place provider profits at risk, hindering both competing priorities. I worry about proposals that might balance the tension between profit and increasing coverage even less effectively. For example, just today, the publication, “Politico” received a leaked proposal circulated by House Republicans. That plan, seeks to vastly change the restrictions on denying coverage to people with preexisting conditions. This could help insurance company profits, but will reduce the number of people covered. The same plan seeks to change the means by which tax credits are determined from the A.C.A.’s use of income-based formulas to one based on age, older Americans receiving more credit because they, presumably, pay more for insurance. It eliminates the individual mandate’s penalties, but caps the tax credits at $4,000, much less than the current credits available to lower income families on the A.C.A. Without the higher income-based credits and individual mandate, younger American might opt back out of any sort of insurance, thereby risking their own care, but also limiting the ability of insurance companies to make a profit with the premiums paid by younger, healthier populations.
The A.C.A. might have problems in need of a remedy, but it strikes a balance and attends to both expanding coverage and allowing for profitability. Generally speaking, despite rough patches, the law worked. The uninsured rate fell. Healthcare providers found that they were forced into changes that actually enhanced their profitability. And insurance companies were building a base of new policyholders that one day could become more profitable.
It’s true, more people need to obtain insurance through the exchange plans for the A.C.A. to become sustainable, for premiums to stabilize. Maybe the individual mandate wasn’t the right approach. But, something must incentivize people to purchase health insurance, even when it costs them very little. Republicans in Congress certainly have options. They might consider auto-enrolling anyone who fails to obtain health insurance in basic bronze-level plans, billing them any share of premium they must pay through tax filings. Alternatively, they might incentivize enrollment with some additional refundable tax credit. That would carry a heavy cost, but square with the Republican desire to lower taxes. Employers might be further incentivized to drop their coverage and send employees to the exchanges through the offer of tax incentives at the corporate level. Congress has several options, but they have to organize around the idea that the framework of the A.C.A., problematic or not, at least balanced two very important priorities.
As a pastor, my heart goes out to people without insurance. I want to ensure they and especially, their children, get the care they need. At the same time, as an attorney who worked in business, I understand the power and need for companies to earn a profit. Any of us with money invested in pension programs or through individual stock accounts want big healthcare providers and insurance companies to do well. The more profit they make, the better our savings returns will look.
To sustain the priorities of profit and better care for more people, I ask Congress and the President, not to mention state legislatures, to maintain the A.C.A., offering sensible repairs to the problems it has. More than that, I pray that they do this.