The Affordable Care Act was passed on its promise to extend medical care to an estimated 45 million Americans who were without health insurance. But as with any comprehensive legislative effort, the law possesses shortcomings that were lost sight of among the debates centering around the thousands of other pages of the law. One shortcoming in particular may prove to be the Achilles’ heel that keeps the ACA from accomplishing its goal of universal coverage.
Americans have traditionally received health insurance coverage through their employers, by purchasing it on their own, or through public assistance programs such as Medicare and Medicaid. For decades, Americans age 65 and older have received their primary insurance through the Medicare program, and poorer Americans have been able to gain coverage through the Medicaid program. Young Americans through the age of 22 were either covered on a health plan through their parent’s employer; relied on their immortality instead of the health system; qualified for Medicaid when they went bankrupt from their medical bills after relying on their immortality; or qualified for Medicare if their immortality led them to be disabled for at least two years.
The ACA made several changes to this established structure in an attempt at lowering overall costs by increasing the number of people in the insurance pool. For the young, the law amended the employer requirement so that employees’ children are now on their insurance rolls until age 26. For the poor, the threshold to qualify for Medicaid was raised to 133% of the Federal Poverty Level. (The Supreme Court made that optional for states. As of now, about 25 states have agreed to that threshold.) For everybody else, coverage would achieved through the individual mandate to purchase insurance through the health care exchanges, or through the mandate requiring employers of more than 50 full-time employees to offer insurance as a benefit.
Unfortunately, despite these legislative changes, the ACA has an Achilles’ heel that will prevent it from fulfilling its goal of 100% coverage: it did not address the systemic and cultural issues that led to the health insurance cost crisis in the first place. Not addressed in the law were cost-contributing issues such as the shortage of physicians and allied health personnel that lead to fewer medical professionals seeing fewer patients for higher wages; the high costs of medical technologies that are passed onto consumers; the Medicare fee-for-service structure that incentivized physicians to see patients based on volume and not medical outcomes; the Medicare Sustainable Growth Rate funding formula that leaves physicians chronically underpaid and less able to accept patients on public assistance; tort abuses that have led to defensive medical practices and driven up liability premiums in high-risk specialties such as geriatrics, which again are passed to the consumer; and a culture that relies on an insurance system to treat rather than to prevent injury and disease. Trust me, I could go on, but my boss at my paid job is getting suspicious about why I’m suddenly focused on my work here.
The failure of the ACA to address these systemic and cultural issues means that it can only act as a band-aid, and not a cure, for our health system’s cost crisis. Although enlarging the insurance pool is designed to lead to some measure of cost relief, this relief must first offset the increases that were expected to occur with the law’s implementation of multiple benefit mandates and its reduction of the community rating provision from five-to-one down to three-to-one. But even when this zero-sum balance occurs, the ACA will still be swimming upstream against the rising cost of health care stemming from the multiple factors it did not address. To illustrate, consider how a real swimming pool can never be filled when the bottom is being dug out faster than the hose can fill it with water. Likewise, the hose of the ACA is trying to fill the health insurance pool with money while the factors above continue to dig out the bottom.
It is of the utmost importance that the ACA succeeds, and least of all for reasons of politics or ideology. Unlike water in a swimming pool, money is a severely limited resource for many. If the ACA is unable to stabilize the health care system’s cost crisis, the number of people unable to afford to purchase insurance through the exchanges will only increase as overall costs continue to go up. In turn, this threatens the very viability of the insurance pool itself. If this happens, the unintended consequence of the ACA just might be a system where only the very poor, very wealthy, and very lucky have health insurance.
Written By Matthew Haarington
Director of Policy Analysis
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