January 16 2017
This week, the American Action Network released unsurprising polling data that show 54 percent of Americans want full repeal of the Affordable Care Act, or major changes to it. Support for repeal reaches 70 percent under the condition that lawmakers provide a transition period ensuring that current ACA beneficiaries can keep coverage while new reforms are implemented.
The ACA, which has already started to unravel legislatively, has never been overwhelmingly popular with the public. However, as the AAN poll affirms, two key provisions in the Affordable Care Act are popular: Fully 92 percent of people favor the rule that requires insurance companies to cover pre-existing health conditions, and 79 percent favor the requirement that allows parents to keep their children on their plans until the age of 26. Because of their popularity, some Republicans are discussing keeping these rules.
It's understandable why these two rules are popular. No one wants to see our friends and neighbors with pre-existing conditions struggle to find or afford health insurance. Similarly, the age-26 rule has resulted in an increase in the portion of young adults who have insurance coverage, even if it is with mom and dad.
But here's the bitter medicine: These rules, popular as they are, are exactly why the ACA is unworkable. Policy people on the Right and the Left know this. You can't mandate that insurance companies take all comers without also mandating that all people buy in.
The ACA tried to address this problem with the individual mandate. But the mandate didn't have sharp enough "teeth." According to recent data from the IRS, 6.5 million people paid the penalty for going uninsured in 2015. The average penalty was $470. For many ACA plans, this would equal two or maybe one month's premiums. So the people paying the penalty are saving serious cash. (Granted, they risk facing high health bills should they get sick or hurt, but when making the decision, they're hoping to stay healthy.)
Similarly, 2.3 million young adults, most of them likely healthy, did not seek coverage in the ACA exchanges because they joined their parents' plan.
So what happened? The people with the most to gain from ACA coverage (sicker, older people) signed up while more younger, healthier people didn't sign up: They either went uninsured or stayed on their parents' plan, if they were young enough.
Therefore, the pool of people insured through ACA plans was sicker than expected. This created financial loss for insurers, caused some insurance companies to leave the exchanges, and is certainly contributing to ever-dwindling choices and higher premiums. Data from the Department of Health and Human Services show that the average premium for a midlevel plan will increase by 25 percent in 2017. And in more than 40 percent of all counties, exchange customers have only one insurer to "choose."
The bottom line is that the provisions that make Obamacare attractive to many are the same provisions that have brought on its demise.
Rather than keeping these provisions, there's a better way to help these sympathetic groups, such as state-based high-risk pools. These pools target financial help to those who really need it, like people with costly pre-existing health conditions.
As for young adults, they'd benefit tremendously if many of the ACA's other regulations were undone, such as mandates on what all insurance plans must cover, or restrictions on age-based pricing. Then more millennials could afford to buy their own insurance plans, lessening the need for dependent coverage.
We can never create a utopia where everyone has all the resources they need to consume everything they want, especially in healthcare. No one wants to be sick, and no one wants our sick friends to struggle with bills from hospitals or insurance companies. But we can make changes that make the insurance marketplace more competitive and functional for everyone, including those who need a safety net.