Monday, February 3, 2014

Affordable Care Act a mess, but piecemeal reform attempts come with risks

The rollout of the Affordable Care Act has been a story of ineptitude. The ham-fisted attempts to launch the website alone have provided newspaper opinion pages enough material for a year of editorials. Prior to the passage of the Act, the Arizona Chamber was very vocal about the many contradictions and bad public policy contained in the law. We continue to be concerned with the counterintuitive assumptions the law is based on and the adverse outcomes these create.

The central problem with this law is that, under the guise of making insurance more accessible and affordable, the Act has done basically the opposite. First, it mandates that insurers provide more expansive coverage and fundamentally changes the way insurers calculate premiums. For example, insurance companies can no longer exclude those with pre-existing conditions or charge more for consumers with chronic conditions. They must allow dependents to stay on their parents’ plan until the dependent is twenty-six years old and the difference in price they may charge a young person vs. an older person is strictly limited.

Pre-Affordable Care Act, health insurance looked like most other types of insurance; premiums were calculated based on various factors that can predict the likelihood a person will access certain benefits (e.g., age, existing medical conditions). Now, all insurers must provide ten “essential health benefits” regardless of the likelihood that a person will utilize any or all of these benefits. This has the effect of increasing premiums and other costs for the young and the healthy, while decreasing costs for the old and the sick.

The Act attempts to pay for all of this by levying at least a dozen different taxes on employers, as well as a tax on healthcare innovation by taxing the sale of medical devices. Premium costs will increase for the young and the healthy, while employers’ ability to create jobs decreases and companies are taxed out of creating innovative new products.

Bottom line: the implementation has been rocky, to put it in polite terms. As a result, Americans are more skeptical about the law than ever, with 50 percent reporting an unfavorable opinion. The insurance companies didn’t ask for this law, and they have tried to navigate it in the least disruptive way possible. But the President keeps changing the rules in the middle of the game. The administration has authorized 19 delays, amendments and repeals to the law, creating a playing field with more seismic activity than San Francisco.

Now, there are proposals in Congress that, in an attempt to undermine a single piece of the Affordable Care Act, would essentially punish health insurers for complying with the law.  Although well-intentioned elected officials might believe they’re protecting taxpayers from an insurance industry bailout, these alterations would further destabilize the market that insurers are trying in good faith to navigate. Forcing a total collapse of the private insurance industry will push us toward a single-payer, total government-controlled healthcare system.

So as some in Congress attempt to protect taxpayers by targeting insurers, let’s carefully consider the consequences as we deal with the most complex health care law of our time. Attacking the Affordable Care Act in this piecemeal fashion will only get us further from the goal of affordable health insurance that is widely accessible. I would encourage Congress to instead focus on finding a feasible solution to our country’s ongoing healthcare crisis.

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