Quality Health Care is Non-Negotiable

Efforts to reform the Affordable Care Act (ACA) have been wide ranging since its inception, but haven’t accomplished much. This could be because of the deep polarization in Washington, and it is clear that as that the quality and access measures implemented in 2009 are vital parts of our health care system moving forward. The individual policies within the ACA work well in concert, and when properly implemented and funded, the ACA can contain costs, improve access, and improve health outcomes.

One of the primary mechanisms of cost control in the Affordable Care Act is the mandate for individuals to have health insurance. The mandate works to grow the pool of insurance buyers beyond just the sick (who could go bankrupt without the protection of insurance), and works well with the fact that health insurance is guaranteed regardless of pre-existing conditions. The mandate contributed to the massive drop in uninsurance in the U.S., and helped to make Minnesota one of the states with the lowest uninsurance rates in the country. It also ensured that seemingly healthy people were covered in the case of sudden illness or injury when they otherwise might not buy insurance. One of the reasons that recent legislative efforts to reform national health care policy failed was that changing the mandate, or removing it and giving states the option to reinstate it, meant millions of relatively healthy Americans would willingly leave the marketplace. This made insurance companies nervous, as only the sick would remain and the pool of insurance enrollees would be riskier to cover (and more expensive).

Here are a few visuals that show how this dynamic works. First, a couple assumptions to simplify the argument: everybody has the same premium and deductible (starting at $1,200 annual premiums and $2,000 deductibles), these plans won’t include copays or coinsurance, and everybody has a comprehensive plan (per the mandate).

 

The Risk Pool with the Mandate in Place

Initially, everyone is in the market. The color indicates how healthy they are (red is unhealthy, green is very healthy, yellow is fair), and the numbers above their heads represent how much they cost to cover in a year. When everybody must buy insurance, the healthy people help subsidize the sick people who cost more than what they pay in a year. This system protects the sickest people from bankruptcy, ensures access for everyone regardless of health, and makes a profit for the company. The next visual shows how repealing the mandate might affect the behaviors of these people.

 

 

Risk Pool After the Mandate is Lifted

Without the mandate, many of the healthy folks would probably leave, as well as some less sick people who found the insurance too expensive or balked at the requirement of buying health insurance (demonstrated on the left, above). This would lead to a smaller, riskier group of individuals left buying insurance (on the right), and the health insurance companies would probably lose money covering them if they left the premiums and deductibles at the same levels as before. Increasing premium costs might improve the likelihood of turning a profit, but it would almost assuredly force more people out of the market (per the last visual).

 

 

Risk Pool Sans Mandate With Cost Spike

The insurance company then decides to raise the premiums up to $2,000 a year, as well as raise the deductibles. These changes further drive out the healthy and moderately healthy people who could not pay for that insurance or would not pay for it because their deductibles were so high (on the left). This leaves only the very sick or those who are concerned they might get very sick (on the right) in the market. As a result, the insurance company can break even, but the remaining pool is very sick and expensive, and the company would probably consider pulling itself out of the marketplace. In short, keeping the mandate is good! It helps keep costs down for the sickest people and protects everybody from sudden illness.

Of course, this is a bit oversimplified. Everybody does not have the same plan, and many people stay in the market but buy bronze level plans with huge deductibles that they hope they never need to use. Also, premiums are determined based on geography and age, with older people paying more than younger people, (people in their 60s charged roughly three times as much as people in their 20s). Even taking all of this into consideration, the individual mandate is an effective way to keep the market cheaper for everybody, especially when individuals can get help to pay for premiums or receive subsidized care. Without the mandate, health care as we know it would quickly evaporate, or become far too expensive to be usable (like what happened in New Jersey before the ACA).

Another primary feature of the ACA is the health insurance is guaranteed for anybody, regardless of the health of the enrollee. The ACA also ended charging individuals based on their health, and these two provisions essentially ensured that anybody who wanted insurance could buy it, and very sick people who needed the care would not have to pay for it entirely on their own. This system benefits people who were barred from purchasing insurance before the ACA greatly.

Historically, health plans saved money by charging higher premiums for people with pre-existing conditions, or would only offer affordable plans if they did not include services that treated said pre-existing condition. This kept costs low for healthy people, but it also forced sick people to forgo insurance entirely, either by making it too expensive or by refusing to sell any plans to them. The ACA requires that any plan must include 10 essential health benefits, which includes care provided in multiple settings (like primary care clinics and hospitals), as well as specific types of services (like maternity care and mental health services).

In 2012, a report from FamiliesUSA estimated that over one-fifth of Minnesota’s population could have a pre-existing condition. Many of these pre-existing conditions are common ailments such as asthma and diabetes, which absolutely cannot go untreated. Pregnancy is also considered a pre-existing condition, particularly if states can alter what is considered an “essential health benefit.” Denying people coverage based on these conditions would be a rotten outcome for any health reforms in the future. We have simply come too far at this point to turn back to the way things were before the ACA.

Insurance serves a few broad purposes: protecting the health of people who buy insurance, protecting patients from bankruptcy, and guaranteeing health care providers their services will be compensated. By ending protections for pre-existing conditions, or removing pieces of the 10 essential health benefits like maternity care or prescription drugs, health care “reform” would not fundamentally protect all Minnesotans’ health.

Proposed “reform” would also shift the burden of the most expensive health care on the planet to the sick, making them choose between their health and their finances. If health care for the sick either bankrupts people with huge medical bills, charges monthly premiums that cost more than a paycheck, or includes deductibles that exceed $10,000, then health care isn’t doing its job. When patients have affordable health insurance, they can use their doctors and improve their health, while the doctors can be sure that they will be paid for their services.

Now, of course we know insurance premiums are expensive, and there is more work to do to ensure every American has quality, affordable health care. Many people who have insurance through their work struggle to afford it, especially those who have coverage for their families as well. Premiums in Minnesota’s individual market are relatively stable, but premiums around the country will rise wildly in 2018. However, the ACA provided landmark legislation in reducing costs, improving care, and expanding coverage to those who have largely been excluded from health insurance. Quality, affordable health care isn’t negotiable, and any future reformers should remember that as we move forward.