Sharing my experiences as a middle age entrepreneur, mother and wife who's still trying to figure some things out.
Friday, January 13, 2017
Why the Affordable Care Act isn't Affordable
I will be first to say healthcare is too expensive for consumers. When I had to go searching for a plan in November because my prior insurer stopped covering individuals, I was angered, frustrated and nearly brought to tears at the reality of my options. The plan I have is more expensive each month than my mortgage and that excludes the deductible of $6,000.
In my lifetime, I have participated in many forms of healthcare coverage or lack of coverage. As I child I was covered under AFDC or Aid For Dependent Children (welfare). I experienced the embarrassment of having two ugly eyeglass frames to choose from at age 12 when I needed glasses because those were the only ones covered and my single mom couldn’t afford anything else. Braces? No way, but the orthodontist was so concerned about how badly my teeth were configured he wrote a letter of appeal to the powers that be and got partial coverage. He generously offered the rest of the service gratis. I was grateful, but embarrassment and guilt left a sting that made me determined to work hard to be dependent on myself, rather than the generosity of others.
As a college student, I had no insurance and used Planned Parenthood for any care I needed because they took payment on a sliding scale. This amounted to yearly exams, birth control pills and treatment for an occasional sore throat or sinus infection. I was so grateful to have basic care that I could afford as I struggled to get the education that would make me independent. I had insurance coverage as soon as I began working in the hospital and it was reasonably affordable because I was always very healthy. Fast forward to 2016 and I am self employed and have a cancer diagnosis. The fact that I even have coverage is because of the Affordable Care Act. Before it, insurance companies could reject me because I had a condition that could get very costly to cover. This would have meant $250,000 for initial treatment and my basic maintenance every year costs between $30-50,000. As it is, I am stretching out the length of time between my basic follow and looking for other options because my deductible is so high that a significant amount comes out of my pocket. $2,000 every three months is not affordable to me or my family. No, The Affordable Care Act, isn’t affordable but let’s take a look at the reasons why.
Insuring more people costs more money. The Affordable Care Act, or Obama Care as fellow Minnesota native Michele Bachmann re-titled it, mandated insurance companies could no longer reject people with pre-existing conditions. They had to cover the kid with cancer, the mom with failing kidneys, the priest with Cystic Fibrosis and yes, the smoking COPD patient on a fixed income. 20 million people were suddenly offered insurance coverage that didn't have access to it before, which was great in that the incidence of massive medical debt plummeted and sick people are able to get care before they are critically ill and most expensive to treat. President Obama was not able to pass legislation to cap profits made by insurance companies because, to my understanding, that violates the free market economy we are so proud of. This isn’t rocket science, more people getting care means more money going to hospital and healthcare systems who provide that care.
Why the mandates and penalties? In order to have enough money to cover everyone, the young healthy people (who I used to be), need to be paying the insurance companies too. It’s not so different from the Social Security System in that the people who are young and strong are supporting the ones who need help and when the young strong ones get old and sick, it is essential there are more young strong ones in the pipeline paying in and so on. While it may seem wrong or even in opposition to American principles to try to force people to have health insurance coverage, it is the only way to support the huge amount of money that is needed to cover everyone. The money has to come from somewhere. Even these measures weren’t enough to make monthly premiums affordable for everyone so the government added money in the form of subsidies for people within certain income limits. So, more people who need care are getting care and the majority of American’s are getting help with their monthly premiums. I think most would agree these are positive outcomes, but wait….
Insurance companies like and are used to, big profits. The cost to insure all of the sick Americans who they could reject coverage to prior, was higher than even they anticipated so they started rejecting in a way that was allowed, by pulling out of the healthcare exchanges. I recall many of them stating things like continuing in the exchanges “is not sustainable.” This was especially true when they were covering individuals, like myself, rather than people who received coverage from their employer. With large groups like employers, insurance companies negotiate prices with healthcare providers and systems, that is why there are limitations on seeing physicians “out of network.” That is code for the insurance company hasn’t negotiated prices with those physicians. They negotiate reduced prices with medical groups in exchange for the large volume of patients or “customers” they provide to that group, a volume discount, so to speak. This is also why we don’t see anymore small family practice doctors like in the good old days. I know many physicians who also long to provide that personal kind of care but they can’t compete with large systems and payers. But, I digress, that is another topic for another day.
Insurance companies are still able to make considerable profits, just not to the degree they could prior to the Affordable Care Act. So, they started to raise monthly premiums, deductibles and co-pays. A typical deductible (amount our of your pocket before insurance starts paying) for a family used to be between $500-1,000 per year and now have climbed to $6,000-20,000. That is in a addition to monthly premiums of anywhere from $700-2,500 and co-insurance (percentage not covered by insurance) of 20-50%. While insurance companies complain about higher costs to cover members, their CEO’s are still getting paid multi-million dollar salaries. I am not saying they shouldn’t be, I am just the kind of person who likes to know the facts when drawing conclusions.
It is a dilemma to be sure and I agree the current state of healthcare is not sustainable for a variety of reasons. But what is the answer? Do we create a new system where there aren’t penalties and the government kicks in more money so the cost of insurance is more affordable to everyone? This increases our deficit tremendously. Do reimbursements to healthcare systems diminish and there are staffing shortages and it takes months to get important procedures or treatment? Maybe the government gives money to the insurance companies in the form of massive tax credits but that would essentially be a government supported system and a precursor to the much demonized term “socialized medicine.” What I do know is, the costs of covering sick people in this country are going to sky rocket over the next 20 years and it’s really just a matter of who is going to foot the bill.