A Realistic View of the ACA – Part 2

In Part 1 of this series, I introduced the series and covered the first part, Repeal. After writing this Part 2 and realizing that discussion of a Transition Plan required a few more words than I originally thought it would, I decided to expand the series to four parts instead of three. So, this Part 2 will focus mainly on a relatively simple Transition Plan for people currently covered under the ACA, and some of the financial math that would be associated with such a plan. Part 3, Replace, will focus on the essential elements that would need to be included in a new plan defined by a law replacing the ACA, and Part 4 will focus on Looking Ahead [after passage of a law replacing the ACA].

Some Basics First

In the process leading to proposed law being voted on in both houses of the Legislature, there is an unfortunate reality we have to face — that bills get to this point only after huge amounts of political bargaining among Representatives and Senators whose primary focus is not on what is best for America, but on what most likely leads to their reelection. For that reason, the most important part of the process is bypassed — determining first what guiding principles can be agreed upon up front before hashing out of the details even begins. In the case of coming up with what became the ACA, or of coming up with a law to replace all or parts of it after its repeal, that would mean addressing fundamental questions like the following:

Is every American citizen entitled to insurance to cover their healthcare needs, or is it simply a product/service that some people can afford and others can’t?
If healthcare insurance is an entitlement, which products/services are considered entitlements, and should the government provide them directly through government-run facilities or pay private providers for their costs and reasonable profits to provide them [and in the latter case, how will guaranteed access and affordability be ensured for people private insurers deem unprofitable to cover]?
If healthcare insurance is not an entitlement, should there be regulations that require access to healthcare services under certain conditions by people who cannot afford to pay for those services [and if so, what are those conditions, and is government required to either pay for that access (through tax revenues) or require providers to absorb the unreimbursed costs they incur in providing them (a form of indirect taxation)]?
In either case, for any financial assistance that may be available under certain conditions, do people who do not manage their own health well [eating habits, exercise, etc.] receive the same assistance as those who do [and if not, on what basis is the granting of assistance made, and who makes that decision]?

Although most legislators would probably say they did address or are addressing fundamental questions like these, they haven’t done so in the way and to the depth I’m saying they should have.

Replace

Given this caveat, we’ll look at two things that replacement legislation needs to address: 1) a transition plan for people currently covered under plans obtained through the ACA; and 2) essential elements of a replacement law. As mentioned above, I’ll focus on the latter in Part 3, Replace. In this Part 2, I’ll focus on a plan for Transition.

Transition Plan

This isn’t rocket science — a lot of what is needed is simply common sense. Politicians have a tendency to get bogged down in peripheral arguments, particularly when they perceive that a decision they are about to make will affect large numbers of people and/or when they recognize the risks involved and the possibility that they and/or their party will be blamed [and punished in the next election] if things don’t go well. I call this the Mesmerization Syndrome. A good example is what has already become a headline item — “Repealing the ACA will kick 20 million people off their health plans”. Something I said in Part 1 of this series is worth repeating in this context. … Although there are, in fact, about 20 million people now enrolled through the exchanges set up under the ACA, nobody knows how many of these people have coverage through the ACA because they could not obtain coverage without the ACA. It would not surprise me if it turns out that only half, maybe even less, would not be able to obtain more or less comparable coverage — i.e., many enrollees probably bought through the exchanges for other reasons [e.g., they found it easier to navigate through their options once the initial glitches were ironed out]. Whatever the actual number of people affected turns out to be, all that is needed initially to avoid this “kicking off” is a simple set of transition rules built around a common-sense “grandfather clause” something like the following:

“Grandfather Clause“ Any existing policy obtained under provisions of the ACA cannot be terminated by the insurer, nor can its renewal be refused until the replacement law is in effect, except for 1) non-payment of premiums; 2) or non-payment of co-pays, deductibles, etc. within “x” days of due dates [unless disputed — with a defined process for resolving disputes].

According to www.healthcare.gov [the site where people can “shop” for and sign up for plans under the ACA], the average 2017 cost of a “gold” plan [the best plans available] will be $9,167. Even if all 20 million enrollees were grandfathered in for all of 2017 and all 20 million qualified for 100% government-subsidized coverage [an extremely exaggerated, almost facetious assumption], the cost of this transition would only be 183.34 billion [in the general range of what would be spent under an unmodified ACA] . Realistically, the cost would be less than that because based on the highest estimate I’ve seen, only about 83% of people enrolled under the ACA qualify for government subsidies [the average amount of individual subsidies is a difficult number to find, but it is certainly nowhere near 100%]. Also, as mentioned above, it is only people who otherwise would not be able to obtain coverage [i.e., not the whole 20 million] who would need to be included in this calculation. It would not surprise me at all if the actual cost of this “grandfather clause” transition turned out to be considerably less than $100 billion.

Essential Elements of a Replacement Law

I’ll get into this in Part 3, Replace. Then, in Part 4 of this series, which will be focused on Looking Forward, I’ll get into 1) how repeal and replacement of the ACA could potentially be the main determinant of the outcome of the 2018 mid-term elections and/or the 2020 presidential election, and 2) what the future will probably look like under the replacement law if it is successful.

Thanks!