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Broken Healthcare Promises

September 27, 2012

The major provisions of the Affordable Care Act, the individual and employer mandates and the Medicaid expansion, are still more than a year away, and their fate hinges in large part on the outcome of the Presidential election a little more than a month away. By design, only a few, mostly popular, provisions have been enacted so far: children are now able to remain on their parents’ insurance plan until their 26th birthday, insurers are prohibited from imposing lifetime dollar limits on essential benefits, and people with pre-existing conditions are made eligible for high-risk insurance. These provisions have indeed proved popular, so much so that Republican nominee Mitt Romney has said he will look into keeping some of these provisions intact should he win.

The uncertainty surrounding the law due to the elections is exacerbated by the fact that no one knows, assuming Obama wins, which states will implement which insurance provisions. States have the option to opt out of setting up a health insurance exchange, and after the Supreme Court Ruling, the option to opt out of the Medicaid expansion as well. A smattering of states have signaled that they will fully implement both provisions, others remain adamantly opposed, while the majority are delaying a decision until after the election in November. To show how muddled the tea leaves are for anyone trying to project the outcomes of these provisions, here is a map of where each state stands on the health insurance exchange

These pervasive uncertainties on different levels make projecting the outcome of the law to 2014, when these major provisions would be implemented, effectively pointless.

This does not mean that some aspects of the Affordable Care Act, or the promises made about it, cannot be judged now.

One of the most divisive issues surrounding the law as it was being crafted was that the significant increase in the government’s role in health care would crowd out private insurance, who would either not be able to compete, or would not be able to feasibly comply with the myriad of new regulations and restrictions. This crowding out would then eventually pave the way for a single-payer, universal health insurance system akin to the ones in Canada or the U.K.

Obama took great pains to allay these concerns, at a town hall meeting in New Hampshire on Aug. 11, 2009, Obama said, “If you like your health care plan, you can keep your health care plan.” After the constitutionality of the law was upheld by the Supreme Court, he again emphasized this point, saying “If you’re one of the more than 250 million Americans who already have health insurance, you will keep your health insurance. This law will only make it more secure and more affordable.”

His reasoning behind this claim was that the law allowed insurers and employees with plans that existed on March 23, 2010 to be “grandfathered” in, meaning they would be exempt from the requirements to offer the new provisions in the laws ‘essential benefits package’.  The problem that arises for these plans is that the insurers are unable to make needed changes to their plans to control increasing costs, lest they lose their grandfathered status and be forced to add a raft of new benefits; on the other hand,  if they keep grandfathered status by not making changes, the costs of these plans will balloon, quickly becoming unaffordable and forcing those consumers to look elsewhere for health insurance.
The effects of this bind can already be see more than a year before the major coverage provisions of the law come into effect. Insurers are recognizing that these plans will not be sustainable in the long term, so they are cutting their losses and not offering them anymore. According to Kaiser’s 2012 Employer Health Benefits Survey, the proportion of insurers that offered at least one of these grandfathered plans dwindled from 72 percent in 2011 to 58% in 2012,while the percent of workers enrolled in grandfathered plans plunged from 56% to 48%. A significant amount of people are not able to keep their previous insurance even before the law is fully implemented, either due to increasing costs of their grandfathered plans or their insurers discontinuing the plan.

The other main objective of the Affordable Care Act, besides expanding insurance coverage, was to slow the growth of its cost and make it more affordable. In a 2008 Town Hall, Obama claimed that under his administration:

we’ll lower premiums by up to $2,500 for a typical family per year… And we won’t do all this twenty years from now, or ten years from now. We’ll do it by the end of my first term as President of the United States.

Unfortunately for Americans, this promise was not kept either.

Instead of decreasing by $2,500, family premiums have actually grown by almost $3,100 under Obama’s administration.

Granted, premium prices are subject to a multitude of factors outside of the President, or government’s control; but Obama made a direct and specific promise,  and this ‘cost containment’ was one of the main talking points pushed by proponents of the law as they ushered it through Congress, that somehow the smattering of provisions implemented before 2014 would reverse the seemingly inexorable trend of premium cost growth.

While it is certainly too early to know how the major provisions of the law will play out, or even if they will ever be implemented, it is clear that to this point, the Administration’s promises about the Affordable Care Act have not been kept, and that the law is far from a panacea that will cure what ills our health care system.


From → Healthcare, Politics

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