Full Disclosure: I am 100% opposed to the Affordable Care Act, but that does not mean that I am opposed to major healthcare reform.
I am writing this post fully acknowledging that our health care and health insurance industries are majorly flawed and that they are in need of drastic reform. It's tragic that quality healthcare and health insurance is by and large a luxury of the middle and upper classes and that healthcare has become so unaffordable that uninsured, working class families can't even afford to take their children to routine doctor's visits or have a broken arm treated without risking their financial stability and livelihood. It's a grave problem and the problem needs a solution.
However, I think that the solution that has been proposed is not just problematic, but wholly wrong-headed and will prove to be detrimental to our entire healthcare system in the United States. I believe that it is completely possible to point out flaws and offer critiques of a system while also sympathizing, and empathizing, with those whose lives are complicated and sometimes destroyed by the deficiencies of our current system.
On to the discussion:
My problems with the Affordable Care Act are legion, but I am not going to discuss most of them here. Suffice it to say that I think that there are several parts of this law which are setting dangerous precedents for the future. One of the more troubling precedents is the way the U.S. government has placed regulations on private industry in such a way that undermines the entire business structure of that industry.
Let me explain:
The health insurance industry is an industry whose business model works because of risk. In this business relationship between the customer and the insurance company, one side is an optimist and the other is a pessimist.
I buy health insurance when I am healthy and I am betting that one day I am going to be sick. If catastrophe or sudden illness befalls me or my family, I want to know that I will have help when it matters. The insurance company is also betting on my health, but they are assuming that I will live a long, relatively healthy life.
Why does the insurance company pay for my unexpected surgery, because they entered into an agreement with me betting that I would never get sick.
This is the way the industry works. Both sides are risking something: I may pay premiums for years and never need the insurance coverage that I have paid for, but I may also become deathly ill immediately after I sign up for coverage and the insurance company may have to pay out far more than I'll ever pay into the system with my premiums. Risk. It's what makes the insurance world go round.
Enter the Affordable Care Act:
One of the most touted aspects of the ACA is the requirement that insurance companies accept patients with pre-existing conditions. As we just saw, this new requirement undermines the structure upon which the insurance industry is built. There is no risk at all involved in the arrangement if a patient can sign up for health insurance after they've been diagnosed with a serious illness. You're not asking for insurance at that point, you're asking for a sugar daddy to pay your bills. The only reason insurance works is because insurers bet that you won't get in a car crash, that you won't die prematurely, that you won't be diagnosed with a serious illness, and for most of us, those events don't happen. However, we happily (I'm being generous) keep paying premiums and those premiums are paying for those insured who have had the diagnosis we all fear.
There is no risk involved from the customer's vantage point if they can apply for auto insurance and pay a premium only after they have rear-ended a garbage truck. They have not paid into the system. They never accepted any risk. Instead, they are expecting the insurance company to pay out for a new car. Again, that's not insurance, that's a sugar daddy.
This problem is further compounded by the regulation that forbids insurance companies to charge patients with pre-existing conditions higher premiums than they do for individuals who are and have been healthy. Insurance companies are businesses that are out to make a profit. In order for them to take on this new financial burden, insurance premiums must go up, and they must go up substantially.
Final Thoughts:
First, this requirement in no way solves the fundamental problem of health care and health insurance: that it is too expensive for average and low income families to afford. Instead, the requirement that insurance companies accept previously uninsured individuals with pre-existing conditions while not charging them higher premiums, will only drive up the cost of insurance for all.
Secondly, I believe that we have set a dangerous precedent. We have allowed the government to pass a law that fundamentally undermines the business structure of a private industry. There is no precedent for this type of action. If the government wants to argue that the health insurance industry provides a necessary service and therefore needs to fall under more stringent government regulation, that's one thing. Public utilities are subject to heavy government regulation that limits the rate of profit those companies can earn in order to control costs, but that is not what has happened here. Instead, the government has regulated the health insurance industry in such a way that it undermines its basic ability to derive a profit and provide a product at a reasonable rate.
Finally, our previous healthcare system failed many people. It failed people who were sick and laid off from their jobs, thereby losing their employer provided health insurance. It failed people who were low-income who couldn't afford to take their child to the doctor, much less afford a $500/month insurance premium. I am not functioning under the illusion that all uninsured people with pre-existing conditions chose to be uninsured. However, I am suggesting that there must be a way to provide for these individuals without potentially dismantling a private industry. I've linked to a United Liberty article below. I don't believe that it has all of the answers, but I do believe that it is an important start.
Sources and Further Reading:
Millennials are Opting Out of Obamacare Because Its Not Insurance- Forbes
Does Obamacare Reduce Costs for People With Pre-Existing Conditions?- Voices of San Diego
Replacing Obamacare: Republican Answers to Pre-Existing Conditions- United Liberty
Fixing Pre-Existing Conditions Without Obamacare- Ohio Liberty Coalition
