Now that the Affordable Care Act is working, it is time to adopt national single-payer health care
By Neil H. Buchanan
Justia (Mountain View, Calif.), April 10, 2014
To the surprise of many people, and to the great consternation of Republicans, the Affordable Care Act (ACA, or the dreaded “Obamacare”) failed to fail. Last week, to much fanfare, the Obama Administration announced that the ACA’s enrollment target had been met, which means that the health care law will not collapse from lack of adequate participation.
This was surprising, of course, because of the early software problems that emboldened the ACA’s opponents, and which raised the possibility that technical problems would doom the new law before it could even get started. Now, however, we know that we will proceed to the next stages of our national experiment with a broad expansion of profit-oriented, subsidized health care.
Despite this success, we must now plan to get rid of the ACA, and replace it with something much better. The ACA is inherently incapable of solving the larger long-term problems that our country faces in providing health care to all of our citizens. It was an important step forward, and we should be happy that it did not die a premature death, but we cannot now allow ourselves to believe that the current system is sustainable, or even acceptable.
That is why it is essential to say, clearly and unambiguously, that the United States needs to adopt a system of universal, single-payer national health insurance, as soon as possible. The ACA is as good as it gets, when it comes to basing a health care system on private insurance, and it is simply not good enough. Even as the ACA takes effect, therefore, we need to start planning to make it disappear.
The success of the ACA, and the importance of its component parts
The reason that the ACA was at risk of failing to launch is actually a somewhat complicated story, but the explanation is ultimately about the nature of private insurance. If, against all logic, we decide to continue to run our health care system through competition among private insurers, the system must be designed with several key elements, in order to avoid what economists call a “death spiral.”
Insurers, even those that are not-for-profit companies, need to make sure that they do not ultimately have to pay out more in benefits than they take in from customers’ premiums. This means that insurers will try to separate people into different categories, on the basis of how expensive they are likely to become in the future. Smokers, for example, are treated differently from nonsmokers, for obvious reasons.
It is this simple logic that causes insurers to refuse to insure people with pre-existing conditions. If, for example, you have late-stage cancer, and you want to be covered by a health insurance policy, it would make no sense for the insurer to agree to take you on as a customer. Short of charging you exactly as much as you would have to pay directly for your cancer treatments, the insurer cannot help but lose money on you.
If you fail to disclose to the insurer that you have a late-stage cancer, then the insurer would need a way to protect itself from the economic loss that your deception would create. That is why insurance contracts generally exclude coverage for treatments related to pre-existing conditions. The problem is that insurers, over time, perfected increasingly aggressive ways to define what counts as a pre-existing condition, such that too many people who were insured suddenly found (after paying premiums year in and year out) that their insurers were canceling their coverage because, for example, a cancer patient had failed to disclose that she once had an unrelated illness (such as psoriasis).
Public outrage against such abuses grew, and the result was that even most opponents of President Obama understood that the insurers had overplayed their hands regarding pre-existing conditions. This meant that, when serious discussions began in 2009 regarding health care reform, one of the fundamental elements required of any such plan was that Americans could not be denied coverage due to pre-existing conditions.
This, however, raised a further difficulty. If everyone were to know that they could never be denied insurance coverage for an illness, then there would be no reason to take out insurance in advance of getting sick. This meant that people needed to be required to sign up for insurance in advance. Healthy policyholders, in particular, are an essential part of the economic model of private insurance. Without them, no private company could stay in business for long, because it is the currently healthy people’s premiums that finance the benefits that are paid on behalf of currently sick people.
The so-called mandate, which was the subject of the much discussed NFIB v. Sebelius Supreme Court decision two years ago, was thus an inextricable part of the ACA, because without it, no one would have any reason to sign up for health insurance in a world where they could not later be turned away, no matter how sick (and thus expensive) they became. Without the mandate, the entire insurance system would collapse. Hence, the term “death spiral.”
Finally, in order to allow everyone to become part of the insurance pool, the law had to recognize that some people could not afford to pay for their insurance. They would need to receive subsidies, allowing them to sign up, and thus to make the system nearly universal.
When this was all turned into law, however, it turned out that there was still some possibility that a large number of people would choose to pay the tax (or penalty) that was designed to push them into the insurance pool. Hence, the drama leading up to March 31’s enrollment deadline, which was entirely a matter of seeing whether the insurance pool would be large enough – and include enough currently-healthy people – to avoid the death spiral. Happily, it worked.
The system is inherently wasteful, even when the ACA is running as planned
By Neil H. Buchanan
Justia (Mountain View, Calif.), April 10, 2014
Justia (Mountain View, Calif.), April 10, 2014
To the surprise of many people, and to the great consternation of Republicans, the Affordable Care Act (ACA, or the dreaded “Obamacare”) failed to fail. Last week, to much fanfare, the Obama Administration announced that the ACA’s enrollment target had been met, which means that the health care law will not collapse from lack of adequate participation.
This was surprising, of course, because of the early software problems that emboldened the ACA’s opponents, and which raised the possibility that technical problems would doom the new law before it could even get started. Now, however, we know that we will proceed to the next stages of our national experiment with a broad expansion of profit-oriented, subsidized health care.
Despite this success, we must now plan to get rid of the ACA, and replace it with something much better. The ACA is inherently incapable of solving the larger long-term problems that our country faces in providing health care to all of our citizens. It was an important step forward, and we should be happy that it did not die a premature death, but we cannot now allow ourselves to believe that the current system is sustainable, or even acceptable.
That is why it is essential to say, clearly and unambiguously, that the United States needs to adopt a system of universal, single-payer national health insurance, as soon as possible. The ACA is as good as it gets, when it comes to basing a health care system on private insurance, and it is simply not good enough. Even as the ACA takes effect, therefore, we need to start planning to make it disappear.
The success of the ACA, and the importance of its component parts
The reason that the ACA was at risk of failing to launch is actually a somewhat complicated story, but the explanation is ultimately about the nature of private insurance. If, against all logic, we decide to continue to run our health care system through competition among private insurers, the system must be designed with several key elements, in order to avoid what economists call a “death spiral.”
Insurers, even those that are not-for-profit companies, need to make sure that they do not ultimately have to pay out more in benefits than they take in from customers’ premiums. This means that insurers will try to separate people into different categories, on the basis of how expensive they are likely to become in the future. Smokers, for example, are treated differently from nonsmokers, for obvious reasons.
It is this simple logic that causes insurers to refuse to insure people with pre-existing conditions. If, for example, you have late-stage cancer, and you want to be covered by a health insurance policy, it would make no sense for the insurer to agree to take you on as a customer. Short of charging you exactly as much as you would have to pay directly for your cancer treatments, the insurer cannot help but lose money on you.
If you fail to disclose to the insurer that you have a late-stage cancer, then the insurer would need a way to protect itself from the economic loss that your deception would create. That is why insurance contracts generally exclude coverage for treatments related to pre-existing conditions. The problem is that insurers, over time, perfected increasingly aggressive ways to define what counts as a pre-existing condition, such that too many people who were insured suddenly found (after paying premiums year in and year out) that their insurers were canceling their coverage because, for example, a cancer patient had failed to disclose that she once had an unrelated illness (such as psoriasis).
Public outrage against such abuses grew, and the result was that even most opponents of President Obama understood that the insurers had overplayed their hands regarding pre-existing conditions. This meant that, when serious discussions began in 2009 regarding health care reform, one of the fundamental elements required of any such plan was that Americans could not be denied coverage due to pre-existing conditions.
This, however, raised a further difficulty. If everyone were to know that they could never be denied insurance coverage for an illness, then there would be no reason to take out insurance in advance of getting sick. This meant that people needed to be required to sign up for insurance in advance. Healthy policyholders, in particular, are an essential part of the economic model of private insurance. Without them, no private company could stay in business for long, because it is the currently healthy people’s premiums that finance the benefits that are paid on behalf of currently sick people.
The so-called mandate, which was the subject of the much discussed NFIB v. Sebelius Supreme Court decision two years ago, was thus an inextricable part of the ACA, because without it, no one would have any reason to sign up for health insurance in a world where they could not later be turned away, no matter how sick (and thus expensive) they became. Without the mandate, the entire insurance system would collapse. Hence, the term “death spiral.”
Finally, in order to allow everyone to become part of the insurance pool, the law had to recognize that some people could not afford to pay for their insurance. They would need to receive subsidies, allowing them to sign up, and thus to make the system nearly universal.
When this was all turned into law, however, it turned out that there was still some possibility that a large number of people would choose to pay the tax (or penalty) that was designed to push them into the insurance pool. Hence, the drama leading up to March 31’s enrollment deadline, which was entirely a matter of seeing whether the insurance pool would be large enough – and include enough currently-healthy people – to avoid the death spiral. Happily, it worked.
The system is inherently wasteful, even when the ACA is running as planned
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