ACA – crappy, junky insurance

ACA continues to surprise (some people…).  Fair to say though, most have of its mechanisms were outlined since the beginning, during the legislative process.

Nominally, the notion that low premium / low coverage plans were to be mandatorily obsoleted was discussed in 2009.  Like many things ACA, It was an ambiguous discussion though.  I recall the original catastrophic plan conversation in context to policies available to low wage workers through employers, the fast food industry or Walmart being the main example.  The idea was, ACA would raise the raise bar on low wage industries a bit.  To the extent they offered plans, the ones they did offer needed to be better, or these business were in danger of being assessed the employer penalty.

Overlooked for several years was the coverage mandates impact on the individual market.  It comes to the fore now as a wave of plan cancellations are done, with those policies replaced by more expensive Obamacare compliant offerings.

Now, for the most part the battle is being won on “if you like your plan, you can keep it.”  Which is to say, earnest conversationalists of all stripes admit it was a lie.  With the events of the last month, it’s just too absurd not to admit unless you’re a real douche.  IE, inner circle political operative or one of the most obtuse and / or deluding of the ideological sycophants. 

Even so, those supporters of the ACA that are capable of acknowledging the lie still wish to blunt it a bit.  Inevitably, various rationales and justifications are introduced.  The most prominent one boils down to, ‘well, if he would have said people would lose their plans, ACA wouldn’t have passed.’

But another rationale / justification offered is more detailed, and speaks to the mechanics of the ACA.  And that rationale is that the cancellation of individual (non-group policies) is the natural result of the ACA’s mechanism to eliminate low premium / low coverage plans, and that this is a good thing because those plans were crappy.

Now, that’s literally true, ie, something of a proper acknowledgement of causation.  Never mind that it’s at odds with “if you like your plan, you can keep it.”  And never mind that ACA advocates only pursuit a genteel discussion of policy detail now so that they can step up from a discussion that acknowledges “if you like your plan” as a lie.

Thing is, the ‘crappy plan’ premise is bullshit.  Those old plans weren’t particularly crappy.  And the notion of their ‘crappiness’ is obviated by the fact that catastrophic coverage is not actually being eliminated / outlawed.  In fact, ‘crap coverage’ is the engine that drives one of the ACA’s other goals:  to reduce medical spending over time.  

With ACA, wonks will note the introduction of efficiencies or innovation to bend the cost curve.  But also introduced is the consumer’s greater exposure to cost sensitivity.  In the group market, this is accomplished with the ‘Cadillac tax’ and other methods.  In the individual market, it’s accomplished by nudging exchange shoppers to select Silver and Bronze plans.

Take a gander at the Silver and Bronze plans.  They have enormous deductibles.  In practical terms, this acts as a disincentive to see the doctor / consume services unless you really need to.  And this isn’t new.  It’s the same principle that guides selection and use of one of the old ‘crappy’ catastrophic plans.  Oh, with Obamacare some esoteric policy details are changed, lifetime caps, etc.  But as a typical practical matter, the Silver and Bronze plans are not a step up in coverage from the old ‘crappy’ policies.  The Silver and bronze plans ARE the old crappy plans, just made more expensive under ACA.

What do those premium increases buy the consumer?  Not better coverage.  That’s not what ACA does to the individual market.

The premium increases pay for the risk pool to be underwritten with community rate actuarials.  IE, having young men and post-menopausal women pay incidence risk on the chance they will need maternity care, stuff like that.

I am not prepared to argue that’s an absurdity.  I think there’s at least a theoretical argument for community rating on health insurance.  But the big point is, bullshit can be called on this notion that the more expensive Obamacare policies are better coverage.   They’re not.  That’s not what the price increase pays for, and ‘crap’ insurance is actually a linchpin of the ACA.


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