Someone asked me about the difference between the Affordable Care Act (ACA) and the American Health Care Act (AHCA). Here are some thoughts.

 

The ACA, passed in March 2010, is the first piece of legislation that attempted to deal with the whole complex health care problem (which republicans only perceived to be difficult after they were responsible for the outcome). Creating this legislation took 18 months. There were over a hundred meetings and roundtable discussions. There were more than 160 republican amendments to the bill. It was tagged as Obamacare by republicans who wanted to use this name to stir up opposition to the bill from their base. It is true that there are problems with the ACA that are structural. Some of these problems were introduced as the result of those amendments.

First: the whole idea of insurance is to get a lot of people to pay for what they will probably never need. But Americans prize freedom, and there are many who simply don’t like being told that they have to spend on health insurance. The AHCA rejects mandatory insurance, so it appeals to those who are sensitive to that aspect of things. But car insurance is mandatory in 48 states.  You have car insurance even when you may never have an accident. You buy health insurance although you may never have a major accident or illness.  It is not un-American to ask some people to pay for insurance they probably won’t need.

Regarding the economics of health insurance, by accepting pre-conditions, insurance companies have greater outlays of cash than if they can opt-out of these high payout situations. This requires more income. That is why the ACA calls for a penalty on those who refuse insurance. It is an attempt to balance funds. ACA also expanded Medicaid, which requires funding from 2 sources: taxes on the rich, and state funding.

The republicans forced amendments to the ACA that allowed states to refuse to fund Medicaid. This has been the primary mechanism republicans have used to destroy the individual markets in those states. Without the support of state funding, participating insurance companies were required to suck up the extra costs. This increased cost caused them to raise premiums, and subsequently to pull out of the market as a business decision. However, if state funding had been available, individual markets would have been better off.

The individual market in any state is smaller than group insurance. This means that statistics in a state may work out that there is an unprofitable ratio of sick/elderly to young/healthy. These are the rural states. The red states. They’re suffering from the double whammy of Republican politics and bad statistics.

Of course, insurance companies are greedy entities, and will manipulate customers, congress, regulators, etc for profit. It is hard to know how or how much impact insurance companies have had in crafting the details of legislation. It is certain that they spend a lot of money on campaigns and lobbyists. We can’t really know how much of the efforts of Congress members is done deliberately to help the insurance companies. As Americans, we can understand insurance companies’ right to profit, but, like oil companies, we also think that they shouldn’t abuse people to exploit them for profit.

The biggest problem with the ACA is that it doesn’t address medical costs, which are skyrocketing. The ACA is about redistribution of funds to support the health care of those who can’t afford it. That is the basis of how poorer people are supposed to get health care. The Congressional Budget Office original projections were accurate to about 94% overall, but were only 55% accurate in the area of exchanges. See this link from factcheck.org. Since then, however, the individual markets have suffered as a result of state defunding.

The AHCA, contrarily, tries to address the costs of healthcare. However, it focuses on the costs of insurance, not the cost of actual health care. The AHCA presupposes that free market competition drives insurance prices down. Casually, it sounds like a good idea. However with even a small amount of inspection, you can see that this will not work well. All companies drive their profit. It is hard for insurance companies to make a profit on the sick and/or elderly. Segmenting the elderly into their own pool means their rates will rise precipitately. It may mean a small decrease for the many that are not elderly. They are in the large majority, and so small difference in premiums is the source of the money for the few who are elderly or chronically sick. So this approach will be a little better for the majority, and bad for the minority. This is the nature of insurance. It is also the nature of politics. Making a lot of people happy, and few people very unhappy. Even so, why make even the small group angry, even if they don’t matter to re-election?

Because the republican dark money wants a payback for services rendered. This is why the taxes which had been used to offset costs of expanded Medicaid are being cancelled, and the money returned to the rich. They want their campaign contributions to have an ROI.

The economics of health care insurance will not change. Republican suggestions of free market competition will not change that it costs more to provide care to the elderly and chronically ill. Lifetime caps are there to help insurance companies, and will inescapably cost lives. As medical costs rise, insurance premiums will rise. This will affect the majority in time. Sooner or later medical costs and not insurance costs will have to be dealt with. In the meantime, giving money to the rich at the expense of the poor, the elderly, and the chronically ill is transparently immoral.

This is why republicans are trying to do this deal in the dark, and to limit public discussion. They know how bad it is. The only worse idea is “repeal now, replace later”. Repealing now will make people’s losses immediate. If republicans can’t figure out how to fix the replace angle now, why should they be able to think of something better later? The ACA actually provided care and financial relief. The AHCA eliminates government expense by leaving people on their own, hoping things will work out, and giving money back to billionaires. Let’s be clear: the only thing republican leadership cares about is paying back their backers.

Here is an Atlantic article on the ACA. And here is one from the investigative program Frontline.

William Casperson

editor

Political Nation

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