"Affordable" Care Act

Many years ago, California passed laws that made having auto insurance mandatory within the state. The insurance companies looked at that legislation and said, "Great, we have a captive audience. Let's cancel policies, create new ones at many times the current costs, and screw as many people as possible, while making huge profits." (I'm paraphrasing.) While the intention of the state mandate was good, and, logically, the insurance companies would have had many more millions buying the existing policies, increasing their coffers a very respectable amount, they got greedy. California later then created and passed Proposition 103, which forced the insurance companies to rein in their greed. According to the Consumer Federation of America's report, Prop 103 has saved California drivers about $100 billion since it was passed, in 1988. California is also the only state where auto insurance rates have consistently gone down over the last 25 years.

The Affordable Care Act is a great idea. Allowing children to stay on their parents insurance longer? Great. Insurance companies not denying or dismissing your insurance for pre-existing conditions? Wonderful. Setting a baseline for the minimum amount of healthcare that plans will service? Stupendous. Getting rid of plan maximum payouts? Awesome.

But, like in California with the auto insurance, the federal government forgot some vital components:

1. Setting insurance cost maximums for those base policies.
2. Making it illegal for insurance plans to eliminate your insurance and then sell it to you again at higher rates.

Insurance works by having many people pay a small amount into a pooled fund. It is assumed that the majority will need very little of the fund and a small minority will need some or a lot of funds, so the majority pay for the minority and everybody pays a small amount total. The insurance companies get their profit from:

• the amount of people in the fund, paying insurance premiums
• the interest from the (assumed) amount of money that is paid in that is not paid out again.

Insurance is, in essence, the only legal pyramid scheme allowed, and all insurance works this way.

Health insurance companies could have looked at "Obamacare" as a huge influx of money into their coffers. They should have been lauding and trumpeting the passage and the subsequent Supreme Court rulings making it legal. Depending on which side you ask, somewhere between 15 and 50 million Americans would be added into the pool of those paying for health insurance. This would, by how insurance works, create more premiums going into its coffers and create more interest on the unused, larger amount of funds.

But, like in California in the 1980s with the auto insurance, the health insurances saw a way to make even more profit from Obamacare: in order to hit the baseline minimums that the Affordable Care Act insisted on, insurers simply eliminated a host of existing plans and then resold those people new plans that hit those base minimums but at a much higher cost to the canceled plans.

The minimums required by Obamacare are:

1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorder services, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services, including oral and vision care

You may not need every single aspect (you might be male and single, and don't need maternity or newborn care, for example), but I think most people can respect that these are the bare minimums of things that should be covered by any insurance plan.

Let's say you had Plan X and it had 8 of the 10 minimums and charged you $50 a month. Insurers could add the two items you do not have to your plan and charge you, say, $5 or $10 a month more for the plan, which you would likely find reasonable and affordable. Instead, insurers are primarily choosing to delete your current plan, create a brand new plan with all 10 items, and charge you $100+ to rejoin. What do you get out of it: the exact same coverage, with one or two new coverages added, at double, triple, or more the original rate.

Now, let's say you are a health insurance company. You have 100,000 people with Plan X, paying $50 a month. You are getting $5 million a month from that plan, or $60 million a year. You are betting that less than 20% of your insured population will need to use these funds during any given year, and further betting that, of those who do need to, the majority are for low-cost circumstances (ER visit, kid has the flu, blood tests, medications, etc.). As an insurer, you can add those two missing items, charge the same people $60 a month, and start making $6 million a month. Because of Obamacare, you may also get another couple of thousand who didn't have insurance before who buy into Plan X. So, now you have 110,000 people at $60/month, or $6.6 million a month. You've increased your income by approximately 33%!

Instead, insurers chose to cancel the policies in full, force people to sign back up (with a strong likelihood they would, since the online registration rollout was so poorly handled), and charge them double, or more, for nearly identical plans. That is a money grab, plain and simple. Instead of being happy with the huge increase in profits that would come naturally, they made a grab for even more. And, what's worse, is that it is completely legal, because the politicians didn't consider that a corporation would take full advantage of a law like this, even though they had examples in fairly recent history.

Well, California is leading the charge again. They are proposing legislation similar to Prop 103 that would work the same way. I imagine it will have the same effect, too; insurance companies will continue to do business, will continue to make huge profits, but the people will have affordable rates and policies. No more raising rates by 170% over the last decade while inflation rose 32.5% during the same period!

Had the federal government thought to do this from the beginning, many of the people now without plans, and most of the people who were forced out and back into new plans, would have hardly noticed the Obamacare rollout. It would have truly meant only those people without a plan would need to work toward getting one.

There is absolutely no reason why the Affordable Care Act cannot work and work well. We've seen it work in more than one state and in nearly two dozen industrialized countries. Insuring everyone is a good thing, when done right. However, rather than learning from similar situations (like car insurance in California) or from the various ways that other countries have implemented it, America decided to recreate the wheel -- and did it badly. Insurance companies, which should have been helping every step of the way and thinking about all that new money that would be coming in naturally, got greedy. Politicians, rather than looking out for their constituents, made bad decisions (Democrats) or abstained from the process altogether (Republicans), rather than writing a law that made sense and closed these types of loopholes.

I hope that Obamacare continues because I know people with cancer and similar, expensive illnesses who need the caps on insurance removed. I know (and am!) people with pre-existing conditions that either cannot get healthcare or cannot get affordable healthcare because of them. I know people with insurance that doesn't actually cover anything, and I know people who have had their insurance dropped for no good reason except they had to actually use it, cutting into fly-by-night insurers profits.

Please, government, don't get rid of the ideas behind Obamacare -- just fix the broken bits with laws that make sense and keep the people in mind.