5 Financial Impacts If The ACA Is Reversed
For some reason, there are a lot of people who are angry at the Affordable Care Act (ACA). Many of them believe it’s a burden on their freedom of choice, their wallets, and that their overall coverage is worse now than it was before. With 21 million people having coverage that didn’t exist before, it’s amazing to me that there would be even an iota of conversation looking to kill it off.
Truthfully, there was one thing that went away that people who were employed with large employers did lose. Many organizations had plans where co-pays were relatively low and other benefits were offered to their employees at a very nice rate, with nothing close to the equivalent coming out of their pockets. I’ll admit that higher deductible plans stink on the surface if you’re not used to it.
For everyone else, that’s the only bad thing from the ACA. I’ve been in the industry for 33 years, on the financial side, and I can tell you that the majority of people who are either on this plan or ended up with a lesser insurance plan than what they previously had are going to be lamenting its removal financially, mainly for two reasons. One, there’s no other health plan out there. Two, there are aspects of the health plan that previously plans didn’t cover, and it’s my belief that if the ACA is reversed those plans will never cover them again.
Let’s take a look at these 5 things now:
1. Pre-existing coverage.
One of the earliest components of the ACA was blocking insurance companies from covering you because of pre-existing medical issues. What this meant is that if you changed jobs and got health care, even if it was from the same carrier, that the insurance company could now say that you were being treated for a pre-existing condition and thus had to wait a year for coverage.
This would mean that pregnant women wouldn’t have coverage. People with diabetes or a similar medical condition wouldn’t have coverage. Even if you needed an operation and it was approved before you switched jobs it suddenly wouldn’t be covered for an entire year. Imagine how costly that used to be if you needed the medical services; well, it’ll come back and hurt a lot of people.
2. Mandatory physical coverage.
Every single insurance plan on the health exchanges had to have a rider where the plan covered a free physical exam at least once a year. Whether people took up the offer or not, this was great coverage for those who decided to do it. Everyone in health care knows that if you discover issues way up front that they’re easier to take care of. Now, if you want a physical you’re looking to spend at least $300 for just the physical, not counting any of the lab tests, since physicals weren’t mandatory before the bill passed.
3. Procedure allowance write-offs
Okay, so you had a high deductible and had to pay a higher portion of your medical bill. A benefit having insurance coverage gave you is that the allowable amount based on the contract the insurance company had with either the physician, medical group or hospital meant a certain amount had to be adjusted off to get down to the allowable amount. What this means is that if your visit cost $300 but the contract with the insurance company said they’d accept $120 in payment that, even if it all went to the deductible, all you were responsible for was $120.
4. Inpatient deductible cap amounts
This is a biggie, something that most people never think about until they’re admitted to the hospital. Depending on where you live, you could incur costs higher than $50,000 on the first day you’re admitted, and upwards of $2,500 to $5,000 more every day you’re an inpatient. Almost every insurance plan on exchanges in the country capped the amount that patients had to pay out of pocket at around $15,000 (these amounts differed by state, so they were even lower in some states).
Sure, that’s a lot of money until you realize that many people without insurance end up with amounts well over $100,000 and even higher, and having to make life threatening decisions because they’re worried that they wouldn’t be able to afford them. With an estimated bankruptcy rate where medical bills were a major portion of the debt being around 62% before the ACA kicked in to around 35% in 2014, it shows that for major health care issues having health insurance via the health exchanges helped a lot of people financially.
5. Insurance premiums are going up higher than under the ACA… and you’re going to get less coverage…
The big story coming out of the presidential election season was the “skyrocketing” cost of health care because of rising premiums. This was a misnomer in most places for two specific reasons.
The first is that it was a general average, and certainly not indicative of coverage everywhere in the country. For instance, here in New York most plans went up less than 10%, some around 5%, which has been the norm since the ACA went into effect and is lower than before the exchange came into play.
The second is that even in those areas where the increase was higher than the average, it was less than premiums used to jump before the ACA. Back before the beginning of this decade in California, a major insurance company first requested a rate of increase of more than 90%, only to “settle” on a rate increase of 39%… at a time when the insurer had recorded record profits. With fewer insurance companies in the market now, does anyone really believe premiums will go down, let alone have coverage options improve?
I’ve always thought the ACA needed some major tweaking, but overall I think it was probably the best plan that could have been passed by a Congress that wasn’t going to work with each other on trying to get the best for those people who really needed it. There might be a savings on taxes but when the dust settles there’s going to be a lot of people filing bankruptcy claims again, let alone having proper health care.