The Heritage Foundation’s February 21 report, How Obamacare Made Things Worse for Patients with Pre-existing Conditions, by health economists Devon Herrick, PhD., a policy advisor to The Heartland Institute, which publishes Health Care News, and John Goodman, PhD, of The Goodman Institute (see related article, page 20), describes why ACA proponents ended up pitching the plan as a solution to protect people from insurance company abuses, rather than a proposal to “insure the uninsured.”
The report notes how Senate Democratic leader Chuck Schumer (D-NY) realized the latter selling point could be a political problem.
“About 95 percent of those who vote already have insurance,” the report stated, citing Schumer from remarks he made at the National Press Club in December 2014.
The Pre-existing Condition Crusade
Herrick and Goodman write that the new selling point of the ACA or Obamacare evolved into a promise that people could sign up for health insurance even after they got sick.
“The message is not aimed at voters who have individual insurance,” Herrick and Goodman wrote. “It is aimed at voters with employer coverage who fear they may end up in the individual market and be mistreated.”
However, the report states that people who fell into this category comprised less than one percent of the population and were already protected under the federal Health Insurance Portability and Accountability Act.
“Most states complied by setting up risk pools, which provided subsidized insurance,” the authors wrote.
Obamacare proceeded full steam ahead with a massive overhaul of the individual insurance market.
Obamacare Breaks Down
The authors state Obamacare plans on the regulated exchanges looked attractive at first. Many plans offered expansive networks, including premier hospitals. The individual plans resembled employer plans in the beginning, but the two markets diverged, the authors write.
Plans in the individual market, 72 percent according to a report by Avalere, started squeezing their networks while narrow networks existed in five to seven percent of employer plans.
“The main reason Obamacare plans have narrow networks is to hold down costs,” Herrick and Goodman wrote. “That leads to lower premiums and makes the plans more attractive to buyers, especially buyers who don’t have any health problems.”
How Exchange Enrollees are Hurt
The report details instances of where sick people covered by an exchange plan are locked out of some of the nation’s top hospitals, cancer centers, physicians and specialty drugs, even those in their own backyard.
For example, the MD Anderson Cancer Center accepts Medicaid but is not included in any network in Texas offered in the individual market. In Minnesota, 170,000 people covered by exchange plans are locked out of the state’s Mayo Clinic. Similarly, only one Ohio plan includes the Cleveland Clinic.
“The remaining insurers [in the individual market] are offering products that look a lot like Medicaid,” Herrick and Goodman stated.
Even primary care in exchange plans can be problematic, the authors write. They cite a health care executive’s statement on CNBC that providers prioritize appointments to those in employer plans that pay higher fees.
The Culprit: The Community Rating
One hallmark of Obamacare has been the community rating: the mandate that insurers must charge the same premium to all regardless of risk factors. This drove the most ill enrollees to exchange plans and chased healthy enrollees to more affordable options.
The overall result has been “a race to the bottom,” the authors wrote. “Millions of healthy people choose to remain uninsured. Only when they get sick, do they enroll, and then they tend to choose plans with the most generous subsidies and lowest out-of-pocket costs.”
The report notes 29 million people no longer carry insurance. The number of uninsured dropped dramatically after Obamacare went into full effect in 2014. The number reached a low of 26.7 million in 2016 but has risen every year since. In 2010, the year the ACA was enacted, 46.7 million did not carry health insurance, according to Kaiser Family Foundation.
Not Hopeless
It is possible to create more responsive insurance markets if lawmakers look at the success of Medicare Advantage and incorporate some of its best features in a plan for all. Medicare Advantage offers private coverage to Medicare enrollees. Enrollees pay the same premium regardless of risk, but Medicare offers providers a risk adjustment for those with more expensive conditions to treat.
“Like all government programs, it is far from perfect,” Herrick and Goodman wrote.
The authors say risk adjustment can be done successfully without the government, but until then, the best solution is to turn Obamacare funds into state grants to better reform individual health insurance markets (see related commentary page 17).
AnneMarie Schieber ([email protected]) is managing editor of Health Care News.
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland’s monthly newspaper for health care reform.
