Only for those without pre-existing conditions or other major risk factors. For them, comparable plans cost about 3 times as much, or weren't available at all.
Also the plan that you claim was comparable before the ACA was probably not comparable at all because it had a lifetime coverage cap. So it was objectively worse because if you got a serious and expensive medical condition you would have been cut off at some point.
I have a pretty expensive PEC and my state had a high risk pool that was much less expensive than what I pay now. (To be clear, I think the preexisting condition exclusion ban is wonderful, just adding a data point to the conversation)
I don't think you understand how insurance works. What do you think would have happened to you if you got a serious chronic medical condition and exceeded your lifetime coverage limit on the old (pre ACA) policy?
There are no serious chronic medical conditions in my family and the ACA has been a lifesaver for us, the only reason we were able to start our last company. That's because before the ACA, no individual health insurance plans were available to our family at any cost, due to "do-not-cover" lists (for instance: our daughter, now a teenager, had an unexplained seizure when she was 4 years old). There were millions of families in the same situation.
Further: as an employer, I'm aware that what I pay for an ACA silver plan is ballpark comparable to what we paid as employers for family coverage in our small group plan. The ACA plan is more expensive, but nothing resembling twice as expensive.
The ACA has not been a disaster for individual entrepreneurs. It has been anything but.
It is ridiculous is to say a good solution to pre-existing conditions and "do-not-cover-lists" is raising rates and deductibles 3x. It is grossly wasteful, inefficient, expensive solution.
What year, how many people, and what provider? We insured California employees and I have some idea of how much we paid to do it.
For instance: are you comparing individual market PPO premiums from 2009 to 2016 ACA individual market PPOs? That 2009 PPO didn't have guaranteed-issue, meaning that your insurer got to cherry pick you out of the population. Your number is a more accurate comparison if it's from the small group marketplace (where we had to buy insurance from), because small group coverage had guaranteed issue.
Also worth mentioning: California premiums had double digit growth in 2009 and 2010, both prior to ACA.
2 adults, 1 child. In 2012 we bought Blue Cross PPO, $2,000 deductible, $400. As ACA approached it crept up a bit, but was still in the $400 range, deductible might have gone to $2500. First year of ACA it jumped to $800, and has gone up quickly since.
Besides the crazy rate hikes, and the massive deductible, it has been constant chaos in terms of plans and doctors. Under ACA we stayed with Blue Cross in year one, then had to switch doctors because they dropped Blue Cross, then Blue Cross dropped their ACA PPO, so we switched to Health Net, then Health Net dropped out of the CoveredCA. Every year december is a time of dread as we wait to see if our plan is changing, going up in price, if our doctors are still going to take insurance. We are thankfully all healthy, but it has created a huge stressor where there was none before.
Did you buy your Anthem PPO on the individual market, or through a small group insurer along with your peers in a startup? Again: the California individual PPO marketplace wasn't community-rated and didn't have guaranteed issue; you would be making an apples/oranges comparison to ACA. The small group market, on the other hand, had many (but not all) of ACA's regulatory changes already, and it had been seeing double digit premium growth for a decade.
It's not interesting to look at the individual marketplace pre-ACA, because insurers had so many tools to avoid providing benefits to claimants: they could not only simply refuse to provide insurance for anyone associated with a very long list of "conditions", but also had recission powers to retroactively refuse coverage, and had both annual and lifetime coverage caps to minimize their liability to consumers.
It's worth noting that in some states, my own state of Illinois included, the crappy pre-ACA individual market still exists: you can buy a non-ACA-compliant individual market plan, for less money than is offered on the exchange. Of course, you're subjecting yourself to 2009 insurance market norms by doing so.
I disagree with almost every assertion you are making, and I'm not sure I have the time or energy to respond anymore. But let me just say this, the individual market pre-ACA had choice, offered real value, was cheaper, had lower deductibles, and had more doctor choice. So if 3x price increase and huge deductibles was somehow still a net in for you, congrats, but it came at a huge price for a lot of other people, and I'll celebrate the upcoming repeal of the ACA.
It did none of those things. It was cheaper and had lower deductibles for young families with practically no prior exposure to the health system. But if you were older, or were a woman who had ever seen a reproductive health specialist, or had at any point in your past had an unexplained seizure, or had reported any of a constellation of 10 different symptoms predictive of a future diabetic condition (and so and so forth), the California individual market provided literally no value at all, because you were locked out of it: insurance wasn't available to you outside the group market at any price.
It's easy for insurers to provide incredibly cheap premiums when they can exclude broad classes of customers on the suspicion that they will in the future make claims.
It's also easy for insurers to provide incredibly cheap premiums when they can quietly impose low annual and lifetime caps on coverage, which they could and did before the ACA.
It's also easy for insurers to provide those cheap premiums when they can re-evaluate your coverage and rescind it retroactively when you're diagnosed with a chronic condition, which they could and did before the ACA.
My point is simple: you're not comparing apples and oranges. You need to compare the small group market to the post-ACA individual market if you want to compare like with like. The system you're comparing it to now was exploiting consumers; you were a beneficiary of it, I agree, but your benefits came at others expense.
More importantly, though, outside the moral dimension: as soon as you got your company off the ground and had to begin providing for employees, you'd have found yourself in the same situation you are now: with annual double digit increases in premiums. Because that's where most of us were prior to the ACA.
One thing I wonder about ACA: it seems like the young/healthy who bought their own insurance have had their premiums go way up compared to before (and also they are penalized if they don't buy insurance, so presumably more of them buy it now), and I haven't heard about any large groups of people whose premiums went down.
So, more money is going into the system than before. Where is the extra money going? Here are the possibilities I can think of:
- Better health outcomes for the previously uninsured or uninsurable. This would be the case if the previously uninsured just didn't get useful medical care before ACA, and now they do. In this case we might see longer life expectancy, increased happiness, or some other improved health care outcome.
- Less money out of the pockets of the previously uninsured. This would be the case if the previously uninsured used to get the medical care they needed anyway, but had to pay a lot for it. In this case we might see, for example, fewer medical bankruptcies.
- More profits for insurance companies or medical service providers. This could be the case if providers were directly or indirectly subsidizing the previously uninsured when they couldn't pay their bills. (If this is true I'm assuming they didn't simply pass the costs on to the previously insured, because that should have resulted in a lot of people's premiums going down after ACA, and apparently that didn't happen.)
Do you have a sense of whether these things have happened, or do you expect them to happen in the future? Or maybe I missed some other possibility.
You're missing that for a very large collection of new insureds, premiums did go down, from Inf to hundreds of dollars. "The ACA" doesn't charge premiums; insurers do. They increase premiums when actuarial values change. The ACA did two big things to change those values:
* It introduced tens of millions of formerly uninsured people to the system; if you were previously uninsured, you're also more likely to be costly to insure (there's a correlation between being stably employed and being healthy, for instance, and the stably employed have always tended to have insurance)
* It required insurers to cover without caps or recission and for policies to have minimal actuarial value to customers, all of which were levers that insurers used to lower premiums in exchange for reduced service to customers.
To believe that ACA red tape was a primary driver for increased premiums, you have to ignore the ratio of money insurers spend on medical costs versus administrative overhead, which is reported annually. It's hard to see how anything in the ACA could have driven up the cost of an doctors visit or an MRI. And yet that's where the expense is growing: to wit, more people are getting more procedures now that they have coverage.
Yes, I understand those points, and I tried to make that clear in my comment, but I guess I failed. More people are insured now, against more risks. I get it.
My question is, now that we as a society are paying for these extra services (expanded risk pool and reducing the ability of insurers to deny coverage), what is the economic benefit that we expect to get as a result, and have we seen evidence of it yet? I hypothesized three possible benefits, and was wondering which one you expect to see, or if you think we've seen it already.
To be clear, this is not an effort to prove that ACA was ineffective. And I didn't say anything about red tape. I'm just trying to understand the economics of the situation, to have a framework for thinking about it beyond "more people have (useful) insurance now."
Edit: thinking about it more, I feel like my comment may come off as demanding that you prove the value of the ACA in some objective sense, especially given the thread it is attached to. Sorry if that is the case. I am mostly just trying to understand the mechanisms by which broadening health insurance access improves society. If the answer for you is just "now my family and others like it don't have to live in fear of getting sick" then I don't mean to imply that that is an inadequate reason to be happy about the ACA.
I can't reply to your comment, so I guess I have to do it here. I feel like you are just listing reasons why having health insurance is good. I know all those reasons. That's not the question I was asking. But I think I probably attached this question to the wrong thread, or have made some other error, because we appear to be talking past each other.
Edit to respond to your comment: Yes, maybe it is a dumb question! I don't know.
It sounds like your answer to my question is a combination of:
(a) denying my premise that we are actually paying more in aggregate for healthcare by saying we were paying for it before with higher service costs. So I guess you believe that the total amount paid for everyone's insurance premiums would have risen just as fast (or faster because of costly emergency room visits) without ACA as they did with it in order to continue covering those hidden costs that are now explicit.
Is the answer to your original question just really simple? It might just be: fewer ER visits and fewer medical bankruptcies, both of which were rampant and quietly increasing costs for everyone prior to ACA. The "extra money in the system" is money that was previously being paid surreptitiously in the form of higher costs for services for everyone.
For the many millions of people who are insured today thanks primarily to the ACA, the economic impact includes:
* Access to preventative care that keeps them out of the ER, where the expense of their care is maximized
* Financial contribution to their care, rather than the previous expectation that they would simply default on gigantic medical bills or go bankrupt, in either case leaving everyone else in the market to absorb their costs
* The availability of guaranteed-issue insurance on the individual market reduces job-lock and, for us in particular, makes it possible to start companies without worrying about how to secure insurance for our families. Health insurance has been a top 5 issue for the founders I've talked to about it (obviously, myself included).
The thing you need to remember about risk pools and denial of coverage is that health insurers can't deny health services to people, only insurance coverage. For a variety of reasons, including the fact that insurers have collusive secret pricing deals with health care chains, but also the fact that acute health care is just crazy expensive to provide, almost anyone who doesn't have insurance will simply be bankrupted by medical events without coverage. When that happens, it's not like we don't pay for it; it's just that our insurance companies get to dodge a bullet that we collectively have to take for them.
I'll throw another anecdote in there. The small consulting company I worked for up until 2014 switched over to reimbursing us for a portion of what we paid for an ACA plan. Before that we had a (very small) group policy that was incredibly expensive because of health problems that one person had. The ACA saved thousands of dollars in that case (without subsidies) just by having access to a larger risk pool.
I've heard people complain about ACA wrt to small business but it's always very vague general terms whereas the specific cases I know about were all positive.
Look at the data then - ACA plans are going up 22% in just this year. And that doesn't account for the skyrocketing deductibles that effectively make the plans worthless except for catastrophic illness. It may have bailed out a some people with pre-existing conditions, but in totality, it isn't a money saver, it is crushing people that have to buy individual plans, and that's not an anecdote, it is clear from the data on the cost of plans.
Non-ACA plans went up by a comparable amount in the years just prior to ACA; that was one of the reasons the ACA had the urgency it did at the time.
Our Non-HDHP non-HSA-qualifying premiums today are more expensive, but not nearly twice as expensive, as the small group market was in 2009. But the trajectory we were on prior to the ACA was double-digit annual premium increases, so it's tough to say how much of that is ACA.
Remember also that these "regulations" we're talking about are primarily things like actuarial value, spending caps, community rating, and guaranteed issue. That's not red tape!
Obviously, if you're 25 years old and buying insurance, the ACA is not a particularly great value to you (unless you have a "pre-existing condition", which I'll remind you there's no due process for adjudicating --- an unexplained seizure 10 years ago is a "do-not-cover" pre-ex). But that's part of the point!
2 points. First, yes, plans started to go up before ACA, in anticipation of ACA. Second, when a plan went up 20% in 2012, it might have been an $80 hike. Now in 2017 when it goes up 20% it is an extra $240 a month. So even if the rate of increase is similar, the pain it causes is not, especially contrasted with stagnant wages.
No, I'm sorry, but that's simply not true. Plans were going up for years. In almost a third of all years in the ten years prior to ACA, California saw double digit growth in its guaranteed-issue small group market.
Also, there's no mechanism by which plans go up by double digits "in anticipation of" the ACA.
"Plans were going up for years" - yes, but not as much they went up after ACA.
"[a]cross all states, from before the reform to the first half of 2014, enrollment-weighted premiums in the individual health insurance market increased by 24.4 percent beyond what they would have had they simply followed state-level seasonally adjusted trends.”
And the rate increase is 49% if you don't weight enrollment, which is a better indicator of individual impact.
Again, you're comparing the pre-ACA California individual insurance market, in which insurers could (and actively did) simply refuse coverage to anyone they might have to provide services to, to the post-ACA California individual insurance market in which they couldn't.
The correct comparison is to the California small group market, which prior to the ACA also had guaranteed issue. The small group market covered companies with low single digit numbers of employees and approximates the ACA individual market (less the adverse selection of people without benefits-providing employers). In that market, the price trends before and after the ACA are broadly comparable.
