“A cynic is a man who knows the price of everything but the value of nothing.”
– Oscar Wilde, in Lady Windermere’s Fan
In the recent wake of criticisms of our nation’s healthcare, it can be easy to give into cynicism. And with a subject as critical and emotional as our health, it’s easy to understand why this could be.
After all, we’re talking about the most important asset we’ll have on this earth. Not just that, our spouses, our children, our friends… Are all affected by public policy, as it relates to health.
And while it may be true that the ACA didn’t get it all right – Certainly, it had its flaws… it’s important to consider how far we’ve come in the last few years, particularly with the passing of the Affordable Care Act.
It wasn’t long ago, after all, that individuals with pre-existing conditions had to fight to get covered. If (and it’s a big if) they were able to secure coverage on the individual marketplace, it was often relatively unaffordable.
It wasn’t long ago that plan designs were so convoluted, the average person didn’t stand a chance understanding what they were enrolling in.
With these issues and many more in mind, I think it’s a good time to pause and consider how far the ACA brought us: Especially as we gear up for more major changes to our system. By no means a comprehensive list, here are some highlights of the ACA:
Positive Change #1 – Everyone gets accepted, regardless of health issues (Guaranteed Issue)
This one is fairly straightforward: Under the old way of doing things, insurance companies could increase your rate, and even deny applicants, due to pre-existing conditions. This hurt many households, as those who were sick were forced into “Major Risk” pools, which were difficult to qualify for, and expensive. Those days are gone.
Now, individuals with pre-existing conditions are free to shop online for coverage and apply freely, without fear of being rejected. And guess what? The insurance companies are still seeing positive cash flows.
Positive Change #2 – Companies must offer coverage to their employees (employer mandate)
Our country’s health insurance system is largely propped up by the tax incentives given to employers to provide coverage to their employees. The employer gets a double benefit: Reduced taxes and insurance costs, while the employee gets the benefit of substantially more affordable coverage (employer contributions and group savings).
A problem exists when an employer chooses not to provide such coverage to their employees, and the ACA responded. Companies with 50 or more full-time equivalents, now must offer medical coverage, at an affordable cost, to their employees.
Positive Change #3 – Simplified plan designs
Prior to the Affordable Care Act, plan designs were so vast, that doing an “apples to apples” comparison between different carriers was virtually impossible in many cases.
Although this was not the result of a strategic effort by the carriers, it simply made life difficult for individuals purchasing coverage to evaluate where they would receive the most value.
The ACA brought a new level of standardization to plan structures, in a simple, “bronze, silver, gold, platinum” plan range, which makes comparing across carriers much more simple for the average consumer.
In addition to this, the plan designs correspond to different “actuarial values”, to help educate consumers what they’re likely to receive, in exchange for their premium dollars.
Then Kaiser Family Foundation says it well, when it says: https://kaiserfamilyfoundation.files.wordpress.com/2013/01/8177.pdf
For example, a plan with an actuarial value of 70% (referred to as a “silver” plan in the ACA) means that for a standard population, the plan will pay 70% of their health care expenses, while the enrollees themselves will pay 30% through some combination of deductibles, copays, and coinsurance.
Positive Change #4 – Encourages healthy behavior (10 Essential Health Benefits, or EHB’s)
The holy grail of insurance is the reduction of risk:
By including basic preventative services, check-ups, and women-wellness into the plans, the ACA strove to increase the amount of early detection and awareness as it relates to the masses.
While many may criticize this move, stating how unfair the whole idea is – To charge folks for services whether they opt-in, or not, this is simply the best way a nation-wide plan can encourage healthy decisions.
Sure, it’s true that there’s a cost embedded into the plans to cover these services, but that cost will be recouped over the long-term if placeholders are more aware of their health.
While we could get into a debate over the carrot vs. the stick… or whether or not most people even grasped the whole concept of investing in their wellness whether they liked it or not, the ACA brought this approach to the table, and it was a step in the right direction. The data is there, and it just plain works.
Don’t trust me?
Just take a look at today’s Fortune 500 companies: Most of which employ very similar tactics to reduce the risk (and cost) of keeping their employees on the group plan.
In plain English, the ACA lowers overall healthcare costs for our country, over the long-haul.
5 – They got the exchange off the ground…
Let’s face the fact that this was a huge undertaking. Although critics will point to high costs associated with the project, the fact remains that we now have a new way of purchasing healthcare in our country.
This was a huge lift, and like any massive implementation of any kind, they hit some bumps along the way, and spent more money than had been anticipated. However, the result is greater levels of transparency, better quality and standardization of information, and better health choices for enrollees.
In a world of trade-offs, I think it was worth it.