The Affordable Care Act (aka Obamacare) is a comprehensive law that affects every corner of the healthcare system. It’s unreasonable to expect voters to grasp every nuance of the law, but it is useful to go a step beyond the current public discussion that says, essentially, individual mandate: bad, coverage for pre-existing conditions: good.
Bottom line: opponents can’t simply get rid of Obamacare, declare pre-existing conditions covered and call it a day.
Consider the example of a family friend whose son was diagnosed with an auto-immune disorder in his early teens. It’s kept under control with a biologic drug that costs over $100,000 per year. There are other costs for diagnostic tests, specialist appointments, and the potential need for hospitalization and surgery. The parents are self-employed; they pay Blue Cross about $30,000 per year for insurance.
In a free market, the family would be uninsurable –or the “pre-existing condition” wouldn’t be covered and the family would face financial ruin. My guess is Blue Cross pays out $100,000 to $200,000 per year for this family –guaranteeing a big loss on the $30,000 premium!
It actually makes sense from the insurance company’s perspective to reject people with pre-existing conditions. After all, you can’t buy life insurance if you’re at high risk of death, you can’t buy homeowners insurance if your house is on fire, and you can’t buy auto insurance to cover a crash you just had.
Under Obamacare we decided as a country that pre-existing conditions would be covered. That wasn’t the consensus before.
But there’s more to Obamacare than just requiring insurance companies to pay for the treatment of pre-existing conditions. Consider some related protections that would evaporate if Obamacare were repealed or ruled unconstitutional.
Obamacare prohibited insurers from doing a lot of other things they used to do. Under the law:
- You can’t be charged a higher premium because of pre-existing conditions
- Your premium can’t go up and your policy can’t be canceled because you got sick
- Insurers cannot impose an annual or lifetime cap on medical expenses
In order for such a system to work, everyone needs to have insurance. That’s where the mandates for employers and individuals to buy insurance come in. The mandates are not about taking away the freedom to decide whether to buy insurance, they are about making sure there are enough healthy people in the system to cover the costs of those who get sick.
The likely alternative to Obamacare isn’t a “free” market. People won’t stand for it. Rather it’s some version of Medicare for All.
September 29, 2020