Another health insurance company folds. Obamacare’s failures continue

Another health insurance company folds. Obamacare’s failures continue

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WASHINGTON, May 7, 2015 – When the Affordable Care Act (ACA) was passed in 2010, about 16½ percent of the population had no health insurance.  Today that percentage has fallen to under 12 percent, meaning about 4½ percent of the population has benefited.  However, for the vast majority of Americans the act is a dismal failure that should be replaced.

Proponents will argue that the major success of the ACA was to reduce the uninsured rate.  In addition, they argue, low-income people have a portion of their insurance cost paid for them by the subsidy they receive from the federal government. Also, children can be medically dependent on their parents until the age of 26 and a person cannot be denied coverage because of a pre-existing condition.

Opponents say there are things that the ACA promised which never materialized, including “If you like your doctor, you can keep your doctor” or “Premiums will fall by about $2,500 per year” or “Affordable quality health care will be available to almost all Americans.” On top of that, other problems exist, such as the promise of the reduced use of emergency rooms, particularly as a substitute for a primary care doctor for the uninsured.

One of the reasons hospital costs are so high is that people without health insurance often go to an emergency room instead of seeing a doctor because they know the hospital will not turn them away even if that can’t afford to pay. The ACA was supposed to change that.

According to a survey recently released by the American College of Emergency Physicians, 73 percent of emergency room doctors reported an increase in volume in the ER since the law took effect.  Almost half of all doctors polled said that volume in the ER saw a “large” increase in volume.

This result is worse than what was seen last year when a similar poll was taken. At that time only 46 percent of emergency room physicians saw an increase in volume. As more people become insured and the rates and deductibles increase for almost all Americans, ER usage is increasing, not decreasing. This is very costly for hospitals that provide the service and receive little or no payment of their fees.

There is another serious problem developing under this law. Many health insurance companies may be forced out of business. If this happens, the lack of competition will put pressure on the market, which will result in fewer choices for consumers and higher premiums.

This week, Assurant Health, a subsidiary of Assurant Inc. that had operated in Wisconsin for about 125 years, announced that it would seek a buyer or close permanently. Assurant said that it lost money because of a reduction in payments from the ACA’s programs and significantly higher costs.

While proponents applaud the no pre-existing condition clause, this has increased costs significantly for insurance companies. Some people buy the least expensive plan while healthy. Then if a serious, possibly life-threatening and very expensive to treat illness or serious injury occurs, the individual simply signs up for the best possible plan, often the day after the diagnosis is received.

As a result, the insurance company receives small payments until the catastrophic condition occurs and then is compelled to pay hundreds of thousands of dollars, while receiving a relatively small increase in premiums. The way the insurance industry works, where the healthy essentially pay for the unhealthy, this situation results in low revenue and high costs, eventually leading to losses.

Proponents also applaud the ACA’s provision that allows a child to be medically dependent on his or her parents until the age of 26. The result of this is that another individual is added to the family plan. Since the insurance industry does not want to place an undue burden on families with many children, their billing policy sets one family rate, regardless of the number of children. Again this results in less revenue and higher cost, leading to losses.

The Affordable Care Act may have benefited 4½ percent of the population, who are all low-income individuals. At the same time, the vast majority of us have suffered from this law. Fortunately, the Supreme Court is likely to find for the plaintiffs in the King v Burwell case, which will essentially gut the ACA. Then Congress and the president will have to come up with a new compromise law this summer. Let’s hope they come up with something that recognizes the needs of the lower classes but doesn’t put heavy burdens on the rest of us.

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