Republicans on Capitol Hill, vowing to repeal the Affordable Care Act the moment the next Congress is gaveled in, are fighting back against grim warnings that doing so will mean millions of people will lose their health insurance policies. A senior House leadership aide, in a briefing with reporters Thursday, conceded that the Republican plan would likely result in fewer Americans having health coverage -- but that will be because they choose not to purchase it.
One of the key underpinnings of the Obamacare and its most controversial element is the individual mandate that requires Americans to either carry health insurance or pay the penalty. (The law includes large subsidies for many low and moderate-income people in order to make health insurance affordable.) The point of the mandate is to come as close as possible to universal coverage -- a world in which virtually everyone is insured.
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While universal coverage has a very obvious warm-and-fuzzy appeal to those who believe that health care should be available to everyone who lives in the world’s wealthiest country, it also has a powerful underlying economic rationale based on the realities of the insurance market. By requiring everyone to buy into the health insurance market, the healthy, who on average consume less health care than the sick, effectively subsidize their coverage.
Many opponents of the ACA, particularly those with a libertarian bent, see this as an unacceptable coercive “taking” by the government, arguing that people should not be forced to purchase something they may not want. Supporters of the law have claimed that because of the unpredictability of illness and accident, nobody can truly opt out of the health insurance market and that the mandate is the best solution to the free-rider problem -- uninsured people seeking emergency care that they often cannot pay for but that hospitals are obligated to provide.
While the details of what the Republicans intend to replace the ACA with remain sketchy, one of the goals expressed in Thursday’s briefing, as reported by The New York Times, will be to replace the principle of universal coverage with something quite different: universal access.
The idea is that having health insurance will not be a requirement, the unnamed aide said, but will be a viable option for anyone who wants it.
“Our goal here is to make sure that everybody can buy coverage or find coverage if they choose to,” the aide reportedly said.
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The details remain to be worked out, and that will be no small task if indeed it is achievable at all.
The problem lies in the basic economics of the health insurance market. Without a mandate to purchase insurance, the people who see the least value in it -- younger, healthier consumers -- are likely to decline to buy it. The result is a pool of insured people who are older and sicker on average than the population as a whole.
That is a more expensive group of people to cover, and health insurers used to have two options for dealing with a pool of potential customers who were sicker than the population as a whole: raise prices or deny coverage to sick or high-risk patients.
However, the ACA removed that second option, requiring insurers selling policies through the health insurance exchanges to extend coverage to all applicants. (Indeed, the individual mandate was the trade-off that insurers accepted in exchange for dropping limitations on pre-existing conditions.) Repealing that part of the law would be wildly unpopular, and indeed President-elect Donald Trump has said that he does not support doing so.
This leaves price increases as insurers’ only option -- short of leaving the exchanges completely -- for dealing with a sicker population. Supporters of the ACA argue that this is just the first step in a vicious cycle. As costs go up, healthier people start to question whether the value they receive from their insurance policy is worth the cost and more of them will drop their policies, leading to further premium increases for those who remain, and so on and so on.
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How Republicans plan to address this problem is unclear. Over the past few years, proposals for subsidized high-risk pools meant to take the sickest patients out of the general insurance pool have been floated, but whether they would be viable remains a question.
Right now, Republicans are working hard to dismiss the fear that they will take actions in January that will immediately throw millions of people off the health insurance rolls. Top party leaders have promised that there will be a considerable adjustment period -- some have said up to four years -- during which a replacement will be devised.
What isn’t immediately known is how the next Congress will handle the individual mandate. Leaving it in place during the transition period would be seen by many of the ACA’s most ardent opponents as a betrayal. But eliminating it could cause insurers operating in the health care exchanges to rush for the exits, creating a major coverage crisis for millions of Americans and resulting, at least in the near term, in the exact opposite of “universal access.”
