Affordable Care Act Debunked

There has been much hype, debate, and confusion over the Affordable Care Act lately.  Let’s try a different approach: let’s look at the facts and see on whom costs or benefits are imposed as a consequence of the upholding of this legislation.  A key list of the provisions in the Act can be found at http://www.healthcare.gov/law/timeline/full.html.  It possesses a series of provisions to take effect beginning in 2010 and extending to 2015.

2010 (consumer protections):  It sets up a website where consumers can view various insurance programs and weigh options.  This will no doubt increase competition in the insurance market.  It will also impose restrictions on how health insurance companies charge:  children under 19 cannot be denied coverage because of a pre-existing condition, those who acquire insurance cannot be dropped later due to a clerical error on a customer’s application (this tended to be a strategy used by some insurance companies to drop coverage for customers who acquired a sickness over the course of their coverage), it sets up an external review process that enables consumers to appeal decisions made by their healthcare providers regarding the determination of their pricing, small businesses are eligible for tax credits to help pay for their employees’ coverage, new plans must include preventive care like mammograms and colonoscopies, young adults without a plan (or offered plan) may stay on parents’ plan until they turn 26, and many other features in 2010.

2011-12:  Incentives for improving the quality and lowering the cost of medical care, special features for seniors.  For insurance companies who sell to large employers, at least 85% of their revenue from sold policies must go directly to healthcare providing.  And for insurance companies who sell to small businesses and individuals, at least 80% of their revenue from policies must go directly to healthcare.  This provision is aimed at reducing the consolidation of profits into the form of administrative costs and executive bonuses.

2013 (Medicaid improvements):  bundling costs, subsidizing state Medicaid while sustaining pay for primary care physicians.

2014:  insurance companies with individual and small group programs are no longer allowed to charge different rates based on gender or health, small businesses and those not covered by an employer will be able to buy insurance in an Exchange program (a competitive market for individual and small groups) (members of Congress will purchase it from here as well), more tax credits to small businesses to help cover employees, those at or below 133% of the poverty line will be eligible for Medicaid, most Americans who can afford healthcare will be required to purchase a plan or pay a fee to help cover costs of others, if healthcare is not available to a person then they will be eligible to apply for an exemption, workers who can’t afford their employer’s program will be able to keep their insurance funds that would have otherwise been taken out of their paycheck.

It’s clear that this Act has the intention to benefit anyone who has or wants health insurance (which is essentially everyone).  Who could possibly hurt from this policy?  Well, obviously the insurance companies themselves might hurt–as they have less freedom to charge what they want (although at the same time, the individual mandate provision that requires those who can afford it to buy a health insurance policy for his/herself most certainly will increase demand for insurance companies).  And businesses that have to cover their employees now face a little more regulation.  This is essentially from where the criticism on the right comes.  But let’s be honest, large employers and insurance companies who sell to them are likely to not be dinged by these policies.  Their profits are sufficient.  Small businesses and small insurance providers would be the only ones facing tough changes.  And that’s precisely the purpose of things like the tax credits, Exchange program, and the extra 5% of kept revenue (I’m not sure how beneficial the extra 5% would be).

So still, with all of this, how could there still be such opposition to the Affordable Care Act?  Since the Citizens United ruling, it’s obvious that big companies have more influence in political elections now relative to, say, everyone else.  And where have big companies decided to utilize their “free speech”?  They sent money to super PACs of course.  And is there anything noteworthy about the choice of super PACs to which they donated?  Well consider the 2011 findings by the nonpartisan Center for Responsive Politics [2]:

The centerpiece of how a business becomes very successful (i.e. profitable) is based on the fact that they care very much about profits.  It may therefore be no surprise why a party that receives far more funding from big businesses (including insurance companies) and wealthy individuals than another party tends to advocate policies that benefit those contributors.  The same can be said of liberals and unions (although one key distinction to be made is that unions contribute far less to liberal candidates than businesses do to conservative ones) [3].  And if big businesses now have to purchase policies from insurance companies that have been slightly constrained by new legislation, it’s no wonder why they would oppose the legislation as it could lead to higher policy prices.

An alternative to the Affordable Care Act (which Obama originally advocated), was a single-payer plan (aka universal healthcare), in which each person paid a tax to cover insurance for everyone–provided by the government.  No doubt this would put the health insurance industry out of business.  Correspondingly, it’s also no surprise why a party whose campaign was heavily supported by insurance companies also advocated against a potential government competitor:

Top (Insurance) Contributors, 2011-2012

Contributor Amount
New York Life Insurance $1,648,546
Blue Cross/Blue Shield $1,372,945
AFLAC Inc $1,112,295
Indep Insurance Agents & Brokers/America $877,250
USAA $841,958
Massachusetts Mutual Life Insurance $757,178
Natl Assn/Insurance & Financial Advisors $727,000
Northwestern Mutual $698,564
Metlife Inc $600,109
American Financial Group $563,950
Liberty Mutual $555,605
Assn for Advanced Life Underwriting $548,500
National Assn of Health Underwriters $492,850
Property Casualty Insurers Assn/America $488,500
Genworth Financial $488,351
Council of Insurance Agents & Brokers $480,899
Travelers Companies $437,630
Prudential Financial $374,895
Zurich Financial Services $374,815
State Farm Insurance $333,835

http://www.opensecrets.org/industries/indus.php?ind=F09

As the Center for Responsive Politics articulately explained:

Insurance companies staunchly oppose the idea of a government-provided health insurance option, which President Barack Obama and most congressional Democrats support. These businesses fear that implementing a “public option” will eventually lead to “single-payer” health care, which they say would mean the collapse of their industry. Insurers believe that even if they survive the presence of a government competitor in the market, their profits will decline sharply, as the federal government will be able to negotiate for lower premiums and drug costs. [4]

[1]  http://www.healthcare.gov/law/timeline/full.html

[2]  http://www.opensecrets.org/news/2011/05/citizens-united-decision-profoundly-affects-political-landscape.html

[3]  http://www.opensecrets.org/overview/topcontribs.php

[4]  http://www.opensecrets.org/industries/indus.php?ind=F09

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