Most everything we think we know about the Affordable Care Act is probably wrong, owing to a combination of propaganda and abysmally poor news reporting on the subject. Starting in 2016, I began researching why insurance premiums were climbing so rapidly in the non-subsidized individual market. Our own premiums rose by +167% (about 2.7 times higher) in 4 years, before we had to drop out of the ACA markets. For 2018, insuring ourselves and our youngest daughter, who is in grad school, would have cost almost $24,000/year for a bare bones, basically catastrophic “Silver” insurance plan with high deductibles.

What happened? My paper goes in to all the details but here are some highlights:

  • All of the very high cost, high risk patients were merged into the small individual market risk pools. As of 2017, all of their high costs is shared exclusively with the other members of the small individual market pools – consequently, premiums skyrocketed.
  • Some persons receive subsidies to lower their monthly costs. The subsidy cut off level has no relation to actual insurance prices. The level is set by the regional poverty level whereas insurance rates are determined by pool risk, individual age and geographic location. There is no relationship between the subsidy cut off level and the price of insurance. This leads to bizarre situations where in several cities across the U.S., an age 64 married couple earning $65,000 per year is above the subsidy cut off level, and hence, receives no subsidy assistance – but their cost of a Silver plan is over $50,000 per year (see paper for details).
  • All health care market participants have engaged in acquisitions and mergers to give themselves greater market pricing power. This includes hospitals buying medical clinics, drug companies buying each other, retail pharmacy changes buying other chains and even insurance companies and more. Everyone has increased their pricing power except for individual consumers. The ACA, as implemented, prohibited individuals from forming groups to achieve volume pricing discounts. Literally everyone else merged to strengthen their market positions – except for individuals.
  • A big surprise – most ACA policies checked provide no coverage for hospitalization or surgery while traveling outside one’s narrow network of medical providers, which is typically an area as small as a few counties (see paper for details). Literally, the ACA leaves people without critical insurance protection while traveling in the United States.
  • The ACA actually does have a pre-existing condition exclusion, but in a different form and name. See the paper for a description of the types of pre-existing condition exclusions. The ACA implements a waiting period for certain pre-existing conditions. If you have no insurance in January but are diagnosed with cancer on February 1, you will have to wait 11 months before you can sign up for insurance. See the paper for details. Its a pre-existing condition exclusion in a different form.
  • Medicare-for-All has almost nothing in common with Medicare, other than the name. Similarly, everyone has different ideas as to what single payer means. Consequently, there is no coherent and workable proposal at this time.

Clearly we need to solve these problems. Medicare itself goes bankrupt in 2026 per the 2018 forecasts. My paper contains many pages of proposed solutions, some of which were adopted by my state, Oregon. Various drafts of the paper were read by state legislators, state health agency staff, insurance and health care industry staff.

Unfortunately, I learned most politicians do not want to listen to ideas on solving real problems and prefer to ram their ideologically preferred solution (whether it works or not) on to others. Consequently, at this point, I maintain this paper for my own records.

I have posted this paper here so that it can be indexed by the Internet search engines. Hopefully others will find it of interest.

ACA Individual Market (PDF) – about 50 pages

Keywords: Affordable Care Act, ACA, ObamaCare, Health Insurance, Premiums, Prices, Cost, Medicare, Medicare-for-All, Single payer, insurance risk, risk pools, individual, group

By EdwardM