The point of insurance is to ensure that individuals who face a catastrophic event with high costs do not end up bankrupt and destitute. Leading up to the passage of the Affordable Care Act, our health insurance system was perverse: medical bills led to more than half of all bankruptcies in the US. And of those medical bill bankruptcies, more than half had insurance when they declared bankruptcy. Having health insurance did not protect them from ending up bankrupt as a result health care costs. The ACA provided a course correction. In the last 8 years, bankruptcies in the US have dropped by more than half.
Repealing the ACA assures us of returning to the perversity of the system as it was before. President Trump, Congressman Banks, and the rest of the GOP have obviously failed, and failed, and failed in their attempts at a straight-forward repeal. So now they are trying to undermine the Affordable Care Act by repealing the individual mandate as part of tax reform. Will the removal of the individual mandate have the same perverse effects as a straight-forward repeal would? Not quite. It will still hurt the middle class and will raise the number of declared bankruptcies in the coming years, but it will be because of a new kind of perversion of the insurance industry. Unable to return to the familiar perversity of the insurance system as it was, they will give us a new perversity.
The Affordable Care Act included a substantial increase in the coverage that insurance companies were required to provide—from unlimited yearly and lifetime coverage to covering individuals with pre-existing conditions to covering dependents until the age of 26. Increasing coverage means increased expenses for insurance companies, which means they will also need increased revenues. The individual mandate provided some of that. By repealing the individual mandate, insurance companies will still have the increased expenses outlined above, but will now lose a source of revenue. That revenue will have to be made up somewhere.
But the repeal of the individual mandate is not the only revenue stream that President Trump (to Congressman Banks' pleasure) have cut off from insurance companies. The ACA requires insurance companies to charge lower premiums and reduce cost sharing responsibilities (e.g., copays and deductibles) to individuals and families who fall below certain levels of income. The federal government provided revenue to insurance companies to make up the difference. President Trump cut this revenue off this summer. The companies are still required to charge lower premiums and reduce cost sharing responsibilities for low income individuals and families, but now they no longer get support from the government to supplement these artificially low costs.
What does this mean? Insurance companies still have higher expenses (through expanded coverage) and decreased revenue from low-income individuals, but no longer have revenue streams from the individual mandate or the federal subsidies. As anyone who manages a budget knows, if your expenses remain the same but your revenue goes down, something’s gotta give. And with no plan to address these changes in revenue, once again, President Trump and Congressman Banks will be giving it to the middle class.
The Congressional Budget Office predicts that the individual mandate repeal will lead to 10% premium increases each year for the next ten years. In 2027, you’ll be paying more than double what you are now for your insurance premium just from the repeal of the individual mandate.
The CBO also predicts that the removal of the subsidies to support lower premiums and cost sharing for low-income individuals will lead to higher premiums for the middle class. So now your premiums will be more than more than double.
And now the perversion of Congressman Banks, President Trump, and the GOP comes into focus. Dismantling the ACA piece by piece will raise premiums and other costs for consumers, which means that fewer individuals will be able to afford insurance coverage. And so, without the safety net of affordable insurance more people will go bankrupt because of medical costs. And so once again, we will have an insurance system that won’t actually ensure that individuals don’t become bankrupt and destitute as a result of medical care.
I’d suggest calling Congressman Banks' office, but I’ve given up on it. He marches lockstep with President Trump and has yet to provide any meaningful or serious responses to constituent concerns about health care.
Abraham Schwab is a Fort Wayne associate professor of philosophy and medical ethicist.
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