I’ve written two articles in Business since the passing of the ACA or Affordable Care Act (feel free to refer back, I know you kept them both), but while the act is now 5 years old, it remains a hot topic of discussion among my clients and America at large. However, instead of my prior bent of discussing the implications solely with respect to insurance, the purpose of this article is to review the ACA on a more holistic scale.
Beginning with the positives, in spite of the partisan scorn surrounding “Obamacare,” the law has unquestionably had some beneficial impacts. Removing the pre-existing conditions clause would be at the top of that list, in my opinion. Mandatory coverage for maternity on individual plans was another step forward. Further, more Americans carry health insurance today as a result of the law. According to a study at the conclusion of 2014, 10 million previously uninsured Americans gained coverage in that year alone. With the penalty for failure to carry coverage increasing to the greater of 2.5 percent of income or $695 per individual for 2016, I suspect the number of uninsured Americans to diminish further. That said, we have a long way to go.
According to an Orlando Sentinel article from September 2015, 10.4 percent of the U.S. population remains without coverage and the picture is unfortunately darker in the Sunshine State. Florida ranks third nationally behind Texas and Alaska for the highest rate of uninsured residents, with an estimated 16.6 percent of our state carrying no health coverage. However, with the online “exchange” (HealthCare. gov) running much more smoothly than the original roll out, one can only hope that this will yield better enrollment figures going forward both in Florida and throughout the country in 2016.
Now, the bad news. Based on the premium increases I have seen for our clients and in the news, I think it can be fairly argued that the ACA has failed to significantly curb healthcare inflation as a whole. A federal government study from 2014 revealed that the U.S. spends 18 percent of our gross domestic product on health care, a full 6 percent ahead of the next-highest developed nation, the Netherlands. With our state’s median household income remaining in the mid-$40,000 range, health coverage remains difficult to afford, both in terms of premiums and utilization. One of the unintended consequences of the employer mandate within the ACA is that employers who otherwise would not offer coverage now have to offer plans that their employees simply can’t afford to use. As an example, how exactly is an average family with a household income of $50,000 (slightly above the median average in Florida) supposed to afford a $5,000 deductible with a $10,000 per person out-of pocket maximum in addition to paying premiums? Additionally, by virtue of those employers being forced to offer this coverage in order to avoid punitive penalties from the IRS, employees and their entire households lose eligibility for the subsidies they would otherwise qualify for and use to afford individual coverage. This is a Catch-22 that faces thousands of families throughout Florida.
Never to be one to provide a laundry list of problems without some ideas for solutions, I have a few ideas I’d like to share. A great first step for Florida specifically would be to join the other 31 states that have already expanded Medicaid. In 2015, the Florida Legislature literally imploded over accepting $18 billion of federal funds that could have extended Medicare to anywhere from 650,000 to 1.25 million Floridians, depending on which study you believe. This is partisan politics at its worst, with the ruling Republicans not wishing to look weak to their constituents as a result of supporting any part of Obamacare. The economics of this decision make no fiscal sense. The federal government is paying 100 percent of the tab through 2016 and at least 90 percent of the cost going forward. This would be a huge benefit to the hundreds of employees we consult with annually who are trying to figure out how to afford coverage for their families. I also believe that an amendment that made all healthcare expenses (premiums, deductibles, etc.) deductible for those in the lower in come brackets would make a ton of sense. Presently, those expenses must sum above a certain threshold to be deductible from taxation.
I’d also suggest removing some of the mandatory coverages that were required by the ACA. Pediatric dental/ vision is nice to have, but it makes no sense to require it only for employees of small employers, plus it adds to the total cost of coverage. Further, the coverage is limited in scope so as to prevent any massive savings to the consumer. I’m not an actuary, but allowing carriers to charge a modest copay (i.e., $25) for preventative care might also yield some savings while making those services overwhelmingly affordable and preventing damage to utilization. On the other hand, it makes no sense that a condition like autism is NOT a mandatory coverage to be included by insurers.
All of the above notwithstanding, this article is admittedly quixotic in nature. Our current leaders in Tallahassee and Washington have demonstrated no willingness to address improving the ACA as written. One side wants to repeal it entirely (something that would have catastrophic consequences in the marketplace and households throughout the country), and the other side defends it as if it came down from Mount Sinai. Neither side is correct. However, the solutions are nuanced and cannot be explained in the 10-second sound bite that most of the electorate bases their votes on. Without the American voter mandating that this complex problem be addressed by a thoughtful approach and supporting those with the courage and mental dexterity to tackle the problem, I regret to predict that the problem of affordability will grow until it becomes entirely untenable. I hope I’m wrong on that score, but we’ll review it again next year. Stay tuned.
ABOUT THE AUTHOR
BRIAN SCARBOROUGH is a Principal at Scarborough Insurance, an independent agency that sells all lines of insurance and has been serving the community since 1961. Visit scarins.com for more information.