The wounded ACA

The country is getting its first look at the impact of the changes to the Affordable Care Act enacted by Congress and President Trump late last year. The news isn’t good.

In the two states, Maryland and Virginia, where insurers have proposed new rates for 2019, the premium increases are staggering, as much as 99 percent for one Blue Cross network. Most proposed increases are smaller than that, but it barely matters. The Congressional Budget Office projects overall rate increases across the country of 35 percent next year, which is hardly sustainable. While states could still take steps to reduce those rate hikes somewhat, there’s ultimately no way to avoid the unraveling in the private insurance market that’s almost certainly to come.

It demonstrates that the GOP’s desire to dismantle the ACA is likely to be fulfilled, albeit with lots of pain for Americans along the way. What’s worse is the Republicans have no plan for how to actually make the country’s dysfunctional health care system work better.

President Trump promised to replace the ACA with something “terrific.” But what he and his GOP allies in Congress have delivered is a wounded ACA. By eliminating the mandate to buy insurance coverage, and allowing insurers to sell stripped down (read: “junk”) policies, the Congress and the President have almost certainly triggered the death spiral that will effectively eliminate the ACA as the viable, albeit imperfect, health law that it was.

That death spiral occurs as healthy people either leave the insurance market entirely (which is already happening) or they purchase the junk plans that are inexpensive but worthless when you actually need them.

As these healthier people leave, only the sicker (and more costly) people continue to buy the decent coverage, which then skyrockets in price because the average payout per beneficiary is higher. This will lead to two outcomes, both of them bad. First, the cost of the insurance subsidies, which are paid by the government, will rise sharply as premiums spike. Because the ACA was designed to make insurance affordable, increases in individual health insurance premiums are generally covered by the government subsidy. An individual ratepayer may see a 25-percent premium increase on paper, but in most cases, it’s been the government picking up the extra cost. Those costs will now rise even more quickly than before.

Second, those who earn too much to qualify for the subsidies will be crushed financially. Health insurance is already a massive financial burden for those in the individual market. Adding 25-40 percent per year to that burden quickly makes it untenable. As those people are forced to drop coverage, it will be the healthiest who drop first, which will only intensify the cost spiral.

There is nothing surprising about this. It’s Insurance 101.

When the Congress passed, and President Trump signed, the changes to the ACA last year, they had no intention of fixing its problems. For Trump, it was clearly just personal. He loathes Barack Obama and put dismantling the 44th President’s signature accomplishment at the top of his list. He clearly didn’t care how doing so would affect Americans.

And Congress, despite years of promises to “Repeal and Replace,” ultimately had no replacement plan, because the ACA was built on the private market insurance model that Republicans had long espoused. Forget Repeal and Replace. We got “Wreck and Run” instead.

If there’s a silver lining, it’s that the dismantling of the ACA, without a viable alternative, will increase the political pressure for what is, in fact, the only viable alternative— namely a single-payer system like Medicare or Medicaid for basic medical coverage. These programs already cover 40 percent of the highest-need Americans, including the elderly, the disabled, the mentally ill, and the poor. Covering the rest of us just makes sense.

And for the first time, we have more than a handful of politicians who are finally willing to talk about it. As the rates continue to skyrocket under a wounded ACA, that pressure will only continue to grow.