By Kevin McKechnie, Executive Director, the ABA HSA Council
Its been almost two years to the day since the Affordable Care Act (ACA) was signed into law by President Obama, and I've almost finished reading all 2,409 pages of the statute and the thousands of pages of enabling regulations HHS has published – so far - implementing the statute.
What a beating.
The original concept, during the campaign of 2008, was that all Americans should have access to more affordable health insurance products more quickly. NOW, in fact. I recall there being almost universal agreement that this was the problem in need of a solution.
So, let's measure success. Is health insurance more widely available? No; Gallup reports that at the end of 2008 14.9 percent of Americans were without health insurance. Today, that figure has risen to 16.8 percent.
Well, perhaps the recession/depression had something to do with that. Besides, some would say it’s probably all Bush's fault.
How about affordability? Is health insurance more or less expensive than it was in 2009?
Wait for it.
It turns out that the Kaiser Family Foundation has reported a more than 21 percent increase in the cost of a family plan between 2009 and now. Just this year, family plans have increased 9 percent, with 2 percent being directly attributable to provisions in the ACA.
So the law designed to "punish the greed of big health insurance companies" by making insurance cost less has actually netted out in a premium increase that’s rising around three times faster than inflation. And to think that once upon a time President Obama promised we would save as much as $2,500 on our premium costs.
The five largest insurers posted a 25 percent return over the last decade and reported 2010 earnings 22 percent larger than in 2009. The sector’s third quarter profits from this year are reported cumulatively as 20.9 percent earnings before interest, taxes, depreciation, and amortization (EBITDA).
And, for those of you with Kevorkian style 401(k)s, large health insurers are still a must have portfolio item. Why? By 2014, when it will be a crime not to purchase insurance or, if you run a business, provide it to your employees, there will be a new, shiny $240 Billion annual marketplace called the State Exchanges from which insurers will be booking profits.
So, the “villains” in this debate seem to be doing just fine. How about the people?
In 2009, Massachusetts fined 49,000 people for having no health insurance. Recall that Massachusetts, ever the trend setter, established an exchange under Governor Romney’s leadership in 2006. The main complaint of most of those 49,000 people: “it was too expensive, and I couldn’t afford it.”
It’s good for Massachusetts though - the MA Department of Revenue has reported that since 2006, the state treasury has collected more than $65 million in fines.
Let’s try to imagine what happens to the country when the Massachusetts model becomes the national model in 2014. How many Americans will be able to afford health insurance after another three years of premium increases? How many Americans will face fines by the IRS for being unable to afford mandated coverage?
All these bad tidings have a common regulatory ancestor in the Medical Loss Ratio (MLR) regulation and in the ACA’s general regulations. The MLR rules will require insurers who return less than 80 or 85 percent of every premium dollar to consumers in claims to pay rebates to those consumers.
A perverse consequence of the MLR mechanism is the upward pressure it exerts on premiums. MLR pressures feature in small business’s inability to purchase affordable group coverage. How odd that the Obama administration, in its quest to legislate more jobs in our country, has failed to notice that large employers, being self-funded, are largely immune from the ACA’s regulatory excesses, while small employers must deal with the market effects such rigorous regulation imposes.
The regulatory list goes on: soon we should be seeing regulations describing essential benefits plans, preventive care and the actuarial value regulation which will be the deciding factor in whether or not health savings accounts (HSA)s are deemed sufficient for sale in the exchanges.
And there is no reason to expect relief any time soon.
With an election looming, republicans are keen to make sure America remains aware that this is President Obama’s law, brought to you when the democrats controlled both houses of Congress. They are in no mood to fix it for him.
Democrats, by contrast, have to find a way to hold the White House and the Senate and so would otherwise be disposed to quietly repeal some of the more onerous requirements but none of them want to be caught doing it lest their political opponents ask them why they voted for such a flawed unpopular law in the first place.
The result is stalemate. The earliest I predict any material changes to the ACA is six to nine months after the new congress the 2012 election produces has an opportunity to debate amendments. And, that timeline is based upon the republicans controlling congress and the White House, not just the House of Representatives.
Irrespective of all the other opinions I read, the political timeline and the outcome it predicts has become more important than the law, especially if you want to see the ACA either repealed or amended.
