While I don’t plan to change the name of this blog from stayathomeeconomist to atworkeconomist, I have recently returned to the full-time paid work force. As a result, I might actually have time to finish going through the PPACA. Toddlers and computers rarely mix so the last couple of months it have been challenging to find the time to write.
For those of you who have been otherwise occupied and didn’t notice, we have entered the election season. While I am not intending to get into politics – there are plenty of those places out there on the Interwebz – it behooves me to note that the Republican Party Platform specifically refers to the PPACA (as Obamacare) 9 times, and calls to repeal the Act as soon as possible. My hope is that by finishing this, you, my readers, can decide for yourself if it is worth repealing.
Since it has been a while since I began this, let’s recap a bit:
The first part of the Act makes immediate changes to health care insurance. We should have already felt these impacts, to some extent, in our lives. Lifetime limits were removed; annual limits were subject to requirements. Rescission was eliminated. Co-pays for items considered preventative care were eliminated (one area of which, contraception, was the subject of much debate recently). Being able to cover your children on your own health insurance was extended to age 26 (Blog Post 3/26).
Public opinion on the various component parts of these reforms has been generally favorable, except of course, the part where we have to pay for them by all buying insurance. (KFF Poll)
I started to make a list of the rest of the items that the first parts of the Act covers, but then realized that it was about as dull as reading the Act yourself, which if you are here, you clearly would rather I did. Plus – my original posts were funnier than a list. So go read them.
For those of you who already did – I’ll move on to the latest section.
Part 5 of the PPACA addresses the question of Reinsurance and Risk Adjustment. I can see why people who read the first 124 pages and got to this section decided to throw up their hands and go play golf or something. Just the title makes me want to go to sleep.
Section 1341 – Transitional Reinsurance Program for Individual Market
What is reinsurance you might ask? Reinsurance is when your insurance company buys insurance. In this case, it is to help ease the burden on the insurance companies for covering high-risk people in the high-risk pools.
Because – really – that’s the crux of the problem with health care in this country. It’s based on an insurance model and insurance doesn’t want to cover risky people. In the case of health care, some of the risk comes from personal action – like driving too fast, or skydiving, or whatnot – but most health problems are either complete chance, or a combination of genetic predisposition and lifestyle choices. And it is all well and good to say that everyone should make the best lifestyle choices possible, but economics, geography and fate all interact to make it impossible to predict with 100% certainty who will need millions of dollars of health care in their lives and who won’t.
So how can we solve this dilemma? There are three main options:
We can go completely free market – if you can pay for health care, great, otherwise, you will die.
This option has already been tossed out of the window in this country, because we have health care insurance, insurance that heretofore has been linked to employment. That makes health then become a matter of class. If you have a middle class job that has benefits, then you will have at least some protection against the conspiracy of genes, environment and chance that results in your health from day to day. If you don’t – well, we aren’t quite ready to say as a society that those people should just die. Some among us are, but not, thankfully, yet the majority.
We can go single-payer – the government pays for all health care through taxation.
This system is a non-starter in America. Doctors don’t like it, patients don’t like it, and politicians hate it. The efficacy of such a program is certainly mixed, depending on how you rank the outcomes, but even if it was the best deal in town, we don’t want to buy it.
We can do a hybrid. Private health care, paid for by insurance, but that insurance is required for all.
This is what the PPACA is intended to do. It faces the reality of the situation that we have an insurance system here, it is unlikely to go away any time soon, but that the current nature of that system (at least up to the implementation of the act) does not address everyone’s needs, and results in many people being denied health care. So let’s fix the last part, without fighting the uphill, if not impossible, battle of fixing the overall system.
So the Act recognizes that insurance companies are not going to want to cover higher risk individuals and creates an organized system of reinsurance so that companies are at least somewhat protected from the increase in the care they are required to offer.
Ok – that’s enough to chew on for one day.