We can fix the Affordable Care Act for $30 each

Jon Muller offers a short-term solution for a problem facing tens of thousands of Iowans. -promoted by desmoinesdem

I just read that Blue Cross and Blue Shield of Kansas City is pulling out of the Affordable Care Act Exchange Market. This is on the heels of an earlier announcement by Wellmark Blue Cross and Blue Shield in Iowa, which last month announced it too was retreating from the individual insurance market. Aetna and Medica have also said they will not sell individual policies to Iowans in 2018.

Keep in mind, these developments come at a time when enrollments started to fall after the Trump administration announced it would not enforce the penalties put in place by the last administration for the current year, penalties that were just beginning to get to the point of altering behavior. Indeed, Wellmark BCBS of Iowa stated that as one of the reasons for its departure from the market. The insurance companies were also afraid (with good reason) that their loss subsidies would not be extended into 2018. Neither Congress nor the President would offer up any such assurance.

It’s important first to understand what this means.

In the case of the State of Iowa, it means no individual will be able to buy a new insurance policy. If you first acquired your current individual policy in the last 3 years, you’re out of luck on January 1, 2018. You will have to marry someone who has insurance, impoverish yourself and qualify for Medicaid, close your small business and get a job with a company that provides insurance, incorporate and attempt to get a small group plan that will likely cost more than double what you’re paying now, move to a different state that still has an exchange (I recommend California), or turn 65.

If you’re not self-employed and your employer does not provide insurance, your choices are extremely limited.

The insurers have very similar stories, which I suspect is similar to the experience of insurers across the country that are leaving the market. Wellmark BCBS lost about $90 million covering 21,000 policy holders over 3 years. BCBS of Kansas City lost about $100 million covering 19,000 policy holders over three years. Combined, these two companies lost $190 million covering 40,000 policy holders. These are policy holders, not individual lives. Many are families covering multiple people.

Now, let’s set aside for the moment the fact that many of those losses came from policy holders who went to the exchange after the insurance companies cranked up rates on frozen older and sicker pools, the pre-ACA plans that were grandfathered (a lot of people actually were allowed to keep their old plans, it turns out….they just got too expensive). The “ability to keep your plan if you like it” contributed greatly to the problem we’re experiencing on the exchanges. For now, let’s just look at the scale of the short-term problem.

The $190 million in losses over 40,000 policies for 3 years works out to $1,583 per family per year, or average losses of $132 per month per family. Applied to Iowa’s total Exchange Market of 52,000 lives, it works out to about $82 million, or roughly $27 per capita. Scaled up to a national population of 317 million, we’re talking $8.6 billion to stabilize the markets so my sister (self-employed hair stylist) and my bowling teammate (a bartender) will be able to continue to buy insurance, which they always have done. Those two are among thousands of Iowans, and millions of Americans, who are very soon about to experience an enormous amount of stress because they don’t know how they’re going to be able to purchase health care coverage next year.

That’s right. For less than $10 billion, Congress can fix the main problem of ACA, and insurers will come flooding back to the exchange markets. There are many other issues that need to be reformed, without a doubt. But it takes a long time to figure all that out.

In the meantime, perhaps a short-term solution through 2018 that amounts to less than $30 per American. Is it possible that even some “repeal and replace” advocates might see the wisdom in spending a relatively small amount of money for a short period of time to solve an enormous problem? Then we can get to work to do whatever it is they think they’re going to do to create a longer term solution favored by more than a third of the electorate.

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