Why are health premiums and deductibles so high?

ObamaCare’s “Sticking Points” Problems With the ACA as it Stands

Out-of-pocket costs, the GOP’s rejection of Medicaid, the family glitch, and premium increases. These are ObamaCare’s sticking points.

I use the term “Sticking Points” for problem areas that present obstacles to progress toward an agreement or goal.

Minor Sticking Points

Below we list major sticking points. Before we do that, I’d like to call attention to some of the less known problems. Problems that are not often discussed include the following.

  • There is no public option. People are required to buy a private product. Conservatives may like the free-market, but others would rather be paying into a group fund. Americans should have options.
  • There is way too much paperwork. The tax forms are confusing.
  • Having to pay a fee for opting out of an employer plan or being forced to take the plan. This is unworkable when a person has two full-time jobs.
  • Insurers only offer monthly contracts, but the law requires 12 months of coverage. Thus, many plan drops are cheating people out of money and benefiting insurers.
  • The subsidy cliff for those making over 400% of the poverty level takes away the incentive to earn. This should phase out slowly.
  • Employee and employer cost spiked with essential health benefits, yet they got no assistance aside from increased employer subsidization. Subsidies for employers are substantial in terms of government spending, but hard to appreciate as an employee.
  • Even the ACA leaves 26 million uninsured. It is much better than TrumpCare’s 52 million but far from universal coverage.
  • The American people should have the right to “opt-out.” Our values demand it. Even though it makes things difficult, we should ideally have opt-outs and no mandate unless the people get something for it. If there is a mandate, it should come with basic coverage and an opt-out. TIP: An opt-out can still include a fee for future hospital use, or basic catastrophic care, but as long as we “force” people, some voters will always stand against it. This is about American values, not bottom lines.
  • People have to project their incomes for tax credits; this almost ensures that about half of them will have to pay back excess creditsRepaying advanced tax credits has too much negative psychology. When people get an advance, and then have to pay back money and get a smaller refund a full year and half later, it is both confusing and aggravating. This is human nature. Throw out your technocratic balance book and your economic theory; this is physiological, not economic.
  • When you opt out of Obamacare (by not getting coverage) you don’t get anything for it. Maybe you should get basic catastrophic coverage when you pay the fee. Americans are not well suited for being “forced.” It seems like a mistake to charge a tax for nothing. I understand why it was done and that it was the only way the politicians of that era could see, but it had a polarizing negative effect.
  • People traveling out of the country can still end up having to comply with the mandate, which is strange.
  • The requirements for very small businesses regarding HRAs makes things unnecessarily hard for small businesses.
  • It seems odd that Workers’ comp does not count as MEC. I’m sure some people collecting workers’ comp feel as though they have coverage. They have already been hurt on the job; now they are getting punished.

TIP: Feel free to ask questions or comment below.

Political sticking points and problems: Americans, who don’t like being “forced” to do anything, are “forced” to get coverage or pay a fee. The fee doesn’t give them anything, not even coverage against catastrophic events. Those with employer coverage feel as though they are seeing a rate hike and paying more for working. This has turned Conservatives against the Democratic Party. Republicans have attempted to “break ObamaCare” and show their constituents how bad it is by making it bad for them. Playing politics with health care has caused trouble in our democracy. The virtues of healthcare reform have been overshadowed by party politics and half truths. Both the left and the right are guilty here, and the people deserve a workable solution.

The Republican-specific sticking points are related to efforts to break ObamaCare by de-funding it and rejecting its provisions. There are a few other sticking points as well. I already covered many Democratic Party problems above like using economic force and not considering all economic aspects of some of the law.

Republicans aren’t trying to achieve better healthcare at the provider level and aren’t seeking universal health care. They are so focused on economics and rewarding workers and employers (and not rewarding those who they feel don’t contribute enough) that they have gone as far to deny millions Medicaid. It hurts providers when they can’t deliver care to the community and are uncertain of demand. The current system that includes tens of millions based on cost is not very economical or moral.

Many arguments in the past have been about morals vs. economics. Liberals fought for morals and conservatives for economics, but this conversation has become so skewed it isn’t about “economics” or “values” any longer. It is about giving very specific industries (like large employers and insurers) what they want while ignoring the needs of the 320 million AND doing almost literally nothing for providers. The Republican values in healthcare seem to be related to factors like premium cost and profit margins.

Trump promised more. I know many conservatives want more. We cannot ignore healthcare and healthcare providers and cannot succeed in the long-term unless we provide health care that people want.

TIP: The ACA has problems even though the legislation which was passed by both parties. TrumpCare cut taxes for the rich, offered a little extra assistance to those above the subsidy cliff, and got rid of the mandate. It would have also created many new problems. Perhaps we can make progress moving forward by fixing the problems that we know to exist rather than trying to repeal the ACA, have no healthcare system in place, and build a new system which will have new problems.

Out-of-Pocket Costs

The facts:  In 2016, your out-of-pocket maximum could be no more than $6,850 for an individual plan and $13,700 for a family plan before marketplace subsidies.

The problem: Even with cost sharing reduction subsidies this is not affordable. Do you know a family who can afford another $13,700 a year? I don’t know a family that can either.

The solution: The government can subsidize, regulate, and tax. I think we have all had just about enough taxes. Subsidies mean taxes or debt. That leaves finding super profitable industries that are willing to be regulated.

We likely need to regulate to avoid personal and national debt. Health care creates jobs and wealth, so it will be hard to regulate in any meaningful way. People like profit.

Rejecting Medicaid

The facts: A lawsuit backed by the right had the NFIB take the ACA to court. During this 2012 case, they gutted Medicaid expansion letting states opt-out. States opted-out and left the poorest to believe the ACA was the problem. They cited cost as an issue. The cost of insurance is an issue, but so is the cost of leaving people without medical care.

The problem: Medicaid is expensive; there isn’t a simple solution. Still, five million plus working poor Americans are going without healthcare as politicians stuff bills full of pork and the inequality gap in America widens. These 5 million are being used as pawns in a political game, and we are all a little worse off for it.

The solution: Expand Medicaid. Or maybe even expand Medicaid to all and let the private market take care of supplemental coverage. Medicaid for all is not Medicare for all, so you didn’t already say no.

Consider offering catastrophic coverage to all citizens who can’t afford to pay into the health insurance system instead of taxing them. With great power comes great responsibility. It always has.

The Family Glitch

The facts: There are no rules for how much employer offered spousal or family coverage can cost. There are rules that say you can’t get cost assistance unless an employer offers coverage that costs more than 9.5% of MAGI per person.

The problem: Asking each household member to pay 10% of their income in health insurance premiums (never mind out-of-pocket costs) IS INSANE. How did this legislation pass? Isn’t someone supposed to care about working families and small businesses?

The solution: The same rules should apply inside and outside the workplace for insurance costs. Coordinating that isn’t simple, but there are a few ways this could work. It’s very important and feels like it’s been all but ignored.

Consider, working American families are overpaying, and that means employers are overpaying. Remind me who benefits from this again?

Premium Increases

The facts: Premiums were rising faster than inflation. The ACA curbed that a bit in the long-term, but the short-term is brutal. Insurers are losing money; Americans are losing money. Wait, again, who is making money?

The problem: Few people can afford premiums without assistance. We can offer assistance to people, but we can’t offer assistance to America (because we are America). We can’t go into un-payable debt over healthcare.

The solution: We have to look at why costs are high, not how we can subsidize and tax away the costs. Look at the budget. Health care isn’t and shouldn’t be free, but it can’t be unaffordable.

Consider: A single payer system that offers catastrophic coverage has many benefits. Catastrophic drugs and treatments are price controlled; litigation and billing are dealt with; the system is simplified. We let the private market handle supplemental coverage. This lets the strong healthcare players survive and takes the burden of propping up the system on the average American.

Conclusion

We don’t need to repeal the 1,000 pages of provisions in the ACA. We know what the problems are. Let’s ask our representatives to fix them.

Solutions can be simple. We can replace tax credits, Medicaid, and Medicare with a single payer catastrophic and essential coverage. We can keep HSAs and fund them with tax credits. We can give the new CMS/HHS more power to advocate on behalf of the people, and cut out the middle-men we can no longer afford. Nobody wants death by taxes or death by over-regulation.

Healthcare is one of the big three spending sectors. Sooner or later, someone needs to rip the bandaids off and heal the wounds. In the long run, we cannot choose corporations over people.

TIP: See our page on “a fix for the ACA” for more ideas on how to fix what isn’t working.

What do you think?

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Mike on

I think you are full of Sh#(*#!

Wanda Hobbs on

I think you’re right! We need to regulate costs and cut out the greedy middlemen!

HOWARD THOMPSON on

I am a firm believer in HR 676. Single payer is the best way to address Healthcare in this country.

Dave on

“We need to, yet again, regulate the industry from the ground up to avoid personal and national debt.”

You clearly don’t know what you are talking about. For all the detail you know about the ACA, you know nothing about economics. Your website is a joke, and this page proves the lunacy of ACA supporters.

Single payer? Wait, the government screwed up Obamacare, so “not the solution” is to pull the government back from having people pay for the consequences of their health habits, and expand government again – surely this will ‘avoid national debt’! Just like Obamacare will ‘bend the cost curve down’, right? The past couple of weeks must have been a nightmare for you – but what’s worse is that millions of people are truly suffering because of this insane bit of law that you and your liberal buddies foisted on the middle class. Once again, liberals have found a new way to screw the middle class – sadly now the country will elect Trump in a backlash election. Thanks a lot, liberals! Trump really is YOUR FAULT – not Republicans. We tried to put up a sane candidate but the insanity of 8 years of Obama has turned the country against reason!

The insurance companies are done subsidizing losses in Obamacare, so all hell is about to begin breaking loose in the healthcare industry, starting with insurance premiums, which Obama unwisely claimed would be lower as a result of his stupid health care bill. Based on what? More regulation? New taxes? More Medicaid? The 80/20 rule? All of those things make health care MORE EXPENSIVE, you idiots!!!!

It used to be that you couldn’t trust liberals with national defense and the economy. Obama just added health care to that list. Good luck trying to hold back the backlash tide with your ‘facts’. You’re playing to a smaller and smaller crowd every day, and the ACA’s days are numbered. Even Clinton wants to change it – shows how bad the bill really is…

Fleming on

It is very disappointing to me that leading up to open enrollment, all the news articles were about the big premium increases that were coming (and came). Even Bill Clinton helped bring the subject to light. Once Trump was elected, the articles immediately pivoted to how millions of Americans will lose their insurance if “Obamacare” is repealed. It’s all spin and hog wash. Look at how often you see the stat that 85% on the exchange get some subsidy, which is simply because nobody else wants to deal with the government if they don’t get a subsidy anyway. You also often see the statement that these out-of-control premiums only affect a “small” number of people. They never mention that there are as many people buying insurance on the individual market off exchange as on exchange. The result is that about 12 million people don’t get a subsidy but pay very high rates (or lose their coverage because they can’t afford it like my family) now so 8 million on exchange get a subsidy that is often tiny. The articles like to say the premiums went up 22% on average. Ours went up 75%. Then they say this is a “one time correction.” Then it’s a correction to an amount we will never afford. In summary, we make more than the about $78k (400% of poverty) ceiling to get a subsidy for our small family but far less than the $104k that represents the income for which the cheapest bronze plan in our county is 8.13%. In other words, by the ACA’s own rules, it’s “unaffordable”, and we won’t have to pay the tax penalty. The problem is we need/want health insurance, so we got a temporary policy for now. The funny thing is that with the temp policy, we can go see all the doctors that were in our PPO that we lost with Obamacare plans. True, there is a $1M max payout/limit for the insurance company, but this is by far the better solution for us right now. It costs one third of the exchange plans price. The fact is people need many different products and options so they can choose what is best for their family instead of being shoe-horned into any one system. It makes sense that when a person or family has sickness, health care and insurance will naturally become a priority in their lives at that point and onward, but young and healthy people that are trying to build a life for themselves don’t want to and can’t afford to pay 8% of their income for this whether it is by over-regulated Obamacare premiums or single-payer system over taxation. I am totally in favor of people being able to get insurance with pre-existing conditions perhaps with some time frame guidelines to make it work as well as some amount of tax credits and even refundable credits and also a low-end public option for really sick and poor people. And finally, the “tweaks” promised by Democrats would not nearly bring this inline with something reasonable. I’m tired of the hubris of any party promising me a better dinner and then making excuses and pointing fingers in the face of the disaster and dusting off their hands and walking away and sticking me with bologna. If your sick, bologna is better than nothing, but it makes no sense for everybody to have accept bologna.

MJ on

Universal catastrophic and physician access coverage is what you get under systems such as Canada’s. This comprises 70% of total healthcare dollars as a “tax” or single payer if you will. Private insurance covers dental, optometrist, drugs, long term care along with sundry goodies like private beds in hospitals. This is the other 30% of the cost which is user pay. The major benefit to all is that if you get REALLY SICK you will get immediate world class treatment without bankruptcy as a side effect.
Industry lobbyists have bought and paid for the entire US Congress over the last 30 years to solidify their monopolies and if you think they are going to give up their $3 trillion dollar racket think again. Clear thinking will bring you to the realization that O’care was the master codification of this butchery. Ditch the political bias and understand that this laughing stock of a system was deliberately constructed by both sides equally. Since Trump is neither maybe he can bring some honest analysis to all this. Maybe not.

MachineGhost on

> This lets the strong healthcare players survive and generally takes the burden of propping
> up the system off the average American.

No it doesn’t. It just cost shifts from upfront premiums to backloaded taxes. Look at Canada’s Medicare-For-All. It’s already insolvent and they’ve had to resort to allowing private insurance to help improve efficiency and lower costs.

ObamaCareFacts.com on

Interesting take. Certainly we, being intelligent humans, can figure out a system that is both moral and functional. I am with you though, shifting costs is not in itself the perfect answer. I think this could help solve some of the problem though: http://obamacarefacts.com/2016/11/21/nationwide-non-profit-public-health-network/

That is, public option plus a nationwide public network. There you are having people pay in now (not on their taxes) and pairing that with non-profit (which is private market, but non-profit).