Friday, June 26, 2015

Why I Support Obamacare, or Scotus Care, Or The ACA

My Personal Stake In the Matter
     First, a bit about me.  I am 48 years old and weigh between 195-200 pounds.  I have regularly exercised since the spring of 2001. In the last 8 years, I can count the number of days I have missed working out on three hands.  Two days after recent surgeries (see below) I was doing light weight lifting – I’m that compulsive about it.  If I look at the clock and see it’s mid-afternoon and I haven’t hit the gym, I get itchy.  I take a vitamin pack and supplements daily.  And, in general, my diet is good, with the exception our weekly Tex-Mex meal.  But, we live in Texas and that just goes with the territory.  I mention all this to demonstrate that I am in very good health and take very good care of myself.
     However, about four years ago, I learned I had a condition called hip impingement.  In layman’s terms, my hips are mal-formed.  No amount of exercise or any other non-invasive procedure could solve this problem.  Thanks to modern orthopedics, this problem is easily solved; I’ve had both my hips “resurfaced” -- think of it has hip replacement light.  But, these procedures were obviously very expensive and, without insurance, we would not have been able to afford it.
     More importantly, I now have a “pre-existing condition” that, under previous laws, would have allowed an insurance company to discriminate against me, denying me coverage.  This would be a huge problem because I eventually will need at least one more hip replacement and, depending on my life span, two.  This would obviously be devastating to my family, because, while our business has been successful, we don’t have a spare $250,000 lying around for surgery.  This makes the prevention of discrimination based on pre-existing conditions of paramount importance to me.  Hence, a big reason why I support the legislation.
     But, consider the possibility that, when I was diagnosed with this problem, I didn’t have insurance and the old rules still existed.  Then, a successful entrepreneur with a medical condition that he couldn’t cure through diet and exercise (and who was clearly very responsible about his health), would have been subjected to a slow and painful degradation of his joints, eventually leading to decreasing productivity, and in the worst case scenario, the need to go on long-term disability.  Ask yourself this question: is this situation – which is increasingly common as the population becomes more athletic – a good public policy outcome?  If so, I hope you have perfect genetic health.  But, a lot of people don’t. 
     So, as we say in Texas, I have “a dog in this hunt.” 
Was the Old System that Bad?
      Yes it was.  First, there was the ability to discriminate.  But that’s not all.  Before the healthcare law was passed, medical bills caused 60% of all bankruptcies:
This year, an estimated 1.5 million Americans will declare bankruptcy. Many people may chalk up that misfortune to overspending or a lavish lifestyle, but a new study suggests that more than 60 percent of people who go bankrupt are actually capsized by medical bills.
Woolhandler and her colleagues surveyed a random sample of 2,314 people who filed for bankruptcy in early 2007, looked at their court records, and then interviewed more than 1,000 of them. Expert advice on getting health insurance and affordable care for chronic pain
They concluded that 62.1 percent of the bankruptcies were medically related because the individuals either had more than $5,000 (or 10 percent of their pretax income) in medical bills, mortgaged their home to pay for medical bills, or lost significant income due to an illness. On average, medically bankrupt families had $17,943 in out-of-pocket expenses, including $26,971 for those who lacked insurance and $17,749 who had insurance at some point.
Overall, three-quarters of the people with a medically-related bankruptcy had health insurance, they say.
Think about the basic conclusion from the above study: even with insurance, a majority of bankruptcies were caused by medical costs.  That indicates very clearly that the old system simply did not work; hence the need for change. 
But, is the current structure of health care the best answer? 
Given the political realities, the answer is yes.  However, before I explain that, let me provide a bit more personal background.  One of my legal specialties is the formation of captive insurance companies; I’m co-author of the leading legal text in the field.  As a result, I’m more than a little familiar with the mechanics of underwriting risk
     The ACA (or is it now SCOTUS care) is based on a “three legged stool:”
The Court (minus the three stooges) understood that the ACA is designed to work via the “three-legged stool” of guaranteed issue and community rating, the individual mandate, and subsidies. All three elements are needed to make it work, which is why it was obvious to anyone who paid any attention that the lawsuit was nonsense
As I noted above, the biggest problem with the previous system was the denial of coverage for pre-exiting conditions.  But, to incentivize the insurance companies to provide coverage for everybody, they needed to have a really big pool of potential insureds.  From their perspective, the bigger the pool, the lower the total cost for providing insurance.  This explains the underlying reason for the individual mandate – the requirement that everybody have insurance.  And, the same logic that requires all drivers to have auto insurance applies to health insurance.  While you may not need or use medical insurance now, there is no way you’re never going to use it; everybody gets sick.  It’s just the price of being human.  When you’re younger, you use it less, but you still use it.  As you get older, you use it more.  Welcome to life.
Who Provided the Basic Design of the ACA?    

The mandate made its political début in a 1989 Heritage Foundation brief titled “Assuring Affordable Health Care for All Americans,” as a counterpoint to the single-payer system and the employer mandate, which were favored in Democratic circles. In the brief, Stuart Butler, the foundation’s health-care expert, argued, “Many states now require passengers in automobiles to wear seat-belts for their own protection. Many others require anybody driving a car to have liability insurance. But neither the federal government nor any state requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness. Under the Heritage plan, there would be such a requirement.” The mandate made its first legislative appearance in 1993, in the Health Equity and Access Reform Today Act—the Republicans’ alternative to President Clinton’s health-reform bill—which was sponsored by John Chafee, of Rhode Island, and co-sponsored by eighteen Republicans, including Bob Dole, who was then the Senate Minority Leader.         
     And the market place was a bi-partisan solution.  It’s simply a central place where consumers have the ability to compare and contrast insurance plans and options.  In short, it prevents the inherent advantage insurers used to have that was derived from a heavily fragmented market.

     And, the basic structure was used in Massachusetts, in a system proposed by a Republican governor who, if memory serves, also ran for another larger office.

Are the Republican Alternatives Viable?

     No.   If you strip out the individual mandate, but keep the non-discriminatory provision, the system will collapse.  There just isn’t a big enough pool of risk to make it work.  It’s that simple. 

A Final Thought

     The US is one of the only developed countries that doesn't have a single payer system.  Think about that and ask yourself, "why do other countries do it differently?"  It it's so bad, why haven't these countries -- which are democracies -- changed their system of providing health insurance?   It socialized medicine is terrbile, shouldn't there be a massive ground-swell of activity to change the system?  Just sayin.'
          So that’s it.  Hope you’ve found this helpful.