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. Health.com: 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 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.
