As the Affordable Care Act debate has dragged on over the years, Republican critics have sometimes questioned a basic principle of insurance ― the idea that people will pay into the system when they are not using it, so it’s there for them when they are.
It happened again on Wednesday, while the House Energy and Commerce Committee was debating repeal and “replace” legislation, when Rep. John Shimkus (R-Ill.) incredulously wondered why the cost of prenatal care for pregnant women should be included in the health insurance premiums paid by men.
Leaving aside the fact that those pregnancies didn’t occur spontaneously in the absence of males, the problem with this argument is that there are countless medical needs an insurance policyholder will never have, but for which they pay premiums. Not everyone gets high blood pressure, but everyone in the insurance pool chips in for those who do. And, of course, women pay into an insurance system that covers prostate cancer, even though they don’t even have prostates.
On Thursday, during a wonky press conference, House Speaker Paul Ryan (R-Wis.) was making his own argument about insurance when he described what he called the Affordable Care Act’s “fatal conceit.” The 2010 health care law, Ryan explained, expects that “young and healthy people are going to go into the market, and pay for older sicker people, so the young healthy person is going to be made to buy health care, and they’re going to pay for person who gets breast cancer in her 40s, or gets heart disease in his 50s.”
Next, Ryan pointed to a pie chart, showing the distribution of insurance buyers. The big piece of the pie, representing people in relatively good health, was in blue. The little piece, for those in poor health, was in red.
“The whole idea of Obamacare is that the people in the blue side pay for the people in the red side,” Ryan said. “The people who are healthy pay for the people who are sick. It’s not working. And that’s why it’s in a death spiral.”
From there, Ryan went on to explain how the Republican repeal bill would stop the skyrocketing premiums and collapsing markets, so that Americans can enjoy “universal access” to medical care.
The supposed fatal conceit of the Affordable Care Act is actually a conceit of every successful universal health care system in the world. Everybody pays in, and everybody benefits, because the young eventually get old and the healthy inevitably become sick. Here in the U.S., company insurance plans have long operated by the same basic principle, which is why the employee contribution for a 25-year-old stock clerk at Target is the same as for a 55-year-old cashier.
The problem in American health care has always been taking care of the people who can’t get coverage from an employer, because they don’t work for a big company. While Ryan’s comments provoked mockery on social media, there was an element of truth to what he said.
Selling to individuals in a way that attracts both the healthy and unhealthy really is tricky, because without some easy mechanism for joining (like having an human resources manager sign you up) or some added financial enticement (like the existing tax break for employer coverage), the healthy ones are less likely to buy.
Before the Affordable Care Act came along, insurers didn’t even try. Instead, they simply wouldn’t sell coverage to people who had records of medical problems, and they would avoid covering some conditions likely to incur big costs or attract high risks. This worked out just fine for the insurance companies. It worked out not well at all for the people with pre-existing conditions ― who, by definition, were the ones who needed insurance most of all.
The Affordable Care Act put a stop to all of that. It guaranteed coverage of pre-existing conditions and required that all plans have comprehensive benefits. To make this viable for insurers, it sought to lure healthy people through a combination of tax credits (which make getting coverage less expensive) and tax penalties (which make not getting coverage more expensive).
Although critics like Ryan never admit it, the arrangement has generally worked well in Massachusetts, the state that pioneered this approach, and in places like California and Michigan ― where insurers are figuring out how to compete in the new market and consumers are finding coverage that’s priced comparably, or even cheaper, than similar employer policies.
In states like Arizona, North Carolina and Tennessee, it’s a different story. Insurers in those places ran up huge losses, because they attracted fewer young and healthy people. In response, they’ve jacked up premiums, and some have abandoned markets altogether. GOP policy decisions, like blocking Medicaid expansion in some states, made the problem worse. But they weren’t the only factor.
As experts keep pointing out, the law’s subsidies basically make a true “death spiral” in these states impossible, since they insulate lower-income consumers from price hikes. But people who don’t get assistance take a big hit, and fleeing insurers have already left many counties with just one company. (At least for the moment, a few counties in Tennessee actually have none lined up for next year.)
The severity and prevalence of the problems depend on who you ask, but among nonpartisan experts, the dominant view ― maybe even the consensus ― is that shoring up the system’s weaknesses wouldn’t be difficult.
Getting more young and healthy people into the system is mostly a matter of making insurance just a little more financially attractive for them.
That can be done through any number of ways ― by padding out the existing subsidies, for example, or creating “reinsurance” funds to help carriers with their most expensive consumers. Such adjustments are altogether typical for large programs in their infancy. And finding the money for them wouldn’t be as challenging as usual, given that the Affordable Care Act has actually come in under budget.
The House Republican bill, of which Ryan is the chief architect, actually includes a few of these elements. And in a less polarized political environment, it’s easy to imagine them forming the basis for a bipartisan compromise.
But of course, the Republican bill doesn’t merely tweak. It proposes to junk the existing system altogether, putting in its place a scheme that looks more like the old one, so that insurers could offer skimpier policies and have a little more leeway to keep out people with pre-existing conditions.
The bill would give states extra money to help those people, but, as Ryan made clear on Thursday, his preferred solution is special, segregated high-risk pools ― like the ones that some states operated previously. In other words, the goal is to create two different groups of people ― the healthy and the sick, rather than combine them.
Ryan said what Republicans always do, which is that their plan would improve access. It’s difficult to find a credible expert who takes that seriously ― particularly since, in addition to making regulatory changes, the House bill would redirect the Affordable Care Act’s subsidies. As a result of the shift, people with low incomes would get less assistance.
The Congressional Budget Office hasn’t had a chance to issue a formal projection on the Republican plan, but preliminary estimates have suggested the number of people who lose coverage will be in the millions, at least.
As for those high-risk pools that Ryan champions, they have a track record ― and it is not good. They typically provided limited coverage at high prices, mostly because they never got enough funding. Enrollment was nowhere near the number of people in need of such plans.
Republicans rarely concede these things, and Ryan didn’t on Thursday. But it’s not clear how much any of this matters to him and other Republicans.
The ultimate goal for Ryan and his GOP allies isn’t to guarantee access to health care, or financial protection from medical bills. It’s to minimize taxes, especially taxes on the rich, and to let the free market operate with as few regulations as possible.
That’s a perfectly defensible choice for extreme conservatives like Ryan and Shimkus. But it reflects a very particular set of priorities and values ― and perhaps not one a majority of Americans share.
CORRECTION: An earlier version wrongly identified Rep. John Shimkus’ state. He represents a district in Illinois.