President Obama signs the Patient Protection and Affordable Care Act in 2010.
For the past six years, and perhaps by accident, the Patient Protection and Affordable Care Act, often called Obamacare, has been offering reassurance to some of the nation’s brightest minds as they work towards solving some of the nation’s biggest problems. With insurers already shifting their plans as the Senate and the incoming administration take decisive steps towards repealing Obamacare, freelancers, consultants, creatives, and startup founders are faced with the terrifying possibility of having to find more traditional employment just to get reliable access to affordable medical care.
Peter Nicholas Biddle’s personal motto is, “Anything worth doing is worth obsessing over.” Like many people who inhabit the tech bubble, he has spent his entire life working to think, obsess, and create like a child. When a baby is put in a crib, they climb out. As soon as possible and with stunning dexterity, they find a way out of their cage. It is this ingenuity and determination, something that many of us seem to lose as adults but see throughout the tech and creative spheres, which he strives for.
When Peter was diagnosed with Ankylosing Spondylitis (AS), a rare form of arthritis, he was in the middle of a multi-decade run at disrupting some of the world’s biggest tech companies. Thanks to their health insurance plans he was able to string together reliable access to a curated team of specialists and cutting-edge treatments. This is important not just because it helps him manage the crippling pain that comes with AS, but because it prevents his spine from fusing into a single, inflexible bone, a likely consequence if he were to not have access to competent, committed, and attentive doctors and the very best treatments. After Peter left big box tech for the allure of a small and agile startup, the Affordable Care Act promised that this access would continue relatively uninterrupted. The transition from an employer-backed health plan to paying for an insurance plan out of pocket wasn’t entirely hassle-free, but the shake-ups the new administration are trumpeting are, Peter says, deeply worrying.
Peter also says that health insurance companies hate him. He’s relatively young, he has a chronic but non-terminal condition, he enjoys sports, like dirt biking, that are on the more dangerous side of the safety spectrum, and he knows how the system works better than most of the people who are trying to fix it. He knows, for example, that having too many of him in a company’s patient pool is a recipe for disaster. If insurance providers can’t avoid covering him, they will do just about anything to get rid of him.
While Peter is a fan of dramatics, he isn’t overstating the problem. Patient pools are carefully calibrated ecosystems where a large number of healthy people pay more into the system, either out of pocket or through their employer, than their coverage actually costs. The money they aren’t using then goes towards covering the astronomically expensive specialty care for a small number of Peters. If you get too many Peters in the mix, the scale won’t balance out and the high-risk patients will cost more to the insurance company than the healthy payers unused premiums can cover. Slowly but surely, the company will find itself in a financial hole. Tip the scale too much, and they will completely implode.
While potentially volatile, this system worked decently well after it’s explosive growth following WWII and up until the late 1980s when the population of the United States was still largely bottom heavy. During this period, thanks heavily to the Baby Boomer generation, the American workforce was skewing young. Providing healthcare for a large number of healthy young people is cheap to do and easy to make money off of. It’s also stabilizing. For half a century, the large proportion of healthy people in insurance company pools were able to effectively subsidize the health care for the older and more expensive segment of the population, and, in doing so, insurers were able to insulate themselves against the errant high-cost Peters.
But then the age demographics in America started to shift. The baby boomers were aging and, as they got older, their health care became increasingly expensive to provide. Today, with birth rates lower and life expectancies longer, the system has been thrown out of whack. The population pyramid has stretched upwards, but has narrowed at the base, so there are more expensive patients, fewer cheap ones, and the chronic people like Peter are an even bigger problem.
Before the Affordable Care Act was enacted in 2010, many health insurance companies countered this imbalance by using “pre-existing conditions” exclusions to lower the risk that Peters bring. This wasn’t a perfect fix, but these loopholes allowed them to pick and choose what they would cover or even completely waive coverage when it came to something that a patient had prior to the insurance plan taking effect. Treatment for cancer, diabetes, renal failure, and ankylosing spondylitis, just to name a few, could be denied based solely on the stance that because the patient had it before they got coverage, it wasn’t included in the deal. By refusing to cover high-cost pre-existing illnesses and conditions, insurers were able to turn a high-risk Peter into a lower risk patient.
The “pre-existing condition” label was banned by a provision included in the Affordable Care Act. As a result, insurance providers now have to offer more comprehensive coverage to expensive patients like Peter, diluting patient pools that are already skewing risky because of the shift in our population demographics. This makes the Affordable Care Act very inconvenient from a risk management perspective.
And yet, Peter argues, one of the worst things that could happen to the health insurance industry would be the repealing of the Affordable Care Act if the ban on “pre-existing condition” exclusions were to stay in place. When insurance is optional, healthy people who are not getting it through an employer will often wait to get it until they really need it, but when “pre-existing conditions” clauses were in use, there was an incentive to pay for coverage, if you could afford it, even if you didn’t need it at that precise moment.
Banning the use of “pre-existing conditions” as a reason to refuse coverage has flipped this. If insurance were not now mandated, someone could theoretically wait to get coverage until a crisis rolled around with confidence in the knowledge that they can’t be refused coverage based existing health problems. The potential effect of that is this: if health insurance isn’t mandatory, but coverage for pre-existing conditions is, insurers would collect fewer premiums from the safe and inexpensive healthy young people on which our system was built, but be paying out just as much, if not more, to cover care for the increasing proportion of Peters floating around in their patient pools. With a lower percentage of people overpaying, and a higher percentage needing more than their monthly premium covers, insurers risk finding themselves, at best, in the black.
Not being able to discriminate based on pre-existing conditions has hurt the health insurance industry, but allowing people to pull out of the system altogether, shrinking insurance companies’ patient pools while still mandating that they cover the high-risk Peters, a segment of our population who are very unlikely to voluntarily give up their coverage if insurance were again made optional, threatens to kill it.
Even so, if Obamacare is scrapped and the ban on using the “pre-existing conditions” label to deny or limit coverage is thrown out with it, greatly improving the chances of insurance companies survival, we end up where Peter sees himself and others with chronic conditions who’ve eschewed traditional employment: without the ability to find an affordable plan that includes coverage of his AS, he will be stuck paying out of pocket. This would work ok for a while, but when you have a condition that costs thousands of dollars a month to treat, “you can be an iron worker or a tech exec, but either way you’re going to run out of money eventually.”
Right now, Peter is working on a diabetes management software and application called Brook. He pitches it like this: “In 2010, there were more than 70,000 lower-limb amputations in the United States due to diabetes. At 10 feet per bucket, that’s 7,000 buckets of feet. I’m working towards fewer buckets of feet.”
This past summer, I spent a little over nine hours sitting in on Brook team meetings and it’s about more than just buckets of feet. It’s also about saving health insurance companies money. If diabetic patients are active, eat healthy, and keep close watch over their blood sugar, the chance of their feet ending up in one of those 5-gallon plastic pails is drastically decreased, along with their risk of heart attack or stroke, their likelihood of going blind, the chance of their kidneys failing or any other of the expensive health complications associated with diabetes. Software like Brook can help health insurance companies become more profitable in the health care market, but in fighting to repeal the Affordable Care Act, insurance providers risk scaring people off of tackling these very sorts of innovations ― not because people don’t want to work on them, but because the risk to them is too high.
Obamacare is one of the reasons that Peter could even consider working on projects like Brook. With the promise of coverage for a chronic lifelong condition that could easily bankrupt him, he was able to risk leaving behind a company-sponsored plan and dive headfirst into the startup hustle. With the new administration only a few weeks away from the White House, his insurance provider has already started to pull back on his care, which makes staying with Brook and continuing to work on lowering healthcare costs for companies and patients alike a scary proposition.
Andrew Berkowitz is a 24-year-old software engineer about to leave for an 8-month fellowship teaching coding in Ghana with the MEST Fellowship. Andrew spent much of his teens and the first half of his twenties at the nexus of tech and entrepreneurship. He’s built apps, worked on physical goods, and has twice appeared on ABC’s BattleBots alongside a black and gold robot named Brutus, but most of his work has centered on pharma with a particular focus, like Peter, on diabetes. Also like Peter, Andrew is a health insurance company’s worst nightmare; he has Type-1 Diabetes and is insulin dependent.
Until recently, Andrew was able to get coverage as a dependent through his mother’s work, but after a round of layoffs, he’s found himself on long phone calls with cautious insurance companies trying to figure out coverage as a high-risk patient.
Andrew and Peter share a focus: Diabetes, a categorization: high-risk, and their frustration with a system that seems to have dedicated itself wholeheartedly to being heartless. Despite the protection provided by the provision against the use of a “pre-existing conditions” clause to deny or limit care, insurers have been finding ways to circumnavigate. Right now, if a patient has a condition a company isn’t keen on covering, they can whittle away at their current coverage offering less and less until the patient either gives in to the new normal or spits themselves back into the Health Insurance Marketplace, also called the Exchange.
Both Peter and Andrew have lost doctors and medications to the whims of their insurers, and both find the idea of these decisions as cost-saving measures to be entirely absurd. For Peter, it’s starting to seem like either the people trying to repeal Obamacare and the ‘pre-existing conditions’ provision either don’t understand the system they are trying to scrap or they are ok with having people with chronic conditions be the collateral damage of another healthcare overhaul. Cutting back on coverage for chronic patients may offer short-term benefits, but the long-term effects of poor care, like increased hospitalizations, stronger medication regimes, and more surgeries, will result in a far greater total expense than actually giving Andrew, for example, the number of test strips his endocrinologist prescribes.
Entrepreneurs like Peter and Andrew tend to operate under a guise of infallibility, but even the bravest know that an illness, accident, or chronic diagnosis is a financially terrifying bit of news, especially when you already fall into the high-risk category. With a new administration pledging to gut the already problematic system and without confidence in their ability to get care, some of America’s most creative thinkers face a heart-wrenching decision: do I risk my health, financial stability and, for those with dependents, the health of my family, in the name of my work? Or do I put aside my work in return for the stability of a company-sponsored plan?
Most people don’t have chronic conditions, and it’s not as if the self-insured in tech have a monopoly on health problems, but the freedom that Obamacare has provided to entrepreneurs like Peter regardless of their health seems to be quickly coming to an end. Repealing the Affordable Care Act may very well put a damper on what is already a slowing tech economy by making it too risky for big thinkers like Peter and Andrew to do the big things that could improve the health of our nation and strengthen the very same health insurance industry that seems hell-bent on cutting them out. What we stand to lose in repealing Obamacare isn’t just comprehensive (relatively) affordable coverage for millions, but also the enormous innovations and discoveries that a small subset of those millions have been empowered to work towards partly because of the confidence that the promise of access to affordable healthcare provided.
Already, and like Andrew, Peter has spent hours on the phone with his insurance company trying to figure out how to stay healthy(ish) and continue to work towards helping others do the same, but his confidence is waning. It may be better, he says, to get a job “doing Enterprise IT, than to keep making software that keeps diabetics off of operating tables.”
Peter Biddle is the writer’s uncle.