Blog PostJune 26, 2015

Supreme Court decision doesn’t change health care’s real problem

The ACA has failed to make health care "affordable," as its name suggests. Instead, the law added millions to a broken system that was not fixed in the least by the King v Burwell decision.

The Affordable Care Act (ACA) has survived a legal challenge in the U.S. Supreme Court. Six of the nine justices ruled that the federal subsidies for consumers using federally created exchanges can stay intact.

While the six million people who may have lost their exchange-based insurance policies are likely relieved today, the relief may be short-lived for one fundamental reason: The problem with the ACA is not what it has done, but what it has failed to do.

Control costs.

Instead, the law has simply added millions of people to a broken system that was not fixed in the least by the King v Burwell decision.

Kaiser Health News reports the insurance markets under the ACA are struggling to keep prices under control while trying to draw more customers (there are still 18 million uninsured people who are eligible for coverage) and encourage quality care. But the insurance markets are still spiraling toward unsustainability:

“The government’s insurance markets – as well as more than a dozen run by states — have been operating for less than two years and are about to lose their training wheels. Start-up funds that have helped stabilize prices and partially pay for administration of the marketplaces are ending, feeding fears that premiums may rise after next year at a steeper rate.”

Steeper than rates already are for many Americans:

“For instance, families of three earning $73,000 have to pay nearly $7,000 on premiums despite also receiving subsidies They still face deductibles, which this year averaged around $2,500 for the most common types of insurance plans, known as silver tiers. If a family required extensive medical care and reached the maximum they would be held responsible for—$13,200 this year—their total health care-related bills, including premiums, would exceed $20,000, or 28 percent of their gross incomes.”

And many insurers right now are pitching rate increases for next year, many by double digits. Here are some of the higher end requests as reported in the Wall Street Journal: Health Care Service Corp. in New Mexico is asking for an average premium increase of 51.6%. Tennessee’s biggest insurer wants a 36.3% average jump. CareFirst BlueCross BlueShield in Maryland is looking to raise rates 30.4% across its products.

The article cites “the high medical costs of new ACA enrollees” as insurers’ justification for the huge hikes, with taxpayer money used as the “subsidies” to help pay for these premiums. Final rates will not be determined until the fall, following ACA-required government review. This often ends in lower rates than what are proposed, but the bottom line is that not enough people are signing up for the exchanges to sustain them once federal startup funds for the exchanges are phased out.

Detail of a nurse uniform on a blue blurred backgroundThat gets back to the root of the health care problem. The race to the top of high-priced health plans would be unnecessary if health care itself had more freedom to compete for patients. Competition by nature leads to lower prices. Which means fewer of our hard earned tax dollars would be needed to prop up the system, and patients would have more control over their health spending.

The cost problem with health care existed long before King v Burwell, and long before the ACA. Our policymakers need to understand the Supreme Court decision hasn’t changed a thing.