President Trump versus the Freedom Caucus makes for great media theater. Why can’t they agree on a healthcare bill? Perhaps it’s because the Affordable Care Act (ACA) was built on a set of false premises about the private market that the president and many in the House still believe are true.
No doubt, there were reforms that might have improved our health care and insurance laws before the ACA. But the ACA didn’t address the right problems, and instead created new problems of its own. ACA proponents (perhaps without intention) misrepresented reality, which misled many Americans to believe the law was needed.
Here are a few of the false statements we were repeatedly told as to why ObamaCare was needed:
We were told that carriers could raise your rates or drop you if you got sick.
It’s tragic enough when our friends, neighbors or even family members are diagnosed with a serious health condition. No one wants our fellow Americans to face financial stress on top of the anxiety of health concerns. That’s why in 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA), which outlawed the practice of dropping coverage or raising rates once a person was accepted for coverage due to his personal healthcare usage. This was never discussed; people simply believed then-Speaker Nancy Pelosi when she implied that this practice was still legal.
We were told that people with pre-existing conditions couldn’t buy a health policy.
But HIPAA mandated that every state guarantee policies for everyone regardless of their pre-existing conditions. States employed one of two methods to comply:
1. We’ll call the first the “ACA way” since ObamaCare was patterned after it. Seven states forbid carriers to ask any health questions on the application and made them basically charge everyone the same rate. As you can imagine, few carriers participated since they couldn’t determine potential risk of the applicants; the premiums were the highest in the nation; and people were mandated to buy a policy.
2. The remaining states allowed “true insurance.” Carriers could determine risk at application by asking questions about health, lifestyle, occupation, etc. and base the premium on these factors. (Newborns were added without questions.) Since most people are healthy, the vast majority of applicants had very low rates even with their pre-existing conditions and many carriers and plans from which to choose. No open enrollment period, mandates, or fees were necessary since the low rates were an incentive to buy.
These states handled the HIPAA requirement by offering guaranteed plans, primarily through subsidized high risk pools, for the few applicants whose pre-existing conditions caused them to be declined coverage by the carriers. The rates were about the same or less than those paid by all applicants in the ACA way states. Understandably, the people in the true insurance states have demanded repeal and made their voice heard at the ballot box.
We were told that most plans were subpar and had high deductibles.
The truth is that every state had its own set of mandated benefits. The states with the fewest mandates allowed people to choose the benefits they wanted and deductibles were actually lower.
We were told that young adults couldn’t get coverage, and that they were kicked off their parents’ plans too early.
The maximum age for dependent coverage varied by state. Some required coverage up to age 31. Parents in true insurance states often bought low-priced private plans for their children rather than paying more to put them on their group plan.
Despite conventional thought, most Americans (87 percent) were happy with their insurance before the ACA. This doesn’t mean that the laws governing health care or health insurance were perfect, but the ACA focused on solving problems that were misrepresented.
In many ways, health reform is a much harder job now for Republicans than it was for Democrats seven years ago. Americans are more divided than ever, and much of that division stems from our disparate experiences before the 2010 overhaul and after. Still more division is the result of misinformation about how insurance markets were regulated prior to the ACA.
Hopefully when everyone, especially the moderate Republicans and Democrats, understand the protections in the former private marketplace, they will come together behind full repeal and agree to put the states back in charge of their private market.
Beverly Gossage is a Senior Fellow for Independent Women’s Voice and President of HSA Benefits Consulting.