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The malady lingers on

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This is the fourth time I have written a column just prior to a general election cycle. Since columns are written a month in advance of publication I will not speculate about the result of the election or discuss the candidates. From the perspective of the health care insurance system there is no need.

One will win, others will lose, but the unique crazy that is ACA will linger like the scent of a skunk meeting its tragic end in oncoming rush hour traffic.

“Crazy” is really the only word that can truly describe ACA. Even former President Bill Clinton agrees.

While committing the most unpardonable of political sins — telling the truth — he called ACA “a crazy system” that “doesn’t make any sense.”

At a Michigan campaign stop he explained that while the system works well for people with modest incomes, “the people that are getting killed in this deal are small business people and individuals who make just a little too much to get any of the these subsidies.” He concluded his keen observations saying, “It’s the craziest thing in the world.” No kidding, Bill? Let everyone in the industry show you their shocked face.

Related: Seeing it coming

It isn’t just “crazy,” it is collapsing under its own weight. That is something else that anyone with even a rudimentary knowledge of insurance was well aware of back in 2010 when “crazy” became law. Costs are expected to be 24 percent higher and deductibles on exchange policies will be going as high as $12,000. And that is the good news.

The bad news is that carriers are racking up balance sheet-busting losses on those policies and are pulling out of markets across the country, leaving consumers with fewer choices and higher prices. That is exactly the opposite of what ACA proponents promised. According to the a report from Kaiser and the Health Research & Education Trust, the average employer-sponsored family policy costs more than $18,000 a year, which is $4,400 more than before the law passed in 2010.

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CO-OP reincarnation?

Michael Cannon of the Cato Institute points out that contrary to the law’s supposed guarantees of access to care for people with expensive illnesses, the opposite is happening. “Obamacare itself is denying coverage to people with pre-existing conditions.” He cites Pinal County, Arizona, where, at the time he was writing, there were no carriers writing exchange policies. (Blue Cross Blue Shield of Arizona came to the rescue after he went to press.)

According to Cannon, “Obamacare does not prevent insurance companies from denying you coverage, dropping your coverage, or watering down your coverage. It does not prevent insurers from limiting your coverage. It does not prevent discrimination against the sick.” He continues, “All of these things happened in Pinal County — and not in spite of Obamacare, but because of it. Obamacare made covering anybody in the exchange prohibitively expensive, so insurers stopped covering anybody.”

The policies that have been written have devolved into the expected death spiral. Young, healthy people aren’t buying into the system to provide the subsidization needed to support sick people. When sick people are all that you have left in a pool, it is impossible to keep from sustaining significant, mounting, compound losses, which is exactly what the major carriers have recently reported.

Now there is renewed talk about government creating a so-called “public option” which would stuff its hand deeper into taxpayers’ pockets while most likely driving private insurance out of the market. The parallels between a “public option” and the nearly extinct nonprofit health insurance cooperatives are striking.

We need a major reset. Whether it is the “Better Way” plan proposed by the House of Representatives and Speaker Paul Ryan or other market-based reforms, the cost of medical care itself must be addressed or those designs too will be doomed to failure. It is great that more people had coverage after ACA, but it is like being proud of putting more passengers on a sinking ship.

Another William, better known as “Willie,” wrote a song titled, “Crazy.” The lyrics say, “I know you’d love me as long as you wanted, then someday leave me for somebody new.” It is past time for “somebody new.” 

David A. Saltzman is a former president of  the National Association of Health Underwriters and a leading insurance marketing and sales expert.


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