As we get ready for the repeal or potential defunding of the Affordable Care Act, the debate on healthcare reform will top news. From Washington DC to kitchen tables across America, everyone will be more involved this go around.

Both the critics and supporters of “Obamacare” really have very little knowledge of the realities of the law.  It takes more than bullet points or a few people’s experience to truly understand the law’s impact.

First off, premiums have more than doubled since the passing of the ACA. This is on both the individual and small group health plans.  With the premium increase, we also have a much higher out-of-pocket cost to the insured, from the ACA.

The ACA did waive medical underwriting for small groups and individual plans; which was a true game changer. People who had been declined individual coverage because of preexisting health conditions could not get coverage. Therefore, more individuals found they had increased premiums.

The advanced tax credits also changed the landscape that made health insurance affordable. If you qualified for the tax credit, then you would not pay more than 9% of your household income towards health insurance. Due to the tax credits,  many Hoosiers could finally afford to get health insurance, even when they had been priced out of the market previously.

Unfortunately, there is a direct correlation with low income and health issues.  More often than not, if you have a condition that needs significant amount of medical attention, it’s difficult to be productive in job market. The need for better health to be competitive within a person’s market led to higher premiums in ACA, and carriers exiting the individual market.

Under the ACA, aged based premiums/cost could not have a difference of more than a 3 to 1 ratio.  This created a problem for attracting young people to buy health insurance. The premiums were too high, if a 64-year old’s premium is $900 a month, the 21 year is $300.  20 somethings will not buy, even if they qualified for tax credits (remember it goes back to the 9% rules).  They qualify for a tax credit of $30 a month, most will not pay $270 a month, unless they have had long term health conditions. This rule created adverse selection, only the sick purchase which increase premiums.

Medicaid Expansion has also been a big issue under the law! In Indiana, HIP 2.0 went from 60K a member to 360K. It is predicted to hit over 500K in 2017.  Think about that, 60K to 500K in less than 3 years. To qualify for this plan, household income must be under 150% of the federal poverty level.   If there is a direct correlation with sick and low income, the cost must be astronomical.

These are some of the realities of the ACA.

First, the markets need to stabilize, otherwise the carriers that are left will exit. How can this be done?  Remove the Insurance tax, Risk Adjustment Programs, and the medical loss ratio for the individual market; Allow the carriers to go back to premium vs claims to be profitable;  Reinstate the gov. reinsurance programs on large claimants.

The conservative companies proved they could make a profit in this scenario.  Keep current tax credit system in place with adjustments.  Leave the Medicaid expansion plan in place.

If these things were done, just this year, Insurance companies would see a clear path to making a profit.

Once markets are stabilized, then debate can truly start.  We will need compromise on both sides. There needs to be a guaranteed issue market, no preexisting conditions exclusions.

Insurance companies need the flexibility to create and develop plans which allow the market to determine if they are bought. They need to give incentives to insurance companies to enter new markets, create competition.

Keeping Medicaid expansion program, there may be no other option with this segment of the population. If they are added in the private market, they would not be able to afford premiums or cost sharing. The individuals that do stay insured may have very high claims.

They need to create a new premium assistance program for people that are priced out of the market. If you have a family of 4 with $60K in household income, it’s very difficult if not impossible for them to pay $1,200 a month, especially if they had problems with the premium was $600 a month.

Obviously this is a snap shot, but this is based on market reality.