As I listened last week to Senator Ben Sasse explain his views on healthcare, I was struck by the point he made that has so far eluded commentators and Democrats, not to mention Republicans. He pointed out that the individual health insurance market prior to Obamacare was not good. He was actually too kind. It was basically for many people, a disaster.
While many Americans had health insurance through their jobs, there were millions who did not. They didn’t qualify for Medicaid and were not old enough for Medicare. They were essentially comprised of the self-employed, the working poor and those who made enough to get by as long as they didn’t get sick. This was because either their coverage was inadequate to cover most costs of healthcare, or they became victims of a health incident. Thus, with a pre-existing condition, a term we now hear often, your options evaporated.
It is important to understand that there were laws and regulations that were meant to protect people who became ill from being discriminated against by insurers. There were even policies billed as “guaranteed renewable” even if you became sick. So what was the problem? Well, this is how it worked:
Let’s say you were insured under “policy 101” along with lots of other people and let’s say your premiums were $250 each month. After a while, those people in that insurance pool covered by that policy could be separated by those who got sick and those who did not. Sometime later, the insurer could start selling a new product, “policy 202,” for a lower premium, say $225 per month, but only offer it to the people in the original policy 101 who didn’t get sick or who had no pre-existing conditions. Those who did get sick or had pre-existing conditions remained in policy 101 and had a guarantee of insurance; HOWEVER, now the experience of that policy justified huge rate hikes every year. Of course, that drove the remaining healthy people into policy 202 (same or better coverage, lower premiums) and only the sick remained in policy 101 because they essentially had no other choice. The rates became astronomical and unaffordable which meant, in reality, if you had individual coverage and a pre-existing condition, you could not get much insurance and what you did get was extremely expensive. This was the real world prior to Obamacare.
And what of the “high risk pools” that some believe will help these people? Though the full explanation is quite complicated, these were essentially plans created in different states and funded either through state governments or a portion of premiums paid by everyone else outside the pool which kept the premiums affordable for sick people or those with pre-existing conditions. Look at what happened in Florida in the 90’s. The idea came forward, the pool grew and became so expensive that the state shut down new enrollees and eventually closed it down. It seemed like a good idea at the time, but when reality appeared, the cure was found to be lacking.
I hope that as this debate continues we reject solutions that have not worked in the past. It would be nice to repair the problems with Obamacare, as there are numerous examples, while retaining the bulk of the value. But acting like we don’t know that some solutions are nonsense is disingenuous at best. So, Democrats, don’t pretend that the ACA is perfect, but do talk about how things were without it; Republicans, argue for new policies, not failed old ones; and, commentators, learn something about insurance before you agree with either side. I know I am asking a tall order for people to actually know and understand what they are talking about! Unfortunately, this knowledge of the facts seems in short supply and unimportant these days. However, as an American, I am always optimistic.