ACA "Obamacare"

[PINEHEEL]

A long-time gripe of mine has been that this is the worst piece of legislation ever passed in American history, and it has done far more harm than good on the whole. It's not the entire fault of any one party, but it is directly responsible for our skyrocketing healthcare costs across the country and it is completely unsustainable. See the chart below.

I don't know why they didn't just expand medicaid but keep competition in the marketplace for people who can afford it. I own a small business and our wife stays at home with our two small children, so we don't have employer coverage options. I just found out our coverage for 2026 is going to cost $26,400, and that's the cheapest plan available on ACA. It's essentially catastrophic coverage, because we (thankfully) don't ever have go to the Doctor except for routine maintenance.

We just moved to a much nicer house with a higher interest rate, but that $26K was 2X what our annual mortgage/tax/insurance costs were at our old house. In what 1st world country should it cost you twice as much for insurance as to own a nice home? If we were to max out our family deductible (easy to do with even one hospital visit), we would pay $46,400 in a single year. It's insanity.


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[ronjon]

It was a Republican plan that really wasn’t terrible in theory. It needs the mandate for coverage and permanent income based credits. Without the mandate too many healthy folks just skip out due to raising costs.

Expanding Medicaid is politically infeasible but almost the same thing as the mandate. Taxes are raised for everyone so there is a big enough pool to cover costs at more reasonable rates.

 

[FreeLunch]

A long-time gripe of mine has been that this is the worst piece of legislation ever passed in American history, and it has done far more harm than good on the whole. It's not the entire fault of any one party, but it is directly responsible for our skyrocketing healthcare costs across the country and it is completely unsustainable. See the chart below.

I don't know why they didn't just expand medicaid but keep competition in the marketplace for people who can afford it. I own a small business and our wife stays at home with our two small children, so we don't have employer coverage options. I just found out our coverage for 2026 is going to cost $26,400, and that's the cheapest plan available on ACA. It's essentially catastrophic coverage, because we (thankfully) don't ever have go to the Doctor except for routine maintenance.

We just moved to a much nicer house with a higher interest rate, but that $26K was 2X what our annual mortgage/tax/insurance costs were at our old house. In what 1st world country should it cost you twice as much for insurance as to own a nice home? If we were to max out our family deductible (easy to do with even one hospital visit), we would pay $46,400 in a single year. It's insanity.

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a) Spending on health insurance is not the same as spending on health care services overall.

I haven't paid a whole lot of attention to the ACA ... if for no other reason than it doesn't involve my wife and I personally.

But I thought the whole point of the ACA was to provide more access to health insurance coverage and thus better access to medical care for people who otherwise would go without health insurance.

Thus, if the ACA had any effect at all, we should expect spending on health insurance to increase.

How much of the spending triggered by the ACA could be justified by improved access to beneficial medical services ... versus ... simply higher inflation in health care costs or greater use of expensive medical procedures of dubious cost / benefit -- I couldn't say.



b) It appears as though the ACA did not lead to higher inflation in health care spending at least in the first years immediately after its adoption.

In the limited time available this AM I couldn't find a longer term chart. Maybe I can get back to that this evening.

I would also note that if the subject is the overall increase in health care costs, one should look at the Personal Consumption Expenditures (PCE) inflation statistics ..... not CPI. The CPI health spending statistics are aimed at out-of-pocket spending by consumers .... not overall spending on health services.








c) If we look at health care spending as a percentage of U.S. GDP, there is some increase since the implementation of the ACA in 2014 but it doesn't seem to be that significant ..... 17.1% in 2014 .... versus .... 17.6% in 2023. An aging population could explain that.

 

[PINEHEEL]

It was a Republican plan that really wasn’t terrible in theory. It needs the mandate for coverage and permanent income based credits. Without the mandate too many healthy folks just skip out due to raising costs.

Expanding Medicaid is politically infeasible but almost the same thing as the mandate. Taxes are raised for everyone so there is a big enough pool to cover costs at more reasonable rates.

Bingo. It was a plan with great intentions but flawed in execution because of political BS where each party didn't want to acquiesce for the greater good. There were ways to mandate coverage while still maintaining competition in the marketplace for those who could afford it. Like student loans, once the government created their own monopoly it gave the providers/insurers no incentive for fiscal accountability.

 

[PINEHEEL]

But I thought the whole point of the ACA was to provide more access to health insurance coverage and thus better access to medical care for people who otherwise would go without health insurance.

Thus, if the ACA had any effect at all, we should expect spending on health insurance to increase.

How much of the spending triggered by the ACA could be justified by improved access to beneficial medical services ... versus ... simply higher inflation in health care costs or greater use of expensive medical procedures of dubious cost / benefit -- I couldn't say.

This was sort of the whole point in theory, but in execution it eliminated all competition from the marketplace. It was more about ensuring that low income people and those with pre-existing conditions could still get coverage. The problem is that was a small subset of the population, and they punished everyone as a result. Instead of expanding Medicaid, they offer tax credits to those who can't afford it, but that works in practice the same as handing out student loans to people who can't afford college and expecting the universities/providers/insurers to not take advantage of it.

I read something recently that pointed out one of the biggest flaws with our health insurance system is it covers routine maintenance. Your car insurance doesn't cover new wipers, batteries, oil changes, etc., so why should your heath insurance cover Doctor visits for colds, stitches, preventative skin care, etc.?

If you could eliminate that you would greatly reduce the burden on insurers and let everyone pay out of pocket as a usage tax. A new option that is becoming more commonplace is direct primary care, where you pay a monthly membership fee for all of your routine maintenance, but they don't accept insurance. The best option for most middle and upper class people would be to use that, and then have an option for catastrophic coverage at a greatly reduced rate.

For my family the local direct primary care membership would cost about $3K a year. I would much rather pay that with catastrophic coverage at, say, $15K a year instead of the $23K I'm going to be paying for all of it, virtually none of which we will benefit from.

 

[FreeLunch]

This was sort of the whole point in theory, but in execution it eliminated all competition from the marketplace. It was more about ensuring that low income people and those with pre-existing conditions could still get coverage. The problem is that was a small subset of the population, and they punished everyone as a result. Instead of expanding Medicaid, they offer tax credits to those who can't afford it, but that works in practice the same as handing out student loans to people who can't afford college and expecting the universities/providers/insurers to not take advantage of it.

I read something recently that pointed out one of the biggest flaws with our health insurance system is it covers routine maintenance. Your car insurance doesn't cover new wipers, batteries, oil changes, etc., so why should your heath insurance cover Doctor visits for colds, stitches, preventative skin care, etc.?

If you could eliminate that you would greatly reduce the burden on insurers and let everyone pay out of pocket as a usage tax. A new option that is becoming more commonplace is direct primary care, where you pay a monthly membership fee for all of your routine maintenance, but they don't accept insurance. The best option for most middle and upper class people would be to use that, and then have an option for catastrophic coverage at a greatly reduced rate.

For my family the local direct primary care membership would cost about $3K a year. I would much rather pay that with catastrophic coverage at, say, $15K a year instead of the $23K I'm going to be paying for all of it, virtually none of which we will benefit from.

I suppose we could all think of ways to more efficiently fund health care spending than our current, hodge-podge system (or non system).

But what evidence can you show us about how the rate of inflation in ... a) health care services overall ..... and ..... b) health insurance premiums ....... has compared to overall inflation in the economy since the implementation of the ACA.



Note -- An increase in household spending on health insurance may reflect an increase in the number of households purchasing health insurance ..... not just an increase in the health insurance premiums (ie., prices).

 

[Chamtrain]

I agree that Obamacare wasn't the "fix" it was intended to be but to blame it for our current price crisis is a bit disingenuous. Prices before it's implementation were already out of control. The fact that they are more out of control tracks with what it did, force coverage (and services) for people who would have previously been denied. Of course costs are going to rise, but it's not the reason for high costs.

For profit health care with insurance middle men is the reason for high costs, until that is ended the ridiculous prices will continue. If the ACA were repealed tomorrow you'd be able to buy some bare bones plan for 13k a year instead of 26k but there would be a million Americans whose lives would be ruined.

Our feckless politicians (Dems and Pubs) put us here, I hate it.

 

[PINEHEEL]

I suppose we could all think of ways to more efficiently fund health care spending than our current, hodge-podge system (or non system).

But what evidence can you show us about how the rate of inflation in ... a) health care services overall ..... and ..... b) health insurance premiums ....... has compared to overall inflation in the economy since the implementation of the ACA.



Note -- An increase in household spending on health insurance may reflect an increase in the number of households purchasing health insurance ..... not just an increase in the health insurance premiums (ie., prices).

The average price paid for health insurance premiums jumped by 143 percent from 2013 to 2019. At the same time, deductibles also increased 35% over that same time span. That's not inflation. That is solely attributable to ACA. You can say that it was largely because more people were covered, but the end result is effectively the same.

I'm not trying to blame any single party or entity, but you're splitting hairs with a partisan knife if you're trying to argue that the ACA hasn't been the single largest contributor to our rising healthcare costs over the past dozen years. Whether it was intended or not, the side effects have led to the same expensive ending. As a result of the ACA, more people are covered, more services are covered, pre-existing conditions are covered, community rating rules were implemented (young pay for old, healthy pay for sick, etc.), etc. Add all of that up, and healthcare costs and insurance premiums have skyrocketed as a result.

In general, we now have a half-***, bastardized healthcare system that is neither universal nor private, either of which would be better than the current system.

 

[PINEHEEL]

If the ACA were repealed tomorrow you'd be able to buy some bare bones plan for 13k a year instead of 26k but there would be a million Americans whose lives would be ruined.

That's a sacrifice I'm willing to make.

 

[FreeLunch]

The average price paid for health insurance premiums jumped by 143 percent from 2013 to 2019. At the same time, deductibles also increased 35% over that same time span. That's not inflation. That is solely attributable to ACA. You can say that it was largely because more people were covered, but the end result is effectively the same.

I'm not trying to blame any single party or entity, but you're splitting hairs with a partisan knife if you're trying to argue that the ACA hasn't been the single largest contributor to our rising healthcare costs over the past dozen years. Whether it was intended or not, the side effects have led to the same expensive ending. As a result of the ACA, more people are covered, more services are covered, pre-existing conditions are covered, community rating rules were implemented (young pay for old, healthy pay for sick, etc.), etc. Add all of that up, and healthcare costs and insurance premiums have skyrocketed as a result.

In general, we now have a half-***, bastardized healthcare system that is neither universal nor private, either of which would be better than the current system.

a) I don't have an axe to grind one or another around the ACA. As I noted earlier -- it's not something that has ever applied to my wife and me. So it's not something I've thought much about.


b) I will note ... and I think you should have ... the 143 percent increase in health insurance premiums is for individual policies. Offhand I don't know what percentage of Americans obtain their health care coverage in the individual market ... vs. ... employer (or other) sponsored group plans ..... vs. ...... Medicare / Medicaid / other government plan.


c) The increase in health insurance premiums among employer sponsored health plans is much lower.

For example, the figures in the chart below go from ~ $15,500 in 2013 to ~ $20,000 in 2019. That's a 29% increase.

We might note that 29% is considerably higher than the overall Consumer Price Index over this period -- 10%. But it's a lot less than the 143% increase cited for individually purchased health plans.


d) I have no idea why there was such a disparity in the increase in insurance premiums between individual versus employer sponsored plans.

 

[FreeLunch]

I agree that Obamacare wasn't the "fix" it was intended to be but to blame it for our current price crisis is a bit disingenuous. Prices before it's implementation were already out of control. The fact that they are more out of control tracks with what it did, force coverage (and services) for people who would have previously been denied. Of course costs are going to rise, but it's not the reason for high costs.

For profit health care with insurance middle men is the reason for high costs, until that is ended the ridiculous prices will continue. If the ACA were repealed tomorrow you'd be able to buy some bare bones plan for 13k a year instead of 26k but there would be a million Americans whose lives would be ruined.

Our feckless politicians (Dems and Pubs) put us here, I hate it.

a) The profit motive in and of itself is an insufficient explanation for the costs or high inflation in health care spending.

Remember -- there are quite a few Walton family billionaires who made their billions $$$ by offering lower prices than the competition.

Presumably, consumers may have as much incentive to pay low prices as business do to charge higher prices. So who may hold the power in that tug-of-war revolves more around the nature of competition in a given market .... more so than simply the incentives facing buyers or sellers.



b) Among the reasons prices and overall spending for health services have far outpaced overall inflation in the economy are:


0 the prevalence of monopolies in many markets .... ie., one major hospital or hospital system in a community

0 information advantage of physicians over patients ....... (Most of us are likely to have an idea about the features we like / be willing to pay for on our next car. But how many of us "know" whether we really need that CAT scan the doctor is ordering for us ?).

0 the availability or use of health insurance disconnects patients from the financial / cost consequences of their health care consumption choices

0 the (perceived) essential nature of many health care services ... (ie., who's going to haggle over the price as you're rolled into the ER ........ do you really want the cheapest heart surgeon ?).

0 extensive education and occupational licensure requirements = barriers to entry / supply among health care providers

0 Baumol's Law -- explains the general inefficiency / high inflation in the service sector compared to the goods producing sector of the economy


I'm sure I probably skipped something here. But that's enough for now.

 

[Chamtrain]

You aren't wrong but none of those matter if we're not running it as a for profit industry.

You have competing interests: for profit health care providers and for profit insurers

It's natural that the one squeezed will be the individual.

 

[Chamtrain]

That's a sacrifice I'm willing to make.

I also got squeezed by the ACA...maybe the 2nd year it was enacted I was forced to buy it through the mandate and made too much money for subsidies. Of course, the qualifications for subsidies didn't take into account the 3k a month in student loans my wife and I were paying towards our law degrees or the 2200 we were paying for daycare for our two young kids. I fully understand the position you are in, it's ********.

 

[ronjon]

Insurance companies aren't making bank on all this. Profits for health insurance are capped to 15-20%. That is certainly a nice profit, but it's not some windfall, and it's less than they were making. They basically had a dream gig before this, collect premiums from healthy folks, don't allow unhealthy folks in the door, sweet deal.

Insurance prices are skyrocketing because as a society, we're fat drunk and stupid. Plus a doctors liability insurance is through the roof as we still don't have restrictions / limits on medical malpractice suits.

 

[FreeLunch]

You aren't wrong but none of those matter if we're not running it as a for profit industry.

You have competing interests: for profit health care providers and for profit insurers

It's natural that the one squeezed will be the individual.

The vast majority of hospitals in the U.S. are not-for-profit institutions. But look at inflation in Hospital Services below.







Higher education is another industry that is dominated by not-for-profit institutions. Yet, look at inflation in college costs compared to overall consumer prices.

 

[PINEHEEL]

I also got squeezed by the ACA...maybe the 2nd year it was enacted I was forced to buy it through the mandate and made too much money for subsidies. Of course, the qualifications for subsidies didn't take into account the 3k a month in student loans my wife and I were paying towards our law degrees or the 2200 we were paying for daycare for our two young kids. I fully understand the position you are in, it's ********.

Yeah, it's kind of like being in a high tax bracket without the option for any deductions. I'm grateful to be able to afford it without credits, but I also work on 100% commission so income isn't guaranteed, and we're perfectly healthy so it feels like lighting $25K on fire every year.

I should add some context that some of my shock was a result of our recent move from Durham to West Jefferson. The Bronze plan was already going up $300+ anyway, but Ashe County is $650/mo (!!!) higher than Durham County. So it was effectively a $1K/month increase for me. Insane that in a system designed to spread risk across everyone, there can be that much discrepancy between two counties in the same state.

 

[PINEHEEL]

Insurance companies aren't making bank on all this. Profits for health insurance are capped to 15-20%. That is certainly a nice profit, but it's not some windfall, and it's less than they were making. They basically had a dream gig before this, collect premiums from healthy folks, don't allow unhealthy folks in the door, sweet deal.

Insurance prices are skyrocketing because as a society, we're fat drunk and stupid. Plus a doctors liability insurance is through the roof as we still don't have restrictions / limits on medical malpractice suits.

I definitely blame the providers; not the insurers. In fact, one of my biggest gripes is they essentially cut out a lot of the insurers when they implemented ACA.

 

[PINEHEEL]

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The vast majority of hospitals in the U.S. are not-for-profit institutions. But look at inflation in Hospital Services below.



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That's like saying Universities are not-for-profit when some of these colleges have essentially turned into private hedge funds in practice. They just spend more on waste to not show a profit.

 

[FreeLunch]

The highest inflation has been in industries -- hospital services and higher education -- dominated by not-for-profit institutions.

Look at where we've seen relatively low ... (below average) ... inflation. It's commercial industries such as automobiles .... furniture .... clothing .... computer software ..... cellphone services ..... TVs ... toys.

 

[FreeLunch]

That's like saying Universities are not-for-profit when some of these colleges have essentially turned into private hedge funds in practice. They just spend more on waste to not show a profit.

On the one hand -- Walmart and Costco try like crazy to keep their costs and prices as low as possible so they can make a profit for their shareholders.

But Haavaad and Dook have been willing and able to raise their tuition and other student costs seemingly without constraint. And as fast as they can rake it in, they find ways to spend it --- at least in part because they don't have shareholders and thus don't need to earn a profit.


So what does the "profit incentive" have to do with whether we might expect to see higher inflation in one sector of the economy versus another ?


Hint --- see Baumol's law as one place to start. Plus look at my earlier post citing the various ways in which the market for health care services deviates from 'perfect competition'.

 

[PINEHEEL]

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So Walmart and Costco try like crazy to keep their costs and prices as low as possible so they can make a profit for their shareholders.

But Haavaad and Dook have been willing and able to raise their tuition and other costs seemingly without constraint -- at least in part because they don't have shareholders and thus don't need to earn a profit.


So what does the "profit incentive" have to do with whether we might expect to see higher inflation in one sector of the economy versus another ?


Hint --- see Baumol's law as one place to start. Plus look at my earlier post citing the various ways in which the market for health care services deviates from 'perfect competition'.

I was simply pointing out the absurdity of your counterargument to Chamtrain that hospitals are "not-for-profit." Sure, just like P4 Athletic Departments are "not-for profit."

 

[FreeLunch]

I was simply pointing out the absurdity of your counterargument to Chamtrain that hospitals are "not-for-profit." Sure, just like P4 Athletic Departments are "not-for profit."

a) It is not an "absurd argument" that most hospitals and most universities and colleges in America are 501(c)(3) not-for-profit organizations. It is a fact.

Now if you would like to outline an economic model of these organizations which explains how or why their financial incentives are similar to commercial businesses, be my guest.

But if you do so, I would suggest leaving off the bit about -- "They just spend more on waste to not show a profit" -- from your explanation of how non-profit universities are really like commercial businesses. Walmart and Microsoft and JP Morgan, etc. don't intentionally waste money in order to minimize or eliminate their profits.

I might also suggest you think about whether not-for-profit institutions are more in the vein of "profit" maximizers .... or .... "revenue" maximizers ?


b) Who do you think are the "owners" of the UNC Athletic Department or our counterparts are other schools ?

Is it Bill Belichick or Hubert Davis -- they're making multi-million $$$ incomes off UNC sports ? But if they lose too many games, they'd be collecting severance pay like so many of their counterparts.

Is it the big wigs in the university booster clubs ? But they're not making any money off their favorite team. It's the opposite. They're having to pay big bucks to gain the status and influence they have within the athletic department.

Is it the university administration .... or ..... the AD .... or ... the board of trustees somehow ?

From what I've seen the UNC Athletic Department pretty much breaks even in financial terms every year. If there's some 'profit incentive' -- UNC appears to fail to meet that routinely. It's hard to see what that could be.


c) A common misunderstanding is that not-for-profit organizations shouldn't show a 'profit' ... (or Excess of Revenue over Expenses).

That probably works for non-profit organizations that have minimal capital requirements or are able to finance capital projects with fund raising .... (eg., UNC athletics).

That does not work for modern hospitals which typically have significant on-going needs for capital to expand ... replace ... and ... update their facilities and equipment. I won't bore everyone with the details but it gets into the nature of depreciation at historic costs versus the money it takes to replace ... add to ... or ... buy new stuff.

 

[UNCChris2001]

Just seeing this thread. While there's some good discussion about health insurance and the healthcare industry here, there's a strong overlap with politics, so I'm going to go ahead and lock it up. Thanks.