The “hidden tax/hidden premium” problem that I described in the previous post can be resolved in two ways.
One way is to cut off the insured from any healthcare that they or a charity can’t pay for; to quite literally lock the emergency room door and let them bleed to death on the sidewalk.
The other approach is to establish some form of universal healthcare.
There are basically three options for providing roughly equivalent, universal healthcare to every American.
One option is to establish a tax-supported delivery system. You can visualize what that might be like by imagining that the system that is currently in place to provide healthcare to active duty military and veterans was expanded and made available to every American.
A second option is to set up a government-run insurance program. The Tricare insurance plan that is provided for the families of active duty military and retired military is an example.
In crafting the Affordable Care Act Congress chose the third option; which is compelling private insurance companies to provide broader coverage at affordable rates. This option maintains the current system of private health care providers delivering services that are paid for by private insurance companies. However,
ACA uses the force of law to impose upon the existing system the goal of universal health care with two sweeping commandments.
ACA first requires insurers to provide coverage for everyone who wants it, regardless of the risk (pre-existing conditions, etc.).
Taking on that added risk alone would drive premiums much higher, making them unaffordable for many, thus increasing the numbers of uninsured. To prevent this from happening ACA further commands that most Americans (there are some exceptions) buy health insurance, or pay a penalty if they don’t (presumably the penalty is enough to entice the purchase of insurance).
It is important to note (I’ll explain why later, in the discussion about the matters now pending before the Supreme Court) that the mechanism Congress chose for collecting this penalty is the annual income tax return and the government agency responsible for collecting the penalty is the Internal Revenue Service.
While this requirement for companies to provide insurance, coupled with the mandate for individuals to buy insurance, is expected to go a long way toward covering the previously-discussed $43 billion gap there are other provisions in ACA that are designed to ameliorate other significant problems with the existing system, primarily by lowering healthcare costs through increased efficiency.
I know that it sounds oxymoronic to say that the government is going to use efficiency to achieve cost savings, but the very real possibility that this goal can be achieved is a testimony to the incredible inefficiency of the current healthcare delivery system.
The private sector is very efficient in many areas. Healthcare delivery and health insurance are not among them.
In an article for SCOTUSblog Lyle Deniston explains (more thoroughly than I) why Congress included the unpopular and Constitutionally-questionable mandate provision in the ACA:
Congress sought to show that it was not intending to draft private individuals into saving the health care industry (the way the government in the past has drafted people into the military to protect national security), but rather was asserting more control over the private insurance industry. That is, obviously, a purely economic rationale, and that fact is the reason Congress thought — as a constitutional matter — that it had ample authority to impose a sweeping new regulatory regime over that interstate market, which makes up more than 17 percent of the entire national economy.
That is an industry, the lawmakers knew, that always has been financed by private premiums paid by insured policyholders. And it knew that, if insurers could not “spread the risk” of covering people who are already unhealthy, or may develop serious health problems in the future, the industry could not be successfully commanded to expand coverage significantly. As Congress understood the insurance market, more people had to be paying into it. And the people it targeted were those who did not voluntarily obtain health insurance.
That is a group that Congress assumed (backed up by some data) would not stay out of the health care industry all of the rest of their lives. Sooner or later, it concluded, they would need health care, and it thus is better that they start paying for it before they might actually need it to accomplish two policy goals: to guarantee that they would be insured when they did need care, and, in the meantime, to help pay the way to cover the insurance industry’s risk of expanded coverage. By expanded coverage, of course, Congress meant finding a way to pay for health care not only for the poor, and for that part of the middle class, that could not afford insurance premiums, but it also meant coverage for those who have pre-existing conditions or medical histories of serious illnesses — high-risk patients, in short.
Reaching deep into the organized private insurance market, and dividing it up into different sectors for different types of coverage requirements, Congress identified a package of health care coverage that it considered to be minimally essential. A wide variety of health plans will satisfy that basic requirement, and the new law sets up an almost bewilderingly complex set of changes in insurance industry practices in order to assure the availability of this most basic level of health insurance.
But Congress did not stop with the insurance companies. And that is where the individual mandate comes in. By 2014, Congress specified, all “applicable individuals” (there are eight groups that are excepted from this category) are required to obtain — and, thereafter, to keep in force — “minimal essential coverage” for the adults and for their dependents.
A family can satisfy this coverage requirement if its members have any health plan funded by the government (Medicare, Medicaid, CHIP, military benefits and so on), if they have a plan through an employer, if they buy an individual plan for themselves alone, or if they can arrange some other form of coverage that will get federal government approval. Individuals are not treated differently from families in their obligations to get insured. Congress did not try to spell out what actual medical treatment must be available under the minimum coverage approach; it was focusing on the scope of coverage, not the benefits.
The mandate does not apply to people who have religious objections to it, to undocumented immigrants living in the U.S., to prison or jail inmates, to members of Indian tribes, to low-income individuals or families, to those who go without health insurance for less than three months, and to a catch-all category for individuals whom the government concludes suffer a “hardship” in getting covered by a health plan.
Failure to satisfy the mandate leads to a requirement to pay a penalty along with one’s federal income tax return.
Rich Umbdenstock, President & CEO of the American Hospital Association, notes that many people oppose ACA because they believe it is the government unconstitutionally forcing Americans to purchase things they don’t want and won’t use.
“That is simply the wrong analogy,” Umbdenstock says. “As we’ve stated to the courts, ‘to put things in the challengers’ terms, Congress did not make anyone buy a General Motors vehicle. It instead made sure no one can drive a General Motors vehicle off the lot and tell the car dealership to bill their neighbor or to absorb the cost itself’. We believe the Supreme Court will understand this important distinction and uphold the individual mandate.”
(That’s a good segue to the next blog post, which will kick off my discussion of the four matters now pending before the Supreme Court)
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