What many in the US don't realize, is that if they have any form of insurance, they are paying for others' care (if they themselves are healthy). It's called distributed risk and it is the cost effective form of risk-management.
Insurance companies do not add value to health care. Insurance companies' primary concern is profit - extracting as much capital and paying for as little care as possible. The profit they extract could easily care for the uninsured.
It is a model of health care faced with the "spiral of death": As they extract profit, rates rise - as rates rise, more people can't afford the premiums - the more people opt out, the more rates will rise, etc.etc.
Health care costs will rise. The ACA can and will help keep the costs from rising as fast.
RomneyCare is working in Massachusetts:
The federal Affordable Care Act is set to kick in fully by 2014, now that the US Supreme Court has affirmed that it is constitutional. The Massachusetts reforms upon which the ACA is based took effect in 2006, under then-Gov. Mitt Romney. So, what does the record show in Massachusetts – did jobs evaporate and is the state bankrupt, as critics portended? Or is the Bay State rather an example of health-care nirvana, as supporters predicted?
Neither extreme is true, and the lessons of Massachusetts may not all apply in the broader national context. But overall, the state is doing pretty well under its reform law, say those who have studied its effects upon residents, businesses, and state coffers.
For one, about 400,000 additional people are newly covered by health insurance, bringing down the share of uninsured residents from 7.4 percent in 2004 to 1.9 percent by 2010, according to the Massachusetts Division of Health Care Finance and Policy. Massachusetts now has the highest percentage of insured residents among all the states.
Costs to the state are also within original estimates, according to the Massachusetts Taxpayers Foundation, contrary to claims by former Sen. Rick Santorum (R) of Pennsylvania that health-care reform was “bankrupting Massachusetts.”
But the state isn’t a perfect demonstration lab for national reform.
The Massachusetts law is funded differently from the federal one. The state didn’t need to increase income taxes to pay for it – most funding for the new law came from the federal government as part of Medicaid, and from shifting around state funds, says John McDonough, a professor at the Harvard School of Public Health.
Critics say that although Massachusetts residents didn't have to pick up much of the tab for reform, the ACA will have more of a negative impact due to tax increases. “The cost that Massachusetts was able to push off onto the federal government will go to taxpayers [under the ACA],” says David Tuerck, an economics professor and executive director of the Beacon Hill Institute, a fiscally conservative think tank.
Still, the state’s law and the national law have many similarities.
In Massachusetts, if you don’t buy health insurance, you pay a fine – as will happen under the ACA. When the law first passed, noncompliers lost the personal exemption on state income taxes. In 2008, the state started charging a fine of half the cost of the cheapest plan that could be found under the Massachusetts Health Connector, the state’s version of the insurance exchanges intended to help consumers shop and compare plans.
Though a penalty can now run to $1,200 or more, “it has been remarkably noncontroversial,” says Professor McDonough.
That may be because the state has been lenient in applying those penalties. People who make too much money to be eligible for subsidized coverage but say they still can’t afford insurance can apply for a waiver, which is also available for those who don’t want coverage because of religious beliefs.
In 2010, Massachusetts granted 55 percent of waiver requests for a premium or copay reduction, according to data from the Connector annual report to the legislature.
Since the reform was signed into law in 2006, “the requirement that everybody has health insurance has become a pretty normal part of the way we do things around here,” says McDonough.
Even so, critics argue that the Massachusetts reform hurts business. The state would have created 18,000 more jobs in 2010 without the reform, according to the Beacon Hill Institute. That isn't a huge impact in a state that employs more than 3 million people, says Professor Tuerck, but extrapolated to a national scale, job losses may be more important.
Tuerck argues that reforms not only taxed people by forcing them to buy coverage, but that they also made insurance rates rise. “The bill imposed new costs both on the federal government and on people who had insurance policies in Massachusetts, and we found that the cost of private health insurance had gone up because of Romneycare,” he says. This could be interpreted as having the same effect as a tax increase, which he says has a negative impact on job growth.
Still, according to Beacon’s Hill’s state competitiveness report on March 6, Massachusetts is the top state in the country for economic growth and income.
Massachusetts health care is also often criticized for being too expensive: The premiums are higher than anywhere else in the country.
McDonough argues that although those figures are correct, they don’t give the full picture. “You get a revealing portrait when you look at it based on ability to pay,” he says. Massachusetts premiums are higher, but so is household income – and when measured as a percentage of income, health insurance is cheaper in Massachusetts than in Texas, which has the highest share of uninsured residents in the nation.
Moreover, the high-priced premiums in Massachusetts predate the state's health-care reform law, McDonough says. Although health-care costs are increasing everywhere, the rate of increase has slowed significantly in Massachusetts in the past two years.
“Don’t assume we’re a basket-case on costs,” says McDonough. “We’re probably better off than you are."
By Kevin Loria | Christian Science Monitor
