An editorial in the Bangor Daily News on March 12 chastised Republicans for not taking swift enough action implementing the Affordable Care Act or Obamacare ( “Republicans in Legislature—get on board with health insurance help”).
Obamacare mandates that states have until Jan. 1, 2014, to create health insurance exchanges. The editorial described exchanges as a panacea where consumers will find insurance coverage both understandable and affordable thanks to new government subsidies. The editorial specifically states that “insurers will become more competitive on price and coverage because they will be on a level playing field throughout the country.”
In reality, Obamacare will drive insurance rates up. We should applaud any effort to prevent this catastrophe from ever becoming a reality in Maine.
Let’s start with the concept of Obamacare putting insurers on a level playing field throughout the country. The provision of the ACA that would have started to accomplish this is the “essential health benefits package.”
Under the law, states must ensure the essential health benefits package covers several categories of care, including preventive care, emergency services, maternity care, hospital and physician services and prescription drugs. The idea was that the federal government would establish a base level of coverage necessary in all plans nationally as part of the mandate that we all purchase coverage. The floor would be the same regardless of state, rather than the state-by-state discrepancies associated with individual state mandates.
Guidance released this past December, however, simply pushed the responsibility to each independent state, essentially locking Maine in its current mandate and cost structure. Yes, that would be the structure currently producing some of the highest health care costs in the country.
Add to that the fact that health plans have to meet certain actuarial values under the ACA. That is a formula that determines the minimum portion of an individual’s health care expenses a policy must cover. The result will be many individuals and small businesses in Maine having to trade in their current policies for more expensive coverage.
We also seem to be putting a lot of faith in the government to make insurance understandable. The BDN editorial states that “the idea behind the exchanges is to make it easy for consumers to understand their options for health insurance and to shop with confidence.” The ACA also requires insurance companies to provide a standardized four-page benefit summary intended to make it easy for consumers to understand their coverage.
Any guesses on how many pages of regulations the feds have produced to offer guidance to insurers in creating these new benefit summaries? To date, over 250. Yet we are supposed to simply accept that, just because the government says so, insurance contracts will suddenly read like a kindergarten book.
The simple truth is that health care is complicated. There are thousands of illnesses and courses of treatment that one might encounter. Much of health care is still art over science, and quality of care is still a subjective measure. Developing insurance policies to pay for health care are complex by nature and will be until health care is no longer complex.
The BDN editorial points to affordable coverage for Maine families. But let’s not forget that the ACA first increases the cost of health insurance by requiring plans to cover more out of the gate. Many individuals and small businesses that buy higher-deductible policies will be told their plans are not good enough, even if they work well for them now.
The only hope for coverage being “affordable” is with massive federal subsidies. These subsidies will burden all taxpayers, especially our small businesses.
Speaking of Maine businesses, let’s not forget the employer mandates that potentially subject an employer to new fines every time one of their employees purchases one of these subsidized plans in the exchange.
The simple reality is that Obamacare is a very poorly written law with vast consequences for all Maine residents. Exchanges will ultimately increase insurance rates, tax Maine employers and threaten the viability of our private insurance market. It will also create a massive new entitlement that we cannot afford.
Of course we should wait for the Supreme Court to rule before investing our time and resources to implement Obamacare. We must minimize the negative impacts of this law on Maine residents and businesses to the extent possible. Not only is this the responsible approach, but we should be thanking the Republicans for protecting Maine’s interests by pushing back against this misguided law.
Joel Allumbaugh is director of the Center for Health Reform Initiatives at the Maine Heritage Policy Center. He also is CEO of National Worksite Benefit Group, Inc., an employee benefits insurance agency specializing in consumer-driven health plan strategies. He serves on the board for the Maine Association of Health Underwriters.