ObamaCare:The Realization of Hope

I have reluctantly watched all of the Republican Presidential “debates” to date. If I were participating in one of the more prevalent drinking games from my college days, my friends and I would all take a drink every time one of the participants said one of two pre-selected words. For the debates, those words would be “Obamacare” or “Reagan”. Depending upon which word you drew from a hat, you would have to take a drink each time your word was mentioned for the length of the debate. I feel sure that I would have drawn “Obamacare”. So far, “I will repeal Obamacare” is Romney’s favorite dog whistle for cheap applause, which is especially ironic because Romney leads the field and his plan in Massachusetts was the blueprint from which the Affordable Care Act was patterned. My unofficial count for only Mitt Romney mentioning “obamacare” is 48.

The ACA is primarily about putting a stop to the worst part of health insurer abuses enabled by the anti-trust exemptions that the healthcare insurance companies have enjoyed since the passage of the McCarran-Ferguson Act in 1945. Despite the Supreme Court ruling that health insurance companies were subject to the interstate commerce laws and thus subject to federal anti-trust laws, Congress chose to override SCOTUS and grant the exemption. As long as health insurance companies have the ability to raise premiums in unison, there will be no competitive pricing in the health care industry despite what Republicans would have you believe. Shopping from state to state is absolutely meaningless and they know it. There is absolutely no incentive for health care providers to control costs as long as the health insurance companies can recoup the reimbursements to providers by simply raising the premiums on their policies in unison. This leaves policyholders with no recourse to find better prices elsewhere. The anti-trust exemption will only be broken by a government payment option unless the exemption is repealed, and that is a long shot at best.

The Big Kahuna

One of the most important parts of the ACA, called the medical care ratio, requires health insurance companies to spend 80% – 85% (depending on the size of the group) of the consumers’ premium dollars they collect on actual medical care rather than overhead, marketing, or other non-medical expenses in determining compliance. If insurers don’t meet this requirement they must send their customers a refund representing the amount that they underpay on actual medical care, so this is a very big deal.

This one clause will change the waste and abusive control that for-profit health insurers have been using to exploit customers and make enormous profits.  Moreover, as the average quintessential “free market” business, they will have to learn how to make a profit on the 20 percent of their receipts that isn’t directly spent on healthcare services. This seems extremely unlikely or we would never have seen the extent to which the health insurance companies went to stifle the passage of this bill.

The Department of Health & Human Services is responsible for determining the rules that will dictate which expenses will qualify as a “medical expense” for the purpose of compliance under the ACA. At first glance, the department has shown it’s resolve to adhere to strict and sensible guidelines.

Why Healthcare Insurance Companies Hate this Bill

Republicans, apparently at the behest of the huge health insurance company lobby in Washington, seek to continue to include the commissions they pay to salespeople and brokers as “medical expenses”. However, HHS has ruled against the inclusion saying sales, marketing, and lobbying are clearly overhead costs for the insurance companies, under IRS, GAAP, and FASB rules and regulations. This is consistent with the classification of overhead costs in every other for-profit business. If HHS had included this as a medical cost, it would have been a clear signal that they did not intend to adhere to the spirit of the law nor that they would enforce the concept of the medical loss ratio.

So, now the question becomes, can private health insurance companies make a profit when they have to spend 80-85% collected for insurance premiums on providing medical care for their customers or not?

The obvious answer is no, they cannot. Investors apparently know that they cannot because parent corporations of health insurance companies are actively seeking alternative investments. Investors also apparently realize that by passing the law, Democrats have said we are finally on a path to a single-payer system for the segment of the American public that needs it. This inherently takes a huge cash cow for the corporate interests and morphs it into a raging bull in a china shop.

My only complaint, which is a complaint of mine regarding all victories by Democrats, is that they have failed miserably in providing adequate information (or ANY information for that matter) to the public that this clause exists for them. It’s as though Democrats think that the average American will simply find out the good that they do through some sort of mystical osmosis. If there is anything that the Dems could learn from their Republican counterparts, it’s that repeating something over and over, at every available venue, is the only way for most Americans to be made aware.

Now is the time to do so! Once the public is aware of this provision and begins to use it, repealing the ACA will become exponentially harder and will mute Romney’s persistent dog whistle in the current campaign.

A Seismic Shift in Healthcare Availability

You might believe that the ACA signals the end of private, for-profit health insurance in America and that we’re following the European form of socialistic democracy. But you should be ecstatic knowing that you will ever be denied a heart transplant because you ate bacon and eggs as a child.

There will always be a for-profit health insurance industry for those who can afford it the same way there will always be Rolex watches for those who want “Timeless Luxury Watches” as opposed to a “common” brand. The only difference will be that those who cannot afford private coverage will also be able to get their families the medical care that they need.

Sounds like a win-win to me.