Jan 17, 2017
Good and Bad of Obamacare. Did ACA accomplish what it set out to do?
“Wir schaffen das” is the collective voice of President-elect Trump and the Republican dominated house /senate in repealing Obamacare. By aggressively going behind ACA, Trump has made it abundantly clear it was not just an empty poll rhetoric but he means serious business. Unforgiving media and the unconventional Trump have morbidly inspired us to strongly believe any action on ACA is a viscous drive to systematically wipe out Obama’s legacy, however when viewed through a nonpartisan lens there is more to it than meets the eye.
Enough had been written and discussed on the precarious state of US healthcare. US is the only country where 62.1% of filers for bankruptcy did so due to higher medical expenses and 43% had been forced to mortgage/sell their primary residence to meet the healthcare needs. In nutshell, HealthCare System was like a world War II tank participating in a Formula one race, it was bleeding and badly required a replacement. ACA was the first step towards fixing it by extending the reach to a wider population, guaranteeing a minimal level of coverage irrespective of the pre-existing condition. In last 8 years, rate of uninsured had phenomenally gone down than ever, with the number of Americans without medical coverage declining by one-third, or 15.8 million people, since 2013. By any yardstick this is a remarkable achievement, time to celebrate? wait a minute. Every decision comes with a price-tag, so does Obamacare.
When ACA had made deeper inroads in getting insurance for all, it couldn’t control the cost of care, for the first time in 2015 Federal spend in Healthcare outpaced social security . This trend is not a one-off case rather seems to be malignant due to Federal subsidy for the FPL groups. Average premium for silver plan has gone up by 25% in this year and in some states its upto 50% . McKinsey number shows insurers losing money in 41 states due to Obamacare. Clearly per capita cost in marketplaces is spiking up for national payers and the Blues. BCBS NC and NM had reported huge losses and their proposal for 52% premium increase was turned down. It’s a “Death Spiral” if regulators don’t approve the rate increase, payers opt out and the exchanges will gradually cease to exist alternatively with rate approval the cost goes up defying the benefits of ACA. In brief though ACA started on a solid promise of “Coverage for All” it doesn’t stand on a strong foundation of economic reasoning leaving behind unanswered questions on scalability and sustenance.
