Health Care 101, continued

Okay, back to where we were before I was so rudely interrupted. As we have established, insurance is about risk pools. Sure, you can offer a cheap policy if you only sell it to people who are young and healthy, and that's what would happen in a non-regulated ("free") market; but that would be largely pointless. As soon as somebody actually needed the insurance, they would not be able to renew it. 

People who are fortunate enough to have employer-provided insurance (which is an oddity largely specific to the United States, for historical reasons we won't go into there) don't generally have this problem. Employers are only willing to buy policies that cover all their employees, so the insurer views the company as constituting a single "risk pool" and prices the policy for that employer in accordance with the overall composition of the workforce. But you must understand that the younger and healthier employees of the company are subsidizing the insurance of older and sicker people. There's nothing wrong with that because we're all going to get old and sick some day, so if you're providing the subsidy now you should be grateful, because you'll eventually be on the other end.

Prior to the Affordable Care Act, people who didn't have employer provided insurance and didn't qualify for government-sponsored insurance were in the situation of the first paragraph: if they actually needed insurance, they couldn't get it. And insurers would kick people off who got cancer. It's those people who the whole pre-existing condition kerfuffle is about. 

Then there is Medicaid, which is for people who are too poor to afford any kind of insurance. Note that many people in that category have jobs. Others are disabled, and of course many are children and elderly people. Yes, disabled and elderly people also get Medicare but it has cost sharing and premium requirements that poor people can't meet, so Medicaid fills in the gaps for them. Prior to the ACA, however, it wasn't enough to be poor to qualify for Medicaid. You had to either also be Medicare eligible -- i.e. over 65 or disabled -- or you had to be caring for minor children. That meant childless adults couldn't get it, and you'd lose it if your youngest kid turned 18 or your marriage broke up. But with Medicaid expansion, in states that accepted it, all people below a certain income threshold (which varies somewhat by state) became eligible for Medicaid. People with incomes too high for Medicaid but too low to afford private insurance get subsidies under the ACA to buy insurance on the state exchanges, so that's how the ACA gets every citizen and legal permanent resident access to health insurance.

So there are three requirements for universal coverage to work. The first is called guaranteed issue and community rating. Insurers have to sell insurance to everybody, for the same price. (The ACA allows adjustment for age.) The second is some form of subsidy for people who can't afford a basic product. The third is that everybody gets in the pool. That's what the individual mandate was intended to assure, but as it turns out it wasn't absolutely necessary because insurance under the ACA is a good enough deal that most people go for it even if they aren't at high risk. Actually the same is true with Medicare. You have to pay a premium for outpatient care insurance under Medicare but almost everybody does because it's a good deal.

There is no way around this. The reason Republicans keep making empty noises about better and cheaper, but never actually come up with a plan to do so, is because they can't. The logic is inescapable, there's no way around it, there's no other way to do it.

However, as I proclaim at the very top of this blog, health care in the U.S. is too expensive. It costs more than it does anywhere else on the planet, and we get less for our money. I'll talk about why next.