This column originally appeared in the San Fernando Valley Business Journal.
There’s been a lot of talk about the Affordable Care Act recently, and a lot of angry constituents showing up to their local town halls. Reform is coming and has the potential, if done right, to be good for patients and for business in the San Fernando Valley.
Some people like the Affordable Care Act. Some people hate it. But I think that most people agree there is room for improvement. Now that businesses and patients have lived with it for a few years, it is clear where there are issues with the ACA. For example, California health insurance premiums have increased, the cost of which is often passed onto local employers.
The best way to achieve universal coverage is through the individual mandate. This makes sure that we have a sustainable marketplace and everyone can choose the plan which works best for them. The insurance market simply cannot be sustained without young healthy people buying insurance.
Young healthy people who do not use a lot of healthcare offset the cost of insuring heavy healthcare users such as those with chronic conditions and the extremely sick. The tax penalty for not buying insurance helps to make sure young healthy people contribute to the market, enforcing the individual mandate. By requiring insurance companies to cover pre-existing conditions and allowing kids to stay on their parent’s health insurance until the age 26 the individual mandate is made more equitable.
A mandate on businesses doesn’t make sense, increasing costs when it might not be the best option for many employers and employees.
The employer mandate is costly for not just business but also for workers and is not necessary, especially if the individual mandate is maintained. Before the ACA many businesses provided their employees with good quality health insurance plans because it was good business to do so. Businesses use health insurance benefits to attract and keep the best and the brightest employees. This practice will continue with or without the employer mandate.
The employer mandate is unduly burdensome for the businesses that do not see a benefit from providing their employees with health insurance and encourages a part-time work force. This is bad for the worker and economy.
The public option is just a bad choice. It will make it impossible for private insurance companies to compete with a Medicaid like public option. A public option would drive down not just competition but also reimbursements to providers and the accessibility of quality health care. Private insurance acts as a subsidy for Medicaid which negotiates significantly better prices due to its size than private insurance can.
The competitiveness of private insurance should be maintained rather than implementing a public option, to service this goal state exchanges should be maintained rather than selling insurance across state lines. This would also be bad for California consumers. Although the instinct that it will generate competition and thus increase both quality and affordability it will be bad for not just California insurance companies, which have to comply with stringent regulations in California designed to protect the consumer, but also the California consumer who benefits from those protections.
Reform to the ACA is coming and if it sticks to the ideals discussed above it will be better.