The failure of the insurance first model

The failure of the insurance first model & how much cheaper healthcare might be if Obamacare hadn't passed:

Bottom Line: I've expressed frustrations with the "insurance first model" and some of the Obama-era regs that have been embraced by many Republicans. I've categorized the GOP plan as 50% less awful than Obamacare (and the Senate plan is a different version of a similar thing on Friday I broke out the key changes with the plan compared to the ACA in case you missed it):

Now, by anyone's definition of success (including Barrack Obama's), the Affordable Care Act is on the verge of failure. The Center for Medicare and Medicaid studies is out with it's latest research on what health insurance policies will be made available as part of the ACA, exchange based offerings. It's findings:

  • As of today 40% of the country geographically (1200 counties) won't have any options for health insurance for 2018
  • 47 counties won't have any insurance policies available. 

According to the Obama administration having people on health insurance was deemed to be a success (never mind that most recently 42 million Americans who had health insurance said they hadn't obtained any healthcare over the past year due to in inability to meet additional out of pocket expense before deductibles are met - according to Kaiser Family Foundation research). With 47 counties and climbing not having any insurance options available - that's a failure. And clearly otherwise, the lack of affordability of healthcare under the ACA is obvious (with the average policy cost per person at $6500 per year and climbing + a deductible that averages over $1,000). But digging deeper into the latest research from The Center for Medicare & Medicaid study was this:

  • At the end of 2015, the per person spending on healthcare had reached $9,990! 
  • That's $3.2+ trillion per year spent on healthcare in the US

Much of that $10k figure is masked by different entities paying portions of per person care (you, employer, subsidies, Medicare, Medicaid) but it's a figure that's reached alarming and unsustainable levels. At the end of 2015 the median household income stood at $55,775 (gross). With $10,000 all in per year in healthcare costs per person - you don't need me to see how this math doesn't work in a sustainable way. Meanwhile what was the impact of the Affordable Care Act on healthcare spending? In the first six years of the ACA...

  • Healthcare spending/costs per person rose 23% (from $8,141 per person to $9,990)
  • Over the same period of time the real inflation rate was just 9%
  • That means that healthcare costs grew 256% faster than the rate of inflation under the first six years of the ACA
  • Healthcare costs would be $1,000+ cheaper per person, per year, had healthcare costs grown at the rate of inflation

As a reminder, the biggest failure of the Affordable Care Act, was that it took the single biggest obstacle in the way of cheaper healthcare - the insurance first model - and mandated it. We have a cost of healthcare crisis - not an access issue. It's not complicated in a non-political line of thinking. End the insurance first healthcare model and have people shop for healthcare services aside from emergency/catastrophic care as we do everything else in life. Unfortunately, that's not being proposed - so it looks like 50% less awful might be about as good as it gets. 

Brian Mudd

Brian Mudd

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