Five myths about health insurance

It is no wonder so many myths about health insurance persist. The U.S. health insurance system is opaque and labyrinthine, and at times purposely so. The current debate over whether to repeal major provisions of the Affordable Care Act (ACA), otherwise known as Obamacare, comes down to whether consumers should subsidize services they never expect to use. But who pays for what, and how, is not straightforward.

MYTH NO. 1: The ACA has forced millions to buy insurance they don’t want.

House Speaker Paul Ryan deployed this myth when defending repeal — which the Congressional Budget Office estimated this past week would increase the number of uninsured people by 22 million by 2026. “It’s not that people are getting pushed off a plan,” Ryan said. “It’s that people will choose not to buy something they don’t like or want.”

That reasoning echoes the late Supreme Court justice Antonin Scalia, who during a 2012 challenge to the ACA suggested that the law’s individual mandate started the federal government down a slippery slope. “Everybody has to buy food sooner or later,” he said. “Therefore, you can make people buy broccoli.” And no one wants broccoli, right?

But both before and after the ACA, most of the uninsured consistently have reported that they want insurance. In a 2009 Department of Health and Human Services report, 48 percent of uninsured people under age 65 said they didn’t have health insurance because of the cost, 38 percent cited life changes (they had lost their jobs, left school or changed their marital status), and 12 percent said their employers didn’t offer it or they’d been denied coverage. Those who “did not want or need coverage” were lumped into an “other” category — along with people who had recently moved, were self-employed or didn’t specify — representing fewer than 8 percent of respondents.

Before the ACA, the uninsured rate had not budged since the passage of Medicare and Medicaid in 1965. Each year, 45 million people reported that they were uninsured for the entire year. Between 2010 and 2016, however, 20 million people gained coverage, almost entirely through Medicaid and marketplace subsidies.

Under both the House and Senate plans to repeal major funding provisions of the ACA, the Congressional Budget Office estimates that the uninsured rates will rise for all age groups, and most substantially for those who earn under 200 percent of the poverty line. That’s because the plans would both reduce the number of people eligible for Medicaid and lower (in some cases eliminate) the subsidies for people who buy insurance on the market. Of the 22 million Ryan was asked about, 15 million would lose Medicaid, and 7 million would lose market insurance.

MYTH NO. 2: Expanding health insurance coverage saves money.

The Obama administration sold the ACA to skeptics on the promise that it would limit health-care cost growth over time. Healthier people need less care, the argument goes. If lack of insurance is a barrier to health care, and if health care improves health, then expanding coverage should improve health. If poor health is costly, then expanding insurance should also lower costs.

Seemingly in vindication, real health spending growth remained historically low for several years after the ACA’s enactment. Compared with the prior decade, when health-care spending grew at an average annual rate of about 3 percent, from 2010 to 2013 annual growth averaged 1.6 percent. But evidence points to the dregs of the recession as the driver of these results, and, as the major insurance expansions took effect in 2014, cost growth again began to climb.

Costs from increased demand for health services overwhelmed savings from improved health (granted, it has been only three years since the major expansions, and health effects may take longer to manifest than budgetary effects). The Rand Health Insurance Experiment — which ran from 1973 through 1981 — and decades of subsequent work have shown that more generous insurance incentivizes greater use of health services and increases costs. Economists call this phenomenon, more generally, the law of demand.

The myth that insurance expansion will save money highlights the fallacy that a program must save money to be valuable. Expanding health insurance is costly, and perhaps costs even more than it saves, but it is also valuable, because it improves people’s access to care, financial stability and overall well-being.

MYTH NO. 3: Health insurance companies make massive profits by cheating consumers.

To strengthen the case for reform, proponents of the ACA scapegoated private insurers in the debate leading up to its passage, blaming outsize premiums and skimpy coverage on unethical behavior. In a 2009 radio address, Obama cited insurers’ undue “profits and bonuses.”…

Read full story at Washington Post

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