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Editorial: Say hello to Obamacare

BY DI EDITORIAL BOARD | OCTOBER 01, 2013 5:00 AM

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Today, more than three years after the passage of the Affordable Care Act, Americans finally saw the implementation of one of its key provisions: the health-insurance marketplaces.

This will allow people looking for health-insurance plans to perform side-by-side comparisons of different insurance options. The only eligibility requirements are that you must live in the United States, be a citizen, and not be in prison.

Changes to how health insurance operates in the United States, particularly with the new marketplaces, show great promise to vastly improve access to health care.

In Iowa, federal funds will be used to expand access to Medicaid to cover more low-income families and individuals. Those with low income who don’t qualify for Medicaid can get coverage for their children through the Children’s Health Insurance Program. Depending on income and the number of dependents, households can also receive tax credits to help pay for private insurance. These credits can be applied directly to cover part of the premium costs.

All available plans included in the marketplaces contain “essential health benefits,” which cover newborn infant care, prescription drugs, preventative health services, mental health and disorder services, along with much more.

Perhaps one of the best features of the new health-care legislation is that insurance providers can no longer deny coverage or raise costs because of pre-existing conditions starting in 2014. The one exception is for some plans that are grandfathered into the system. These are individual insurance plans, not those obtained through an employer. Anyone with such plans can have them changed by entering the marketplaces’ open enrollment program.

The marketplaces also aim to tackle another serious hurdle in purchasing health insurance: price.

According to a report by the Robert Wood Johnson Foundation, health-insurance premiums have been skyrocketing over the past several years while the percentage of people covered by employer-sponsored health insurance has fallen. In employer-sponsored health-insurance plans, premiums paid by employees grew by around 150 percent from 2000 to 2011. Over the same period, the number of people in the United States covered by employer-sponsored health insurance fell by 10 percentage points.

The plan for reducing costs to consumers and improving coverage comes down to simple economics. A brief by the U.S. Department of Health and Human Services reported that more competition and transparency in prices are related to lower health-insurance premiums. On average, individuals would be able to choose from 53 different insurance options in the marketplaces.

Combined with price comparison tools, increased competition among insurance providers should theoretically drive down the costs of insurance and increase coverage.

With a larger pool of people in the health-insurance system, the cost of health care should be more diffused, leading to lower costs.

Much of the problem with high prices in the health-care industry resulted from instances in which the uninsured received emergency treatment. Without insurance, health care can be abhorrently expensive to the point that those who receive it cannot pay for it. At that point, everyone else has to pick up the tab.

To remedy this problem, there is a fee people who can afford health insurance must pay if they don’t purchase it. It amounts to 1 percent of violators’ income in 2014, and it will continue growing with each year.

The logic behind this goes that by failing to purchase health insurance, individuals are both putting themselves at risk and leaving everyone else with the bill when something goes wrong.

Overall, the marketplace provision of the Affordable Care Act lines up well with free-market economic thought and at least in theory, looks like a promising step toward insuring all Americans.


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