The recent U.S. Supreme Court ruling upholding a key provision of the Affordable Care Act ensures that the law will be an issue in the 2016 campaigns, and a likely refrain from opponents will be that the law raised premiums and forced millions of people to change their health plans.
Without question, the law did both, and Republicans opposed to the law have called for ending many of the regulations that remade the market for people who buy their own health insurance.
The proposals _ put forth by conservative policy organizations, such as the Heritage Foundation and the American Enterprise Institute _ generally would allow more flexibility in the type of health plans that can be sold.
But the proposals are themselves examples of the inescapable tradeoffs in health care reform.
The proposals would lower premiums for some people but increase them for others. In many cases, premiums would be lower because people had less coverage. And the proposals could lessen competition by making it harder to compare health plans.
At the same time, lower premiums could encourage more people to sign up for health insurance. The proposals also would spare some people _ those covered by health plans exempt from some of the new regulations _ from sharp rate increases. And the proposals would give people more options when shopping for the health plan that best suits them.
The proposals include eliminating or modifying regulations that:
_Cap how much health insurers can charge older people compared with younger people.
_Require health plans to cover a package of basic benefits.
_Set minimum actuarial values for health plans sold in the different tiers on the marketplaces set up under the law.
No one has proposed ending the requirement that health plans cover people with pre-existing health problems. That provision, which also has increased premiums, is among the most popular changes in the law.
The proposals would affect a small portion of the overall health insurance market. Roughly 15.6 million people were covered by health plans bought by individuals at the end of last year. In contrast, about 150 million people were covered by health plans from an employer.
Nor would they lower the overall cost of health insurance. That largely hinges on the cost of health care, and the proposals would not change that, at least not initially.
Eliminating the key regulations also would come at a price.
"You can save on premiums, but there is no free lunch here," said Justin Sydnor, an economist and assistant professor of actuarial science, risk management and insurance at the University of Wisconsin-Madison.
Opt for a plan with a higher deductible and you pay lower premiums. But you also get less coverage and assume more risk.
That's just fine with some people.
"People have different preferences," said Edmund Haislmaier, a senior research fellow of health policy studies at the Heritage Foundation. But it also would mean lower premiums overall for people who are young and healthy and higher premiums for those who are older and sicker. That's because the people most likely to opt for health plans with lower premiums and less coverage are those who are young and healthy. In contrast, older and sicker people would opt for health plans with more coverage.
The result would be two different risks pools, each with much different rates.
The Affordable Care Act puts them in the same risk pool _ limiting premiums for someone who is older to three times that paid by someone who is young.
What this means is young, healthy people subsidize older, sicker people. That's one of the reasons for the requirement that everyone have health insurance or pay a penalty _ 2 percent this year, rising to 2.5 percent next year, of income above roughly $10,000 for an individual and $20,000 for a family. People who are young and healthy are needed to help keep the cost of health insurance in check.
Opponents of the law contend that is unfair. But insurance is based on the concept of shared, or "pooled," risk.
Haislmaier acknowledged the potential problem.
But he said it could be lessened by using statistical methods that adjust for the health status of people in different health plans. Those methods, known as risk adjustment, are used for Medicare Advantage and Medicare prescription drug plans as well as for the health plans sold on the federal and state marketplaces.
Not requiring health plans to cover a package of so-called essential benefits also would lower the cost.
For example, the Affordable Care Act requires health plans to cover mental health benefits the same as other medical conditions. It requires plans to cover habilitative services, such as physical and occupational therapy, speech therapy and other services for people with disabilities. And it requires them to cover some preventive care without any copays or deductibles.
The requirements added an estimated 9 percent to the cost of the average health plans, Haislmaier said.
The law also requires health plans in the different tiers to have a minimum actuarial value. Those in the silver tier, for instance, must cover 70 percent of the total medical claims.
Haislmaier estimated that this requirement added 8 percent to the cost of the average health plan.
But requiring health plans to cover essential benefits and have a minimum value has made it easier for people to shop for health plans.
"With the regulations in place, you basically get what you pay for," said Sydnor, the UW-Madison professor.
Requiring health plans to cover a package of essential benefits also has intensified price competition by making it easier for people to compare competing plans.
"We definitely would say it has intensified competition," said Marty Anderson, director of consumer marketing for Security Health, an affiliate of Marshfield Clinic. "Absolutely."
The increased competition didn't surprise some economists.
"We have always said that would happen," said Len Nichols, an economist and director of the Center for Health Policy Research and Ethics at George Mason University.
"Rules make a market work better if they are smart rules," he said, "and those kind of standardization rules are smart."
Haislmaier agrees, with a caveat.
"I want the right rules and as few as necessary," he said.
The design of the Affordable Care Act could have been "way, way simpler."
(c)2015 Milwaukee Journal Sentinel
