Here's how any insurance works:
Let's pretend, 1000 people pay $100 for insurance. This yields the insurance company $100,000 to pay out for coverage of those 1000 people. Normally though only a small percentage of people need coverage. So let's pretend that, in our example, 50 people need $1000 to pay for their health care costs. That leaves behind $50,000 in profits for an insurance company.
This system however, falls apart if one of four things happen:
- Not enough people sign up ie the 1000 number is too low
- The premium is not enough ie the $100 is too low
- Too many people are sick ie more than 50 people need coverage
- Those sick 50 people spend more than $1000 each.
For premiums to not change, number two to four can have some affect but the premium increase can really only be mitigated by increasing number one. How can I say that so comfortably? Because, 5% of Americans make up 50% of america's health care spending. So number three is very low already...hard to make it any lower. We either need number one to go up or number four to go down.
Decreasing number four is a difficult topic for another day!
In regards to number one, the Republicans are blaming Democrats and Obama for the current premium hikes that are affecting the Affordable Care Act. What they forget to mention is that they did everything to limit the number of people that could sign up for this act. Entire Republican run states opted out of the plan all together!
The Republican opposition and subsequent lack of participation, set up the act for a rate hike from day one.
There just aren't enough people paying for insurance coverage (number one) to cover the health of the truly sick in this nation (number three and four), thus the premium (number two) has to go up.
The Republicans were trying to get the act to fail and now that it's failing, they are blaming the Democrats. They should stand up and take a bow for their success...they have succeeded in ruining the biggest healthcare expansion in our country's history.
Republicans, you are succeeding in killing off affordable care for the poorest of our country. This was your plan all along, so why are you now blaming the Democrats for it?!?
@gmalhotra
Very well explained!!
Thank you!
Agreed, well explained and interesting - thanks for sharing! So...any solutions?
Somehow get all the states on board. Never gonna happen though
Yeah - asking the question more as potential fodder for another blog post vs quick and easy answer in a comment. As you said, the Supreme Ct decision enabling Republican-run states to opt out of expanding Medicaid coverage hurts #1. But what about other ways to affect #1, like getting the healthier, non-Medicaid eligible (regardless of an expansion) to buy into the plan? But I guess that’s hard to do without lowering #2. Which is made even harder with declining competition. Feels like it’d be impossible to pass, but a public option to hit #1 and #2 seems likes the smartest option, but curious on your thoughts of feasibility and effectiveness if it actually went through.
It never was affordable.
Not only that it caused everyone else's insurance premiums to increase.
I guess you didn't actually read the post.