Elements of an Authentic “Affordable Care Act” (Part 1)

In April 2012, ABC and The Washington Post conducted a poll on the Affordable Care Act (ACA) that found that 53% of Americans oppose ACA and 39% support it.  Two thirds say the Supreme Court should toss the law entirely (38%) or toss the individual mandate (28%).  Just one quarter want the law upheld as is.  Among independents, 56% oppose the ACA and 73% want the Supreme Court to reject it.

The public’s verdicts on ACA are not aligned along a single dimension.  Some people dislike government intrusion in health care; some feel ACA is unfair to them.  Most know that the politicians sculpting ACA ignored “low total cost”- an irresistible theme for consumers.  ACA will foster a health system with major omissions and only a token effort to control costs.

In the short life of the ACA, misstatements on cost have been pathetic.  Originally, ACA was touted to reduce the federal deficit by $143B over 10 years.  But when the long term care component of ACA was found to be a financial impossibility, the $70 billion in premiums had to be backed out of the scoring.  The President’s fiscal 2013 budget proposal included an additional $111B for premium subsidy shortfalls in the ACA.  That made it a quarter trillion dollars uglier than when we were first allowed to read it.

U.S. Health Care expenditures in 2010 were $2.6 trillion.  There were 121 million “consumer units” (families and singles) in 2010, so total health care spending per consumer unit was a heart-stopping $21,470.  But the 2010 “out of pocket” per consumer unit was just $3,157.   Although they don’t realize it, most consumers are deeply insulated from the full costs of health care.  Since the average U.S. consumer unit has pre-tax earnings of $62,490, the full cost of health care would be a crushing 34% of a typical consumer unit’s earnings, not just the 5% “out of pocket.”  Most of the U.S. health care costs are paid directly by government, employers, insurance companies or other entities.

The ACA pandered to some voters with its consumer premium subsidies, but it tried to hide the total costs from the majority of consumers.   The constitutionality of ACA is currently being scrutinized by the Supreme Court.  We expect a ruling in June 2012, but many assume that the ACA will be ruled unconstitutional or have its individual mandate ruled unconstitutional.  In either case it would become unworkable, and Americans need replacement legislation that better serves their health care needs and budgets.  In the segment that follows, we will look at some ideas that can reduce total health care costs and provide consumers with coverage for essential services that ACA omitted.  These recommendations are presented as parts of an integrated system.

Alan Daley is a retired businessman living in Colorado who follows public policy from a consumer’s perspective.

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