President Barack Obama promised the citizens of America affordable health insurance under the Affordable Care Act.
Both arguments used by President Obama and his fellow democrats are faulty. The first was that the health care law would bring down health insurance costs, and also provide health cover for those not insured either due to financial reasons or for health reasons.
AdvertisementAccording to two latest studies, one by Society of Actuaries - a group of professionals who manage and interpret financial risks - is that the non-employer based individuals and families who buy insurance from the market would pay higher premiums.
The second study conducted by Covered California - the California entity liable for setting up the state's health care exchange - concludes that premium will increase by 14%. For families with an income of more than $94,000 approximately, the premiums will be at least 30% higher.
There are less expensive and intrusive ways to resolve the health care system.
The major problem being, that, which affects 4 million Americans with pre-existing medical conditions, where the premiums are exorbitant or insurers refuse to provide them with cover.
The law has brought about two regulations to address these issues -one - by which insurers provide cover to everyone who applies and second - they have to charge the same premium to all irrespective of medical history. Unfortunately these rules raise premium costs in general.
One way to deal with this problem is to create state based high risk health insurance pools. These high risk pools generally offer a choice of plans and enrollment is limited to those unable to afford any other coverage. These plans will be isolated from the health insurance marketplace so premiums are not increased due to these plans.
These high risk pools must be properly funded and according to a study 3 years old a comprehensive set of high risk pool programs would cost $15 - $20 billion a year.
Because high-risk pools are isolated from the broader health-insurance marketplace, they don't increase premiums for those outside the pool. It amounts to a fraction of the amount The Affordable Care Act estimates in its spending.
The federal government should ensure that state-based, high-risk pools are properly funded, which should be regularly reviewed to ensure adequacy. Also states should have rules to prevent both insurers and individuals from improperly taking advantage of the high-risk pools.
Rather than distort the marketplace and increase the cost for many Americans, reforms that use the market force to reduce costs should be explored.
Hannah Punitha (IRDA Licence Number: 2710062)
Lanhee Chen, 8th April 2013
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