The Affordable Care Act or ObamaCare was intended to decrease the number of people in America without health insurance. According to the proponents of the law, there were more than 20 million uninsured people who would be helped by the law. In very general terms, the law would eliminate barriers to getting health insurance such as making plans more affordable to people with lower incomes and doing away with medical underwriting that prevented unhealthy people from qualifying for a plan. The thinking was that once we have all these additional people in the system, insurance companies would be able to compete for all of this extra business by expanding the plans they offer and lowering their prices. In that regard, the law was indeed well intended. No one disputes that everyone should have access to affordable health insurance. Reality, however, often proves to be a tricky thing.
The actual experience under the Affordable Care Act and especially in a more rural area like Yavapai County, Arizona has been just the opposite of what was intended. With the elimination of medical underwriting combined with generous grace periods for paying for a plan and liberal enrollment options, the health insurance companies have experienced the phenomenon of insurance known as adverse selection. Adverse selection simply means that the demand for health insurance is positively correlated with the risk of loss. In other words, the person most likely to want health insurance is the sick person who needs it the most. The risk has materialized for them because they need treatment such as a surgery right away. That alone would be fine if there were a lot of other healthy people signing up and paying for plans in order to help spread the cost of the risk. However, many younger and healthier people have either not been signing up or, if they do, they only keep their plan for part of the year or just long enough to avoid the meager tax penalty imposed for not having a plan for just a portion of the year.
As a consequence of adverse selection, many insurance companies have left the market and more are expected to leave next year. The few insurance companies that have stayed have responded by raising deductibles and doubling prices. They have also cut back on the number of doctors that accept their plans. All of this has, in turn, made health insurance even less attractive for the young and healthy who do not perceive an immediate and compelling need for having health insurance. If the trend from the past two years continues into 2017, we might well just see the final death spiral of the Affordable Care Act with their being no plans available in our area. We will then indeed have a health care crisis.
Prescott, Arizona Resource
Prescott Health and Life is the quad-city areas independent insurance specialist agency. We represent over forty of the nation's top insurance carriers. We will research and work with you to find the insurance plan that fits your lifestyle and budget.
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