In this era of “fake news” and opinions that are stated with convincing certainty, you may find it hard to know what’s real. Especially when it comes to something as complex as health care.
The thin line between myth and reality seems to get a lot thinner when it comes to the Affordable Care Act (ACA), also known as Obamacare. For the coming year, it seems, the only certainty about the ACA is that there will be a lot of uncertainty. As we usher in 2017, let’s draw a clear line between what is and isn’t real.
ACA Myth #1: Getting rid of the ACA will lower everyone’s insurance premiums.
The cost of health care had been rising for decades. Even before the design of the ACA. The ACA has done almost nothing to control the underlying cost of medical care. If the ACA is done away with, its replacement won’t magically slash the price tags for procedures, tests and prescriptions.
Today, much of the care is for preventable health problems. These problems are often related to obesity and unhealthy lifestyles. Repealing the ACA won’t suddenly result in fewer people needing diabetes medications or hip replacements. To lower insurance costs, we all need to take better care of ourselves so we spend less on health care.
ACA Myth #2: Allowing insurance companies to compete across state lines will lower insurance premiums.
This line of thought assumes that costs will be lower with insurers competing freely wherever they choose. It also assumes there would not be different sets of regulations state to state.
But that assumption doesn’t consider how much it costs insurers to set up networks of doctors and hospitals in hundreds of local markets across the nation. And it doesn’t consider the unpredictability of establishing a big enough pool of customers in each state to help spread financial risks.
Provider networks are an important tool insurers use to hold down costs for consumers. Insurers deliver a large customer base to in-network doctors and hospitals, who agree to charge discounted prices to patients. Building these networks takes a lot of time and money.
Selling insurance across state lines would require insurers to develop dozens – if not hundreds – of new provider networks.
Beyond that, insurance pools need to be large in order to spread financial risk. Risk is spread among many contributors to the pool of customers. In new territories, it would be difficult and time-consuming to establish pools. And in addition, insurers would have little data about the people in these new out-of-state markets. That would make it hard to predict these two things:
- How much health care those new members would need
- And how to set premiums to cover the cost of care
Research by the Urban Institute shows that erasing state lines isn’t a cure for high premiums.
ACA Myth #3: It’s cheaper to go without insurance and cover health care costs out-of-pocket.
Do you have confidence that you can stay healthy and avoid injuries or illnesses? What about the countless health problems that are out of your control? Every time you get in the car, you’re trusting that all the other drivers are as conscientious as you are. You only have to check your local news to find proof that the other drivers aren’t always that conscientious.
There’s also the possibility that you could wake up one morning with a serious illness that requires costly treatment. Even routine health problems can threaten your finances.
If you want an idea of how expensive some common medical procedures can be, you can try our treatment cost estimator. A single visit to the emergency room and a hospital admission can easily reach into the thousands of dollars. Without insurance, you’ll still be able to receive treatment at an emergency room. However, that doesn’t mean that care is free.
In fact, the average cost of a three-day hospital stay in the US is $30,000. Coincidentally, that’s nearly identical to the average student loan debt for 2015 college graduates.
There’s a reason why insurance exists. It’s because it’s far cheaper to pay for insurance than it is to pay all of our medical bills out-of-pocket.
Myths can be a lot of fun if we’re talking about an intergalactic battle between good and evil or a shadowy dinosaur that lives in a Scottish lake. But when it comes to our health and how much it costs to maintain it, we must all stay grounded in reality.