The vast majority of Americans believe that all citizens are entitled to some reasonable access to healthcare. However, folks with chronic conditions or a medical history indicating high risk often cannot purchase health insurance and face financial ruin from medical bills.
Also, many people tend to forgo health insurance until they develop a chronic condition or otherwise expect to encounter large medical bills. Consequently, individual policies, even for the healthy, are often prohibitively expensive or offer severely limited benefits.
Both groups end up in emergency rooms and hospitals when conditions become acute and can't pay their bills. The rest of us pick up the tab through significantly higher insurance premiums and government subsidies.
Most liberals and a few conservatives argued the individual mandate was necessary, along with the ACA requirement that insurance companies not deny coverage or set rates on the basis of pre-existing conditions, is necessary to ensure that everyone have access to reasonably priced healthcare.
Maryland already compels insurance companies to take all comers and not discriminate in the rates they charge but, unlike Massachusetts, the state doesn't impose an individual mandate. However, thanks to a requirement that employers cover employee dependents until the age of 26 and a well-regulated system as compared to other states, an individual mandate was proven unnecessary to spread the extra cost of insuring individuals with pre-existing conditions or without employer coverage across the entire insured population.
Rather, the individual mandate was just a political deal between the Obama administration and insurance companies -- the latter will get millions of new healthy policyholders and attendant profits -- and it is much like other deals U.S. President Barack Obama made to co-opt pharmaceutical manufacturers and healthcare providers and dragoon a bad law through Congress.
However, the ACA doesn't solve the broader affordability problem bedeviling business and middle class families facing rising premiums, co-pays and burdensome claims processes.
The law provides subsidies for low- and moderate-income individuals to purchase healthcare and assistance to small businesses -- together with the individual mandate these should lower the number of Americans without insurance from 50 million to about 30 million-35 million. These subsidies will accelerate healthcare inflation -- the costs of drugs, doctors' visits, hospital stays, administrative costs and malpractice suits will rise faster than ever, making health insurance increasingly unaffordable for businesses and middle-income individuals.
The ACA requires the Office of Personnel Management to sponsor, through private firms, two health plans -- those public options will be advantaged by larger taxpayer contributions and exemptions from critical regulations imposed on private insurers.
Businesses will have a strong incentive to push employees into one of the two public plans or drop coverage altogether and pay the $2,000 penalty imposed by the ACA. Middle- and upper-income employees displaced from employer-based plans will likely find one of the "public options" the least expensive and most sensible choice.
Once one major firm in a market -- be it a national market like autos or local market like dry cleaners -- drops private insurance in favor of a government plan, or drops health coverage altogether and simply pays the $2,000 per employee fine, others will be compelled by price competition to follow.
All along, the OPM-sponsored plans were a Trojan horse. They will be advantaged over private insurers even with the individual mandate helping pull down the latter's costs per enrollee. With the ACA pushing healthcare costs ever higher, the artificial price advantage of government-sponsored insurance will be too big to resist.
(Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist.)
(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)
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