The One Number That Shows Why Any Health Care Reform Effort Will Fail

People don't really want insurance.


A doctor

Congressional Republicans are finally inching forward with a plan to repeal and replace the Affordable Care Act (ACA), a.k.a. Obamacare. About time, right? After all, displeasure with the 44th president's health care overhaul is what sparked the Tea Party movement in 2009–10 and swept the GOP to a majority in the U.S. House. President Obama was dinged with "lie of the year" in 2013 by the otherwise left-leaning website PolitiFact for his claim that "if you like your health care plan, you can keep your health care plan." Donald Trump vowed during the campaign to repeal the law and replace it with something where "everybody's going to be taken care of much better than they're taken care of now." And since Obamacare went into effect in 2013, there has never been a time when the polling giant Gallup has found more people approving than disapproving of it.

But the attempt to do away with it completely was never going to be as easy as it looked. Although the public has remained, on the whole, more sour than positive toward the ACA, there were always aspects of it people liked. Now that the Republicans have regained control of both houses of Congress and the White House, they're realizing that getting rid of those provisions in particular is going to be tough to accomplish politically.

That reality is highlighted by a new poll, out this morning, from CNN and ORC. Support for the law is still outstripped by opposition to it (46 percent vs. 49 percent). At the same time, though, a whopping 87 percent of Americans favor "maintaining the protections offered to people with pre-existing conditions under Obamacare."

That is, to put it mildly, a problem.

We've collectively lost sight of what insurance actually is: a way to protect yourself against a possible future outcome. Some of the people who buy the insurance will eventually be affected by that outcome. Others never will be. But since none of us can know beforehand which camp we're in, we're willing to pay a little bit now for the peace of mind of knowing we're covered, just in case.

But if insurers can't turn anyone away, there is a strong incentive on the individual level to treat the system as something else entirely—and to not buy in unless you know you're going to need a lot of expensive care in the near future. If you're young and mostly healthy, why would you pay premiums every month, potentially for years, while drawing little value out, if you can just wait until you have an imminent use for a lot of coverage and join a plan then?

Traditional insurance markets don't have that problem, because a company isn't obligated to sell its coverage to someone who's already hurt or sick, and it's definitely not going to sell coverage at roughly the same price it would charge to a healthy customer. Obamacare took that freedom away, but tried to compensate for the bad incentive it was creating by taxing those who chose to go without coverage. The new GOP plan eliminates the individual mandate—the requirement to either sign up for a plan or pay a penalty—but does not appear to do away with the mandate that companies cover people with pre-existing conditions (and not charge them many times more than they charge everyone else). That dramatically increases the chances that we could fall into a so-called death spiral where only sick people buy coverage, and insurance companies have to jack prices way up for everyone just to stay in business.

Keeping protections in place for people with pre-existing conditions seems to many Americans like the compassionate thing to do. In a previous life I conducted focus groups with voters for a living. Over and over again, no matter which city I was in, I heard the same things when it came to health care policy: People didn't like the ACA; they saw it as big, complicated, and confusing. They believed it would cause disruptions in their lives and worried it would end up costing their families more than they were paying at the time. But they did very much support ensuring people couldn't get locked out of the insurance market just because they were already sick.

The poll from CNN/ORC I cited earlier proves that hasn't changed. It also suggests that any attempt by Republicans to fix the problems with Obamacare will likely fail the affordability test. Politicians are rarely willing to go against the people who employ them. Unfortunately, the people who employ them want the unattainable in this case: access to unlimited health care with minimal waiting at low prices that doesn't "discriminate" against people who already know they're going to use a lot of care. That's not insurance. It's a pipe dream.