...six months from now, and you know what that means: It won't be
long before you're sitting across the table from your crazy aunt or
uncle who watches Fox News.*
If he or she is still ranting about Obamacare by then, you can explain it in very simple language from Chief Justice John Roberts's majority opinion yesterday.
I had read somewhere that Roberts was a great writer so I looked up his opinion on King vs. Burwell and actually read it. (And, no, I don't have a life.) So, here, lightly edited, is the text which explains the ACA very clearly -- even to your crazy aunt or uncle.
The
Patient Protection and Affordable Care Act grew out of a long history
of failed health insurance reform. In the 1990s, several states began
experimenting with ways to expand people's access to coverage. One
common approach was to impose a pair of insurance market regulations -- a
"guaranteed issue" requirement, which barred insurers from denying
coverage to any person because of his health, and a "community rating"
requirement, which barred insurers from charging a person higher
premiums for the same reason. Together, those requirements were designed
to ensure that anyone who wanted to buy health insurance could do so.
The guaranteed issue and community rating requirements achieved that
goal, but they had an unintended consequence: They encouraged people to
wait until they got sick to buy insurance. Why buy insurance coverage
when you are healthy, if you can buy the same coverage for the same
price when you become ill? This consequence -- known as "adverse
selection" -- led to a second: Insurers were forced to increase premiums
to account for the fact that, more and more, it was the sick rather
than the healthy who were buying insurance. And that consequence fed
back into the first: As the cost of insurance rose, even more people
waited until they became ill to buy it.
This led to an economic "death spiral." As premiums rose higher and
higher, and the number of people buying insurance sank lower and lower,
insurers began to leave the market entirely. As a result, the number of
people without insurance increased dramatically.
This cycle happened repeatedly during the 1990s. For example, in
1993, the state of Washington reformed its individual insurance market
by adopting the guaranteed issue and community rating requirements. Over
the next three years, premiums rose by 78 percent and the number of
people enrolled fell by 25 percent. By 1999, 17 of the state's 19
private insurers had left the market, and the remaining two had
announced their intention to do so.
For another example, also in 1993, New York adopted the guaranteed
issue and community rating requirements. Over the next few years, some
major insurers in the individual market raised premiums by roughly 40
percent. By 1996, these reforms had "effectively eliminated the
commercial individual indemnity market in New York with the largest
individual health insurer exiting the market."
In 1996, Massachusetts adopted the guaranteed issue and community
rating requirements and experienced similar results. But in 2006,
Massachusetts added two more reforms: The commonwealth required
individuals to buy insurance or pay a penalty, and it gave tax credits
to certain individuals to ensure that they could afford the insurance
they were required to buy. The combination of these three reforms --
insurance market regulations, a coverage mandate, and tax credits --
reduced the uninsured rate in Massachusetts to 2.6 percent, by far the
lowest in the nation.
The Affordable Care Act adopts a version of the three key reforms
that made the Massachusetts system successful. First, the Act adopts the
guaranteed issue and community rating requirements. The Act provides
that "each health insurance issuer that offers health insurance coverage
in the individual . . . market in a state must accept every . . .
individual in the state that applies for such coverage." The Act also
bars insurers from charging higher premiums on the basis of a person's
health.
Second, the Act generally requires individuals to maintain health
insurance coverage or make a payment to the IRS. Congress recognized
that, without an incentive, "many individuals would wait to purchase
health insurance until they needed care." So Congress adopted a coverage
requirement to "minimize this adverse selection and broaden the health
insurance risk pool to include healthy individuals, which will lower
health insurance premiums." In Congress's view, that coverage
requirement was "essential to creating effective health insurance
markets." Congress also provided an exemption from the coverage
requirement for anyone who has to spend more than eight percent of his
income on health insurance.
Third, the Act seeks to make insurance more affordable by giving
refundable tax credits to individuals with household incomes between 100
percent and 400 percent of the federal poverty line. Individuals who
meet the Act's requirements may purchase insurance with the tax credits,
which are provided in advance directly to the individual's insurer.
These three reforms are closely intertwined. As noted, Congress found
that the guaranteed issue and community rating requirements would not
work without the coverage requirement. And the coverage requirement
would not work without the tax credits. The reason is that, without the
tax credits, the cost of buying insurance would exceed eight percent of
income for a large number of individuals, which would exempt them from
the coverage requirement. Given the relationship between these three
reforms, the Act provided that they should take effect on the same day
-- January 1, 2014.
* I can't believe I just skipped over the entire high school football season!
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