Over the last seven years, Republicans have said a lot of things about the Affordable Care Act that have been proven to be false (e.g., death panels, socialized takeover of the healthcare industry). But for the last eighteen months they've made one claim that has, unfortunately for proponents of the ACA, been hard to refute, and that is that the law itself is in danger of imminent collapse.
To support their claim they point to the exodus of insurance providers out of certain markets which has resulted in huge premium spikes to the tune of 30 percent or more. Consumers in these markets have, in many instances, only one insurance provider to turn to, forcing them to pay the fine rather than the exorbitant premiums. And this has led to insurance companies across the country having to raise their rates to offset the losses in these markets. Hence, a death spiral as Republicans are calling it.
But what Republicans are conveniently leaving out is that they themselves are the ones responsible for this spiral. Back in December of 2015, the Republican-controlled Senate managed to divert billions of dollars meant to cover potential losses the insurance companies might suffer away from them and back into the coffers of the treasury. This set into motion a cascade effect that has brought about the situation we now face.
A piece in Salon magazine from last March explained in great detail, step by step, what the Republicans were up to what happened as a result.
When the ACA was rolled out, telling insurance companies that they had to insure anybody who signed up, regardless of previous conditions or sickness, everybody realized that the insurance companies would probably lose money in the first decade or so, until previously-uninsured-but-sick people got into the system, got better, and things evened out.
To get the insurance companies to go along with this danger of losing money, the ACA promised to make them whole for any losses in any of the first decade’s years. At the end of each fiscal year, the insurance companies merely had to document their losses, and the government would reimburse them out of ACA funds provided for by the law.
The possibility of their losing money was referred to as the “risk corridor,” and the ACA explicitly filled those risk corridors with a guarantee of making the insurance companies, at the very least, whole.
Marco Rubio and a number of other Republicans had succeeded in gutting the risk corridors. The result was that, just in 2015, end-of-fiscal-year risk corridor payments to insurance companies that were supposed to total around $2.9 billion were only reimbursed, according to Rubio himself quoted in the Times, to the tune of around $400 million. Rubio bragged that he’d “saved taxpayers $2.5 billion.”
So the insurance companies did the only things they could. In (mostly red) states with low incomes and thus poorer health, they simply pulled out of the marketplace altogether. This has left some states with only one single insurer left. In others, they jacked up their prices to make up their losses.
A federal claims court recently ordered that the payments be restored. Unfortunately, the damage has already been done. Smaller providers went out of business and the larger ones simply pulled out. Assuming the order survives an appeal, those markets that had been decimated are likely to remain that way and millions of people will suffer needlessly.
So, yes, the law is probably unsustainable in its current form, and barring a legislative fix its long-term prospects are dubious at best. But Republicans gloating over the dire straits of this law are akin to a person standing over someone bleeding to death from a shotgun wound they themselves caused and then speculating how long it will take before the victim dies.
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