87% of Americans Believe Insurers Should Cover Pre-Existing Conditions, but There's a Catch

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Life comes with two certainties according to Benjamin Franklin: death and taxes. Perhaps it's time to add a third: healthcare uncertainty.

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When Donald Trump won the presidency, it was practically a foregone conclusion that the Affordable Care Act would be repealed and that the numerous ideas Republicans had for how to replace it would be whittled down into a single plan that would pass with ease in Congress. However, more than eight months later, Obamacare, as the ACA is more commonly known, remains the health law of the land, and the GOP remains no closer to repealing it than it did during the Barack Obama presidency.

Here's what Americans want out of a health plan, according to a new survey

What's going to happen to Obamacare and the future of healthcare in America is pretty much anyone's guess at this point, which is what made a recent survey from InsuranceQuotes.com, conducted by Princeton Survey Research Associates International, all the more timely.

In early August, more than 1,000 adults across the country were asked their opinions about Obamacare and specific aspects of the law. Though a slight majority (53%) haven't had their opinion on the ACA swayed since the election, it left the group no less opinionated on what qualities a healthcare plan should have. Here are some of the key findings: 

  • 78% of respondents either strongly favored or somewhat favored the idea that the federal government should provide financial assistance to low-income Americans who otherwise couldn't afford health insurance.
  • 78% of respondents were also in favor of allowing young adults the ability to stay on their parents' plan until age 26. Some 54% of total respondents "strongly favored" this idea.
  • 79% of respondents believe that Medicaid should be available to provide health insurance to more low-income people. In other words, nearly four out of five Americans supports the Medicaid expansion program that 31 states have thus far taken advantage of.
  • 87% of respondents favor the idea of requiring health insurance companies to cover people with pre-existing conditions. Interestingly enough, 68% of those surveyed "strongly favored" this idea, 19% "somewhat favored" it, and just 5% apiece "somewhat opposed" or "strongly opposed" the idea.

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This latter point is of particular interest, because a key Obamacare mandate disallowed insurers from turning away folks with pre-existing conditions. Further, insurers can't charge those with pre-existing conditions more than healthy adults of the same location and age. Insurance companies have argued that this mandate has tied their hands and is directly responsible for the hefty losses incurred since the ACA went into effect.

But there's a catch...

Now here's the catch: While Americans are clear in their desire that low-income folks and those with pre-existing conditions should be taken care of, 57% oppose the individual mandate that requires consumers to purchase health insurance or pay a fine, known as the Shared Responsibility Payment (SRP). Overall, 40% "strongly opposed" the mandate its fine, with another 17% "somewhat opposed" to the idea.

In other words, the public expects insurers to pay to cover sicker folks without charging them any extra, and then expects that healthy young adults will willingly enroll for health insurance without facing a penalty that gives them incentive to do so. What we've witnessed from the data through three-plus years is that younger adults aren't enrolling anywhere near as much as expected, even with the SRP in place. Without the individual mandate penalty, even fewer young adults would be expected to enroll, further steepening losses for insurance companies and making market destabilization even worse than it is currently.

As I've argued, perhaps the biggest issue with the SRP is that its penalty for not buying insurance hasn't been steep enough to coerce healthier adults to enroll. Even in 2016, when the penalty was the greater of $695 or 2.5% of modified adjusted gross income, the Kaiser Family Foundation estimated the average non-compliant household penalty would be $969. Comparatively, HealthPocket finds that the average unsubsidized bronze plan (the cheapest tier plan) in 2017 costs $311 across the country. That works out to more than $3,700 a year. Healthy folks are unlikely to pay $3,700-plus for health coverage when they can take a penalty for under $1,000.

What's more, with President Trump signing an executive order easing the burdens of Obamacare, the Internal Revenue Service can't deny a tax filing that leaves line 61 -- the line that describes what you paid in SRP if you didn't have insurance -- blank. This gives even more incentive for young healthy adults to skirt the SRP entirely and avoid buying health insurance.

Essentially, what the American public wants in a healthcare plan doesn't make financial sense.

Fixing Obamacare is bound to be unpopular

To date, all of the repeal-and-replace proposals brought forth by the Republican Party in Congress would look to shore up the shortcomings of Obamacare. Options like the reinstitution of catastrophic plans, which have low premiums and high deductibles, could appeal to healthier young adults who don't head to the doctor much. Other changes, like allowing insurance companies the ability to charge seniors five times as much as younger adults, as opposed to three times as much under the ACA, are designed to make a replacement plan more sustainable to insurers over the long run.

There's no pleasing both sides. Requiring seniors to pay more for premiums because they get sick more often means less money for these folks before retirement -- and if you haven't noticed, we're not exactly good at saving money in this country. Giving more flexibility in premium pricing may also hurt those with pre-existing conditions. Similarly, cutting back or eliminating the subsidies tied to Obamacare could prove crippling to low-income individuals and families.

No matter how the string is pulled, someone loses, meaning any change to Obamacare from its current form is probably going to be unpopular with the public. What I can say with relative certainty is that the public's dream plan, based on InsuranceQuotes.com's survey, almost certainly isn't economically viable.

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