The Three-Legged Stool Obamacare is built around what is commonly referred to as the “three-legged stool”. The first leg tackles price discrimination in the non-group insurance market. Limits are imposed on insurance providers, establishing how prices of non-group insurance can vary from person to person. Prices can be affected by age and smoking status. However, restricting insurance companies from price discriminating will impose a problem in itself, as insurers will simply increase prices to account for free riders (people who purchase insurance when they are in need only) or just secede from providing insurance at all. Several states implemented just this first part of Obamacare in 1990, with every single state experiencing a large increase
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The percentage of Americans uninsured has dropped from 16.4% to 11.9% from 2010 (year Obamacare was introduced) to 2015. Whilst this sounds like a positive change, access to healthcare has not improved. American consumers are increasingly inclined to forego medical care, due to the ever-increasing In-Network insurance deductibles. As many as 40% of Americans will forego medical care in 2015 compared to 29% in 2009. Deductibles have increased from $680 to $1200 over the same time period. It is evident that insurance providers do not agree with the prediction that an increased customer base will normalize the market risk. UnitedHealth, one of the biggest insurance providers in the United States has even indicated that it may drop out of the exchange policy market as they expected millions in losses. UnitedHealth’s actions suggest that in certain insurance markets, specifically the ones supported by subsidies, are unprofitable at any given price. If other insurance companies follow suite, certain insurance markets could face an adverse selection “death spiral”. With insurance firms raising premiums to account for increased risk, more consumers drop out, increasing the risk further inciting a continuous increase in insurance premiums and deductibles until the providers drop out of the market …show more content…
For example, many insurance packages cannot be used properly by consumers due to the substantial deductibles. Obamacare has managed to reduce the number of uninsured, but access to healthcare has not really been improved as American consumers still think healthcare is too expensive. The introduction of a maximum deductible or government provided insurance could have made the difference between a patient choosing preventative care, remedial care or even showing up to the doctor at all. The drawback of a maximum deductible or public insurance are the associated costs, which would have conflicted with the objective of reducing healthcare spending. It should be noted that the United states is one of the only OECD countries that does not provide universal
The percentage of Americans uninsured has dropped from 16.4% to 11.9% from 2010 (year Obamacare was introduced) to 2015. Whilst this sounds like a positive change, access to healthcare has not improved. American consumers are increasingly inclined to forego medical care, due to the ever-increasing In-Network insurance deductibles. As many as 40% of Americans will forego medical care in 2015 compared to 29% in 2009. Deductibles have increased from $680 to $1200 over the same time period. It is evident that insurance providers do not agree with the prediction that an increased customer base will normalize the market risk. UnitedHealth, one of the biggest insurance providers in the United States has even indicated that it may drop out of the exchange policy market as they expected millions in losses. UnitedHealth’s actions suggest that in certain insurance markets, specifically the ones supported by subsidies, are unprofitable at any given price. If other insurance companies follow suite, certain insurance markets could face an adverse selection “death spiral”. With insurance firms raising premiums to account for increased risk, more consumers drop out, increasing the risk further inciting a continuous increase in insurance premiums and deductibles until the providers drop out of the market …show more content…
For example, many insurance packages cannot be used properly by consumers due to the substantial deductibles. Obamacare has managed to reduce the number of uninsured, but access to healthcare has not really been improved as American consumers still think healthcare is too expensive. The introduction of a maximum deductible or government provided insurance could have made the difference between a patient choosing preventative care, remedial care or even showing up to the doctor at all. The drawback of a maximum deductible or public insurance are the associated costs, which would have conflicted with the objective of reducing healthcare spending. It should be noted that the United states is one of the only OECD countries that does not provide universal