The Affordable Care Act was a landmark piece of legislation for the United States. While most other G-20 countries already have some form of universal healthcare (either through a single payer system, or mandatory insurance coverage), the US was one of the few countries that did not have one. Arguably, however, it didn’t go far enough, and therein lies its biggest problem.

One of the key provisions in Obamacare was that insurers could not deny coverage based on pre-existing conditions. This was a hugely important for those with serious or chronic illnesses, who would normally be denied coverage. For example, diabetes can cost someone approximately $7900 a year in direct medical expenses, which is a hefty sum if you don’t have insurance coverage. Obamacare mandating that these individuals, and others with similar conditions, have to be able to purchase coverage, is an excellent step forward. However, the business of insurance relies on those who enrol but do not require services subsidising those who enrol and do. In terms of healthcare, this would be low risk people paying and not using services, ensuring high-risk individuals are able to access services. As you can imagine, there is very little incentive for low risk individuals to enrol; a phenomena known as “adverse selection.”

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