One of the complaints about the Affordable Care Act (ACA, also known as Obamacare) is that for some people it contributed to an increase in the premiums they had to pay for health insurance. The observation was made that they were being forced to pay for health insurance that included more "essential health benefits" than they had previously had, and that drove up premium costs. Metaphorically, they were being forced to buy a Cadillac when they had been perfectly content with a Chevette.
Insurance is a mechanism for sharing risk. Thus it works best when everyone participates. If people with low risk opt out, choosing to go without insurance and take their chances, and only people at higher risk (or who are most risk-averse) are in the "risk pool," premium costs will be higher. The people who are uninsured may get sick or hurt and require care that they then cannot afford. Most likely that care will be provided anyway, resulting in their financial ruin, and since they will be unable to pay for it, the cost of that care must be spread among all who do buy into the risk pool.
This is the rationale for requiring everyone to play. This was also the trade-off for getting the insurance companies to drop their exclusion of pre-existing conditions. If you are not allowed to wait until you get sick or hurt and NEED coverage to buy it, there can be no justification for denying you coverage for a problem you already had when you bought insurance.
So, what about this "essential benefits" package? Why do we have to do that? Why pay for coverage we think we will never need and didn't have before?
When you buy auto insurance, there is something called "comprehensive" coverage, which covers everything other than collisions. So if someone dumps a bucket of red paint on your white car, it's covered. Likewise if you return to the car you parked in a high-risk neighborhood and find it perched on blocks with its wheels missing, or someone's ex-girlfriend mistook your car for that of her jerk of an ex-boyfriend and carved obscenities into most of the painted surfaces, or she took a baseball bat to the hood and fenders. Or maybe you parked it under a tree with a limb you didn't realize was dead and which then fell onto the roof while you were in a nearby store stocking up on beer for this weekend's March Madness games.
You wouldn't think the coverage was very comprehensive if, for example, it didn't cover damage to your car caused by someone who didn't like you, and the insurance company thought you had it coming, or the policy excluded "acts of God," and the insurance company, declaring God all-powerful, used that to refuse to pay for just about anything.
So, back to health insurance. Suppose you were presented with a long list of things that could be covered or not. You could go through and pick all the things that you thought would be expensive and that you were unlikely to need, and leave them out, thereby lowering your premiums. The insurance company would then do an actuarial (risk) analysis and charge you an accordingly low premium. But maybe your assessment of your own risk was wrong, or you were just unlucky, and now you have expenses that aren't covered because of the choices you made. You are now in the same situation you would have been in if you had been able to decide not to buy insurance at all.
To prevent this, policymakers had to decide what coverage everyone should have to buy. Inevitably it includes something you will never need. It may cover expenses related to pregnancy, and if you are a middle-aged widower, you may be quite correct in thinking that is coverage you will never need. Similarly, you may not want to pay for coverage for mental illness if you have never had one and have no family history of that, but mental health problems are common, and it may be very expensive if you're wrong in your risk assessment.
But many people deride the ACA - especially the "Affordable" part of its name - if it made their premiums go up because they had to pay for coverage they never had before.
Here's a policy you can almost certainly afford: it will cover you for injuries sustained if you step on a land mine near your home in rural Iowa. No other risks to your health are covered. Oh, and you are on the hook for the first $10,000 in expenses, but after that the insurance policy kicks in. I can assure you, the premiums for this coverage will be VERY affordable. And the value of the coverage to you will be essentially nil. This will really be the same as having no health insurance at all, unless your Iowa neighbors take a strong dislike to you and start planting landmines along the perimeter of your property. By reputation, at least, Iowans are not like that.
The now-proposed American Health Care Act (AHCA) will allow people to buy health insurance that is much less comprehensive than under the ACA. The appeal of lower premiums with such an approach is strong. The AHCA's critics from the right call it "Obamacare lite." (Tastes great, less filling, right?) Because if it still requires you to have health insurance, it's still an unacceptable government intrusion into your life.
Until you find out that what wasn't included in your new policy is something you actually need. Oh, no! Why did Uncle Sam say it was OK to buy coverage that didn't include the costs of rehab after the surgery for my broken hip? Why didn't anyone tell me I should pay for maternity benefits even though I wasn't planning ever to get pregnant because life doesn't always go as planned?
If there is an essential benefits package, that everyone pays for, then there is enough money going into the risk pool, and everyone is covered for all the things the experts say the average American may need. That's how risk sharing works.
Maybe you think that's just too costly. There are many other ways of reducing costs. Skimping on coverage is the wrong approach.
