What Happened to Our Healthcare System?

On October 4, 2016, former President Bill Clinton had some choice words for the Affordable Care Act (ACA), also known as Obamacare. He pointed out that the ACA has failed to help small business owners or individuals who make just over the ACA requirement for discounted insurance.

For example, in 2015, if a single individual made $47,000 a year, then they would not qualify for a subsidy. To qualify for a subsidy, a single individual must make less than $46,680 a year. But if you happen to make $46,680 or more, like $47,000, then does that mean you can afford an individual healthcare plan? No, probably not.

The ACA was supposed to fix the healthcare system and make insurance affordable for everyone, so every person can be covered. Yet, studies show that around 29 million individuals are still uninsured and the price of health insurance is still unaffordable for a large number of the U.S. population.

How did we get here? Where did we go wrong?

The 2008 Recession and How It Got Us Here, Today

In 2000, 83% of employees in the work force worked +35 hours and were considered to be full-time employees and 17% were part-time employees. But after the 2008 recession, full-time employment dropped to 80% and part-time employment went up to 20.1%. While the change in percentage does not seem significant, it was the start of a massive shift in the job market.

But why did this shift occur? After the recession, companies that were still in business had to find ways to cut costs in order to stay open. Under federal law, businesses with a certain number of employees must offer certain benefits, like health insurance. On average, employers cover 83% of the cost of the premium of an individual and 72% of the premium for a family. Employees still need to cover a portion of the health insurance premium, but how can they afford the cost if the price of insurance is rising and personal income remains the same, or drops?

In 2008, the cost of individual insurance rose by 5% and family insurance rose by 4.7%, while personal income dropped by 0.4%. But in 2009, the cost of individual insurance rose by 2.6% and family insurance rose by 5.5%, yet personal income dropped by 5.6%.

Health insurance companies need to make a profit, even though most citizens cannot afford to purchase health insurance. During the recession, the cost of healthcare coverage either remained the same or increased. Whereas earned income during the recession dropped, by 5.6%. A person who earned $47,000 a year in 2007 would have found their income drop to around $44,400 in 2009. But only if they were lucky enough to keep their job, since the unemployment rate in 2007 was 4.6% and in 2009 it rose to 9.3%.

But Where Does This Leave Us?

Recent numbers show that in 2017, insurance premiums under Obamacare will go up 25%. Despite the 2008 Recession, health insurance companies are managing to make record profits.

While the majority of U.S. citizens were losing their jobs, making less money, and/or losing their savings, the U.S. healthcare insurance companies were making record profits. The five largest insurance companies made $12.2 billion in profit in 2009, compared to the $4.4 billion they made in 2008. In 2009, 2.7 million Americans lost their health coverage.

Obamacare was enacted in 2010, with the goal of expanding Medicaid and giving federal subsidies to help middle and lower-class Americans buy private coverage. It began with the belief that, in 2014, around 3.5 million Americans will enroll in Medicaid, but in reality 6.8 million individuals enrolled.

To enroll in Medicaid, an individual has to make less than $16,243 a year, just $4,363 above the federal poverty level of $11,880. So in 2014, 6.8 million Americans hover just above, or below, what is considered to be absolute poverty.

But, in times of wealth or poverty, people will continue to get sick. When healthcare is indispensable, yet unaffordable, then health insurance is just as necessary. When our system is over-burdened and our economy is recovering from a recession, it is not surprising that the Affordable Care Act has yet to meet expectations.