‘Buying it yourself’ means buying nothing: The nightmare of pre-ACA insurance, which President Trump is trying to revive
There’s a claim floating around that people can “buy their own insurance, which is much better, for much less money.”
But that’s misleading.
Before the Affordable Care Act (ACA), insurance companies were urging Americans to purchase their own insurance—essentially a call to take personal responsibility. It sounded easy, right? Just shop around for what you need.
In reality, though, things were quite different. About 18% of applicants were denied coverage outright. Often, not for reckless behavior but due to pre-existing conditions. Conditions like sinusitis, taking antidepressants, having had knee surgery, or even being pregnant.
For those who didn’t get outright rejected, there was a game of “medical underwriting.” It involved a long process of filling out forms detailing every doctor visit and health issue over the last decade. The insurance company would then determine if you were too risky to cover.
If you somehow made it through this hurdle, you might be offered a policy at, say, 200%, 300%, or 400% of the normal rate. Imagine having metastatic cancer at 40 years old—that could tacking on an additional premium of $142,650 per year. And if you have rheumatoid arthritis? Add $26,580. Even something like uncomplicated diabetes could mean a $5,600 increase. Oh, and having a baby? That’s at least $17,320+.
Conditions like depression, asthma, and high cholesterol? They could either get you denied coverage or push your rates way up.
Reports that were not made
Then, of course, you got sick.
Before the ACA, a staggering 62% of individual market plans didn’t cover maternity care. 34% of plans excluded substance use treatment, while 18% offered no mental health services at all. And 9% didn’t cover prescription drugs.
Want those “extra perks”? Sure. But be prepared to cough up an extra $800 each month for each benefit, on top of your regular premiums.
Even if a plan claimed to cover something, it often had annual or lifetime limits. Research shows 59% of employer plans and 89% of individual market plans had these lifetime caps—usually somewhere between $1 million and $5 million.
You might think that seems like a long way off before you’d reach that limit. But consider premature babies who can be in the NICU for months. Or if you’re in a serious car accident. Once you hit that cap, the insurance company stops paying, and every expense is now your responsibility.
Many plans had period limits before the ACA. Once you hit it, you were done. Left without coverage. Facing bankruptcy or worse.
Trap of existing conditions
Here’s how it often went: You had insurance through your job, and then you were diagnosed with a condition. Whether it was diabetes, multiple sclerosis, or cancer, the situation became tricky if you lost your job or changed employers, especially since many companies would terminate your coverage.
Now, you need individual insurance but have a chronic illness.
Chances are? Denied.
Or maybe you’d find a plan that excluded treatment for your condition—maybe for 6 months, a year, or even longer.
Around 27% of non-elderly adults had conditions that made them uninsurable before the ACA—not even serious illnesses. Insurers simply didn’t want to deal with things like asthma, arthritis, high blood pressure, and even past mental health treatment.
Somewhere between 50 million and 129 million Americans had pre-existing conditions that could lead to denial before the ACA. Imagine a newborn denied coverage because of a minor condition that typically resolves on its own, only for them to need an expensive $90,000 surgery later. The insurance company would refuse to pay, calling it a pre-existing condition—the state would end up covering that cost.
Or consider someone with a history of sinusitis and depression who struggled to get insurance for years after starting their own business. Eventually, after a lengthy process, he got a high-deductible plan, but only after his agent spent a lot of time negotiating with the insurer.
What the ACA actually fixed
From 2014 onward, the ACA made some significant changes:
- Denial of coverage based on pre-existing conditions is no longer an option. The insurer has to provide coverage—end of story.
- Insurance premiums can’t rise just because of your health condition. Adjustments are allowed only based on age, location, and tobacco use.
- No more lifetime or annual caps on essential health benefits. This means you won’t hit a limit and lose coverage.
- No exclusions for pre-existing conditions. If it’s covered, it has to be covered regardless of when you enrolled.
The law also mandates that plans must provide 10 categories of Essential Health Benefits including hospitalization and preventive care, with no annual or lifetime dollar limits.
A cap was also placed on out-of-pocket expenses—$7,150 for individuals and $14,300 for families in 2017. Prior to the ACA, 17% of those with employer insurance faced no max at all, allowing for unlimited fees.
The “fat cat” lie
Some say insurance companies are “fat cats” benefiting from a “corrupt system.”
It’s true that they profit, but the ACA introduced provisions like medical loss rate rules, requiring insurers to spend at least 80% of premiums on actual care (85% for larger groups). If they don’t, they have to refund the excess to their customers.
Before the ACA, insurance companies could essentially pocket whatever they wanted after paying for care.
The real “rotten system” existed prior to the ACA.
What will happen if I go back
If the ACA is repealed, we will see a return to:
- Denial of coverage for pre-existing conditions
- Significant increases in premiums for those with health histories
- Plans excluding maternity care and mental health services
- Lifetime and annual benefit limits
- No limit on co-payment amounts
109 million Americans would lose protections against lifetime restrictions, and 24 million might lose protections against unlimited copays.
Some states may attempt to reinstate older protections, but those protections didn’t work well in the past. Most people avoided those plans. Why? Because you really need subsidies to make insurance affordable, especially for healthy people, and those come from the government.
Conclusion
The notion that people could “buy their own insurance that’s much better and cheaper” without the ACA is, at best, naive. It’s like forgetting the past.
We tried that system. It didn’t work. At all.
Sure, the ACA is not flawless. Many still find premiums too high, networks too narrow, and deductibles a burden. There’s a lot to improve.
But regressing to past practices isn’t the answer. That would be a disaster.
