Letter to my Representative about the Affordable Care Act

270 Fulton Street
Palo Alto, California 94301
November 13, 2013

The Honorable Anna G. Eshoo
698 Emerson St
Palo Alto, California  94301-1609

Dear Representative Eshoo,

Thank you for your letter of November 8 and your e-mail of November 11, 2013. I am impressed by your emotional commitment to the Affordable Care Act, but I repeat my observation that it is an economic and medical disaster.

The new "comprehensive" plan I am now required to purchase costs $4100 per year more than my old plan, which had a maximum annual out-of-pocket of $5000. There is no scenario in which I personally am not damaged - by thousands of dollars a year. You repeat the patently false assertion that "nothing in the ACA required your insurer to cancel your insurance policy." But mine was exactly the kind of plan that ACA was designed to ban - my old plan gave me an incentive to look for value in my medical care, and take responsibility for my own health. It was very precisely ACA-mandated modifications than canceled plans like mine and drove my premium from $295 per month to $637.

You make many claims in defense of ACA - but if you think about them, none make any sense:

• A ban on lifetime caps is a barrier to a robust, affordable health care system - exactly the opposite of what you suggest.
• Banning discrimination based on pre-existing conditions invites adverse selection, and is an incentive to not get a health plan - exactly the opposite of what you suggest. Healthy people - most of the population - can now join the health insurance system only if they get sick.
• Bankruptcy is the appropriate outcome for people who accept medical care they can't afford. It clears the books and allows them start afresh. Making that a general obligation provides yet another perverse incentive to not save, to not buy health insurance, to not be a responsible person.
• Preventive medicine (like cholesterol screening) is a waste of money: the scientific evidence on this is clear. Also, preventive care and screening do not have the characteristics of insurable expenses. Mandating this coverage for all people is an example of how the ACA unnecessarily raises health care costs, increases demand without regard to supply, and encourages wasteful overtreatment. Removing copays makes this mistake even worse.
• Pediatric dental care involves small and predictable expenses, and is a direct result of a decision to have children. It has none of the characteristics of an insurable risk. I raised three children and their dental bills were just one of many predictable costs. In contrast, cancer treatment is relatively rare and expensive, and thus suitable for insurance protection and risk-sharing. I am surprised that you confounded these two very different problems.
• Your statement that the ACA "requirement" that people have "comprehensive health insurance… makes insurance more available and affordable for people who are likely to have such costs while creating incentives for people who might have high-cost health needs in the future to get coverage" is nonsense. In fact, "comprehensive" health plans are a priori less affordable. The ACA creates incentives for people who don't need insurance now to avoid expensive coverage and instead pay (or not pay) a modest penalty. This will make coverage less and less affordable in the future as adverse selection dominates the insured population.
• The requirement that "insurers have to spend at least 80 percent of your premiums on actual care, not overhead costs" is merely protection for incumbent insurance companies (whose shares have been climbing steadily thanks to your largesse). It is a throttle on innovation and investment, and a long-term guarantee that health plan costs will rise. I wish you would promote the wonderful American economic system, rather than attacking it. And if you are going to attack business profits, I hope you will be fair about it and also attack Apple and Intel and Google.
• The ACA doesn't offer any new "investments in public health." Indeed, it has many clauses that will reduce investment - by taxing medical equipment and by capping profits.

I hope you will take some time to defend the substantial marriage penalty and extraordinary effective marginal tax rates imposed by the ACA. If two single people each earning $20,000 per year marry, they lose a healthcare subsidy of $1269 per year - and that's on top of various other marriage penalties that fall particularly heavily on families struggling to climb the economic ladder. It is monstrous to promote a system where people are actually better off keeping their income low - but that's exactly what the ACA does, in too many cases.

The ACA will be the direct cause of huge increases in health care costs. It arms more and more people with third party reimbursement. It punishes the poor. It discourages high deductible health plans which gave consumers an incentive to seek value for our healthcare dollars. It has cut worker hours and eliminated jobs.

Here are some ideas for sensible health care reform:

• Give individuals the same favorable tax treatment for insurance premiums that employers have.
• Require employers to list health care benefit costs on the W-2, so employees can decide whether they actually want their compensation to go to gold-plated health plans.
• Give Alabama, California, and New Jersey incentives to harmonize HSA tax treatment with Federal law.
• Allow insurance companies to cap coverage. If we have the moral and political will to fund extreme and tragic cases, then let the government explicitly reinsure these risks.
• Require hospitals to post price lists and quote firm, all-in prices.
• People who pay cash in advance for health care should always get the best price.
• Require significant copays and coinsurance in all health plans - including Medicaid - so all consumers have an incentive to seek value. Apply the copays to check-ups and screening; let consumers decide if those are worth the money. Exempt only public health benefits like vaccinations. Apply excise taxes to "comprehensive health plans" to discourage their use.
• Strengthen the old "guaranteed issue" rules where anyone with continuous "creditable coverage" is guaranteed an affordable policy subject to cohort-based underwriting.
• End the mandate requiring insurers to allow children to stay on their parents' health insurance plan after age 18. We as a society want to encourage young people to form their own households and take responsibility for their own lives.
• Pediatric dental care and normal maternity care offer important societal benefits - but these do not have the characteristics of insurable expenses, and they should not be mandated coverages. Any subsidies should be provided through tax credits or a comprehensive welfare system.
• End coverage mandates for acupuncture, experimental therapies, talking psychotherapy, chiropractic, on-patent drugs, and other medical treatments that are not essential to good medical care. Allow these items to be covered optionally. Also, encourage optional coverage with separate pricing for expensive therapies with marginal benefit, like left ventricular assist devices, bone marrow transplants, and so on.
• Remove the marriage penalties and discontinuities in subsidies to low-income people. There should always be a positive financial incentive to marry (and never a positive incentive to divorce), and no person with below-median income should ever face an effective marginal tax rate higher than 40%.

Over the next few years we will all see how your changes to our health care system work out. You as a Member of Congress have exempted yourself from the system you created. I am very sad that I was not able to do the same, and I am quite certain that my grandchildren and yours will not get good medical care unless the horrific "Affordable Care Act" is reversed.

Thank you for your consideration.