WEBVTT

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Imagine writing a law that forces every single

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American citizen to buy a product from a private

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for -profit company and doing it under the threat

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of a financial penalty from the federal government.

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I mean, on its face, that sounds like either

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a progressive big government nightmare or, you

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know, a hyper -capitalist dystopia, depending

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on your perspective. Building entirely on where

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you sit, yeah. But what if I told you the fundamental

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blueprint for that mandate, the most fiercely

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contested polarizing part of the Affordable Care

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Act, was actually dreamed up by a prominent conservative

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think tank back in 1989? It completely upends

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the conventional narrative. I mean, we tend to

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view these massive pieces of legislation as pure

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ideological victories for one side or the other.

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Exactly. But when you actually look at the architecture

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of the ACA, it is this bizarre. deeply compromised

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fusion of competing economic theories. And today

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we are taking a crowbar to that architecture.

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We are basically ripping the partisan politics

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right out of the Affordable Care Act to look

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solely at the plumbing of the policy mechanics,

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just the mechanics. So if you are tuning into

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this deep dive, maybe you're preparing for a

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major policy debate or trying to wrap your head

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around health care economics for a class or or

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maybe just trying to understand the invisible

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forces dictating your own medical bills. Right.

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Our mission today is to demystify this behemoth

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of a law. We are zeroing in on the primary regulatory

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changes that rewrote the individual insurance

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market, the massive expansion of Medicaid for

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low -income Americans, and those incredibly unexpected

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bipartisan origins that made it all happen. But

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before we dig into those mechanisms, we really

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have to establish a clear boundary for this conversation.

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Yeah, this is crucial. The source material we're

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unpacking today It contains heavily documented

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history and some highly, highly charged debates

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that span the entire political spectrum. From

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the far left to the far right. So I want to speak

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directly to you, the listener, for a second to

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make this absolutely unequivocally clear. We

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are not taking any sides today. Not at all. We

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are not endorsing the viewpoints of the original

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sources or the politicians mention, the critics,

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the advocates, nothing. Our job is strictly to

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act as your impartial guides through the text

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provided. We are just here to map out the factual

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mechanics, the historical timeline and the documented

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impacts contained in the research. The politics

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stay at the door. And setting that stage requires

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grasping the sheer scale of what we are talking

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about. It really does. When the Affordable Care

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Act was signed into law on March 23, 2010. It

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wasn't just like a tweak to the system. Right.

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It represented the single most significant regulatory

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overhaul and expansion of coverage in the U .S.

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health care system since Medicare and Medicaid

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were enacted in 1965. That's a huge deal. So

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to understand why it looks the way it does, why

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the drafters decided to heavily regulate private

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insurance companies rather than just burning

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the system down and building a single payer government

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run system from scratch, we actually have to

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rewind the clock. We do. We need to go back to

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the in the 1980s and examine a very specific

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quiet crisis that was bubbling up in emergency

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rooms. Yeah, tell us about that crisis. Well,

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it's known in economics as the free rider problem.

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And its modern health care origins trace back

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to a federal law passed in 1986 called MTELA.

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MTELA. Right, the Emergency Medical Treatment

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and Active Labor Act. OK. MTELA essentially mandated

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that any hospital participating in Medicare,

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which is, you know, Almost every hospital in

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the country must provide stabilizing emergency

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care to anyone who walks through their doors

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Regardless of ability to pay exactly regardless

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of ability to pay citizenship status or whether

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they have insurance And, I mean, on a human level,

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that makes perfect sense. If someone collapses

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on the sidewalk with a heart attack, the paramedics

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and the ER doctors shouldn't be rifling through

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the patient's wallet to check their credit score

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before charging the defibrillator? No, of course

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not. You stabilize the human being first. Morally,

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it's unquestionable. Economically, however, it

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created a massive structural distortion in the

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market. Because the care isn't actually free.

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Right. The resources used in that emergency room,

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the trauma surgeons, the MRI machines, the surgical

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suites, the medications, none of that is free.

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It all costs an absolute fortune. So when an

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uninsured patient racks up a $50 ,000 ER bill

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and simply cannot pay it, that debt doesn't just

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vanish into the ether. It doesn't. The hospital

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absorbs the blow initially. But hospitals have

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incredibly tight operating margins. They can't

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just write off millions in uncompensated care

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and keep the lights on. So they have to find

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a way to make up that lost revenue. And they

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do it through cost shifting. To cover the losses

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from the uninsured, hospitals incrementally raise

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the prices they charge for everything else. They

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charge higher rates to the private insurance

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companies for routine procedures, hospital stays,

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diagnostics. And the private insurance companies,

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in turn, are not going to just accept lower profit

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margins. So they pass those higher costs directly

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onto employers and individuals. Exactly. In the

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form of higher monthly premiums. Which means

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if I am responsibly buying health insurance every

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month, a portion of my premium is quietly being

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siphoned off to cover the emergency care of the

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uninsured. Yes. It acts as a massive, invisible

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tax levied on people who buy insurance, subsidizing

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those who don't. And that enamic creates a perverse

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incentive, doesn't it? It really does. If you

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are young, relatively healthy, and tight on cash,

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you might look at the system and think, Why should

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I pay hundreds of dollars a month for insurance?

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If I get hit by a bus, Amtelekey guarantees the

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ER will patch me up. You become a free rider

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on the system. Right. And this brings us back

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to that surprising conservative origin story.

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Because the people who first looked at this free

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rider problem and proposed a structural market

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-based solution weren't progressive reformers.

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No, the most prominent early solution came from

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the Heritage Foundation in 1989. The Heritage

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Foundation. A conservative think tank. Exactly.

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They recognized that the hidden tax of uncompensated

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care was distorting the free market. So their

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solution was the individual mandate. They argued

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that if society guarantees you emergency care,

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then you have a personal responsibility to ensure

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you can pay for it. So you don't become a financial

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burden on your neighbors? Right. It was framed

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entirely around personal responsibility. Instead

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of the government taking over the health care

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system, which was the great fear surrounding

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single -payer proposals, the government would

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simply mandate that citizens engage with the

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private market. And that concept didn't just

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stay locked in a think tank, right? No. It became

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the centerpiece of Republican legislative strategy

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in 1993. At the time, President Bill Clinton

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was pushing a massive, sweeping health care reform

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package. Often dubbed Hillary Care. Yes, Hillary

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Care. And it centered heavily on an employer

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mandate, forcing businesses to provide insurance.

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The pushback against that was fierce. Unbelievably

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fierce. And in response, Republicans in Congress,

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led by figures like John Chafee, Orrin Hatch,

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Bob Bennett and Chuck Grassley, introduced an

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alternative called the HEART Act. The Health

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Equity and Access Reform Today Act. Act is essentially

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the skeletal blueprint for what would become

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the Affordable Care Act. It featured an individual

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mandate requiring every citizen to buy insurance,

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a financial penalty for those who refused, and

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federal subsidies to help low -income people

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purchase private plans through state -based purchasing

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groups. What strikes me as so bizarre looking

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back at the historical record is the rhetoric.

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I mean, today, the individual mandate is often

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attacked as an unprecedented overreach of federal

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power. Oh, absolutely. But in 1993, the proponents

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of the Hart Act weren't raising constitutional

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alarms about forcing citizens to buy a product.

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Not at all. The economic consensus at the time,

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particularly among conservative economists like

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Mark Pauley, who advised the George H .W. Bush

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administration, was incredibly pragmatic. They

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viewed the mandate's penalty not as a a tyrannical

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infringement on liberty, but essentially as a

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tax. Exactly. Even the Congressional Budget Office,

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the CBO, modeled it as a revenue generating tax

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in 1994. It was just seen as a standard economic

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lever to correct a market failure. So you have

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the structure, the mandate, the subsidies, the

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private purchasing pools, that was fundamentally

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conservative in its origin. Yeah. But how does

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that merge with the democratic push for reform

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over a decade later? Our sources point heavily

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to a shift in the academic perspective on health

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care spending, championed by a man named Peter

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Orszag. Ah, Peter Orszag. He's a crucial, if

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wonky, figure in this history. He served as President

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Obama's director of the Office of Management

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and Budget. And he viewed the health care crisis

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almost entirely through the lens of data, right?

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Data, efficiency, and cost -benefit analysis.

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He was deeply, deeply influenced by a concept

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called comparative effectiveness. Which is basically

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the idea of looking at hard empirical data to

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determine which medical treatments actually yield

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positive health outcomes and which ones are just

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billing padding. Precisely. And the holy grail

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of this data was the Dartmouth Atlas of Health

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Care, spearheaded by a researcher named John

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E. Wenberg. The Dartmouth researcher spent years

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analyzing Medicare claims data across the country.

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And what they found was just staggering. What

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did they find? They found massive, inexplicable

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variations in how much Medicare spent per patient,

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depending on where that patient lived. And there

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is a legendary anecdote about this that perfectly

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illustrates the impact of the data. During the

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early days of formulating the ACA, President

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Obama supposedly made his entire senior staff

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read an article in The New Yorker by Atul Gawande

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that highlighted this Dartmouth research. I remember

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that. Yeah. It compared two counties in Texas,

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McAllen, and El Paso. Demographically, medically,

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they were very similar. But Medicare was spending

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vastly more money per enrollee in McAllen than

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in El Paso. And the critical finding wasn't just

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the cost difference. If McAllen was spending

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twice as much and their seniors were living longer,

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healthier lives. That would be one thing. Right.

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You'd say, OK, they're getting what they pay

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for. Exactly. But the outcomes were identical,

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or in some cases even worse. The extra spending

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wasn't buying better health. There was the money

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going then. It was going toward volume. The traditional

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American health care system operates on a fee

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-for -service model. Doctors and hospitals are

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paid for every single thing they do. Every blood

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test. Every blood test, every MRI, every day

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in a hospital bed generates a separate bill.

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The system financially rewards doing more things,

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regardless of whether those things are medically

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necessary or effective. So a doctor in a fee

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-for -service system might order a third MRI

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just to be absolutely, 100 % sure, knowing the

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hospital gets paid for it, rather than relying

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on the first two. It's an incentive structure

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that practically begs for overtreatment. So ORSAC

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and the reformers looked at that Dartmouth data

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and saw a gold mine. They really did. They theorized

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that if they could write a law that fundamentally

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changed those incentives, moving away from paying

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for volume and toward paying for value and outcomes,

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they could wring hundreds of billions of dollars

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of waste out of the system. And that saved money

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could then theoretically fund the massive subsidies

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needed to cover the uninsured. That was the theory.

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It's a fascinating theoretical marriage. You

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take the conservative market -based structure

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of the individual mandate to solve the free rider

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problem, and you graft it onto this technocratic,

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data -driven progressive obsession with wringing

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out systemic inefficiencies. It's very elegant

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on a whiteboard. Yeah, but taking that elegant

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whiteboard theory and turning it into past legislation

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between 2008 and 2010 was an absolute bloodbath.

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The legislative gauntlet the ACA ran is historic.

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I mean, the Democrats, despite holding the presidency

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and majorities in both houses, knew they didn't

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have the political capital or the 60 votes required

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in the Senate to pass a single -payer system.

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That's why they actively chose to build on that

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1990s bipartisan framework. They believed it

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would attract moderate Republican support. And

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they spent months trying to get it. The Senate

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Finance Committee, composed of three Democrats,

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Max Baucus, Jeff Bingham, and Kent Conrad, and

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three Republicans, Mike Enzi, Chuck Grassley,

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Olympia Snowmet, for over 60 hours in grueling

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closed -door sessions trying to hammer out a

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bipartisan compromise. But outside those committee

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room doors, the political landscape was shifting

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violently. The summer of 2009 saw the rise of

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the Tea Party movement. Oh, the town halls. Town

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hall meetings across the country erupted into

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shouting matches. The narrative shifted from

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technical debates over comparative effectiveness

00:12:42.669 --> 00:12:46.129
to existential fears about government overreach,

00:12:46.649 --> 00:12:49.649
socialism, and the sheer staggering cost of the

00:12:49.649 --> 00:12:52.190
proposed subsidies. And because of that, the

00:12:52.190 --> 00:12:54.590
political calculus for Republicans entirely flipped.

00:12:55.070 --> 00:12:57.269
It was no longer advantageous to negotiate a

00:12:57.269 --> 00:13:00.009
compromise. The mandate from their base was to

00:13:00.009 --> 00:13:03.019
block the legislation entirely. Which meant Democrats

00:13:03.019 --> 00:13:05.259
were going to have to pass it alone. Right. But

00:13:05.259 --> 00:13:08.299
they still had to navigate the arcane, incredibly

00:13:08.299 --> 00:13:11.059
strict rules of the Senate. Which brings us to

00:13:11.059 --> 00:13:14.159
the first major hurdle, the Constitution itself.

00:13:14.460 --> 00:13:17.139
Yes. The Constitution requires that all bills

00:13:17.139 --> 00:13:19.720
dealing with revenue taxes and spending must

00:13:19.720 --> 00:13:22.169
originate in the House of Representatives. But

00:13:22.169 --> 00:13:24.470
the Senate was the chamber that had finally crafted

00:13:24.470 --> 00:13:27.490
a fragile 60 -vote compromise bill. So they couldn't

00:13:27.490 --> 00:13:29.970
just introduce their bill? No. They had to design

00:13:29.970 --> 00:13:32.330
a bill that had already passed the House to legally

00:13:32.330 --> 00:13:34.610
serve as a vehicle. This leads to one of the

00:13:34.610 --> 00:13:36.870
most bizarre parliamentary maneuvers in modern

00:13:36.870 --> 00:13:41.169
history. They found H .R. 3590. Which was originally

00:13:41.169 --> 00:13:44.029
a relatively minor bill altering housing tax

00:13:44.029 --> 00:13:46.169
credits for service members. Right. And the Senate

00:13:46.169 --> 00:13:48.990
took that House -passed bill, gutted every single

00:13:48.990 --> 00:13:51.509
word of the original text, and pasted in the

00:13:51.509 --> 00:13:53.450
thousands of pages of the Affordable Care Act.

00:13:53.769 --> 00:13:56.549
A massive legislative Trojan horse. And they

00:13:56.549 --> 00:13:59.610
managed to hold exactly 60 Democratic votes to

00:13:59.610 --> 00:14:03.190
pass it on Christmas Eve 2009. The plan was then

00:14:03.190 --> 00:14:05.769
for the House to pass their own version, combine

00:14:05.769 --> 00:14:08.049
the two at a conference committee, and vote on

00:14:08.049 --> 00:14:10.710
the final product. But then the political earth

00:14:10.710 --> 00:14:13.350
shifted again. Senator Ted Kennedy passed away.

00:14:13.409 --> 00:14:17.129
Wow. And in a stunning upset in the subsequent

00:14:17.129 --> 00:14:19.509
special election in Massachusetts, a Republican

00:14:19.509 --> 00:14:23.049
named Scott Brown won the seat, campaigning specifically

00:14:23.049 --> 00:14:26.049
on being the 41st vote to filibuster Obamacare.

00:14:26.200 --> 00:14:28.580
Suddenly, the Democrats only have 59 votes in

00:14:28.580 --> 00:14:31.059
the Senate. The super majority is gone. They

00:14:31.059 --> 00:14:33.919
can no longer pass a newly merged bill. If they

00:14:33.919 --> 00:14:35.899
change a single comma in the Senate bill, it

00:14:35.899 --> 00:14:38.159
has to go back for another 60 vote threshold,

00:14:38.399 --> 00:14:40.980
which they will lose. The entire effort was on

00:14:40.980 --> 00:14:43.580
the brink of collapse. The only procedural path

00:14:43.580 --> 00:14:46.320
forward was incredibly risky. What was it? The

00:14:46.320 --> 00:14:48.039
House of Representatives would have to swallow

00:14:48.039 --> 00:14:50.639
their pride, abandon their own preferred version

00:14:50.639 --> 00:14:53.679
of the bill and vote to pass the Senate's exact

00:14:53.679 --> 00:14:56.549
bill. Word for word. Because if they did that,

00:14:56.809 --> 00:14:59.409
it bypasses the Senate entirely and goes straight

00:14:59.409 --> 00:15:02.250
to the president's desk to become law. Exactly.

00:15:03.110 --> 00:15:05.509
But the House Democrats hated parts of the Senate

00:15:05.509 --> 00:15:08.389
bill. It didn't have the financial fixes and

00:15:08.389 --> 00:15:10.750
the subsidy levels they demanded. Which is where

00:15:10.750 --> 00:15:13.250
the obscure process of budget reconciliation

00:15:13.250 --> 00:15:16.309
comes into play. Yes. The plan was a two -step

00:15:16.309 --> 00:15:19.409
maneuver. First, the House passes the flawed

00:15:19.409 --> 00:15:22.539
Senate bill. Second, Both chambers immediately

00:15:22.539 --> 00:15:25.019
pass a separate fix -it bill using the budget

00:15:25.019 --> 00:15:27.740
reconciliation process. Let's pause and explain

00:15:27.740 --> 00:15:30.100
reconciliation because it is basically the cheat

00:15:30.100 --> 00:15:32.139
code of the U .S. Senate. Normally, as we said,

00:15:32.179 --> 00:15:34.440
you need 60 votes to break a filibuster. Right.

00:15:34.700 --> 00:15:37.240
But budget reconciliation is a special rule created

00:15:37.240 --> 00:15:39.899
in the 1970s that allows certain bills to pass

00:15:39.899 --> 00:15:42.600
with a simple majority of 51 votes. But there

00:15:42.600 --> 00:15:45.679
is a massive catch. known as the Byrd Rule. Because

00:15:45.679 --> 00:15:48.500
it bypasses the filibuster, a reconciliation

00:15:48.500 --> 00:15:51.080
bill must strictly, exclusively deal with the

00:15:51.080 --> 00:15:54.620
federal budget. Revenues, spending, and the debt

00:15:54.620 --> 00:15:57.840
limit. Yes. You cannot use it to make broad policy

00:15:57.840 --> 00:16:01.039
changes, create new non -budgetary regulations,

00:16:01.620 --> 00:16:04.460
or alter civil rights laws. And if a provision

00:16:04.460 --> 00:16:06.860
doesn't have a direct, significant impact on

00:16:06.860 --> 00:16:09.539
the budget, any senator can object, and it gets

00:16:09.539 --> 00:16:11.960
stripped out of the bill. This constraint almost

00:16:11.960 --> 00:16:14.700
killed the ACA at the 11th hour because of a

00:16:14.700 --> 00:16:17.200
group of pro -life Democrats in the House led

00:16:17.200 --> 00:16:20.080
by Representative Bart Stupak. Stupak and his

00:16:20.080 --> 00:16:22.120
coalition looked at the Senate bill and believed

00:16:22.120 --> 00:16:24.399
its language restricting federal funding for

00:16:24.399 --> 00:16:27.059
abortions was too weak. They feared the massive

00:16:27.059 --> 00:16:29.720
new federal subsidies would indirectly flow toward

00:16:29.720 --> 00:16:32.960
plans that covered elective abortions. They demanded

00:16:32.960 --> 00:16:34.919
stricter language before they would vote yes.

00:16:35.159 --> 00:16:37.620
But Democratic leadership couldn't just add stricter

00:16:37.620 --> 00:16:40.039
language into the reconciliation fix -it bill.

00:16:40.200 --> 00:16:43.480
Why? Because of the Byrd Rule. Right. Regulating

00:16:43.480 --> 00:16:46.019
abortion coverage is a policy change, not a strict

00:16:46.019 --> 00:16:48.580
budgetary arithmetic change. It would have been

00:16:48.580 --> 00:16:50.440
ruled out of order in the Senate. So as a total

00:16:50.440 --> 00:16:52.620
standoff, Stupak had enough votes to tank the

00:16:52.620 --> 00:16:55.340
entire House vote. The legislation was deadlocked

00:16:55.340 --> 00:16:58.039
until President Obama directly intervened. To

00:16:58.039 --> 00:17:00.820
secure the votes, Obama promised to issue an

00:17:00.820 --> 00:17:04.900
executive order, Order 13535, immediately upon

00:17:04.900 --> 00:17:06.680
signing the bill. And what did that order do?

00:17:06.920 --> 00:17:09.599
It explicitly reaffirmed the principles of the

00:17:09.599 --> 00:17:12.380
Hyde Amendment, ensuring that federal funds provided

00:17:12.380 --> 00:17:15.039
by the ACA could not be used for abortion services.

00:17:15.440 --> 00:17:18.000
That executive promise gave Stupak the political

00:17:18.000 --> 00:17:21.940
cover he needed. On March 21, 2010, the House

00:17:21.940 --> 00:17:24.319
passed the Senate bill by a razor thin margin

00:17:24.319 --> 00:17:27.380
of 219 to 212. Not a single Republican voted

00:17:27.380 --> 00:17:30.180
for it. Two days later, Obama signed it into

00:17:30.180 --> 00:17:33.170
law. That historical timeline is crucial because

00:17:33.170 --> 00:17:35.430
it explains the shape of the law. They didn't

00:17:35.430 --> 00:17:37.970
build a single payer system. No, they took the

00:17:37.970 --> 00:17:40.970
existing deeply flawed private individual insurance

00:17:40.970 --> 00:17:44.630
market and Decided to use federal power to completely

00:17:44.630 --> 00:17:46.690
rewrite the rules of how those private businesses

00:17:46.690 --> 00:17:48.869
operate Which brings us to the second major area

00:17:48.869 --> 00:17:51.269
of our deep dive Rewriting the rules because

00:17:51.269 --> 00:17:54.230
if you are going to force Americans to buy private

00:17:54.230 --> 00:17:56.670
insurance You have to ensure the product they

00:17:56.670 --> 00:17:59.130
are buying actually protects them. Absolutely

00:17:59.130 --> 00:18:01.859
because prior to the the individual insurance

00:18:01.859 --> 00:18:03.839
market was practically a predatory environment.

00:18:04.339 --> 00:18:07.240
Let's talk about that. If you received your insurance

00:18:07.240 --> 00:18:09.940
through a massive employer, like a Fortune 500

00:18:09.940 --> 00:18:12.799
company, you were generally shielded from the

00:18:12.799 --> 00:18:15.339
worst practices because the employer spread the

00:18:15.339 --> 00:18:17.700
risk over thousands of employees. Right. But

00:18:17.700 --> 00:18:20.359
if you were a freelancer, an entrepreneur, a

00:18:20.359 --> 00:18:23.359
gig worker, or an employee of a tiny, small business,

00:18:23.940 --> 00:18:26.200
you were thrust into the individual market. And

00:18:26.200 --> 00:18:28.799
in that market, insurers utilized a practice

00:18:28.799 --> 00:18:31.670
called medical underwriting. This is the era

00:18:31.670 --> 00:18:34.089
of pre -existing conditions. Explain the mechanics

00:18:34.089 --> 00:18:36.829
of medical underwriting. Well, an insurance company's

00:18:36.829 --> 00:18:39.910
primary goal is to assess and manage risk. In

00:18:39.910 --> 00:18:42.210
the old individual market when you applied for

00:18:42.210 --> 00:18:45.230
a policy, the insurer would scour your entire

00:18:45.230 --> 00:18:47.799
medical history. Digging through Everything everything

00:18:47.799 --> 00:18:50.000
and if they found any evidence of a pre -existing

00:18:50.000 --> 00:18:52.079
condition and we are not just talking about terminal

00:18:52.079 --> 00:18:54.380
cancer We were talking about asthma manageable

00:18:54.380 --> 00:18:57.619
type 2 diabetes a previous knee surgery or even

00:18:57.619 --> 00:19:00.380
a documented history of seasonal allergies or

00:19:00.380 --> 00:19:03.240
taking antidepressants They have the legal right

00:19:03.240 --> 00:19:06.240
to completely deny you coverage or if they did

00:19:06.240 --> 00:19:08.440
offer you a policy it would come with an explicit

00:19:08.440 --> 00:19:11.339
exclusion writer Yeah, exactly. They'd say we

00:19:11.339 --> 00:19:14.000
will insure you but we will not cover anything

00:19:14.000 --> 00:19:17.400
related to your asthma or your pain. Which defeats

00:19:17.400 --> 00:19:19.480
the purpose. Or they would utilize rescission.

00:19:19.559 --> 00:19:21.960
Wow, rescission is terrifying. It really is.

00:19:22.240 --> 00:19:24.279
This was a practice where an individual would

00:19:24.279 --> 00:19:27.640
pay their premiums faithfully for years, but

00:19:27.640 --> 00:19:29.720
then get diagnosed with an expensive illness,

00:19:30.279 --> 00:19:32.720
like breast cancer. And the moment the massive

00:19:32.720 --> 00:19:36.079
hospital bills hit the insurer's desk, the insurer

00:19:36.079 --> 00:19:38.480
would deploy a team to dig through the patient's

00:19:38.480 --> 00:19:40.839
original application from five years ago. Yes.

00:19:41.160 --> 00:19:44.400
If they found a single error, Say, the patient

00:19:44.400 --> 00:19:46.660
forgot to list a minor dermatology visit from

00:19:46.660 --> 00:19:49.539
their teenage years. The insurer would declare

00:19:49.539 --> 00:19:52.279
the application fraudulent and retroactively

00:19:52.279 --> 00:19:54.440
cancel the policy. Leaving the patient to face

00:19:54.440 --> 00:19:56.920
bankruptcy while fighting for their life. The

00:19:56.920 --> 00:19:59.279
Affordable Care Act obliterated those practices.

00:19:59.609 --> 00:20:02.349
they implemented a regulatory pillar called guaranteed

00:20:02.349 --> 00:20:05.049
issue. Under the ACA, it is federally illegal

00:20:05.049 --> 00:20:07.349
for an insurance company to deny coverage to

00:20:07.349 --> 00:20:10.789
any individual or refuse to renew a policy based

00:20:10.789 --> 00:20:13.410
on a pre -existing condition. If you apply during

00:20:13.410 --> 00:20:16.109
the open enrollment period, they must issue you

00:20:16.109 --> 00:20:19.069
a policy period. But guaranteed issue by itself

00:20:19.069 --> 00:20:21.769
is economically toothless, right? Completely.

00:20:21.990 --> 00:20:24.710
Because an insurer could theoretically say, fine,

00:20:24.769 --> 00:20:27.049
the law says I have to sell a policy to this

00:20:27.049 --> 00:20:30.500
diabetic applicant. I will price the monthly

00:20:30.500 --> 00:20:34.240
premium at $12 ,000 a month. It's a de facto

00:20:34.240 --> 00:20:37.859
denial. Exactly. To prevent that, the law coupled

00:20:37.859 --> 00:20:40.440
guaranteed issue with a pricing regulation called

00:20:40.440 --> 00:20:43.779
partial community rating. Community rating. Let's

00:20:43.779 --> 00:20:46.359
break that down. Community rating is an actuarial

00:20:46.359 --> 00:20:49.579
concept where everyone in a specific geographic

00:20:49.579 --> 00:20:53.039
area pays the exact same premium. regardless

00:20:53.039 --> 00:20:55.619
of their health status. And the ACA implemented

00:20:55.619 --> 00:20:58.380
a partial version of this. Under the new rules,

00:20:58.700 --> 00:21:00.700
an insurance company is only allowed to vary

00:21:00.700 --> 00:21:03.059
the price of a premium based on four distinct

00:21:03.059 --> 00:21:06.519
factors. Age, geographic location, family size,

00:21:06.680 --> 00:21:08.680
and tobacco use. That's it. They cannot charge

00:21:08.680 --> 00:21:10.940
you a penny more because you have cancer or because

00:21:10.940 --> 00:21:12.880
you are a woman, which, you know, was common

00:21:12.880 --> 00:21:14.920
practice prior to the law, charging women more

00:21:14.920 --> 00:21:17.220
because of potential maternity costs. And even

00:21:17.220 --> 00:21:19.740
on the age factor, the law implemented strict

00:21:19.740 --> 00:21:21.799
guardrails. They instituted a three -to -one

00:21:21.799 --> 00:21:24.339
age banding rule. What does that mean? This means

00:21:24.339 --> 00:21:26.980
that an insurance company cannot charge their

00:21:26.980 --> 00:21:29.880
oldest applicant, say, a 64 -year -old, more

00:21:29.880 --> 00:21:32.220
than three times what they charge their youngest

00:21:32.220 --> 00:21:34.930
adult applicants, like a 21 -year -old. Let's

00:21:34.930 --> 00:21:37.349
dig into the math of that 3 to 1 ratio, because

00:21:37.349 --> 00:21:40.829
it is the source of massive friction. Actuarially

00:21:40.829 --> 00:21:43.529
speaking, a 64 -year -old generally consumes

00:21:43.529 --> 00:21:45.710
far more than three times the health care of

00:21:45.710 --> 00:21:48.490
a 21 -year -old. Oh, absolutely. The true cost

00:21:48.490 --> 00:21:52.730
ratio is often closer to 5 to 1 or 6 to 1. So

00:21:52.730 --> 00:21:55.450
by legally capping the ratio at 3 to 1, the government

00:21:55.450 --> 00:21:58.309
is deliberately overcharging the young, healthy

00:21:58.309 --> 00:22:01.549
21 -year -old to artificially lower the premium

00:22:01.549 --> 00:22:04.089
for the 64 -year -old. That is exactly right.

00:22:04.299 --> 00:22:07.940
It is a forced, systemic cross -subsidization.

00:22:08.740 --> 00:22:10.579
The young and healthy are required to pay more

00:22:10.579 --> 00:22:13.039
than their statistical risk dictates in order

00:22:13.039 --> 00:22:15.339
to make the insurance affordable for the older,

00:22:15.480 --> 00:22:17.740
sicker population. Because without that three

00:22:17.740 --> 00:22:20.359
-to -one cap, older Americans would simply be

00:22:20.359 --> 00:22:22.339
priced out of the individual market entirely.

00:22:22.420 --> 00:22:24.700
I wouldn't be able to afford it. The law also

00:22:24.700 --> 00:22:26.940
took aim at the fine print of insurance contracts,

00:22:27.119 --> 00:22:29.710
specifically regarding caps. Before the ACA,

00:22:29.789 --> 00:22:32.150
it was standard industry practice to place annual

00:22:32.150 --> 00:22:34.490
and lifetime limits on coverage. You might buy

00:22:34.490 --> 00:22:37.710
a policy that proudly states it has a one million

00:22:37.710 --> 00:22:40.549
dollar lifetime maximum benefit. And to an average

00:22:40.549 --> 00:22:42.650
healthy person, a million dollars sounds like

00:22:42.650 --> 00:22:45.190
an infinite amount of medical care. But in the

00:22:45.190 --> 00:22:48.430
reality of modern American health care, a complex

00:22:48.430 --> 00:22:51.970
organ transplant, a prolonged battle with leukemia.

00:22:52.119 --> 00:22:55.099
Or a premature infant spending three months in

00:22:55.099 --> 00:22:57.779
a neonatal intensive care unit can blast through

00:22:57.779 --> 00:23:00.220
a million dollars in a matter of weeks. And once

00:23:00.220 --> 00:23:02.839
you hit that cap, the insurance companies simply

00:23:02.839 --> 00:23:05.240
wash their hands of you. The contract was fulfilled

00:23:05.240 --> 00:23:08.319
and every subsequent bill was entirely your responsibility.

00:23:08.619 --> 00:23:11.819
The ACA made lifetime and annual caps on essential

00:23:11.819 --> 00:23:14.619
health benefits completely illegal. And they

00:23:14.619 --> 00:23:17.059
coupled that ban with the establishment of maximum

00:23:17.059 --> 00:23:20.099
out -of -pocket caps, or MOP. This is arguably

00:23:20.099 --> 00:23:22.200
one of the most vital financial protections in

00:23:22.200 --> 00:23:25.640
the law. Every ACA compliant plan must include

00:23:25.640 --> 00:23:28.119
a hard mathematical ceiling on what a patient

00:23:28.119 --> 00:23:30.220
has to pay in a given year. This means you know

00:23:30.220 --> 00:23:32.980
your worst case scenario. If your MOP is set

00:23:32.980 --> 00:23:35.819
at $8 ,000, you will pay your deductibles, your

00:23:35.819 --> 00:23:38.279
copays, and your coinsurance for every doctor

00:23:38.279 --> 00:23:40.700
visit and prescription. But the second your personal

00:23:40.700 --> 00:23:44.019
spending hits exactly $8 ,000, the insurance

00:23:44.019 --> 00:23:46.700
company is legally obligated to step in and pay

00:23:46.700 --> 00:23:49.599
100 % of all remaining covered medical costs

00:23:49.599 --> 00:23:52.200
for the rest of the calendar year. You cannot

00:23:52.200 --> 00:23:54.720
be financially ruined beyond that set limit.

00:23:54.880 --> 00:23:57.099
But of course, a worst -case scenario cap is

00:23:57.099 --> 00:23:59.680
completely useless if the insurance company defines

00:23:59.680 --> 00:24:02.609
covered medical costs so narrowly that nothing

00:24:02.609 --> 00:24:04.690
you actually need is included. Right. If I hit

00:24:04.690 --> 00:24:07.170
my MOP, but the insurance company says, sorry,

00:24:07.210 --> 00:24:09.329
we don't cover chemotherapy at all, I'm still

00:24:09.329 --> 00:24:12.170
bankrupt. Which is where the ACA had to define

00:24:12.170 --> 00:24:14.930
what health insurance actually is. They tasked

00:24:14.930 --> 00:24:16.910
the National Academy of Medicine to establish

00:24:16.910 --> 00:24:19.930
a baseline, which became known as the 10 essential

00:24:19.930 --> 00:24:22.970
health benefits. Every single new policy sold

00:24:22.970 --> 00:24:25.670
in the individual and small group markets had

00:24:25.670 --> 00:24:28.130
to comprehensively cover these 10 categories.

00:24:28.369 --> 00:24:30.980
It was a massive expansion of standard coverage.

00:24:31.200 --> 00:24:33.039
The list is extensive. It includes ambulatory

00:24:33.039 --> 00:24:36.099
patient services, emergency services, hospitalization.

00:24:36.440 --> 00:24:38.839
It mandates parity for mental health and substance

00:24:38.839 --> 00:24:41.559
use disorder services, meaning insurers have

00:24:41.559 --> 00:24:43.480
to treat behavioral health with the same financial

00:24:43.480 --> 00:24:45.880
coverage as physical health. It includes prescription

00:24:45.880 --> 00:24:49.680
drugs, rehabilitative services and devices, laboratory

00:24:49.680 --> 00:24:53.019
services, and pediatric services, including oral

00:24:53.019 --> 00:24:55.529
and vision care for children. But perhaps the

00:24:55.529 --> 00:24:57.910
two most culturally and economically significant

00:24:57.910 --> 00:25:00.430
additions were maternity care and preventive

00:25:00.430 --> 00:25:03.329
services. Prior to the law, a staggering number

00:25:03.329 --> 00:25:06.089
of individual plans simply did not cover maternity

00:25:06.089 --> 00:25:08.910
care. If you were a young family planning to

00:25:08.910 --> 00:25:11.890
have a child, you had to actively seek out and

00:25:11.890 --> 00:25:14.569
purchase an incredibly expensive supplemental

00:25:14.569 --> 00:25:16.690
maternity rider. Which often had long waiting

00:25:16.690 --> 00:25:19.289
periods. Now, maternity and newborn care is a

00:25:19.289 --> 00:25:21.490
standard essential benefit across all plans,

00:25:21.789 --> 00:25:24.230
but this creates a frequent point of contention,

00:25:24.509 --> 00:25:27.140
right? You will often hear critics say, I am

00:25:27.140 --> 00:25:30.079
a 60 year old single man. Why is the federal

00:25:30.079 --> 00:25:32.019
government forcing me to buy a health insurance

00:25:32.019 --> 00:25:34.539
policy that includes maternity care? It is a

00:25:34.539 --> 00:25:36.460
totally logical question from the perspective

00:25:36.460 --> 00:25:39.019
of an individual consumer. But from an insurance

00:25:39.019 --> 00:25:41.339
perspective, it goes back to the concept of the

00:25:41.339 --> 00:25:44.099
risk pool. If you allow people to pick and choose

00:25:44.099 --> 00:25:46.420
benefits entirely based on their current needs,

00:25:46.920 --> 00:25:49.119
if only pregnant women buy maternity coverage

00:25:49.119 --> 00:25:52.039
and only cancer patients buy chemotherapy coverage,

00:25:52.559 --> 00:25:54.599
the system collapses into adverse selection.

00:25:54.839 --> 00:25:57.299
Because the cost of the maternity rider becomes

00:25:57.299 --> 00:26:00.059
so astronomically high that no family can afford

00:26:00.059 --> 00:26:03.039
it Exactly by forcing the 60 year old man to

00:26:03.039 --> 00:26:05.940
carry the coverage You spread the cost of childbirth

00:26:05.940 --> 00:26:09.180
across the entire societal pool making it affordable

00:26:09.180 --> 00:26:11.579
for the young families who actually need it It's

00:26:11.579 --> 00:26:14.220
the same logic behind public schools. You pay

00:26:14.220 --> 00:26:16.480
property taxes to fund the local schools, even

00:26:16.480 --> 00:26:19.000
if you don't have children, because society collectively

00:26:19.000 --> 00:26:22.519
benefits from an educated populace. The ACA applies

00:26:22.519 --> 00:26:25.160
that collective logic to private insurance benefits.

00:26:25.420 --> 00:26:27.700
The essential benefits also mandated a suite

00:26:27.700 --> 00:26:29.799
of preventive services that must be provided

00:26:29.799 --> 00:26:31.980
absolutely free to the patient at the point of

00:26:31.980 --> 00:26:35.380
care. No copay, no coinsurance, no deductible.

00:26:35.529 --> 00:26:38.930
We are talking about routine immunizations, mammograms,

00:26:39.150 --> 00:26:42.150
colonoscopies, blood pressure screening, gestational

00:26:42.150 --> 00:26:44.970
diabetes screening, HIV screening, and domestic

00:26:44.970 --> 00:26:47.369
violence screening and counseling. The economic

00:26:47.369 --> 00:26:50.250
theory here is straightforward. An ounce of prevention

00:26:50.250 --> 00:26:52.960
is worth a pound of cure. Yeah, it is vastly

00:26:52.960 --> 00:26:55.160
cheaper for the health care system to pay a few

00:26:55.160 --> 00:26:58.180
hundred dollars for a free colonoscopy to snip

00:26:58.180 --> 00:27:01.759
a benign polyp today than it is to pay hundreds

00:27:01.759 --> 00:27:04.140
of thousands of dollars for late -stage colon

00:27:04.140 --> 00:27:06.579
cancer surgery and chemotherapy five years from

00:27:06.579 --> 00:27:08.680
now because the patient avoided the screening

00:27:08.680 --> 00:27:12.039
due to a $50 copay. This mandate also included

00:27:12.039 --> 00:27:14.779
all FDA approved contraceptive methods for women.

00:27:15.000 --> 00:27:18.079
which sparked an absolute firestorm of litigation.

00:27:18.339 --> 00:27:20.099
Right, because the mandate applied to almost

00:27:20.099 --> 00:27:22.539
all employers, leading to Supreme Court cases

00:27:22.539 --> 00:27:25.059
like Burwell v. Hobby Lobby. The debate centered

00:27:25.059 --> 00:27:27.700
on whether closely held private, for -profit

00:27:27.700 --> 00:27:30.559
corporations could claim religious exemptions

00:27:30.559 --> 00:27:32.559
to providing certain contraceptives to their

00:27:32.559 --> 00:27:35.039
employees. But beneath the legal and cultural

00:27:35.039 --> 00:27:37.039
warfare, the public health mechanism remained

00:27:37.039 --> 00:27:40.369
the same. remove financial barriers to necessary

00:27:40.369 --> 00:27:42.789
care. So now we have a market where every plan

00:27:42.789 --> 00:27:45.450
must accept everyone, regardless of health, and

00:27:45.450 --> 00:27:48.049
every plan must offer the same robust standardized

00:27:48.049 --> 00:27:50.970
benefits. And to help consumers actually navigate

00:27:50.970 --> 00:27:53.690
and compare these identical products, the law

00:27:53.690 --> 00:27:56.150
created the metal tiers on the new health insurance

00:27:56.150 --> 00:27:59.799
exchanges. the bronze, silver, gold, and platinum

00:27:59.799 --> 00:28:02.359
plans. I think the easiest way to conceptualize

00:28:02.359 --> 00:28:05.619
this isn't as different levels of medical care,

00:28:06.059 --> 00:28:08.920
but as different financial shock absorbers. That's

00:28:08.920 --> 00:28:11.220
a great way to put it. If you buy a bronze plan,

00:28:11.740 --> 00:28:14.160
you are getting the absolute cheapest monthly

00:28:14.160 --> 00:28:17.019
premium. But the shock absorbers are practically

00:28:17.019 --> 00:28:20.019
non -existent. The plan only covers an actuarial

00:28:20.019 --> 00:28:23.299
average of 60 % of health care costs. So if you

00:28:23.299 --> 00:28:25.880
hit a medical pothole, you are going to feel

00:28:25.880 --> 00:28:29.380
every single bump. You will pay thousands of

00:28:29.380 --> 00:28:32.059
dollars out of pocket to meet a massive deductible

00:28:32.059 --> 00:28:34.019
before the insurance really steps in to help.

00:28:34.140 --> 00:28:36.640
It is essentially catastrophic coverage for young,

00:28:36.640 --> 00:28:39.319
healthy people who just want the lowest possible

00:28:39.319 --> 00:28:41.420
monthly bill and don't expect to go to the doctor.

00:28:41.559 --> 00:28:43.259
On the other end, you have the platinum tier.

00:28:43.380 --> 00:28:46.140
This is the luxury system. You pay a massive,

00:28:46.559 --> 00:28:49.059
painfully high monthly premium up front. But

00:28:49.059 --> 00:28:51.180
when you hit a medical pothole, you barely feel

00:28:51.180 --> 00:28:54.480
it. The plan covers roughly 90 % of costs, meaning

00:28:54.480 --> 00:28:56.880
your deductibles and copays are tiny. You can

00:28:56.880 --> 00:28:58.940
go to the doctor frequently without constantly

00:28:58.940 --> 00:29:01.279
pulling out your credit card. Silver covers 70

00:29:01.279 --> 00:29:05.440
% and gold covers 80%. They all offer the exact

00:29:05.440 --> 00:29:08.960
same 10 essential benefits. They just distribute

00:29:08.960 --> 00:29:11.000
the financial pain differently between the monthly

00:29:11.000 --> 00:29:13.859
premium and the point -of -care deductible. Now,

00:29:13.960 --> 00:29:16.500
there is a massive lingering question here. If

00:29:16.500 --> 00:29:19.400
the government forces private for -profit insurance

00:29:19.400 --> 00:29:21.599
companies to offer all these benefits, remove

00:29:21.599 --> 00:29:24.400
caps and take on sick people, what stops those

00:29:24.400 --> 00:29:26.599
companies from simply jacking up the premiums

00:29:26.599 --> 00:29:29.019
astronomically, paying out the bare minimum in

00:29:29.019 --> 00:29:31.500
claims, and keeping billions in pure profit?

00:29:31.640 --> 00:29:33.680
Well, wait, hold on. That is the fundamental

00:29:33.680 --> 00:29:36.400
nature of a corporation. Right. To maximize shareholder

00:29:36.400 --> 00:29:38.660
value. Right. If you tell an insurance CEO they

00:29:38.660 --> 00:29:41.079
have a captive audience legally mandated to buy

00:29:41.079 --> 00:29:43.140
their product, they're going to squeeze every

00:29:43.140 --> 00:29:45.599
dime out of it. The drafters of the ACA knew

00:29:45.599 --> 00:29:48.140
this. They knew they were handing a captive market

00:29:48.140 --> 00:29:51.839
to private industry. To prevent unchecked profiteering,

00:29:52.359 --> 00:29:55.039
they implemented a blunt, powerful regulatory

00:29:55.039 --> 00:29:58.730
tool called the medical loss ratio. or the MLR.

00:29:58.829 --> 00:30:01.990
The 80 -20 rule. Yes. The MLR provision federally

00:30:01.990 --> 00:30:04.529
mandates that in the individual and small group

00:30:04.529 --> 00:30:07.109
markets, an insurance company must spend a minimum

00:30:07.109 --> 00:30:10.710
of 80 % of every single premium dollar they collect

00:30:10.710 --> 00:30:13.509
directly on clinical health care costs and quality

00:30:13.509 --> 00:30:16.230
improvement activities. For large group markets,

00:30:16.549 --> 00:30:19.130
it's 85%. Which means the federal government

00:30:19.130 --> 00:30:21.269
is legally capping their operational budget.

00:30:21.829 --> 00:30:23.890
The insurance company is only allowed to retain

00:30:23.890 --> 00:30:27.029
15 % to 20 % of their revenue to cover all their

00:30:27.029 --> 00:30:29.690
administrative overhead, marketing budgets, broker

00:30:29.690 --> 00:30:32.869
commissions, CEO bonuses, and pure shareholder

00:30:32.869 --> 00:30:35.210
profit. And the enforcement mechanism is direct.

00:30:35.369 --> 00:30:37.750
If an insurance company's accountants tally up

00:30:37.750 --> 00:30:39.970
the year and realize they only spent 70 % of

00:30:39.970 --> 00:30:42.289
premium revenue on actual health care, they cannot

00:30:42.289 --> 00:30:45.009
simply pocket that extra 10 % as a windfall profit.

00:30:45.230 --> 00:30:47.130
The law requires them to issue rebate checks

00:30:47.130 --> 00:30:49.109
directly back to their consumers to make up the

00:30:49.109 --> 00:30:52.509
difference. It forces a brutal level of efficiency

00:30:52.509 --> 00:30:55.349
on an industry historically known for bloated

00:30:55.349 --> 00:30:57.930
bureaucracy. Okay, so we have mapped out the

00:30:57.930 --> 00:31:00.750
rules. Guaranteed issue, community rating, essential

00:31:00.750 --> 00:31:04.509
benefits, profit caps. But there is a massive,

00:31:04.849 --> 00:31:07.269
looming mathematical paradox sitting in the middle

00:31:07.269 --> 00:31:09.349
of all this regulation. Which brings us to the

00:31:09.349 --> 00:31:12.369
third major phase of our deep dive, the engine

00:31:12.369 --> 00:31:15.109
of coverage. The paradox is simple, and it's

00:31:15.109 --> 00:31:17.390
deadly to an insurance market. We've established

00:31:17.390 --> 00:31:20.890
that the ACA forces insurers to accept incredibly

00:31:20.890 --> 00:31:24.109
sick, expensive patients, and it caps how much

00:31:24.109 --> 00:31:26.569
those patients can be charged. Yes. If an insurer

00:31:26.569 --> 00:31:28.950
takes on a thousand cancer patients, they're

00:31:28.950 --> 00:31:31.079
going to hemorrhage money. they will go bankrupt

00:31:31.079 --> 00:31:34.000
practically overnight. Unless they can find a

00:31:34.000 --> 00:31:36.500
way to massively dilute that risk. The only way

00:31:36.500 --> 00:31:39.019
the math works is if millions of perfectly healthy

00:31:39.019 --> 00:31:41.099
people, people who pay their premiums every month

00:31:41.099 --> 00:31:43.099
but never go to the doctor except for maybe a

00:31:43.099 --> 00:31:46.299
flu shot, also buy into the exact same insurance

00:31:46.299 --> 00:31:49.170
pool. Their unused premium dollars subsidize

00:31:49.170 --> 00:31:51.470
the expensive care of the sick. But human behavior

00:31:51.470 --> 00:31:53.849
works against this. If you are young and healthy,

00:31:54.170 --> 00:31:56.650
and you know the law guarantees you can buy insurance

00:31:56.650 --> 00:31:59.690
later, even if you get sick, your logical financial

00:31:59.690 --> 00:32:01.970
move is to hold off on buying insurance until

00:32:01.970 --> 00:32:04.769
the day you actually get a diagnosis. And this

00:32:04.769 --> 00:32:07.890
triggers the actuarial nightmare known as the

00:32:07.890 --> 00:32:10.660
death spiral. Let's walk through how this collapse

00:32:10.660 --> 00:32:14.400
happens. In year one, insurers set a reasonable

00:32:14.400 --> 00:32:17.759
premium, but mostly sick people buy the insurance

00:32:17.759 --> 00:32:19.940
because they need it immediately. The healthy

00:32:19.940 --> 00:32:22.220
people stay out. So at the end of the year, the

00:32:22.220 --> 00:32:24.480
insurer realizes the pool was much sicker than

00:32:24.480 --> 00:32:27.400
expected and they lost millions. Right. So in

00:32:27.400 --> 00:32:30.359
year two, the insurer has no choice but to drastically

00:32:30.359 --> 00:32:32.920
raise the premiums to cover those losses. But

00:32:32.920 --> 00:32:36.190
when the premiums spike, The moderately healthy

00:32:36.190 --> 00:32:38.170
people in the pool, the ones who could barely

00:32:38.170 --> 00:32:40.650
afford it to begin with, look at the new price

00:32:40.650 --> 00:32:43.210
tag and drop their coverage. Leaving only the

00:32:43.210 --> 00:32:45.470
absolute sickest, most expensive patients in

00:32:45.470 --> 00:32:48.509
the pool. So in year three, the premiums skyrocket

00:32:48.509 --> 00:32:51.289
again. This forces the next tier of people out.

00:32:51.529 --> 00:32:54.690
The pool gets smaller, sicker, and more expensive

00:32:54.690 --> 00:32:57.849
every single cycle until the premiums are astronomical,

00:32:58.309 --> 00:33:00.650
the insurer goes completely bankrupt, and the

00:33:00.650 --> 00:33:03.109
entire market collapses inward on itself. To

00:33:03.109 --> 00:33:06.190
prevent the death spiral, the ACA had to aggressively

00:33:06.190 --> 00:33:08.789
manipulate human behavior. They needed to force

00:33:08.789 --> 00:33:11.289
the healthy people into the pool. They did this

00:33:11.289 --> 00:33:14.170
using a massive stick and a massive carrot. The

00:33:14.170 --> 00:33:16.150
stick is the individual mandate we discussed

00:33:16.150 --> 00:33:18.640
at the beginning. The mechanism was a tax penalty.

00:33:18.859 --> 00:33:20.940
When you filed your federal tax returns, you

00:33:20.940 --> 00:33:23.680
had to provide proof of minimum essential coverage.

00:33:24.019 --> 00:33:26.579
If you didn't have it, the IRS assessed a penalty.

00:33:26.900 --> 00:33:31.160
At its peak, the penalty was $695 per adult or

00:33:31.160 --> 00:33:33.619
2 .5 % of your household income, whichever was

00:33:33.619 --> 00:33:36.480
greater. It was a blunt force instrument to ensure

00:33:36.480 --> 00:33:39.599
broad participation. However, it wasn't universal.

00:33:40.160 --> 00:33:42.940
The law curved out several key exemptions. For

00:33:42.940 --> 00:33:45.440
instance, undocumented immigrants were completely

00:33:45.440 --> 00:33:47.960
exempt from the mandate as they were also legally

00:33:47.960 --> 00:33:50.279
barred from receiving subsidies or accessing

00:33:50.279 --> 00:33:52.559
Medicaid under the law. The sources estimate

00:33:52.559 --> 00:33:55.420
there were roughly 8 million undocumented individuals

00:33:55.420 --> 00:33:58.240
at the time. Additionally, people who were legally

00:33:58.240 --> 00:34:00.799
eligible for Medicaid but simply hadn't navigated

00:34:00.799 --> 00:34:03.680
the bureaucracy to enroll were exempt from the

00:34:03.680 --> 00:34:05.700
penalty. Crucially, there was an affordability

00:34:05.700 --> 00:34:08.300
exemption. If the cheapest available insurance

00:34:08.300 --> 00:34:10.500
policy on the exchange cost more than roughly

00:34:10.500 --> 00:34:13.260
8 % of your household income, the government

00:34:13.260 --> 00:34:16.000
deemed it mathematically unaffordable, and you

00:34:16.000 --> 00:34:18.360
were legally exempt from the mandate penalty.

00:34:18.780 --> 00:34:22.119
Now we have to acknowledge a massive recent shift

00:34:22.119 --> 00:34:25.340
regarding this stick. In 2017, under the Trump

00:34:25.340 --> 00:34:28.280
administration, Congress passed the Tax Cuts

00:34:28.280 --> 00:34:30.920
and Jobs Act. Through the reconciliation process,

00:34:31.139 --> 00:34:33.719
they couldn't repeal the ACA entirely, but they

00:34:33.719 --> 00:34:36.420
made a devastating surgical strike. They set

00:34:36.420 --> 00:34:38.500
the financial penalty for the individual mandate

00:34:38.500 --> 00:34:42.079
to exactly zero dollars, beginning in 2019. The

00:34:42.079 --> 00:34:44.159
mandate still exists in the text of the law,

00:34:44.360 --> 00:34:47.710
but it is entirely toothless. At the time, conventional

00:34:47.710 --> 00:34:50.170
economic wisdom warned that removing the penalty

00:34:50.170 --> 00:34:52.710
would trigger the death spiral instantly. Healthy

00:34:52.710 --> 00:34:55.110
people would flee, and the exchanges would collapse.

00:34:55.570 --> 00:34:58.469
But the collapse didn't happen. The markets wobbled,

00:34:58.829 --> 00:35:01.210
premiums rose slightly, but they stabilized.

00:35:01.510 --> 00:35:04.730
Why? Because the analysts underestimated the

00:35:04.730 --> 00:35:06.849
overwhelming power of the carrot. The carrot

00:35:06.849 --> 00:35:09.869
is the system of premium subsidies. This is the

00:35:09.869 --> 00:35:12.889
true beating heart of the ACA's exchange markets.

00:35:13.210 --> 00:35:15.170
The government realized that you can mandate

00:35:15.170 --> 00:35:17.409
coverage all you want. But if a working class

00:35:17.409 --> 00:35:19.389
family simply doesn't have the cash to pay a

00:35:19.389 --> 00:35:21.869
$600 monthly premium. They aren't going to buy

00:35:21.869 --> 00:35:25.190
it. So the law created advanceable, refundable

00:35:25.190 --> 00:35:27.670
tax credits to help pay the monthly bill. Let's

00:35:27.670 --> 00:35:30.010
break down exactly who gets this money and how

00:35:30.010 --> 00:35:32.570
it's calculated, because it's incredibly precise.

00:35:32.849 --> 00:35:34.969
To qualify, your household income must fall strictly

00:35:34.969 --> 00:35:37.949
between 100 % and 400 % of the federal poverty

00:35:37.949 --> 00:35:40.670
level or the FPL. And you have to buy your insurance

00:35:40.670 --> 00:35:42.690
through the official government exchanges, like

00:35:42.690 --> 00:35:45.329
healthcare .gov. You also cannot be eligible

00:35:45.329 --> 00:35:47.949
for Medicaid, Medicare, or have an affordable

00:35:47.949 --> 00:35:50.539
offer of insurance from your employer. The calculus

00:35:50.539 --> 00:35:52.900
of the subsidy is tied to a specific benchmark.

00:35:53.400 --> 00:35:56.500
The second lowest cost silver plan, or the SLCSP,

00:35:56.940 --> 00:35:58.900
available in your specific geographic rating

00:35:58.900 --> 00:36:01.940
area. Why the second lowest? Why not just the

00:36:01.940 --> 00:36:04.920
cheapest? It's a behavioral nudge. By pegging

00:36:04.920 --> 00:36:07.519
the subsidy to the second lowest plan, the government

00:36:07.519 --> 00:36:09.579
ensures that the consumer has enough subsidy

00:36:09.579 --> 00:36:12.139
to afford a decent middle -of -the -road silver

00:36:12.139 --> 00:36:14.840
plan. But if the consumer wants to be frugal,

00:36:15.300 --> 00:36:17.519
they can choose the absolute cheapest bronze

00:36:17.519 --> 00:36:20.250
plan. apply their generous silver level subsidy

00:36:20.250 --> 00:36:22.769
to it, and potentially pay a monthly premium

00:36:22.769 --> 00:36:25.909
of zero dollars. It encourages price shopping.

00:36:26.409 --> 00:36:28.530
The law dictates a maximum percentage of your

00:36:28.530 --> 00:36:30.309
income that you should have to spend on that

00:36:30.309 --> 00:36:32.909
benchmark plan. Let's ground this in real numbers

00:36:32.909 --> 00:36:35.829
from the source data around 2019. If your income

00:36:35.829 --> 00:36:38.690
was hovering right near the poverty line, say

00:36:38.690 --> 00:36:41.789
a single person making about $12 ,000 a year,

00:36:42.150 --> 00:36:44.489
the law said your premium should not exceed roughly

00:36:44.489 --> 00:36:47.110
2 % of your income. That's about $20 a month.

00:36:47.320 --> 00:36:49.760
But the actual sticker price of that silver plan

00:36:49.760 --> 00:36:52.440
might be $500 a month. So the federal government

00:36:52.440 --> 00:36:55.340
steps in and wires the remaining $480 directly

00:36:55.340 --> 00:36:57.139
to the insurance company every month on your

00:36:57.139 --> 00:37:00.099
behalf. You only ever see the $20 bill. As your

00:37:00.099 --> 00:37:02.960
income rises, that percentage cap rises on a

00:37:02.960 --> 00:37:06.119
sliding scale. If you are a single person making

00:37:06.119 --> 00:37:08.820
closer to 400 % of the poverty line, which is

00:37:08.820 --> 00:37:12.460
about $48 ,000 to $50 ,000 a year, your cap is

00:37:12.460 --> 00:37:15.909
set at roughly 9 .86 % of your income. So you

00:37:15.909 --> 00:37:18.409
are paying a much larger share, maybe $400 a

00:37:18.409 --> 00:37:21.730
month, and the government subsidy shrinks accordingly.

00:37:22.269 --> 00:37:24.550
But this sliding scale creates one of the most

00:37:24.550 --> 00:37:27.030
brutal, unforgiving mathematical traps in modern

00:37:27.030 --> 00:37:29.769
public policy. It is known as the subsidy cliff.

00:37:30.130 --> 00:37:32.630
The discontinuity of treatment. Explain the terror

00:37:32.630 --> 00:37:35.150
of the cliff. Because the law cuts off subsidies

00:37:35.150 --> 00:37:37.710
strictly at 400 % of the federal poverty level,

00:37:38.230 --> 00:37:40.429
the math creates a massive penalty for earning

00:37:40.429 --> 00:37:42.980
just $1 over the limit. Let's look at an older

00:37:42.980 --> 00:37:45.039
couple, say a 60 -year -old husband and wife,

00:37:45.139 --> 00:37:48.219
whose combined income is exactly 399 % of the

00:37:48.219 --> 00:37:51.099
poverty level. Let's call it $65 ,000 a year.

00:37:51.340 --> 00:37:53.440
Because of their age, the actual sticker price

00:37:53.440 --> 00:37:55.900
of their insurance is astronomical, maybe $24

00:37:55.900 --> 00:37:58.199
,000 a year. But because they are under the 400

00:37:58.199 --> 00:38:01.179
% threshold, the law caps their premium at roughly

00:38:01.179 --> 00:38:04.260
9 .8 % of their income, about $6 ,300 a year.

00:38:04.400 --> 00:38:07.639
The government pays the massive $17 ,000 difference.

00:38:07.980 --> 00:38:10.510
OK, they are surviving. But what happens if the

00:38:10.510 --> 00:38:12.510
husband works a little overtime or they sell

00:38:12.510 --> 00:38:15.230
a small stock portfolio and their adjusted gross

00:38:15.230 --> 00:38:19.309
income for the year gets $66 ,000? They just

00:38:19.309 --> 00:38:22.510
crossed 401 % of the poverty level. They fall

00:38:22.510 --> 00:38:25.210
off the cliff. They are instantly disqualified

00:38:25.210 --> 00:38:27.409
from receiving a single penny of federal subsidy.

00:38:27.869 --> 00:38:30.349
They are now fully responsible for the entire

00:38:30.349 --> 00:38:33.730
$24 ,000 sticker price of their premiums. An

00:38:33.730 --> 00:38:36.789
income increase of $1 ,000 just triggered a $17

00:38:36.789 --> 00:38:40.329
,000 tax bill. Their insurance now consumes over

00:38:40.329 --> 00:38:43.619
a third of their total pretax income. It is financially

00:38:43.619 --> 00:38:45.599
devastating for middle class families caught

00:38:45.599 --> 00:38:47.980
on that fault line. Now, those subsidies only

00:38:47.980 --> 00:38:50.260
address the monthly premium, but what about the

00:38:50.260 --> 00:38:53.619
deductibles? As we said, a bronze or silver plan

00:38:53.619 --> 00:38:55.820
still requires you to pay thousands out of pocket

00:38:55.820 --> 00:38:57.880
before the real coverage kicks in. If you are

00:38:57.880 --> 00:39:01.340
making $25 ,000 a year, a $4 ,000 deductible

00:39:01.340 --> 00:39:03.519
might as well be a million dollars. You still

00:39:03.519 --> 00:39:05.500
can't afford to see a doctor. To address that

00:39:05.500 --> 00:39:08.039
secondary barrier, the ACA created cost sharing

00:39:08.039 --> 00:39:10.920
reduction subsidies, or CSRs. These are a completely

00:39:10.920 --> 00:39:13.030
separate stream of of money paid directly to

00:39:13.030 --> 00:39:15.110
the insurance companies. If an enrollee earns

00:39:15.110 --> 00:39:18.070
less than 250 % of the poverty level, roughly

00:39:18.070 --> 00:39:20.469
$30 ,000 for an individual, and they choose a

00:39:20.469 --> 00:39:22.889
silver plan, the government pays the insurer

00:39:22.889 --> 00:39:25.090
extra money to artificially lower the plan's

00:39:25.090 --> 00:39:28.230
deductibles, co -pays, and out -of -pocket maximums.

00:39:28.449 --> 00:39:30.369
So the premium subsidy gets you in the door,

00:39:30.610 --> 00:39:32.909
and the CSR subsidy ensures you can actually

00:39:32.909 --> 00:39:36.010
afford to sit on the exam table. Exactly. But

00:39:36.010 --> 00:39:38.889
all of this, the billions in premium tax credits,

00:39:39.030 --> 00:39:42.070
the billions in CSRs, requires a staggering amount

00:39:42.070 --> 00:39:43.969
of federal revenue. Where is the money coming

00:39:43.969 --> 00:39:46.449
from? To fund this machine, the ACA deployed

00:39:46.449 --> 00:39:48.889
several major tax provisions aimed squarely at

00:39:48.889 --> 00:39:51.480
high earners and specific industries. First,

00:39:51.739 --> 00:39:54.019
they targeted payroll taxes. The law implemented

00:39:54.019 --> 00:39:57.340
an additional Medicare tax of 0 .9 % on wages

00:39:57.340 --> 00:40:00.199
for individuals earning over $200 ,000 a year,

00:40:00.460 --> 00:40:03.300
or $250 ,000 for a married couple. It's important

00:40:03.300 --> 00:40:07.119
to note the first $199 ,999 price is taxed at

00:40:07.119 --> 00:40:09.699
the normal rate. The extra 0 .9 % only applies

00:40:09.699 --> 00:40:11.780
to the dollars earned above that threshold. Correct.

00:40:11.960 --> 00:40:14.619
Second, they implemented a 3 .8 % net investment

00:40:14.619 --> 00:40:17.340
income tax. This is a tax applied to unearned

00:40:17.340 --> 00:40:19.599
income, capital gains, dividends, rental income

00:40:19.599 --> 00:40:22.320
for those exact same high -income brackets. This

00:40:22.320 --> 00:40:25.539
was a profound shift heavily taxing the investment

00:40:25.539 --> 00:40:28.840
wealth of the top tier to directly fund the subsidies

00:40:28.840 --> 00:40:31.380
for the lower and middle tiers. They also levied

00:40:31.380 --> 00:40:34.239
massive excise taxes on the pharmaceutical industry

00:40:34.239 --> 00:40:37.639
specifically on prescription drug importers and

00:40:37.639 --> 00:40:40.099
manufacturers banking on the idea that these

00:40:40.099 --> 00:40:42.500
companies would see a massive influx of newly

00:40:42.500 --> 00:40:45.900
insured customers and finally they implemented

00:40:45.900 --> 00:40:48.980
the employer mandate. The employer mandate targets

00:40:48.980 --> 00:40:52.139
businesses with 50 or more full -time equivalent

00:40:52.139 --> 00:40:55.340
employees. If a business of that size refuses

00:40:55.340 --> 00:40:58.179
to offer affordable, minimum value health insurance

00:40:58.179 --> 00:41:00.539
to its workers, and just one of those workers

00:41:00.539 --> 00:41:03.119
goes to the ACA exchange and receives a federal

00:41:03.119 --> 00:41:05.460
subsidy, the business is hit with a substantial

00:41:05.460 --> 00:41:08.320
tax penalty per employee. It was designed to

00:41:08.320 --> 00:41:10.420
lock the existing employer -based system in place

00:41:10.420 --> 00:41:12.360
so companies wouldn't just dump their employees

00:41:12.360 --> 00:41:14.260
onto the federal exchanges. OK, I want to pivot

00:41:14.260 --> 00:41:15.960
back to the insurance companies for a second,

00:41:16.119 --> 00:41:18.420
because we glossed over a massive operational

00:41:18.420 --> 00:41:21.119
risk. What's that? We forced the healthy and

00:41:21.119 --> 00:41:23.679
the sick into the same pool. But what if the

00:41:23.679 --> 00:41:27.219
distribution isn't even? Ah, right. What if Blue

00:41:27.219 --> 00:41:30.559
Cross Blue Shield prices a plan at $400 a month,

00:41:30.900 --> 00:41:34.360
and by sheer statistical bad luck, every single

00:41:34.360 --> 00:41:36.980
leukemia patient in the county happens to pick

00:41:36.980 --> 00:41:40.239
their specific plan, while all the healthy 25

00:41:40.239 --> 00:41:43.369
-year -olds pick the competing Aetna plan? Blue

00:41:43.369 --> 00:41:45.409
Cross goes bankrupt through no fault of their

00:41:45.409 --> 00:41:48.369
own pricing strategy. This was a terrifying vulnerability

00:41:48.369 --> 00:41:51.090
for insurers trying to price an entirely new,

00:41:51.130 --> 00:41:54.349
unpredictable market in 2014. To convince these

00:41:54.349 --> 00:41:57.389
companies to actually participate, the ACA established

00:41:57.389 --> 00:42:00.809
three complex risk management mechanisms, colloquially

00:42:00.809 --> 00:42:04.170
known as the three Rs, risk corridors, reinsurance,

00:42:04.309 --> 00:42:06.550
and risk adjustment. Let's unpack the three Rs,

00:42:06.570 --> 00:42:08.210
starting with the one that triggered massive

00:42:08.210 --> 00:42:11.190
Supreme Court battles, risk corridors. Risk corridors

00:42:11.190 --> 00:42:14.210
was a temporary three -year program from 2014

00:42:14.210 --> 00:42:16.969
to 2016. It was essentially a government safety

00:42:16.969 --> 00:42:18.869
net. The Department of Health and Human Services

00:42:18.869 --> 00:42:21.429
said to the insurers, price your plans as best

00:42:21.429 --> 00:42:23.630
you can. If you miscalculate and your medical

00:42:23.630 --> 00:42:26.070
claims end up being vastly higher than you expected,

00:42:26.570 --> 00:42:28.309
the federal government will step in and cover

00:42:28.309 --> 00:42:30.750
a portion of your massive losses. Conversely,

00:42:30.909 --> 00:42:33.489
if you get lucky and your pool's incredibly healthy,

00:42:33.690 --> 00:42:36.210
resulting in massive profits, you have to pay

00:42:36.210 --> 00:42:38.469
a portion of those excess profits back to the

00:42:38.469 --> 00:42:40.469
government. It sounds like a perfect stabilizing

00:42:40.469 --> 00:42:43.380
mechanism. What went wrong? The math and the

00:42:43.380 --> 00:42:45.800
politics violently collided. In those early years,

00:42:45.880 --> 00:42:49.420
the pool of new enrollees was much, much sicker

00:42:49.420 --> 00:42:52.480
than anyone anticipated. Way more insurance companies

00:42:52.480 --> 00:42:55.179
suffered catastrophic losses than achieved excess

00:42:55.179 --> 00:42:57.300
profits. The program ended up running a massive

00:42:57.300 --> 00:43:00.860
deficit of roughly $8 .3 billion. But the ACA

00:43:00.860 --> 00:43:03.280
statute said the government shall pay those debts,

00:43:03.440 --> 00:43:06.059
right? It was a legal obligation. So how did

00:43:06.059 --> 00:43:09.480
Congress choke off the funds? This requires understanding

00:43:09.480 --> 00:43:12.809
a fundamental constitutional principle. the power

00:43:12.809 --> 00:43:15.369
of the purse. The Constitution dictates that

00:43:15.369 --> 00:43:17.789
money can only be drawn from the Treasury through

00:43:17.789 --> 00:43:20.630
a specific appropriation made by Congress. So

00:43:20.630 --> 00:43:23.849
in 2014, Republicans in Congress, led by figures

00:43:23.849 --> 00:43:26.389
like Senator Marco Rubio, who fiercely opposed

00:43:26.389 --> 00:43:28.389
what they called insurance company bailouts,

00:43:28.769 --> 00:43:31.929
slipped a subtle rider into a massive must -pass

00:43:31.929 --> 00:43:34.590
omnibus spending bill. What did the rider say?

00:43:34.730 --> 00:43:37.050
It essentially said, the Department of Health

00:43:37.050 --> 00:43:39.710
and Human Services is legally prohibited from

00:43:39.710 --> 00:43:42.670
using any general federal funds to pay the risk

00:43:42.670 --> 00:43:45.289
corridor debts. They can only pay out the exact

00:43:45.289 --> 00:43:51.119
amount they collected in excess profits. mathematically

00:43:51.119 --> 00:43:54.139
starved it to death. Which is devastating. The

00:43:54.139 --> 00:43:56.480
insurers priced their plans based on a federal

00:43:56.480 --> 00:43:59.179
promise of a safety net and then Congress pulled

00:43:59.179 --> 00:44:02.139
the net away while they were in midair. It bankrupted

00:44:02.139 --> 00:44:04.840
dozens of smaller regional insurance co -ops

00:44:04.840 --> 00:44:08.510
almost immediately. The surviving insurers turned

00:44:08.510 --> 00:44:10.909
around and sued the federal government in the

00:44:10.909 --> 00:44:13.849
Court of Federal Claims. These lawsuits, consolidated

00:44:13.849 --> 00:44:16.429
under cases like Moda Health v. United States

00:44:16.429 --> 00:44:18.550
and Maine Community Health Options v. United

00:44:18.550 --> 00:44:21.449
States, dragged on for years until they hit the

00:44:21.449 --> 00:44:24.210
Supreme Court in 2020. And the Supreme Court,

00:44:24.409 --> 00:44:26.309
despite having a conservative majority at the

00:44:26.309 --> 00:44:29.030
time, actually ruled in favor of the insurance

00:44:29.030 --> 00:44:32.170
companies. They did. In an 8 -1 decision, the

00:44:32.170 --> 00:44:34.869
court ruled that the ACA had created a binding

00:44:34.869 --> 00:44:37.289
statutory obligation for the government to pay.

00:44:37.929 --> 00:44:40.030
The government had made a contract, the insurers

00:44:40.030 --> 00:44:43.150
acted on it, and using a sneaky appropriations

00:44:43.150 --> 00:44:45.809
rider to deobligate those payments retroactively

00:44:45.809 --> 00:44:48.750
was illegal. The government had to pay the billions

00:44:48.750 --> 00:44:51.690
it owed. What a mess. What about the other two

00:44:51.690 --> 00:44:55.230
Rs? Reinsurance was another temporary retrospective

00:44:55.230 --> 00:44:57.789
program. It essentially acted as catastrophic

00:44:57.789 --> 00:45:00.429
insurance for the insurers themselves, reimbursing

00:45:00.429 --> 00:45:03.269
them for incredibly high cost individual claims,

00:45:03.630 --> 00:45:05.849
say a patient who racked up over a million dollars

00:45:05.849 --> 00:45:08.230
in bills. But the only permanent program is risk

00:45:08.230 --> 00:45:10.150
adjustment. How does risk adjustment actually

00:45:10.150 --> 00:45:12.389
work on a mechanical level? Risk adjustment is

00:45:12.389 --> 00:45:15.210
a zero -sum game that transfers money between

00:45:15.210 --> 00:45:18.239
insurers based on the actuarial health of their

00:45:18.239 --> 00:45:20.159
enrollees. The government looks at all the patients

00:45:20.159 --> 00:45:22.280
enrolled in Blue Cross, looks at their medical

00:45:22.280 --> 00:45:24.840
diagnoses, and assigns them a risk score. They

00:45:24.840 --> 00:45:27.639
do the same for Aetna. If Blue Cross ended up

00:45:27.639 --> 00:45:30.099
with a pool of sicker, more expensive patients,

00:45:30.460 --> 00:45:33.099
and Aetna ended up with a pool of younger, healthier

00:45:33.099 --> 00:45:36.679
patients, the government literally forces Aetna

00:45:36.800 --> 00:45:39.800
to write a check to Blue Cross. It completely

00:45:39.800 --> 00:45:42.320
alters the competitive landscape. Instead of

00:45:42.320 --> 00:45:44.639
insurance companies competing by trying to cherry

00:45:44.639 --> 00:45:46.980
pick healthy people and creatively deny sick

00:45:46.980 --> 00:45:49.960
people, they are forced to compete on how efficiently

00:45:49.960 --> 00:45:52.380
they can manage care and negotiate with hospital

00:45:52.380 --> 00:45:55.119
networks because the raw risk of the sick patients

00:45:55.119 --> 00:45:57.860
is balanced out by the fund transfers. Exactly.

00:45:58.119 --> 00:46:01.079
So that complex sprawling ecosystem covers the

00:46:01.079 --> 00:46:03.300
individual market, the exchanges and the subsidies.

00:46:03.800 --> 00:46:05.920
But there is a glaring hole in everything we

00:46:05.920 --> 00:46:07.860
just talked about. All of those subsidies, all

00:46:07.860 --> 00:46:10.659
those tax credits, they only apply to people

00:46:10.659 --> 00:46:13.380
making above 100 % of the poverty line. Right.

00:46:13.619 --> 00:46:15.579
What about the poorest citizens? People living

00:46:15.579 --> 00:46:18.360
in deep poverty making $5 ,000 a year or nothing

00:46:18.360 --> 00:46:20.340
at all? They don't get a dime of exchange subsidies.

00:46:20.760 --> 00:46:23.219
How did the law address them? This brings us

00:46:23.219 --> 00:46:26.460
to our fourth major pillar, the Medicaid expansion.

00:46:26.829 --> 00:46:30.030
This is where the ACA attempted its most profound

00:46:30.030 --> 00:46:32.989
social intervention, and it resulted in the most

00:46:32.989 --> 00:46:35.630
fractured, contentious outcome of the entire

00:46:35.630 --> 00:46:38.289
law. To understand the expansion, we have to

00:46:38.289 --> 00:46:40.590
look at how Medicaid operated for the 50 years

00:46:40.590 --> 00:46:43.869
prior to the ACA. Most people assume that before

00:46:43.869 --> 00:46:46.650
Obamacare, if you were poor, you just got Medicaid.

00:46:46.829 --> 00:46:48.929
But that wasn't true at all. Old Medicaid was

00:46:48.929 --> 00:46:51.269
strictly categorical. Being impoverished was

00:46:51.269 --> 00:46:53.889
a necessary condition, but it wasn't sufficient

00:46:53.889 --> 00:46:56.800
on its own. To qualify, you had to fit into a

00:46:56.800 --> 00:46:59.519
specific federally recognized bucket. You had

00:46:59.519 --> 00:47:02.420
to be a child, a pregnant woman, an elderly person

00:47:02.420 --> 00:47:05.280
requiring long -term care, or an individual with

00:47:05.280 --> 00:47:07.840
a severe legally recognized disability. Which

00:47:07.840 --> 00:47:09.699
leaves a massive demographic out in the cold.

00:47:10.219 --> 00:47:12.519
If you were a 35 -year -old able -bodied adult

00:47:12.519 --> 00:47:14.360
without dependent children in a vast majority

00:47:14.360 --> 00:47:16.139
of states, you could be living on the street

00:47:16.139 --> 00:47:18.179
literally penniless, and you still would not

00:47:18.179 --> 00:47:20.340
qualify for a single dollar of Medicaid coverage.

00:47:20.670 --> 00:47:23.690
The drafters of the ACA viewed this as a profound

00:47:23.690 --> 00:47:26.489
moral and systemic failure. Their solution was

00:47:26.489 --> 00:47:29.190
sweeping. They sought to obliterate the categories.

00:47:29.710 --> 00:47:33.050
The ACA mandated an expansion of Medicaid eligibility

00:47:33.050 --> 00:47:35.929
to all U .S. citizens and legal residents with

00:47:35.929 --> 00:47:38.570
incomes up to 133 percent of the federal poverty

00:47:38.570 --> 00:47:41.210
line, regardless of their family status or physical

00:47:41.210 --> 00:47:44.670
ability. And due to a quirky five percent income

00:47:44.670 --> 00:47:47.769
disregard rule in the tax calculation, the functional

00:47:47.769 --> 00:47:50.789
threshold was effectively set at 138 percent

00:47:50.789 --> 00:47:53.409
of the poverty level. If you made onto that line,

00:47:53.489 --> 00:47:56.309
you were in full stop. But Medicaid is a joint

00:47:56.309 --> 00:47:58.849
program. It is partially funded by the federal

00:47:58.849 --> 00:48:01.210
government, but it is administered and partially

00:48:01.210 --> 00:48:04.090
funded by the individual state governments. Forcing

00:48:04.090 --> 00:48:06.469
states to suddenly add millions of new people

00:48:06.469 --> 00:48:09.349
to their welfare rolls is a massive fiscal burden.

00:48:09.489 --> 00:48:10.989
So the federal government had to make an offer

00:48:10.989 --> 00:48:13.150
the states couldn't mathematically refuse. They

00:48:13.150 --> 00:48:15.690
deployed an unprecedented funding mechanism.

00:48:16.050 --> 00:48:18.110
The federal government promised to pay 100 %

00:48:18.110 --> 00:48:20.550
of the increased costs for every single newly

00:48:20.550 --> 00:48:22.750
eligible enrollee for the first three years of

00:48:22.750 --> 00:48:26.849
the expansion, 2014, 2015, and 2016. After that,

00:48:27.170 --> 00:48:29.809
the federal share would slowly phase down, but

00:48:29.809 --> 00:48:32.969
it would permanently lock in at 90 % from 2020

00:48:32.969 --> 00:48:35.929
onward. The states would only ever be responsible

00:48:35.929 --> 00:48:38.429
for 10 cents on the dollar for this massive expansion

00:48:38.429 --> 00:48:40.929
of their social safety net. But the drafters

00:48:40.929 --> 00:48:43.110
didn't just rely on the carrot of free money.

00:48:43.289 --> 00:48:45.969
They included a massive existential stick to

00:48:45.969 --> 00:48:49.010
ensure compliance. The text of the ACA essentially

00:48:49.010 --> 00:48:51.650
said to the state governors, you must adopt this

00:48:51.650 --> 00:48:54.110
expansion and cover these new populations. If

00:48:54.110 --> 00:48:56.489
you refuse, the federal government will withhold

00:48:56.489 --> 00:48:59.090
all of your existing legacy Medicaid funding.

00:48:59.210 --> 00:49:01.590
which is the nuclear option. Medicaid is often

00:49:01.590 --> 00:49:04.130
the largest single item in a state budget. If

00:49:04.130 --> 00:49:06.289
the federal government pulled all matching funds,

00:49:06.670 --> 00:49:08.730
state health care systems would implode overnight.

00:49:09.190 --> 00:49:11.789
Nursing homes would go bankrupt. Pediatric wards

00:49:11.789 --> 00:49:14.570
would close. This threat triggered the most consequential

00:49:14.570 --> 00:49:17.630
legal battle in the history of the law. The 2012

00:49:17.630 --> 00:49:20.469
Supreme Court case, National Federation of Independent

00:49:20.469 --> 00:49:23.590
Business v. Sebelius. This case is famous because

00:49:23.590 --> 00:49:26.309
Chief Justice John Roberts famously upheld the

00:49:26.309 --> 00:49:28.469
individual mandate by classifying the penalty

00:49:28.469 --> 00:49:31.269
as a tax, saving the core of the law. But the

00:49:31.269 --> 00:49:33.090
second half of that ruling regarding Medicaid

00:49:33.090 --> 00:49:36.150
is what truly altered the map of American health

00:49:36.150 --> 00:49:38.829
care. The conservative states argued that the

00:49:38.829 --> 00:49:41.190
federal government's threat to pull all legacy

00:49:41.190 --> 00:49:45.230
funding was unconstitutionally coercive. It violated

00:49:45.230 --> 00:49:47.550
the principles of federalism. They argued the

00:49:47.550 --> 00:49:49.550
federal government was effectively holding a

00:49:49.550 --> 00:49:52.150
gun to the heads of the states. forcing them

00:49:52.150 --> 00:49:54.869
to enact a federal priority under threat of financial

00:49:54.869 --> 00:49:57.550
ruin. And a majority of the Supreme Court agreed

00:49:57.550 --> 00:50:00.289
with them. Chief Justice Roberts wrote that while

00:50:00.289 --> 00:50:02.989
Congress can use financial incentives to encourage

00:50:02.989 --> 00:50:05.710
states to act, the financial inducement here

00:50:05.710 --> 00:50:08.510
was so massive and the threat of lost legacy

00:50:08.510 --> 00:50:11.349
funds so catastrophic that it crossed the line

00:50:11.349 --> 00:50:14.349
from gentle persuasion into outright compulsion.

00:50:14.809 --> 00:50:16.829
So the court ruled that the Medicaid expansion

00:50:16.829 --> 00:50:18.900
had to be optional. The federal government could

00:50:18.900 --> 00:50:21.420
offer the 90 % funding for the new enrollees.

00:50:21.559 --> 00:50:23.639
But if a state chose to decline the expansion

00:50:23.639 --> 00:50:27.119
and keep its pre ACA eligibility rules, the federal

00:50:27.119 --> 00:50:29.579
government could not touch a dime of their existing

00:50:29.579 --> 00:50:32.260
legacy Medicaid funding. This ruling instantly

00:50:32.260 --> 00:50:35.059
shattered the unified architecture of the ACA.

00:50:35.059 --> 00:50:37.500
It created what is now known as the great state

00:50:37.500 --> 00:50:40.340
divide or more tragically, the coverage gap.

00:50:40.570 --> 00:50:42.849
Because immediately, a wave of predominantly

00:50:42.849 --> 00:50:44.949
Republican -controlled states looked at that

00:50:44.949 --> 00:50:48.070
10 % future cost, looked at the intense political

00:50:48.070 --> 00:50:51.210
toxicity of participating in Obamacare, and formally

00:50:51.210 --> 00:50:53.809
opted out. Which created an absolute mathematical

00:50:53.809 --> 00:50:56.469
nightmare for the working poor residing in those

00:50:56.469 --> 00:50:59.150
non -expansion states. The law was designed as

00:50:59.150 --> 00:51:02.010
an interlocking puzzle. The exchange subsidies

00:51:02.010 --> 00:51:04.670
were built to catch people above 100 % of poverty

00:51:04.670 --> 00:51:07.090
under the strict assumption that the newly expanded

00:51:07.090 --> 00:51:10.429
Medicaid would catch everyone from zero to 138%.

00:51:10.429 --> 00:51:12.789
When the states opted out, the Medicaid net vanished,

00:51:12.929 --> 00:51:15.170
but the exchange subsidy floor stayed exactly

00:51:15.170 --> 00:51:18.400
where it was. Let's walk through a concrete example

00:51:18.400 --> 00:51:20.739
from the source material to show exactly how

00:51:20.739 --> 00:51:23.159
devastating this math is. Let's look at the state

00:51:23.159 --> 00:51:37.019
of Kansas. If you were a working adult with dependent

00:51:37.019 --> 00:51:39.579
children, you could qualify, but only if your

00:51:39.579 --> 00:51:42.440
household income was below a staggeringly low

00:51:42.440 --> 00:51:45.059
32 % of the federal poverty line. Let's do the

00:51:45.059 --> 00:51:47.699
actual human math on that. For a family of three,

00:51:48.119 --> 00:51:50.559
say a single mother with two kids, the federal

00:51:50.559 --> 00:51:55.480
poverty line is roughly $19 ,530 a year. 32 %

00:51:55.480 --> 00:51:58.139
of that is an annual income of about $6 ,250.

00:51:58.860 --> 00:52:01.340
So if that mother works a few hours a week and

00:52:01.340 --> 00:52:04.599
makes $6 ,000 a year, she and her kids get Medicaid.

00:52:04.860 --> 00:52:06.800
But what happens if she finds a better part -time

00:52:06.800 --> 00:52:09.639
job and increases her income to $10 ,000 a year?

00:52:09.739 --> 00:52:12.039
She has bettered her financial situation, but

00:52:12.039 --> 00:52:15.360
she has crossed the 32 % threshold. She immediately

00:52:15.360 --> 00:52:18.059
loses her Medicaid eligibility because Kansas

00:52:18.059 --> 00:52:20.280
considers her too wealthy. So she turns to the

00:52:20.280 --> 00:52:22.519
ACA exchanges for help. She longs on to healthcare

00:52:22.519 --> 00:52:24.739
.gov to get a subsidy. But the system rejects

00:52:24.739 --> 00:52:27.059
her because the ACA exchange subsidies legally

00:52:27.059 --> 00:52:29.199
do not kick in until a household reaches 100

00:52:29.199 --> 00:52:33.800
% of the poverty level, that $19 ,530 mark. Since

00:52:33.800 --> 00:52:36.019
she only makes $10 ,000, the federal government

00:52:36.019 --> 00:52:38.179
considers her too poor to qualify for a subsidy.

00:52:38.440 --> 00:52:40.340
She is caught in the middle, too rich for state

00:52:40.340 --> 00:52:43.039
Medicaid, too poor for federal exchange subsidies.

00:52:43.539 --> 00:52:45.440
She falls straight down into the coverage gap.

00:52:45.559 --> 00:52:48.219
She gets absolutely nothing, no Medicaid, no

00:52:48.219 --> 00:52:51.320
premium tax credits, and she is left completely

00:52:51.320 --> 00:52:53.980
uninsured. And she wasn't alone. The sources

00:52:53.980 --> 00:52:57.119
note that researchers calculated up to 6 .4 million

00:52:57.119 --> 00:53:00.360
Americans fell into this exact coverage gap simply

00:53:00.360 --> 00:53:02.599
because of the zip code they lived in. It created

00:53:02.599 --> 00:53:05.099
two entirely divergent realities of healthcare

00:53:05.099 --> 00:53:08.900
access in America. By 2016, the data showed that

00:53:08.900 --> 00:53:11.719
states embracing the Medicaid expansion had driven

00:53:11.719 --> 00:53:14.099
their uninsured rates down to an average of 7

00:53:14.099 --> 00:53:16.900
.3 percent. Meanwhile, the states that refused

00:53:16.900 --> 00:53:20.340
the expansion sat at a 14 .1 % uninsured rate.

00:53:20.420 --> 00:53:22.639
It was nearly double. Which perfectly transitions

00:53:22.639 --> 00:53:25.219
us to the final and perhaps most important pillar

00:53:25.219 --> 00:53:28.159
of our deep dive, the real world impact. We have

00:53:28.159 --> 00:53:30.340
mapped the theoretical blueprint, the brutal

00:53:30.340 --> 00:53:32.820
legislative compromises, the actuarial mandates,

00:53:33.079 --> 00:53:35.139
and the Supreme Court curveballs. But when the

00:53:35.139 --> 00:53:37.599
dust settled, what did the actual data reveal

00:53:37.599 --> 00:53:39.960
a decade later? Did this massive fragile machine

00:53:39.960 --> 00:53:42.659
actually work? To answer that, with the impartiality

00:53:42.659 --> 00:53:44.579
we promised at the beginning, we have to look

00:53:44.460 --> 00:53:48.039
unblinkingly at both the documented triumphs,

00:53:48.239 --> 00:53:50.679
the undeniable expansion of coverage and improved

00:53:50.679 --> 00:53:54.079
medical outcomes, and the very real statistically

00:53:54.079 --> 00:53:57.119
verified economic pain and structural failures

00:53:57.119 --> 00:53:59.619
the law caused. Let's start with the macro level

00:53:59.619 --> 00:54:02.280
triumphs. The most glaring undeniable statistic

00:54:02.280 --> 00:54:05.579
is the national uninsured rate. Before the ACA

00:54:05.579 --> 00:54:08.579
fully went into effect in 2010, roughly 16 percent

00:54:08.579 --> 00:54:10.820
of the American population lacked health insurance.

00:54:10.940 --> 00:54:13.820
By 2016, after the fan date, the exchanges in

00:54:13.820 --> 00:54:16.079
the Medicaid expansion were operating, that number

00:54:16.079 --> 00:54:19.360
plummeted to 8 .9%. Depending on the specific

00:54:19.360 --> 00:54:21.699
demographic estimates used, the law provided

00:54:21.699 --> 00:54:24.260
coverage to between 20 and 24 million additional

00:54:24.260 --> 00:54:26.920
people who previously had nothing. And we have

00:54:26.920 --> 00:54:29.599
rigorous academic data showing exactly what that

00:54:29.599 --> 00:54:32.019
influx of coverage meant in terms of human survival.

00:54:32.619 --> 00:54:35.800
A landmark July 2019 study published by the National

00:54:35.800 --> 00:54:38.679
Bureau of Economic Research, the NBER, isolated

00:54:38.679 --> 00:54:41.039
the impact of the Medicaid expansion on mortality

00:54:41.039 --> 00:54:43.079
rates. They wanted to see if simply giving someone

00:54:43.079 --> 00:54:45.239
a Medicaid card actually prevented them from

00:54:45.239 --> 00:54:47.800
dying. Exactly. And the findings were stark.

00:54:48.400 --> 00:54:52.199
The study focused on adults aged 55 to 64, a

00:54:52.199 --> 00:54:54.440
highly vulnerable pre -Medicare demographic.

00:54:54.719 --> 00:54:57.219
They found that states enacting the Medicaid

00:54:57.219 --> 00:55:00.079
expansion exhibited statistically significant

00:55:00.079 --> 00:55:02.539
measurable reductions in mortality rates. But

00:55:02.539 --> 00:55:05.840
numbers to that. How many lives? The NBER estimated

00:55:05.840 --> 00:55:08.199
that over a four -year period, the expansion

00:55:08.199 --> 00:55:11.900
states saved the lives of at least 19 ,200 older

00:55:11.900 --> 00:55:14.019
adults. These are people who would have statistically

00:55:14.019 --> 00:55:16.460
died without the intervention of covered medical

00:55:16.460 --> 00:55:18.619
care. Conversely, the study calculated that 15

00:55:18.619 --> 00:55:21.880
,600 older adults died prematurely in the non

00:55:21.880 --> 00:55:24.260
-expansion states during those exact same years.

00:55:24.010 --> 00:55:26.829
because they lacked access to care. The researchers

00:55:26.829 --> 00:55:29.030
characterized the life -saving impacts as large,

00:55:29.349 --> 00:55:32.130
estimating a 39 to 64 percent reduction in annual

00:55:32.130 --> 00:55:34.530
mortality rates for the older adults who specifically

00:55:34.530 --> 00:55:36.969
gained coverage. The sources also highlight granular

00:55:36.969 --> 00:55:39.590
improvements across highly specific medical disciplines.

00:55:39.809 --> 00:55:42.230
Take trauma care, for instance. Before the ACA,

00:55:42.630 --> 00:55:44.750
emergency rooms were flooded with uninsured trauma

00:55:44.750 --> 00:55:47.849
victims, car crashes, violent injuries. After

00:55:47.849 --> 00:55:49.889
the law passed, the uninsured rate among trauma

00:55:49.889 --> 00:55:52.489
patients nationwide plummeted by 50 percent.

00:55:52.719 --> 00:55:55.000
In states that expanded early, like Maryland,

00:55:55.619 --> 00:55:57.320
researchers found that young adults hospitalized

00:55:57.320 --> 00:56:00.159
for acute traumatic injuries experienced a 25

00:56:00.159 --> 00:56:03.320
% reduction in mortality and a 60 % increase

00:56:03.320 --> 00:56:05.800
in being discharged to a rehabilitation facility

00:56:05.800 --> 00:56:07.920
rather than just being sent home to fend for

00:56:07.920 --> 00:56:10.630
themselves. We see similarly dramatic impacts

00:56:10.630 --> 00:56:12.769
in the management of chronic infectious diseases.

00:56:13.329 --> 00:56:15.929
An analysis of public health data found a 2 .8

00:56:15.929 --> 00:56:18.269
% annual increase in viral suppression rates

00:56:18.269 --> 00:56:21.349
among all people living with HIV nationwide from

00:56:21.349 --> 00:56:24.789
2010 to 2015 directly attributed to Medicaid

00:56:24.789 --> 00:56:27.969
expansion providing consistent access to antiretroviral

00:56:27.969 --> 00:56:30.429
medications. In Massachusetts, an early adopter

00:56:30.429 --> 00:56:33.030
of these reforms, the state achieved an astounding

00:56:33.030 --> 00:56:36.050
85 % viral suppression rate for HIV patients

00:56:36.050 --> 00:56:38.130
retained in health care. And regarding preventative

00:56:38.000 --> 00:56:41.460
A study utilizing National Cancer Institute data

00:56:41.460 --> 00:56:43.519
found that Medicaid expansion was associated

00:56:43.519 --> 00:56:46.760
with a 6 .4 percent net increase in early stage

00:56:46.760 --> 00:56:49.159
diagnoses of all cancers combined. Which goes

00:56:49.159 --> 00:56:51.619
back to the free preventive care mandate. Right.

00:56:51.719 --> 00:56:53.860
People were finally getting their colonoscopies

00:56:53.860 --> 00:56:56.119
and mammograms because there was no copay. They

00:56:56.119 --> 00:56:58.739
were catching the tumors at stage one when they're

00:56:58.739 --> 00:57:00.960
highly treatable rather than showing up in the

00:57:00.960 --> 00:57:04.360
ER at stage four when care is astronomically

00:57:04.360 --> 00:57:07.530
expensive and often futile. Beyond the medical

00:57:07.530 --> 00:57:10.210
outcomes, there was a profound macroeconomic

00:57:10.210 --> 00:57:13.210
shift. Critics spent years arguing the ACA would

00:57:13.210 --> 00:57:15.570
bankrupt the country. But multiple reports from

00:57:15.570 --> 00:57:17.670
the nonpartisan Congressional Budget Office over

00:57:17.670 --> 00:57:20.130
the years concluded that, largely due to the

00:57:20.130 --> 00:57:22.369
new taxes and the cuts to future Medicare spending

00:57:22.369 --> 00:57:25.550
growth embedded in the law, the ACA provisions

00:57:25.550 --> 00:57:28.130
actually reduced the overall federal budget deficit.

00:57:28.289 --> 00:57:30.210
And perhaps more importantly, it deliberately

00:57:30.210 --> 00:57:32.269
altered the distribution of wealth in America.

00:57:32.929 --> 00:57:36.280
A March 2018 CBO report detailed how the ACF

00:57:36.280 --> 00:57:38.840
functioned as a massive engine for reducing income

00:57:38.840 --> 00:57:40.900
inequality. The law funded approximately six

00:57:40.900 --> 00:57:42.639
hundred dollars in average health care benefits

00:57:42.639 --> 00:57:45.019
for families in the bottom 40 percent of the

00:57:45.019 --> 00:57:46.519
income distribution. And where did that money

00:57:46.519 --> 00:57:49.219
come from? It was largely paid for by the new

00:57:49.219 --> 00:57:52.079
Medicare surtax and the unearned investment income

00:57:52.079 --> 00:57:55.519
tax levied almost exclusively on the top one

00:57:55.519 --> 00:57:57.800
percent of earners. It was a structural transfer

00:57:57.800 --> 00:58:00.019
of wealth from the absolute top to the bottom

00:58:00.019 --> 00:58:03.219
half routed through the health care system. So.

00:58:03.469 --> 00:58:06.170
If lives were saved, the deficit went down, and

00:58:06.170 --> 00:58:08.590
inequality was reduced, why did the political

00:58:08.590 --> 00:58:11.809
warfare never stop? Why is it still so deeply

00:58:11.809 --> 00:58:14.369
resented by millions of people? We have to provide

00:58:14.369 --> 00:58:16.650
the impartial pushback detailed in the sources.

00:58:17.090 --> 00:58:19.710
Where did the machine fail? The pushback is substantial.

00:58:19.880 --> 00:58:22.679
and it primarily revolves around a devastating

00:58:22.679 --> 00:58:25.300
affordability crisis for the millions of people

00:58:25.300 --> 00:58:27.519
who don't qualify for the massive subsidies.

00:58:27.920 --> 00:58:29.719
For the middle class who had to buy insurance

00:58:29.719 --> 00:58:31.699
on the individual market without significant

00:58:31.699 --> 00:58:34.500
federal help, the ACA felt less like a safety

00:58:34.500 --> 00:58:36.820
net and more like a financial straitjacket. Critics

00:58:36.820 --> 00:58:39.400
point directly at out -of -pocket costs. We talked

00:58:39.400 --> 00:58:41.820
about how premiums were subsidized, but the actual

00:58:41.820 --> 00:58:44.260
cost of using the health care system, the deductibles,

00:58:44.340 --> 00:58:46.760
and copays skyrocketed. Over the first decade

00:58:46.760 --> 00:58:48.820
of the law, households out -of -pocket spending

00:58:48.820 --> 00:58:51.780
on health care care rose by a staggering 77%.

00:58:51.780 --> 00:58:54.400
The essential health benefits and the ban on

00:58:54.400 --> 00:58:58.039
caps made the policies actuarially richer, which

00:58:58.039 --> 00:59:00.500
meant insurers had to shift the costs to the

00:59:00.500 --> 00:59:03.559
consumer's deductible. The sources cite a survey

00:59:03.559 --> 00:59:06.920
of 2015 data showing that nearly half 49 % of

00:59:06.920 --> 00:59:10.079
non -group market enrollees had individual deductibles

00:59:10.079 --> 00:59:13.679
of at least $1 ,500. For families, the deductibles

00:59:13.679 --> 00:59:18.159
routinely exceeded $3 ,000 or even $5 ,000. So

00:59:18.159 --> 00:59:20.280
you are mandated by the federal government to

00:59:20.280 --> 00:59:23.300
pay $500 a month for a policy. But if your kid

00:59:23.300 --> 00:59:25.980
gets sick and you have a $5 ,000 family deductible,

00:59:26.380 --> 00:59:28.960
you essentially have to pay for all routine pediatric

00:59:28.960 --> 00:59:31.480
care entirely out of your own pocket anyway.

00:59:31.500 --> 00:59:34.199
until you hit that massive threshold. You are

00:59:34.199 --> 00:59:36.900
fully insured on paper, but functionally uninsured

00:59:36.900 --> 00:59:39.159
when it comes to everyday cash flow. The survey

00:59:39.159 --> 00:59:41.179
noted that only 50 % of people were satisfied

00:59:41.179 --> 00:59:43.000
with their annual deductible. There is also a

00:59:43.000 --> 00:59:44.940
massive structural critique regarding the Medicaid

00:59:44.940 --> 00:59:47.139
expansion. We celebrated covering millions of

00:59:47.139 --> 00:59:49.159
new people, but having a Medicaid card does not

00:59:49.159 --> 00:59:51.400
automatically equal access to a doctor. According

00:59:51.400 --> 00:59:53.920
to the research, roughly 30 % of healthcare providers

00:59:53.920 --> 00:59:56.300
across the country outright refuse to accept

00:59:56.300 --> 00:59:58.579
new Medicaid patients. Why? Is it ideological?

00:59:58.800 --> 01:00:01.550
It's purely mathematical. The reimbostment rates

01:00:01.550 --> 01:00:04.929
for Medicaid are abysmally low. On average, a

01:00:04.929 --> 01:00:07.730
doctor receives about 62 cents from a state Medicaid

01:00:07.730 --> 01:00:10.489
program for every dollar they would receive from

01:00:10.489 --> 01:00:13.449
a private commercial insurer for performing the

01:00:13.449 --> 01:00:16.030
exact same procedure. If a clinic's overhead

01:00:16.030 --> 01:00:18.690
requires them to make 75 cents on the dollar

01:00:18.690 --> 01:00:21.650
just to break even, taking a Medicaid patient

01:00:21.650 --> 01:00:24.789
is a guaranteed financial loss. This has led

01:00:24.789 --> 01:00:27.250
to widespread reports of a two -tiered system.

01:00:27.809 --> 01:00:30.530
Critics argue the ACA expanded a second -class

01:00:30.530 --> 01:00:33.070
tier of coverage where Medicaid patients face

01:00:33.070 --> 01:00:36.130
agonizingly long wait times, are routinely turned

01:00:36.130 --> 01:00:38.710
away from private clinics, and struggle immensely

01:00:38.710 --> 01:00:41.190
to find specialists like endocrinologists or

01:00:41.190 --> 01:00:43.710
orthopedic surgeons who will accept their coverage.

01:00:43.969 --> 01:00:46.250
We also must address the broken promises and

01:00:46.250 --> 01:00:48.829
the public misconceptions that permanently damage

01:00:48.829 --> 01:00:51.840
the law's credibility. The most devastating of

01:00:51.840 --> 01:00:54.420
these was President Obama's repeated definitive

01:00:54.420 --> 01:00:56.559
assertion to the American public, if you like

01:00:56.559 --> 01:00:58.579
your health care plan, you can keep your health

01:00:58.579 --> 01:01:01.360
care plan. That statement turned out to be demonstrably

01:01:01.360 --> 01:01:04.010
false for millions of people. It did. Because

01:01:04.010 --> 01:01:07.329
when the ACA went into effect, it mandated that

01:01:07.329 --> 01:01:10.130
all individual plans must meet those new essential

01:01:10.130 --> 01:01:12.510
health benefits standards. Millions of Americans

01:01:12.510 --> 01:01:14.349
who were perfectly happy with their cheaper,

01:01:14.570 --> 01:01:17.289
skimpier, bare -bones policies suddenly received

01:01:17.289 --> 01:01:19.869
cancellation notices from their insurers in the

01:01:19.869 --> 01:01:22.789
fall of 2013. Their existing plans were deemed

01:01:22.789 --> 01:01:25.469
illegal under the new federal regulations. They

01:01:25.469 --> 01:01:27.909
were forced onto the exchanges to buy vastly

01:01:27.909 --> 01:01:30.750
more comprehensive and often vastly more expensive

01:01:30.750 --> 01:01:33.480
plans they didn't necessarily want. The blowback

01:01:33.480 --> 01:01:37.159
was monumental. PolitiFact famously named Obama's

01:01:37.159 --> 01:01:40.599
statement their 2013 lie of the year. It cemented

01:01:40.599 --> 01:01:42.639
a narrative that the government was not enhancing

01:01:42.639 --> 01:01:45.559
choice, but forcibly dictating it. There were

01:01:45.559 --> 01:01:47.880
also the very real fears of the exchange death

01:01:47.880 --> 01:01:50.079
spiral we analyzed earlier. While the entire

01:01:50.079 --> 01:01:52.579
national market didn't collapse into a singularity,

01:01:52.980 --> 01:01:54.960
many regional marketplaces suffered tremendously.

01:01:55.159 --> 01:01:57.780
Because the initial risk pools were older and

01:01:57.780 --> 01:02:00.460
sicker than expected, several major national

01:02:00.460 --> 01:02:03.199
insurers like Aetna and UnitedHealthcare simply

01:02:03.199 --> 01:02:05.820
abandoned dozens of state exchanges entirely

01:02:05.820 --> 01:02:09.019
to stop bleeding cash. Which destroyed competition.

01:02:09.719 --> 01:02:13.139
By 2017, five entire states only had a single

01:02:13.139 --> 01:02:15.320
insurance company offering plans on their exchange.

01:02:15.559 --> 01:02:17.960
If you lived in one of those states, you had

01:02:17.960 --> 01:02:20.880
a federal mandate to buy a product, but a functional

01:02:20.880 --> 01:02:23.300
monopoly selling it to you. And finally, we have

01:02:23.300 --> 01:02:25.719
to mention the most infamous pervasive misconception

01:02:25.719 --> 01:02:28.880
of the entire era, the death panels. This was

01:02:28.880 --> 01:02:31.199
a rhetorical weapon that haunted the law for

01:02:31.199 --> 01:02:34.900
years. Critics claim the ACA created shadowy

01:02:34.900 --> 01:02:37.239
boards of government bureaucrats who would review

01:02:37.239 --> 01:02:40.280
the medical files of the elderly and coldly decide

01:02:40.280 --> 01:02:42.900
if they were worth the cost of rationing out

01:02:42.900 --> 01:02:45.280
life -saving care. In reality, this was a massive

01:02:45.280 --> 01:02:47.719
distortion of two relatively benign provisions.

01:02:48.059 --> 01:02:49.659
First, there was a provision that simply allowed

01:02:49.659 --> 01:02:52.320
Medicare to reimburse doctors for having voluntary

01:02:52.320 --> 01:02:54.300
advanced care planning consultations with their

01:02:54.300 --> 01:02:57.119
patients, discussing living wills, hospice preferences,

01:02:57.340 --> 01:02:59.119
and end -of -life wishes if the patient wanted

01:02:59.119 --> 01:03:02.320
to. Second, the law created the Independent Payment

01:03:02.320 --> 01:03:06.199
Advisory Board, a wonky panel tasked solely with

01:03:06.199 --> 01:03:08.920
suggesting systemic Medicare cost savings to

01:03:08.920 --> 01:03:12.070
Congress if spending targets were breached. The

01:03:12.070 --> 01:03:15.389
law explicitly forbade this board from rationing

01:03:15.389 --> 01:03:18.510
care or modifying benefits. But the nuance didn't

01:03:18.510 --> 01:03:20.730
matter. The labeled death panels tapped into

01:03:20.730 --> 01:03:23.289
a deep, visceral fear of government control over

01:03:23.289 --> 01:03:25.889
life and death, and it stuck in the public consciousness

01:03:25.889 --> 01:03:28.650
shaping elections for a decade. When you step

01:03:28.650 --> 01:03:30.829
back and look at this entirety of this mechanism,

01:03:31.150 --> 01:03:33.309
the Heritage Foundation origins, the brutal 60

01:03:33.309 --> 01:03:35.489
-hour committee fights, the Byzantine budget

01:03:35.489 --> 01:03:38.670
reconciliation process, the complex cross -subsidization

01:03:38.670 --> 01:03:41.130
of the mandate, the tragedy of the Medicaid coverage

01:03:41.130 --> 01:03:43.869
gap, the undeniable millions of lives saved,

01:03:44.070 --> 01:03:46.690
and the crushing reality of $5 ,000 deductibles,

01:03:46.989 --> 01:03:49.269
the core defining tension of the Affordable Care

01:03:49.269 --> 01:03:51.710
Act reveals itself. What is that core tension

01:03:51.710 --> 01:03:55.150
in your view? It is the spectacle of a massive,

01:03:55.570 --> 01:03:59.699
intricate highly fragile regulatory machine attempting

01:03:59.699 --> 01:04:02.820
to solve a fundamental social welfare problem

01:04:02.820 --> 01:04:06.059
using the rigid profit -driven tools of private

01:04:06.059 --> 01:04:09.679
capitalism. It is an attempt to weave a universal

01:04:09.679 --> 01:04:13.119
social safety net out of private, legally binding

01:04:13.119 --> 01:04:15.820
insurance contracts. It's forcing for -profit

01:04:15.820 --> 01:04:18.059
companies to act almost like public utilities.

01:04:18.380 --> 01:04:20.599
The government tells them, you must cover everyone,

01:04:20.699 --> 01:04:22.960
you must offer these 10 exact benefits, and you

01:04:22.960 --> 01:04:26.519
must cap your profit margins at 15%. But simultaneously,

01:04:26.719 --> 01:04:28.719
the government recognizes these companies will

01:04:28.719 --> 01:04:31.219
fail under those rules. So it relies heavily

01:04:31.219 --> 01:04:34.000
on public tax dollars, billions in subsidies

01:04:34.000 --> 01:04:36.519
to prop those very private markets up and keep

01:04:36.519 --> 01:04:39.019
them from collapsing into a death spiral. Precisely.

01:04:39.219 --> 01:04:41.699
It is a grand, sprawling compromise that inherently

01:04:41.699 --> 01:04:43.880
contains the deepest flaws of both a free market

01:04:43.880 --> 01:04:46.340
system and a government run system. It is neither

01:04:46.340 --> 01:04:49.340
pure capitalism nor pure socialism. It is uniquely,

01:04:49.599 --> 01:04:51.539
messily American. Which brings us to the end

01:04:51.539 --> 01:04:53.809
of our journey today. We have mapped the plumbing,

01:04:54.130 --> 01:04:56.550
the triumphs, and the failures. But I want to

01:04:56.550 --> 01:04:59.789
leave you, the listener, with a final provocative

01:04:59.789 --> 01:05:02.070
thought to mull over as you navigate your own

01:05:02.070 --> 01:05:04.389
health care choices. You've seen the mechanics

01:05:04.389 --> 01:05:07.550
now. You've seen how the ACA forces private actors

01:05:07.550 --> 01:05:10.429
to play by social rules, funded by taxpayer wealth

01:05:10.429 --> 01:05:12.929
transfers. As you look at the future of American

01:05:12.929 --> 01:05:15.409
health care, whether you personally advocate

01:05:15.409 --> 01:05:17.389
for tearing this down and returning to a totally

01:05:17.389 --> 01:05:20.869
free market system, or You advocate for burning

01:05:20.869 --> 01:05:23.010
it down and building a government -run, single

01:05:23.010 --> 01:05:25.889
-payer Medicare -for -all system. Consider this

01:05:25.889 --> 01:05:30.579
deeper structural question. tries to be both

01:05:30.579 --> 01:05:33.340
a ruthless capitalist enterprise and a compassionate

01:05:33.340 --> 01:05:36.199
social safety net inherently unstable, destined

01:05:36.199 --> 01:05:38.980
to constantly require new legislative duct tape,

01:05:39.539 --> 01:05:42.280
or given the deeply entrenched private industries

01:05:42.280 --> 01:05:44.320
and the fiercely divided political realities

01:05:44.320 --> 01:05:47.079
of America, is this messy contradictory machine

01:05:47.079 --> 01:05:50.000
the only practical compromise our society is

01:05:50.000 --> 01:05:52.679
actually capable of sustaining? That is the defining

01:05:52.679 --> 01:05:54.699
question that will drive the next 50 years of

01:05:54.699 --> 01:05:56.639
policy debate. Something to think about the next

01:05:56.639 --> 01:05:58.760
time you look at a premium bill. Thank you for

01:05:58.760 --> 01:06:00.559
joining us on this deep dive. We'll catch you

01:06:00.559 --> 01:06:01.000
next time.