OP here. This is Part 3 of my series on US Healthcare structural flaws.
The core argument is that the ACA’s 'Medical Loss Ratio' (which caps insurer profits at 15%) inadvertently created a 'Cost-Plus' incentive for inflation. Insurers bought Pharmacy Benefit Managers (PBMs) to 'launder' profits from the regulated insurance side to the unregulated PBM side via rebates.
I also dig into why the 'Association Health Plan' rule change in 2024 effectively locked small businesses out of the market.
GlibMonkeyDeath•Dec 1, 2025
I agree that the way the US pays for health care is completely broken, but your framing of the Association Health Plan rule change is strange to me.
Association Health Plans are a way to weaken the ACA, so Republicans can finally get back to the days of underwritten health insurance (i.e., de-facto denials for preexisting conditions via unaffordable insurance costs.) It has been in legal limbo for a while, and the Department of Labor finally (rightfully, in my opinion) seriously limited the scope of these plans.
AHP's are able to charge based on the "health" of the group, and aren't subject to covering the ACA essential items (like, say, emergency, maternal, or rehabilitation care.) This would encourage groups of "healthy" people to form low-cost plans that lacked basic coverage, and would leave "sick" people on ACA plans, which of course would go up in cost because of this.
We saw this in the bad old pre-ACA days. It's the classic death spiral that made most "high risk" pools basically non-functional before the ACA. The only option was to have a job through an employer with a large enough group plan that your rates wouldn't skyrocket. Otherwise, the option was usually bankruptcy.
Of course, literally every other modern democratic nation besides the US has figured out how to provide health insurance in one way or another without bankrupting their citizens. Maybe you could do another article showing how other countries systems avoid the US problems.
kmundy•Dec 3, 2025
You are right about the math of the 'Death Spiral.' If we simply deregulated AHPs without a safety net, healthy people would flee, leaving the sick in a collapsing ACA pool. That is exactly what happened in the pre-ACA 'bad old days.'
But my proposal isn't just 'Deregulation.' It pairs AHPs with a specific mechanism designed to stop that spiral: Invisible High-Risk Pools (The Maine Model).
The 'Maine Model' allows insurers to 'cede' their highest-risk patients to a state-funded reinsurance pool. The patient keeps their same card and doctor (hence 'Invisible'), but the risk is offloaded.
The Data: Before the ACA, Maine implemented this. Anthem requested a 20% rate hike due to adverse selection. After the pool was implemented, the rate hike dropped to under 2%.
This shows we can protect the sick without forcing the healthy to pay $25k/year premiums to an oligopoly.
Regarding other countries: I’d love to write that article! But most of them (like Germany or Switzerland) succeed by strictly regulating prices or supply. In the US, we have the worst of both worlds: we cap insurer profits (via MLR) but leave costs unchecked, which actually incentivizes inflation. My 'Three-Legged Stool' proposal is an attempt to engineer a path out of that specific American trap.
GlibMonkeyDeath•Dec 8, 2025
>The Data: Before the ACA, Maine implemented this. Anthem requested a 20% rate hike due to adverse selection. After the pool was implemented, the rate hike dropped to under 2%.
>This shows we can protect the sick without forcing the healthy to pay $25k/year premiums to an oligopoly.
So in effect give the oligopoly tax money so they keep their rates the same for the sick and the well? Isn't that what Congress is basically currently fighting over (federal money vs. state?)
Congress also intentionally removed the unpopular requirement to have to buy insurance (either through your employer or the ACA market), essentially re-creating one of the death-spiral conditions in the first place. It's been the Republican goal all along to get the ACA to die in a death spiral so we can go back to forcing people into medical bankruptcy, like God intended.
kmundy•Dec 8, 2025
Well, the subsidy just buys us some time to stabilize the risk pool. Meanwhile, the ACO+Factory model is emerging, which flips the incentives; changes the way the product is consumed, so we stop overpaying in the first place.
GlibMonkeyDeath•Dec 9, 2025
I agree we need to remove the perverse incentives across the entire system. I also agree the current ACA subsidies are a band-aid.
It's incredibly frustrating because this is a solved problem - even just fixing the most egregious flaws in the ACA would be a huge improvement. I am very skeptical, though, that in my lifetime American voters will ever be unified enough again to take on the de facto doctors union, the health insurer oligopoly, and the pharmaceutical companies, all of whom currently benefit from the broken system, and basically control the government top to bottom.
kmundy•Dec 9, 2025
You’re right—Congress is the bottleneck for the important stuff (Residency Cap, MLR). And the lobby is massive.
I'm a tad more hopeful than you though. I'm hoping that if we all have a shared understanding of how these well intentioned rules (MLR, GME caps) are unwittingly benefitting insurers, it helps bring some clarity into what precisely needs to change & will, perhaps, build some pressure on legislators.
2 Comments
Association Health Plans are a way to weaken the ACA, so Republicans can finally get back to the days of underwritten health insurance (i.e., de-facto denials for preexisting conditions via unaffordable insurance costs.) It has been in legal limbo for a while, and the Department of Labor finally (rightfully, in my opinion) seriously limited the scope of these plans.
AHP's are able to charge based on the "health" of the group, and aren't subject to covering the ACA essential items (like, say, emergency, maternal, or rehabilitation care.) This would encourage groups of "healthy" people to form low-cost plans that lacked basic coverage, and would leave "sick" people on ACA plans, which of course would go up in cost because of this.
We saw this in the bad old pre-ACA days. It's the classic death spiral that made most "high risk" pools basically non-functional before the ACA. The only option was to have a job through an employer with a large enough group plan that your rates wouldn't skyrocket. Otherwise, the option was usually bankruptcy.
Of course, literally every other modern democratic nation besides the US has figured out how to provide health insurance in one way or another without bankrupting their citizens. Maybe you could do another article showing how other countries systems avoid the US problems.
But my proposal isn't just 'Deregulation.' It pairs AHPs with a specific mechanism designed to stop that spiral: Invisible High-Risk Pools (The Maine Model).
The 'Maine Model' allows insurers to 'cede' their highest-risk patients to a state-funded reinsurance pool. The patient keeps their same card and doctor (hence 'Invisible'), but the risk is offloaded.
The Data: Before the ACA, Maine implemented this. Anthem requested a 20% rate hike due to adverse selection. After the pool was implemented, the rate hike dropped to under 2%.
This shows we can protect the sick without forcing the healthy to pay $25k/year premiums to an oligopoly.
Regarding other countries: I’d love to write that article! But most of them (like Germany or Switzerland) succeed by strictly regulating prices or supply. In the US, we have the worst of both worlds: we cap insurer profits (via MLR) but leave costs unchecked, which actually incentivizes inflation. My 'Three-Legged Stool' proposal is an attempt to engineer a path out of that specific American trap.
>This shows we can protect the sick without forcing the healthy to pay $25k/year premiums to an oligopoly.
So in effect give the oligopoly tax money so they keep their rates the same for the sick and the well? Isn't that what Congress is basically currently fighting over (federal money vs. state?)
Congress also intentionally removed the unpopular requirement to have to buy insurance (either through your employer or the ACA market), essentially re-creating one of the death-spiral conditions in the first place. It's been the Republican goal all along to get the ACA to die in a death spiral so we can go back to forcing people into medical bankruptcy, like God intended.
It's incredibly frustrating because this is a solved problem - even just fixing the most egregious flaws in the ACA would be a huge improvement. I am very skeptical, though, that in my lifetime American voters will ever be unified enough again to take on the de facto doctors union, the health insurer oligopoly, and the pharmaceutical companies, all of whom currently benefit from the broken system, and basically control the government top to bottom.