Image by fr0ggy5.

It’s helpful to think of the U.S. health care system like a pie made up of different slices (Figure). The largest (blue) slice is employer health insurance, which covers 160 million workers and their dependents; individual non-group insurance (in orange) provides 24 million individuals and their families with patchy insurance (including the enhanced subsidies); Medicaid (in yellow) covers 65 million poor and low-income adults, children, and seniors; Medicare (in red) pays for medical care for 60 million seniors and people with disabilities; the Veteran’s Health Administration (in bright green) provides the best socialized medicine in the nation to 9.1 million qualifying veterans; and that leaves the rest, approximately 28 million Americans, in the (purple) slice of the uninsured. It’s a patchwork arrangement that keeps Americans sliding from one slice to another their entire life until they turn 65, when they finally land on Medicare.

Figure: The U.S. patchwork health care arrangement

Source: Health Insurance Coverage of the Total Population | KFF; Veterans Health Administration; and ReportsSummary.pdf.

One thing about a pie chart, it’s simple geometry. If you make one slice bigger, by definition, you make another slice smaller.

Simple geometry was what President Obama had in mind, when he signed the Patient Protection and Affordable Care Act (ACA) into law in 2010. Despite the name, President Obama and Senator Max Baucus, then chair of the powerful Senate Finance Committee tasked with developing the legislation, gave up on making health care affordable (which would have required the elimination of health insurance companies) and instead concentrated on increasing the number of individuals with health insurance. It attempted, quite successfully, to shrink the slice of the uninsured.

To do this, the ACA included an employer mandate, expanding the slice of individuals covered by their employer, an individual mandate, increasing the slice of the non-group market, the expansion of Medicaid, which enlarged the slice of individuals who qualified, kept the Medicare and VA slices the same size, and presto! The slice of the uninsured shrank. As if by a miracle, the number of uninsured dropped from 50 million to 25 million almost (OK, it took four years to get through the courts) overnight. It was nothing more than simple geometry.

The non-group market

To understand the government shutdown, it’s important to delve deeper into the non-group, private health insurance (orange) slice of the health care pie, where 24 million individuals now get their health insurance.

The slice didn’t start out that large. Before the ACA, only 8 million individuals purchased private health insurance on their own. Unlike individuals who receive their private health insurance from their employer, who typically pays a significant chunk of the monthly premiums, leaving the employee to cover a smaller share of the premium, individuals in the non-group market paid the entire share of the monthly premiums on their own. In 2010, before the passage of the ACA, the average annual cost for health insurance for a family in the individual, non-group market according to America’s Health Insurance Plans, was almost $12,000 for premiums plus their deductible.

For the average worker, making a little over $49,000 in 2010, paying for health insurance meant spending 25% of their income on health insurance premiums (not........

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