States vs territories and the unintended effects of Obamacare

For all those arguing that smart people in government can solve healthcare problems, a case for you to consider. As well as the 50 states that make up the USA, there are various territories which are overseen directly by the Federal Government but which are not themselves states; Guam, the Northern Marianas Islands, Puerto Rico and the US Virgin Islands ("organized" territories with a degree of self-rule) and American Samoa, Midway Islands and a bunch of small atolls and islands ("unorganized" territories). Federal government rulings apply to these territories in the same way that they do the states.

It turns out that the implications of recent Affordable Care Act were not entirely thought through with respect to these territories:

While the Affordable Care Act requires health insurers in the territories to accept all shoppers no matter how sick, it does not mandate that all territorial residents buy plans nor does it provide subsidies to make coverage more affordable--as it does in the 50 states and the District of Columbia.

The big win for poor people in the ACA was that they would receive subsidies to purchase the (rather expensive) health coverage that the ACA mandated they buy, and the big win for sick people was that they could not be refused insurance or be priced out of the market due to pre-existing conditions. The way the finances balanced was a mandate to purchase insurance under penalty of fines. But those subsidies aren't provided to residents of these territories, so ACA plans are extremely expensive; and the mandate does not apply in the territories. Result: most people aren't buying ACA plans because a) they are expensive and b) they don't have to. The only people buying ACA plans are the really sick people for whom even unsubsidized ACA plans are far better than their alternatives.

So the insurance companies in those territories are stuck having to accept really sick people without any ability to dilute the effect on their returns by including a large pool of healthy people:

The administration has offered technical assistance to alleviate the problem alongside potential policy work-arounds. One solution Health and Human Services has suggested is having the territories pass their own individual mandates, just as Massachusetts did back in 2006. But the regulators say that won't work either, because they don't have enough money to subsidize the purchase of insurance coverage for their citizens.

In other words: if Guam mandates purchase of insurance by Guam citizens, they'll have to pay full price for the ACA-compliant plans and they'll march on 155 Hesler Place with torches, pitchforks and lengths of rope.

It appears that no-one drafting the Affordable Care Act asked "hey, how does this affect the non-state territories?" As a result, they've made a horrific mess of healthcare in those areas. Oopsie. Next time someone proposes that the government step in to fix something, remember how badly they got this wrong.