Reed Abelson and Margot Sanger-Katz (NYT, the Upshot) write,
Competition, at least in theory, helps keep premiums low and service high. That’s the whole point of having a market for health insurance. But 17 percent of people eligible for this market might have no choice of carrier next year.
…People who do not receive federal tax credits to help pay for their coverage are particularly hard hit by having to pay higher premiums and could be unable to afford the cost. They are a small minority of people currently in the Obamacare marketplaces, but more than a third of all people buying their own insurance, according to recent estimates.
…There are currently about half as many people in the exchanges as the Congressional Budget Office expected…. About 27 million Americans still don’t have insurance
Read the whole thing. My prediction is that in order to keep the system going under the Clinton Administration, much more taxpayer money will be spent and consumers and health care providers will face more coercive rules.
I expect a half-step toward “medicaid for all”. The democrats will propose that no-option or one-option counties also get a ‘public option’. That will give rise to a quasi-cartel-like system of agreements and cross-payments between the big insurance companies that will always guarantee that the ‘public option contingency’ never happens.
But prices will still go up, so eventuality the system breaks and we get USNHS, which is what the progressives have anyways really wanted anyway.
As Megan McArdle keeps pointing out, we’re not getting a public option in this country for two reasons — 1) we can’t afford it. 2) it would require lowering salaries, cutting jobs and reducing benefits of some very powerful groups.
Has not being able to afford it ever stopped anyone?
We’ve got permanently leftist demographics now. And with interest rates at practically nothing there will be no immediate collapse. They are just going to pile on debt.
How many divisions do debt concerned policy wonks have?
Afford what? Forget about bending the cost curve, They will simply squash the quality, convenience, and freedom of choice curves (both supply and demand for health care) until we can “afford” it. Oh, and “afford” will be left for a future generation to deal with. There will be some room for “pay to play”, so the wealthy can pay some more money out of their own pockets, so the Central Park crowd does not complain.
They will just keep pouring money into various subsidies. Some directly to customers. Some via reinsurance arrangements to insurers. Many of you wonks won’t even call half the subsidies “subsidies” because there will be some half ass officials story about how something isn’t really a subsidy.
Obamacare took a group of people who previously got care but didn’t pay and turned them into people who pay (with someone else’s money). Cui Bono, who benefits? There is a reason that hospitals in Virginia are willing to pay their states share of the Medicaid expansion.
I want to see Obamacare fail. But if I wanted to make it work, here’s what I would try first:
1. Allow different pricing by age. The government could even specify what the ratios can be. This would make the exchanges much more attractive to healthier people.
2. Increase the individual penalty for being insurance-less, so that the penalty is higher than the cost of insurance, at least for the healthiest age groups.
3. If the penalty is less than the cost of insurance for the least healthy age groups, then limit open enrollment on the exchanges to once per year.
4. Take a burden off employers and allow them to expire COBRA coverage on the date that open enrollment next hits. This will put more people onto the exchanges.
5. Fund very narrow subsidy programs based on having a diagnosed condition over which the patient has no influence in contracting (e.g., genetic disorders). Figure out what the average cost per person is for treatment of those disorders and give out vouchers that those unfortunate folks can use to spend on healthcare. Then allow exchange-based insurers to increase their premiums by an equal amount for anyone with those diagnoses. Example: type 1 diabetes or Huntington’s disease. The restriction to conditions over which the patient has no influence in contracting is so that we don’t spend public money rewarding risky behavior.
There are lots of problems with (2), practical and legal.
The practical problem is that many people cannot afford the new rates (be that insurance or penalty). In my state, rates went up 37% last year, and are going up 51% this year. In my own case, with a family of three completely healthy people, our portion for pretty crummy insurance would still be almost $15K next year.
That is the practical problem for (2). Even if they can pay them now, with 40-50% increases year after year, there is no reason to expect that they can pay them next year.
The legal problem is that Roberts’ terrible SCOTUS decision about the tax/penalty question regarding the mandate only approved of it (characterizing it as a tax that could be avoided) since the penalty was nominal. If it were (as in my case) almost $15K, it would be hard to categorize it any longer as ‘nominal’, and it would fail Constitutionality even by the tortured standards that approved it.
I agree with your practical points about proposal 2. They are some of the reasons why I’d like to see Obamacare fail. (But if I was a supporter …)
I disagree with the legal implications. The Roberts court — even before Scalia’s death — showed that it would not stand in the way of Obamacare. I see no reason to believe that they would find a backbone now.
Roberts’ rationale for approving the mandate penalty was his alone. The 4 leftists who made up the rest of the majority thought the penalty was fine, even if it was not a tax. Once Clinton replaces Scalia, Roberts’ holding fades into a thing of merely antiquarian interest.
Really, it’s a little worse than that. Even low density areas with multiple insurers often only have one provider and that is some 70% of the country. They are mostly provided through medicare as would a similiar public option. It has been that way since medicare. The upside is these are low density so cover few people. Large urban areas where most people live usually have competition. A chart.
Umm, a couple of facts
– The employer provided insurance market has the same problem with a lack of regional competition as the ACA market.
– The Medical Loss Ratio(MLR) in the ACA greatly affects the ability of insurance companies to take advantage of the loss of competition; it was the inclusions of MLR into the ACA that drove the insurance industry nuts.
-Healthcare is expensive. And whenever I hear this nonsense about the subsidies I wonder why the people that profess such things do not realize that our subsidies to those with employer provided insurance are much higher than the ACA subsidies, and have been for many years. Additionally, that subsidy is the most regressive subsidy in our healthcare system.
– There is no logical reason to read Megan McCardle’s thoughts on any subject.