Obamacare is being hobbled by the political compromises made to get it passed. ..
Conservatives point to Obamacare’s marketplace woes as evidence that government should stop mucking around with health insurance. In fact, government hasn’t mucked around enough: if we want to make universal health insurance a reality, the government needs to do more, not less.
Pointer from Mark Thoma.
A while back on twitter, someone pointed me to a passage from David Deutsch.
The key defect of compromise policies is that when one of them is implemented and fails, no one learns anything because no one ever agreed to it.
So, one side says that the stimulus failed because stimulus does not work. The other side says that it worked, but there was not enough of it. One side says Obamacare has not achieved its objectives because it is a flawed concept. The other side says that “government hasn’t mucked around enough.”
If you wanted to create accountability in politics, you could say, “You can have your way, but if the results do not conform to your promises, you lose power.” But things are never that clean.
With markets profits and losses ensure accountability. When your firm loses enough money, you can insist that you were right all along and just ran into bad luck, but nonetheless you go out of business.
Although the aphorisms that come to my mind don’t stress markets, this reminds me of a couple of quotes / maxims / aphorisms.
1. One is that “All successful reform is excessive.”
2. The other is that (I’m paraphrasing) “To get anything done you need to “Take Excessive Measures.”
Taking excessive measures sounds like something the Romans would have said, during either the Republic or the Empire. It also limns why Basic Training in the military is different from an undemanding semester at a mediocre college.
Bruce Charlton coined one of the versions as
3. “Insufficient reform is worse than none.”
“Insufficient reforms are worse than none in the long term since they allow things to get worse for longer.
“Excessive reforms are worse than necessary in the short term, but effective in the long term (so long as the patient survives).
“Ergo all effective reform is excessive. ” –end Bruce Charlton quote
Which you can find with a key word search here.
http://charltonteaching.blogspot.co.uk/2011/11/aphorism-or-what.html
4. It also reminds me of another Charlton based aphorism, which is “Things have to get worse before they get better.”
http://charltonteaching.blogspot.com/2010/07/charltons-law-things-must-always-get.html
The rationale for parliamentary government. The downside is less policy stability as Brexit shows.
“With markets profits and losses ensure accountability. When your firm loses enough money, you can insist that you were right all along and just ran into bad luck, but nonetheless you go out of business.”
Isn’t this exactly what happened to the insurance companies who are leaving some states?
They failed. They failed because of one reason and one reason alone; their cost estimates were wrong.
No one made them price their insurance at any set amount. They knew what had to be covered and the limits on out of pocket costs for consumers.
They screwed up. Now they are gone.
That is the free market.
Nope. They can’t even raise the average price to market levels without permission from regulators, which takes forever and is hard to get is an unpredictable way.
In the free market, if providers of some good or service advertise at a rate that turns out to force a loss because of unexpectedly higher input prices, then yes, they have to sucks up the losses for a limited time and quantity, but as soon as .they are able, companies just raise the price to the clearing level. That’s “free market”. Obamacare isn’t even close.
Incorrect.
When the exchanges started they themselves set the market level.
Strange, I read an awful lot of stories about premium increases these days. Doesn’t seem that hard.
Actually, I used to approve rate increases. We kept a lid on anything too bad and it was a very political process that had little to do with reality.
If you get the price kind of right and just need single digit trend each year we won’t bother you. But if you find you need double digit increases or want to get ahead of a death spiral then good luck.
I remember when we did LTC price increases and the only question was what % we would allow every year because that’s what the pols wanted, even though some of these carriers were losing 300% they might say something like “you can only increase 15% each year.”
Anyway, rate review is a Kafkaesque process that made me want to kill myself. If I described some of these meeting to you I don’t think I would be believed.
Well, you are right about the last thing.
Oh, btw.
Everyone knew this would be a problem. The ACA had set up risk corridors to help insurance companies get their costs in order at the beginning of the program.
The GOP cut it and caused many of these problems.
“The ACA had set up risk corridors to help insurance companies get their costs in order at the beginning of the program.”
You aren’t even making sense! In a real marketplace, a business simply decides to offer consumers a product and consumers either buy or don’t buy the product. Market clearing prices are established. NOTHING like this exists for health insurance — the product that insurance companies offer (via ACA or even in the regular marketplace) is heavily regulated with respect to who can be covered and why, what can be charged, etc. That’s why state health insurance regulations exist in the first place. These insurance companies cannot simply say, here are the five policies we’d like to offer consumers and be done with it.
Don’t for a second imagine we have anything resembling a real market for health insurance or care.
They set up minimum coverage. They set up max out of pockets. That is it.
If you do not know what the risk corridor program was, you really should not comment.
“To set the table, we need to take a deep breath and go over a provision of the Affordable Care Act known as “risk corridors.”
The ACA upended the traditional health insurance model of selling mostly to healthy people, mandating that insurers must provide policies to everyone, regardless of health or pre-existing conditions. That presented a problem for the companies, which didn’t know how much they would need to charge in premiums in order to cover their expenses for all the new policies.
To help companies stay solvent as they adjusted their rates to proper levels, the law provided a three-year period in which the government would spread the risk among all insurers in ACA marketplaces. This program, set to last between 2014-16, is known as risk corridors.
If some insurers are successful in setting their marketplace rates properly and make more than a certain amount, Washington gets some of that extra money, referred to as user fees. Companies that don’t do well have a portion of their losses covered by the government.”
http://www.politifact.com/florida/statements/2015/dec/07/marco-rubio/rubio-says-he-prevented-25-billion-obamacare-bailo/
Oh, one more thing.
No one required insurance companies to enter the exchanges.
That was their own personal, market driven decision.
Their minimum coverage standards are garbage and include a bunch of shit that shouldn’t be there. I know, I went through all those standards when I was working on pricing out these plans.
BTW, you don’t know shit about the three Rs. See above.
Actually, the three Rs are a giant subsidy program for the exchanges paid for by regular peoples insurance. The reimbursement funds come from charges on non-exchange plans.
Also, most government programs have three R type risk sharing arrangements that everyone tries to game and it creates perverse incentives. I’ve played that game myself.
Also, this 80% ratio is fucking retarded. You know how you make more money like that. You get premium up so that 20% of premium is a bigger number. Why would you want to control trend when trend is what increases your allowable profit.
One would think that would set up a perfect opportunity for the free market to work.
This is not quite accurate. No single insurance product was required to be priced at a set level, but the relationships between the pricing for different insurance products is effectively prescribed by the law. That’s a pretty important distinction from a free market, in which products that cost triple to make can be priced accordingly.
But what the marketplace (sort of) had given us was the following situation: you get so-called “free” insurance from your insurer. You get a serious illness that causes you to lose your job, and thus your insurance. Because you lose your job you are temporarily unable to pay for insurance, but then find that you can no longer purchase insurance because you had a pre-existing condition.
Saying that Obamacare is deeply flawed is not the same as saying it is “failed.” It is unquestionably an improvement on what we had before, which was simply an obscenity.
Those who correctly criticize it from the left are not comparing it to an ideal that exists only in their heads. They are comparing it to superior systems that exist all over the world, which were put in place during a period of openness to state-based solutions which existed post WWII, and which have proved resilient to every swing to the right because, whatever their flaws, they were so clearly superior to what existed before, and to the American model.
My understanding is that the reason America missed out on this was because WWII wage caps created an incentive for businesses to offer “free” insurance as a perq, and this proved to be a relatively satisfactory solution as long as unemployment remained low and the perqs remained common.
In the long run this missed opportunity has been a tragedy.
The good news is that this sort of religious faith in the superiority of market as the best solution for every problem under the sun is largely an affliction of a generation that will soon die off, whereas the kids who are its victims know better.
Clearly superior:
http://www.telegraph.co.uk/news/2016/09/02/obese-patients-and-smokers-banned-from-all-routine-operations-by/
Just don’t call it a “death panel” because that triggers leftists.
One of the biggest reasons that American healthcare is more expensive is because of inflation in the 70s and 80s. Other countries that implemented single payer around that time had lower inflation, and that added up over time.
However, what does that mean for us now. If we implemented single payer tomorrow, could we cram 50% reimbursement cuts down providers throats? Could congressmen withstand that nurse marches on Washington? That’s that it would take to match the OECD.
Truth is, the rest of the OECD never shoved a price cut like that down providers throats. They simply kept inflation lower for a few decades and it added up. Their inflation rate today isn’t that different then ours, they are just starting from a lower base.
Do you think you can put all those doctors, hospitals, nurses, etc out of business? Cause that’s what it will take. That’s where the fat is. There isn’t enough in insurance company underwriting margin to get to OECD levels.
Obamacare was a HUGE coup for the healthcare providers. Before they provided these poors care and didn’t get paid. Now they do what they would have done anyway and get paid for it. There is a reason the the hospitals in Virginia offered to pay their states portion of the medicaid expansion. Because they would still come out ahead. Cui bono, who benefits.
You aren’t getting OECD results without OECD prices. You aren’t getting OECD prices without doing a massive sudden crackdown on healthcare providers. And healthcare providers are the most powerful political group in the country, infinitely more powerful then in any other place or time in history.
I certainly agree about the OECD prices. Will take years to get there and would require providers to reduce their bloated incomes.
But I disagree about that “unreimbursed care” part.
Government and over charging paying customers.
Never saw a doctor go broke.
People used to walk into the emergency room and get free care by law because they couldn’t pay.
Now they walk in with Medicaid, ACA, or some other form of payment.
Hospital reimbursement on these people just went from $0 to >$0. That’s a win.
>> The other side says that it worked, but there was not enough of it.
I think the correct terminology would be the ‘calculation problem’.
I think, but do not know, most of the increase in number of insured under Obamacare is the result of the expansion of Medicaid.
I think other than that, which could have been done separately, Obamacare is a failure by any reasonable measure. Cost have increased. For many, if not most buying individual plans, you can only get an HMO plan, not the preferred PPO plan (I know this to be true in Dallas, and my understanding is rural areas have fewer choices). So choices have decreased.
What we are witnessing is the “death spiral”, where insurers must raise rates to cover the sick that sign up, and increasing the rates encourages those that are healthier to find alternatives (Christian sharing networks are booming).
Basically this is a result of “community rating”, where premiums cannot be based on the insured’s health. So we have a game where insurance companies are offering “group plans” as it provides a sort of screen against the sickest (people covered are employed, so can’t be that sick), or the Christian sharing networks (on the theory that church going Christians will be healthier). In other words, avoid community rating.
As to the article in question, Obamacare has failed. Whether some other hypothetical healthcare reform might have worked , is just a different issue.
Do you understand that costs under the ACA are less than costs under employer provided insurance?
Do you understand that the government subsidizes employer provided insurance more than they subsidize the ACA?
You people really need to improve your information sources.
I would suggest reading everything that Maggie Mahar has written on the subject, on her own site and at Angry Bear.
Or you can just constantly repeat incorrect assumptions that suit your ideology.
Your choice.
Dude, with every single one of your comments, you prove the point, the literal point of the blog post. Sheesh!
“With markets profits and losses ensure accountability. When your firm loses enough money, you can insist that you were right all along and just ran into bad luck, but nonetheless you go out of business.”
Don’t think so.
Individual healthcare costs (i.e., those paid by individuals in the private market) are up.
Insurers are losing money hand over fist and many are leaving the market. Insurers are constrained by regulators in setting price and terms.
Providers are constrained in offering services by both state (CON/certificate of need) and federal (Stark, etc) regulations. (Handle was right above.)
There hasn’t been a free market in healthcare in the US in decades. (Except purely self-pay areas like cosmetics…and interestingly dentistry.)
Insurers had the option to enter and had control over pricing with some expectation the feds would help if they missed. They had a lot of constraints on plan structure when they went to market. After going to market, when they had more info, pricing and plan structure remained constrained.
The insurers that thought they would made bank from new lives are getting hammered.
They will either exit, go to the government for relief, or try to take it out of provider rates. Or all three.
ACA was a half-assed Frankenstein and is collapsing under its own complexity.
The reason the exchanges are smaller than projected is fewer employers have dropped and more added healthcare than projected. Total healthcare coverage is higher than projected.
If you throw government money at something, people will take free shit.
I’m incredibly unimpressed that people will accept free health insurance paid for by others.
One question.
Could you step over an injured or sick human being that needs medical care without a thought?
If you couldn’t, then you should be able to figure it out.
Serious question, not trolling: How can conservatives take any blame for something that was passed with zero (R) votes? It is a (D) bill, (D) policy, and (D) crap sandwich all the way down.
They take the blame from stopping it from being even more successful than it is.
As of right now, the lives of more than 75,000 Americans have been saved by the ACA, and the lives of millions have been dramatically improved.