Wednesday, October 26, 2016

Obamacare Problems Shouldn't Surprise Anyone

Ok, first thing, I feel I need to say whenever I discuss the Affordable Care Act (ACA, aka Obamacare): it is a Republican plan.  It is the conservative answer to the question: "How do we provide health coverage for everyone?"  The liberal answer can take a few forms but the easiest is "single payer" (aka: medicare for everyone).

ACA's 3 legged stool is straight forward:

  1. Require insurance companies cover everyone (no preexisting condition exemptions).
  2. Mandate everyone get insurance (otherwise, because of 1. the sensible thing is to not get insurance until you are sick/injured, which doesn't work for, I think, obvious reasons--if not obvious: this would devolve to just paying for health care, i.e. no meaningful insurance at all)
  3. Provide subsidies for those who can't afford and penalties for those who can to make sure everyone gets insurance.

There are a couple ways for this this to breakdown but they amount to the same thing: too many people or insurance companies opt out.  This is exactly what is happening.  Healthy people not covered via employers are just not getting insurance on the exchanges, which means those that do purchase are in worse health than average, so the costs to cover them are higher than expected and so we see the combination of insurance companies dropping out of the exchanges and/or raising fees dramatically.

The public option would have done quite a bit to fix this: by making it possible for people to buy into Medicare (essentially) on the exchange, you wouldn't have to worry about insurance companies leaving, and the costs would be fairly low since they could be leveraged with Medicare and/or Medicaid.  Problem solved...except insurance companies did not want this because they feared (and liberals hoped) that the public option would be cheaper and provide better coverage than insurance plans, and so, over time, people would leave the insurance companies for the public option.  Basically this is a back door slide into single payer.  Not sure it would have worked but it wasn't just the liberals who thought it might: insurance companies agreed.

If there is no public option then there are a couple other mechanisms for fixing this, but both amount to the same thing: anyone that "opts out" has to pay the equivalent of a bronze tier insurance coverage.  While this technically could mean increasing the size of the penalty or just giving everyone insurance and then billing them, it would probably need to be the former.  At that point, why pay a penalty and not get insurance when the cost is the same?  So people would sign up in larger numbers.

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