• Do Obamacare’s three “mores” spell long-term failure?

    Ross Douthat has been doing some thought provoking writing about Obamacare of late. In his latest post, he discusses how Americans might respond to what he terms the law’s three “mores”: that the insurance it offers “will be more expensive, more subsidized and more comprehensive than what was previously available on the individual market.”

    Do they spell long-term failure? Douthat does not say that they will with certainty, but it’s the question he raises.

    This is why the law’s critics believe Obamacare might be a long-term failure even if it survives its launch troubles and works on its own terms for a while. It’s not about the good things the reform delivers: those are real enough. It’s about whether there are too many other goods, for too many people, that the law’s three “mores” end up crowding out.

    Maybe! But I think the pundits’ tendency to view the long-term fate of the law as a “success” or “failure” is a symptom of short-term political thinking. Right now, and for the last four years, it was entirely reasonable to think of the law’s fate as a success or failure. We’ve been in a perpetual struggle over this very dichotomy. Elected Republicans (not all, but most) have fought for defeat, reversal in the courts, repeal, defunding, and certainly tried in every way possible to sow the seeds for troubled, if not failed, implementation. Meanwhile, elected Democrats (not all, but most) have fought for success, legal legitimacy, to maintain funding, and for implementation.

    But this has all occurred in an environment unlike one we’re likely to see a year from now and beyond. To date, the features of Obamacare that have been implemented, though important, are relatively minor compared to what’s now being attempted. Once the exchanges are functioning (presuming they do function) and Medicaid expansion takes hold (in states that have accepted it), things will be different. Tens of millions of people will depend on the law in ways not all of them even realize today. Likely most people will know someone whose insurance depends on Obamacare. Businesses will have reorganized and health care providers will have retooled in ways that depend on the law as well.

    This will all make a big difference. People won’t want to lose their coverage or part thereof. People won’t want their friends and relatives to lose coverage. People will be very concerned about changes of any type, just as they are today. Businesses and health care providers will not want the landscape to be dramatically reshaped anytime soon. Status quo bias is strong, and there will be a new status quo. We know this. This very fact is what gives comfort to supporters of the law and what drives the desperate attempt by opponents to kill it before it fully launches.

    That’s not to say people will uniformly like the cost of coverage. I fully expect many, if not most, will think health care is too expensive. We already think that, and have for years. I do think this will eventually give rise to further reform proposals and be a topic of campaigns. But it will all be in the context of Obamacare, upon which many depend.

    Therefore, what I expect is not a conversation about “success” or “failure” or — in time — about “repeal,” but about how to incrementally change the law to start to take better control of costs.

    After all, Medicare has a cost control problem, has for decades, and it’s not ever been close to being repealed. The biggest, recent change has been to expand it, adding a drug benefit. Yes, we also get payment reforms. They’re not deep enough, to be sure, but they’re a far cry from repeal or restructuring. Though restructuring may be what we need, it’s a heavy political lift to achieve it.

    Or look at Massachusetts. There health reform like that occurring at the national level has not tamed spending. There’s hardly a cry to reverse the coverage law, though. Instead, there’s an effort underway to add to it in ways that may better control that spending.

    On the whole, this “success” vs “failure” idea is short-sighted, and soon will be out of date. Indeed, there’s a policy risk in continuing such rhetoric. So long as Republicans couch their reform ideas in the language of “repeal,” Democrats have no choice but to resist. They own the law and they’re not going to let the opposition steal it away.

    Ironically, many conservative reforms could easily fit within the framework of Obamacare, and likely would appeal to moderate Democrats. Once we get beyond “repeal,” broad, bipartisan reform that more fully addresses at least some of Douthat’s three “mores” may be possible.

    Notice, I did not say “likely.” After all, the partisan divide is still wide and campaigns are not likely to be won on a message of kumbaya.

    @afrakt

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    • Very thoughtful. I suppose there are many who have no problem with millions going without health insurance because they can’t afford it, and object to subsidizing insurance for them because they are undeserving. Of course, the subsidies don’t really benefit the undeserving; the subsidies benefit those who need health care, those injured and ill, especially those with chronic illness who would be denied insurance because they are ill. I predict that, once Obamacare is implemented, those who object now will come to see the changes as benefiting, not the undeserving poor, but the injured and ill, including family members and friends.

    • Well done, Austin, thank you.

      Just for the heck of it, let us assume that the fate of the ACA will be decided by the number of voters who like it vs. the number of voters who dislike it.

      New Medicaid recipients will like the ACA, but sad to say their voting record is abysmal. (cf. Tennessee, which cancelled Tenn Care even after almost 25% of its citizens were included in it. The problem was that
      a large number of likely voters were opposed to the higher taxes that would have resulted from permanent TennCare.)

      New ACA enrollees from the dark side of the individual insurance market (i.e, over age 50) will love the ACA. Will they all vote Democratic?

      The right wing has spent a lot of energy trying to get seniors to oppose the ACA, even though it barely affects them.

      This may still be the key battleground.

    • First, I’ve never read anything by Douhat that was “thought provoking” (except to think that this guy doesn’t have all of his logic in order).
      Three “mores”? … How about less expensive, no subsidy unless you are low income, and the same range of coverage as existing policies.
      In other words, Douhat is still trumpeting the fearful scarcity “we’ll all go bankrupt” line that Republicans love… and reality just keeps denying this old canard.
      You are right to point out that “failure” is not an option and the Republicans are fighting a losing battle to think they can repeal ACA. It they were smart (which they aren’t) they would try to propose “reasonable” improvements to the law… but we know that this will not happen.
      The ACA is here to stay and and could be improved with conservative “reforms”… although the entire law is modeled after the conservative Heritage foundation think tank proposal and is actually very “conservative”.
      I personally would like to see a public option as well as more price controls which could take care of a lot of the expensive bits of the law and benefit everyone.

    • I agree that once it is implemented success vs. failure isn’t really a meaningful metric, historically it hasn’t been with most of our social programs. What I am going to find really interesting going forward is whether Obamacare will lead to real momentum on cost control. Something I’ve been arguing for years is that cost control isn’t possible without universal coverage, any cost control effort has winners and losers and without universal coverage the losers will always have sufficient strength in both the market and government to forestall most cost control efforts. However, once everyone is in the system more power is gained by those with interests in favor of cost control.

      I do have to admit, however, that with the Rude Goldberg machine that is Obamacare I feel uncertain that the collective action problem necessary for cost control is solved than I would with a simpler method of universal coverage. Still, I do think it will be a lot more difficult for competing interests to try to shift costs rather than lower them after the reform giving me some hope. The next 5 – 10 years will be very interesting from a health policy standpoint.

    • As a consequence of the law, many Americans are losing coverage in what will soon be the millions. A very likely scenario, unless the enrollment problems are addressed by February, is that many more Americans will be without insurance after enrollment closes than before it opened. That would be a peculiar shortcoming and an interesting new status quo. How would voters respond to it?

      • That’s odd, because if I do nothing, my insurer enrolls me in a plan that is better than my current plan and costs the same. It also doesn’t have double digit increases that have become the norm.

        If I enroll through the exchange (without a subsidy) I get a substantial savings for the same plan. Amazing how bad reality sucks. Not.

    • Jardinero raises a real concern.

      The individual policy market has been a drag on profits for years with most insurance companies. The only way they made money in this market was tough underwriting, hard nosed claim denials, and loss leader pricing where rates would go up rapidly after the first year.
      (The ‘Great Benefits’ company in John Grisham’s novel was not real far from the truth.)

      Anyways, some insurers see the ACA exchanges as a way to exit the individual market. Those who qualify for subsidies on the exchanges will in many cases be better off with ACA coverage than they were before
      Those who make too much for subsidies may be worse off and they will be extremely vocal about it. Remember, the subsidies stop at about $40,000 income for one person and $62,000 for a couple without kids. This may in fact create a new class of uninsureds.

    • Douthat’s earlier observation (I’d call it fear) was more insightful: that the problems encountered with the neo-liberal solution in ACA would ultimately result in the adoption of the liberal (or New Deal) solution to replace it. The refrain that ACA will result in many millions losing health insurance can be true only if the many more millions who obtain insurance as the result of ACA don’t count. And for many, they don’t. As for Douthat’s “mores” (as in “I want more”, like a self-absorbed child), that’s just another iteration of Romney’s 47% looking for a government handout. Of course, ACA can’t, by a wave of the wand, create “mores”; more of health care, more of everything. Instead, ACA must redistribute some health care so many more will have it. It’s called the common good.

      • As yet, a few dozen, in the entire USA have been successfully enrolled. I have read two news stories, in which I tally more than half a million collectively non-renewed in Florida and Michigan from a mere two carriers. The arithmetic is working against the notion that the law will insure more people not less.

        • You seem to be assuming that none of the people whose insurance was discontinued will be able to find new insurance that they can afford.

          • So far the only successful enrollees, one month out, are several thousand medicaid enrollees in a handful of states. One sixth of the open enrollment period is over. I am suggesting that unless the enrollment process gets ironed out quickly, there will be more uninsureds ex-post than ex-ante.

            • > So far the only successful enrollees,
              > one month out, are several thousand
              > medicaid enrollees in a handful of states.
              > One sixth of the open enrollment period is over.

              Enrollment figures are not reliable for any purpose at the moment.

              They’ll begin to firm up through the month of November, and (if Jeff Zients’ claim that the website/back-end issues will be fixed by the end of November) will become reliable for all journalistic and analytic purposes by the end of December–one month after the site issues are fixed.

              For the purpose of responding to your comment, there’s no linear relationship between the amount of the enrollment period that has expired and the number of successful enrollees.

              Once the technical issues are corrected, it takes the same amount of electronic time and effort to enroll 10 new people as it does to enroll 10 million. There are no human beings in the loop to perform the enrollment. It all happens at the speed of machine-to-machine communication.

              So, if the healthcare.gov issues are fixed by the end of November, it’s entirely conceivable that the entire complement of presently-stymied ACA enrollees will complete their enrollment in the 30-day period in December.

            • Let’s not forget the people that will be covered by Medicaid expansion. Those numbers alone will dwarf the number who lose their policies because they don’t meet minimum requirements.

            • It is nice how easy you can determine for another that the insurance one liked should be the equivalent to a Medicaid policy or so. I know you are going to say that is not what you said, but you are the one that made the comparison.

              ” Those numbers alone will dwarf the number… ”

              If our objective were to increase the number of Medicaid policies that could have easily been done without the law. I frankly think that anyone that loses their employer sponsored health care and ends up on Medicaid has been severely damaged.

    • When it comes to controlling health care costs the ACA is the blind squirrel that will occasionally find a nut. I realize that the authors on this blog have argued that the ACA was all about expanding access to health care and controlling health care costs was left for a future reform but we have to admit that the status quo will become more entrenched. If all of the economists agree that subsidized health insurance is a bad idea for corporations because it is particularly inept at controlling health care costs then why is it such a great idea for controlling health care costs in the individual market?

      As an example I am paying $391 a month for a silverish bronze plan($3000/$5000/80%). I would be happy if the ACA left me alone but my grandfathered plan will be canceled in 2014 or sooner. Sorry, Bob Hertz, I am an over 50 person who is being coerced into participating in the exchange. When I look at the available plans on the exchange I find the nearest plan will cost about $1000. Since at the moment I qualify for a subsidy, the government will pay for almost all of the increase from my current plan. This looks like a great deal for insurance companies and a lousy deal for the government and me. Unfortunately the ACA has much higher out of pocket costs compared to my current plan so it makes sense as a healthy family to select the lowest cost plan and maximize the percentage of the cost paid by the government subsidy. Opting out of health insurance is another viable but risky option. I would benefit even more if the 2nd lowest silver plan goes up in cost relative to the lowest cost plan. So how do these scenarios control health care costs if I have so little skin in the game and benefit if the silver plan costs go up in cost relative to my plan?

      We must remember that the ACA was modeled after the state with highest health insurance rates in the country, Massachusetts.The ACA success at controlling health insurance and health care costs will probably mimic the Massachusetts efforts. I do not remember of any instance where Massachusetts has dazzled me with their health care cost control.

      • I don’t think anyone advocates subsidizing insurance costs for people with lower income as a means of controlling costs, but there may be a difference between the health insurance exchanges and employer-sponsored coverage. Everyone in the exchange will have the option of choosing a less expensive policy with less coverage (though some might prefer an even less expensive policy with even poorer coverage.) Many employers that offer insurance probably offer employees the same choice but I am not sure that all employers do.

    • Thanks for the good, thoughtful post.

      I do think we are going to see a lot of very upset people – most above the subsidy cut off points [with a high probability of being voters and interacting with their congressman].

      I have believed for some time that for many insurance prior to OC was not a very good investment – and for this group it will be worse.

      It will be interesting to see if an “alternative” solution develops that they prefer – self-insurance, life insurance with access to benefits for catastrophic events, paying cash…

      Which of course will put them in jeopardy of the penalty. It will be interesting to see how the enforcement of the penalty goes – Dems will want to add teeth to the law – good luck getting that passed…

      If the “wealthy” and healthy middle class go to these alternatives that likely puts pressure on premiums in the coming years.

      I have seen some speculation that one way a rapid increase in premiums – the death spiral – might be avoided could be to allow less robust plans in the market – scaling back the scope of things covered.

    • Subsidizing a product will make it more expensive than without subsidies.
      The employer tax exclusion for health insurance premiums is generally agreed to has increased premiums more than normal. Subsidies should have a similar effect, if not even greater, for this is tax money going directly to insurers.
      I wonder if the government has considered providing refunds to those insurers providing similar products for lower subsidies?
      Don Levit

      • “I wonder if the government has considered providing refunds to those insurers providing similar products for lower subsidies?”

        I don’t understand this. My understanding was that the subsidy goes to the insured. The insurance company, I thought, doesn’t see any difference between a subsidy-receiving customer and a non-subsidy-receiving customer.

        And while subsidies usually increase demand, and thus price, that can’t happen with ACA for the simple reason that insurers are required to refund any excess if they find they are spending less than 80% of receipts on actual medical care.

        So I don’t understand your post. (By the way, sorry if this comes off as overly snarky: memory has it that you are one of the people worth reading here, so one of us is missing something here.)

    • The goal of the ACA was to increase ACCESS TO INSURANCE for all patients. If that is considered the only “goal” then the ACA will be a smashing success.

      The American people never saw a social welfare spending program that they didnt enthusiastically endorse. There might be some grumbling about it right now, but just wait 5 years until there are tens of millions of Americans getting federal govt money to buy health insurance. The debate will be over and the ACA will be an untouchable “fourth” fail of politics just like Medicare and Social Security.

    • Note to Bill Huber and Jardinero:

      To my knowledge, most companies that are discontinuing certain lines of individual insurance are in fact offering compliant private plans to their subscribers after 12/31/2013.

      I am not saying this is a perfect solution or even close to it, But there may be an alternative to the exchanges.

      The drafters of the ACA were concentrating on the individual-market horror stories where people were paying $1000 a month for a $10000 deductible

      Instead I am seeing more and more evidence of people in mainly red states that had low premiums even in the individual market. And they are very very mad.

      • I think what we are seeing is that people who were healthy and could jump through all of the “no health problems and I promise never to make a claim” hoops were able to purchase inexpensive insurance in the past.
        Now that insurance companies have to sell policies to everyone without asking about their medical history, everyone is in the same pool and that pool includes more expensive people who are actually sick and need health care. The resulting policies are more expensive.
        Before ACA, these people with medical issues either had extremely expensive insurance or they couldn’t get insurance at all.
        It will be interesting to see what happens a year from now when the insurance companies have had a year’s worth of experience with the new policies. Will they get cheaper (they may be overpriced now) or will they get more expensive (too many sick people buying insurance)?

    • There is no evidence that increasing cost sharing up to 12,500 will reduce healthcare costs. There is no evidence that prices will be more transparent with this level of cost sharing, or how it will work if people with more comprehensive insurance still pay third payer. Ross Douthat does not know what he is talking about, and I’m surprised Austin gives him so much credit.

    • ” People won’t want to lose their coverage or part thereof. People won’t want their friends and relatives to lose coverage. People will be very concerned about changes of any type, just as they are today.”

      Bingo! the devil you know and all that … That is precisely the dynamic the admin was/is counting on to blunt the momentum for SP – more and more folks were primed for it, the insurance companies could see the writing on the wall. Enter Obamacare – bailout for insurance companies, a new program for folks to be “vested in” no matter how lousy it is – the “reasonable” attitude is to “give it a try”, “wait and see”, don’t “rush” to something “new” like SP until we “see how this works”. Brilliant – O didn’t win the advertisers award for best campaign of the year in ’08 (beating Coke and Apple, i do believe) for nothing …

      We will need SP eventually – we need it now – that is what is by turns so sad and so infuriating about the ACA – is further delays what is really needed for the sake of the preservation of a monied interest. This would be upsetting in any arena, but with regard to healthcare it is downright tragic …

    • Mr. Douthat intellectualizes while tethered to a political ideology.

      To the many millions suffering so miserably under our current system, and to the families and friends who must watch their loved ones suffer, such intellectualizing is the difference between living through an earthquake and watching one happen on TV.

      Mr. Douthat is out of touch.

      There is no doubt that Obamacare is here to stay.

      The healthcare law will evolve and the politicians will agree to the necessary fixes because the people will clamor for them once they realize what they have in this new law.

    • Ross Douthat seems to have taken note of a few of the trade offs.

    • Mark Spohr hits it just right.

      In the states which allowed full underwriting, a person could get a low premium policy which covered no preventive care and had a relatively low annual claim maximum (like $250,000).
      In the same state, a person with a medical history could be declined or forced to pay a very high premium.

      Like all plans with guaranteed issue, the ACA raises the premiums for the healthy person and lowers them for the unhealthy one. This has happened in every single state that adopted guaranteed issue over the last 30 years.

      The ACA drafters knew this, but brought in the subsidies so that the effect would be muted. We will see if that works.

      There is an argument raised by moderate conservatives like John Goodman and Tom Miller and Casey Mulligan that if we want to help sicker people buy insurance, we should just take tax money from general revenue and subsidize them.

      But that would be on-budget, oh the horror! Instead we sneakily tax the healthy through raising their premiums — instead of taxing the rich through the income tax.

      • The idea that John Goodman is a moderate conservative rather than a climate change denying idealogue is simply laughable.

        • Simon, take a look at John Goodman’s most recent post which is aimed at a fix of ObamaCare’s problems and then tell us why that type of thinking makes him an ideologue.

          http://healthblog.ncpa.org/why-the-exchanges-are-a-mess-and-a-very-simple-solution/

          • Goodman is an ideologue. Right from the start he frames the problem: “The short explanation, I believe, is that Obama privatized his election campaigns, while he nationalized health reform.”
            Besides being wrong, this is framing his argument in ideology.
            His “solution” (tax credit) also comes from his ideology and not from any sense of what would work politically or what would really help any of the 90% of Americans who are overpaying for private insurance (and the large subset of these who couldn’t get insurance).

            • Emily: John Goodman’s “solutions” are solutions only to those who have only the most amateurish grasp of health policy or an incredibly Randian view of the world. Flat tax credits do absolutely nothing to help the poor or the sick. This is just basic. You need community rating, guaranteed issue, and subsidies.

            • “Right from the start he frames the problem”

              I see, one is an ideologue if they believe in the private market and one is not an ideologue if they believe that government should take over health care. Isn’t Obamacare nationalizing health care? Wasn’t Obama’s election campaign done privately? That comment makes no sense unless you believe that Obama’s election campaign was run by the government. I know knee jerk reactions feel good, but don’t you want to first analyze the situation?

              “John Goodman’s “solutions” are solutions only to those who have only the most amateurish grasp of health policy”

              Another knee jerk reaction. Goodman created HSA’s which is one of the only health care programs that has demonstrated the ability to save money yet you call him amateurish. Demeaning the individual doesn’t really advance intellectual thought on the subject.

              Community rating has caused rates to skyrocket in NJ. There is a middle between government and private, but that means we have to deal with facts instead of personalities.

    • Dear Emily,
      I fear this is in vain but I will make one more attempt.
      ” see, one is an ideologue if they believe in the private market and one is not an ideologue if they believe that government should take over health care. Isn’t Obamacare nationalizing health care?”
      One is an ideologue if they believe that the answer to any problem is either “free market” or “private”. Goodman is an ideologue who advocates a free market solution to everything.
      Obama hasn’t “nationalized health care”. Last I checked, we have private doctors, private hospitals, private insurance companies, private medical suppliers…. not much nationalized here.

      • “Goodman is an ideologue who advocates a free market solution to everything.”

        Everything? He doesn’t think the military should be run by a free market does he? Medicaid is a government program and he is using that government program in the plan he presents. I think you ought to go back and read a bit more.

        “Obama hasn’t “nationalized health care””

        You are right the ACA doesn’t completely nationalize health care but it moves us in that direction. The ACA is using force to make individuals cooperate. It states how much profit margin an insurer might obtain. It determines what type of product the insurance company provides. By your criteria the Soviet Union didn’t nationalize anything. It had private people that worked for state run companies that you might believe were private as well based upon what you have said.

        There is something wrong with your understanding of what private is. Adam Smith: A willing buyer and a willing seller. When force is used the word ‘willing’ becomes obsolete.

    • thought provoking ?
      Respectfully, did you actually read the piece by Douthat ?
      He knows that PPACA plans are more exspensive because…he got a quote from a website.
      Leaving aside that a quote from a website is not a firm offer, and that evaluating the astonishingly skimpy coverage (eg, 20% copay even after exceeding out of pocket limit) is difficult due to opaque legal language…
      surely you, if not Douthat, know that low teaser rates are available only to the super healthy, and that they are often no renewable except at higher rates…..

      Finally, how does Douthat value peace of mind: with ACA, you no longer have to worry about preexisting condition bankruptcy; surely that is worth at least a dolllar….