• Finally, it’s put-up or shut-up time for health reform

    I’ve been on the road, reading various depressing polemics on potential “rate shock” facing young adults who are now uninsured or buying coverage on the non-group market. If the typical newspaper reader understood that less than 14% of adults age 21-27 in this group would actually face the full unsubsidized cost of coverage in the new exchanges, we could waste less of our time on an absurdly-framed debate. I was all set to write yet another column by a liberal policy-wonk excoriating Avik Roy for his columns trying to establish that a relatively cherry-picked subgroup of healthy, relatively-affluent young adults will get hammered by health reform.

    Then I just stopped.

    We’re just past the point of partisan thrust and parry. Young adults will explore their options. Either they will have a positive experience with the new health insurance exchanges, or they won’t. Fifty-year-olds and 62-year-olds with diabetes will do the same. On the whole, I believe people will have positive experiences. Premiums on the new exchanges are reasonable, coming in below CBO expectations, and certainly below critics’ worst predictions.

    I suspect  the worst backlash won’t actually come from uninsured or under-insured people who actually buy coverage on the new exchanges. Backlash will come from people with pretty crummy jobs who hear that their hours are cut back. Backlash will come from people with limited employer-based coverage who face higher premiums or encounter other changes such as disliked wellness provisions. Some will look across the fence at decent plans on the new exchanges, only to discover that they can’t receive subsidies if they spurn their employer’s coverage.

    Thousands of employers will blame “ObamaCare” for whatever unpopular moves they impose their workers. It’s the obvious play. In many cases, this blame will be mostly or entirely misplaced. Other times, the blame will be justified, reflecting glitches or unintended consequences of the new law. Either way, many workers will believe what their employers tell them. Millions of workers with relatively modest incomes will see their lives getting a little worse when they were hoping that health reform would make their lives a little better.  Other people—I suspect many more—will see their lives getting a little or a lot better. Some of the most deserving people will seek benefits and medical care–only to  discover that no help is forthcoming because their states rejected Medicaid expansion. Republicans had better hope that this is a disorganized and politically marginal group.

    At long last, we’re nearing put-up or shut-up time for the new law. ACA’s political fortunes will rest on whether it tangibly improves peoples’ lives. If it does that, the politics will take care of itself. If it doesn’t, Republicans won’t need Avik’s columns or anyone else’s to knock it down.


    • Well done!

      If the exchanges work, there will be tremendous pressure to open them up to the millions of Americans who now have expensive employer coverage.

      Those who are younger and make less than $50K will do better on the exchanges than they do in many employer plans. Those who are over 55 and making over $62K will do much, much worse on the exchanges.

      This will create agonizing situations in many businesses. Group insurance could unravel as fast as defined benefit plans have unraveled.

      That might be OK, but only if we somehow replace employer contributions with federal taxes. That will not be easy in the current political climate.

    • Reading this post, I don’t see any recognition that the ACA is trying to force $15-an-hour employees and their employers to purchase very expensive health insurance — as much as half the employee’s annual income in the case of family coverage. And it gives them no new help — other than the current tax law.

      At the same time, other people at virtually the same income level will be able to get health insurance for free from Medicaid and almost for free from the exchange.

      Sorry, that’s not an unintended feature of the law. That is exactly the way it is designed.

    • ha! I wrote a similar, though shorter version, of this blog post to my representative in Congress earlier today.

      I don’t know who these affluent and/or healthy 20 somethings are who aren’t already still covered on their parents’ insurance, and don’t have a job with health insurance benefits, and also don’t want to buy insurance.
      I personally know of a few 20-something men, employed full time but don’t get health insurance, who can’t wait to try & buy through the exchange. They are hopeful. You might even say excited.

      I don’t know if it’ll help me or not. But if it doesn’t help, there’s plenty of other directions which would be deserving of a finger of blame, including perhaps The President… But I can’t figure any legit reason to blame the ACA law’s existence for anything.

      I do see some flaws that are bound to happen.
      But they all seem to be tied to the employer provided system we’ve been locked into.
      That’s not the fault of the ACA law.
      It’s the fault of the Emergency Stabilization Act of 1942.

      Granted, if the ACA law, instead made the law that employers could NOT offer health insurance as fringe employment benefits, it would’ve more appropriately undone the damage of that 1942 law.

      But if we had such a tight labor market nowadays, we wouldn’t be having this conversation.

    • Dr Goodman has a point. The most troubling rate shocks are not the extra premiums faced by 27 year old males that the Wall St Journal and Avik Roy have highlighted.

      The big shocks at least demographically are the existing small group premiums that will go up due to rate banding, mandates, caps on deductibles, etc.

      I have read that 16 million persons will see significant increases in their current premiums on their January anniversaries. Ask any insurance broker for confirmation.

      The regulations that cause these increases will leave the insured with a better policy in many ways. However, there is no provision to help these individuals and small businesses pay the higher premiums.

      Note — I would make one small correction in Dr Goodman;s comment:
      a $15 per hour employee will not qualify for Medicaid anywhere in the USA.

    • If the rates are infact lower than expected, I hope this is not a prelude to a “loss-leader” competition to build market share. I have seen it before during the gate-keeper, risk-sharing days in the early 1990s.

    • “Note — I would make one small correction in Dr Goodman;s comment:
      a $15 per hour employee will not qualify for Medicaid anywhere in the USA.”

      SMALL correction? For a blog on issues such as these and coming from someone who purports to be an expert in such things, that strikes me as a massive correction.

    • Medicaid enrollment will go up to 138% of poverty in states that have expanded and a full time $15-an-hour employee supporting a family of four will qualify.

    • So we are expected to be OK with locking in a system that makes men subsidize women – lifetime health care costs 30% more for women than men – but ACA says we all pay the same premium. We are OK with a locking in a system that makes Asian Americans subsidize the rest of us – Asian Americans have roughly a third of what the rest of us have in lifetime health care costs…

      We are ok with having all of us pay for a bunch of crap that very few of us need or use.

      The net result is a lot of Docs and Hospitals and drug companies and insurance companies will be very happy at the expense of the rest of us

      I find it ironic that TIE is so committed to making locking in this train wreck and making all of the above happy – it just does not seem to fit with their theology….

      • Your response to Harold’s post is puzzling to me. I think it says more about you than him or TIE.

        It is not now, nor has it ever been, against the spirit of TIE to have evidence-informed policy preferences. Meanwhile, we do not attempt to delegitimize those of others, even when they’re different from ours. (I’m not suggesting you are doing that, I’m explaining who we are.) Moreover, each author is entitled to his or her own views. Harold and I don’t always agree, for example. You might recall our back-and-forth about the recent AEI proposal, for example. I gave John Goodman a fair hearing here, and even found some of what he proposes to be worthwhile and logically sound. There are other examples. I would think that the totality of our work would be good enough evidence of the collective openness to different views of TIE.

        I’m not sure what you want or expect, but it is not more legitimate, proper, or correct to be against the ACA as it is to be for it. If you think otherwise, I think you’ve got some serious thinking to do.