Obamacare: intended to fail?
A popular argument on the right is that single payer was the goal of Obamacare all along. That certainly makes some sense, especially since quite a few Democrats (and even Obama, some years ago) are on record as supporting single payer.
But as Rick Moran (quoting Jim Geraghty) has pointed out:
This is where you say, “It’s designed to fail! It’s designed to collapse the existing health-care system!” That’s a really compelling theory, but the catch is that it’s got Obama’s name on it and the Democratic party has built just about all of their political capital on the idea that it would work. Democrats would be betting that after completely fouling up their signature domestic policy and one-sixth of the American economy, the voters would trust them to give it another shot, this time making even bigger, more radical, expensive, and complicated changes.
Moran adds:
Besides, for the conspiracy to work, a single-payer system would have to get through the GOP House, not to mention needing 60 votes in the Senate. Does anyone believe that after the internal bloodletting over defunding Obamacare there are any Republicans who would vote for their own electoral execution and help pass a single-payer system?
No, this is sheer incompetence, coupled with typical dishonesty from the administration. They may pay for it by owning the biggest boondoggle in American history ”” the failure of a government entitlement that could discredit the idea of big government for a long time.
Good points. But Moran is forgetting the way Cloward-Piven works: overload a system, collapse it, and then take advantage of the crisis to ride to the rescue with something more leftward, because the original Humpty-Dumpty (in this case, the private health insurance system) can’t be put back together again. Who would people be more likely to turn to in such a crisis, mean old Republicans or the kindly Democrats who mean well and wanted single payer in the first place?
Alternate theory: that the Democrats thought the problems with Obamacare would be smaller and more controllable, and that the general reaction to covering more people would be good—good enough that Democrats would gain seats in Congress. Then the case could be made later that a switch to single payer would make a somewhat-good-but-still-flawed thing even better.
But perhaps Obamacare versus single payer wasn’t and isn’t the big issue. Perhaps the Democrats don’t care so very much which it is because the real goal isn’t what sort of health insurance system we have. The real goal is solidifying political power for their side. Anything that makes more people see government as rescuer can accomplish this, as well as anything that controls more people. They probably figure that either system would increase Democratic power. Although single payer would be better for this, either would do.
Bloggers like myself and others have written about this since the first versions of the ACA were posted online and it has nothing to do with ideology or theories; rather it is all about math. Why?
1 – I used to be in the insurance industry and I understand how actuarial tables work.
2 – While the left may make a habit of lying to themselves they do have people who can do the math that isn’t complicated.
ACA sets up an adverse selection spiral and does so structurally and obviously. So much so that the possibility that ACA design intent was anything other is not credible. Any barely capable economist, math teacher or insurance professional can see this (while some politically motivated ones might not admit it).
As Nancy Pelosi said moments after ACA was passed “This will make them cry out for a public option”. The left, in meetings with other denizens of the left, have admitted so on open mics and video.
You are spot on about Cloward-Piven and their influence in the Democratic Party is difficult to overstate. They were invited to signing ceremonies at the White House when Clinton was president. In academia they are practically deified.
As usual Neo your analysis is on point.
I think they didn’t expect it to fail so fast. Your alternate theory. I do agree political power is a key goal, but their view of “fairness” is also a goal, and for that they prefer socialized care.
An abrupt failure such as ACA is likely to undermine the left’s agenda. I don’t think they thought it was a good healthcare option, but they didn’t expect it to be this horrid.
But Moran is forgetting the way Cloward-Piven works: overload a system, collapse it, and then take advantage of the crisis to ride to the rescue with something more leftward, because the original Humpty-Dumpty (in this case, the private health insurance system) can’t be put back together again.
thats not cloward and piven, thats ringling brothers doing cloward and piven..
you collapse the system, you dont rescue it, you take it over using all those laws and preparations and general changes, and the domestic army, russian troops, billions of rounds, and so on.
its like watching morons who believe the magicians tricks cause no matter how many times you explain it they just dont have the capacity to do otherwise. (despite your thinking otherwise and mor highly of them)
did you know that they were going to stop foods stamps? that withotu a special deal with the USDA the riots would have started now, instead of nearer the new year?
cloward and piven is not a way to unfreeze, move and refreeze… but a collapse collapse…
all we need is a crisis of sufficient size that he wants, he can call the cards in!!! i have tried to detail those parts, but its like teaching those incapable
maybe the original cloward and piven was about getting welfare a different sheen, but the current version with so many on it, and so few as producers, would collapse not just welfare, but the whole united states!!!!
which is why we unilaterally disarmed
replaced all our leading officers with obama appointees
made civilian appointees equal to earned military titles and with the power to order such!!!
and russia and china have built things up..
in other words, cloward and piven became the cover for total collapse… NOT welfare collapse leading to a defined minimum national income!
ie. you want to go past that… but if you say your past that, they wont side with you. so you say your with this thing that has a limit… then when you get to the limit, you ignore it and race on by.
feminists did it… which is why in a short while they wont have enough people to vote out the race based parts of obamacare – and they forgot they and their mates are white… oops… too bad…
i guess thats why they made the CIVILIAN LABOR CAMPS and have mae the laws and have military people manning them…
as far as obamacare planned to fail, nope.
they just think everythig is easy
ie. that talent, skill, and all those things are not real
you only have to loo at what stalin and lennin did in replacing the people that ran the companies with arbitrary appointees… then the companies didnt run and could not run… this is why the west actually like fascism more… it kept the talented people in place but put them to work for the system…
wyhen things go wacko
those soviet troops will make sure that there is no military response to save the US… (which happens over and over in many countries. see egypt, see indonesia, see many more)
Art…
I find it most curious that the US Army has stopped training… pretty much across the board.
The commanding general claims, on the record, that America is down to less than 20,000 combat ready troops — as defined.
Long before Barry is due to ‘retire’ the US Army will be but a shell of what it had been — in 2012.
Likewise the USN is being cut in half. The carriers are being left at the pier.
“as far as obamacare planned to fail, nope.
they just think everythig is easy
ie. that talent, skill, and all those things are not real”
Got it in one.
If only these people had once had to fix a faucet or change a tire they might have some humility about how hard it is to make anything work, especially a monstrously complex health network like this.
It reminds me of Sam Rayburn’s comment to Lyndon Johnson about the people around John Kennedy. Johnson was over awed by all the Harvard pedigrees. “I’d feel a lot better about them if any of them had run for sheriff”. What a mess the best and the brightest created. Obama’s crew is far less accomplished than that.
I’ve decided that from now on, the most accurate predictor for Obama’s decisions are ego and incompetence.
…and spite.
I merely call evil evil. It’s simpler and truer.
“Long before Barry is due to ‘retire’ the US Army will be but a shell of what it had been – in 2012. Likewise the USN is being cut in half. The carriers are being left at the pier.”
Can’t allow Home Land Security to be out gunned if you’re wishing and hoping for an excuse to Kristallnacht. Anyone who does not recognize Team Obama-Pelosi-Reid-Schumer-Durbin-etc are capable of death squads and concentration camps given the opportunity is an idiot.
Stay locked and loaded.
I have yet to understand why Republicans are trying to rescue this thing by delaying the individual mandate.
I’m not so sure that Obamacare not working was a plan; they just didn’t care if it worked or not since they were making bigger plans for afterwards.
If Obamacare works – “great, see we know what we are doing”; if Obamacare fails, “see we need to do more.”
The Democrats do this all the time – throw money at something, if it works, raise taxes to pay for more of it; if it fails, throw even MORE money at it.
Yeah, ACA was all they could do at the time. It would establish enough control that just by tweaking and tweaking- eventually it would have been almost single payer, with an oligopoly of utility-like insurance companies run by HHS.
The logical outcome is that 0bamacare crashes the economy and creates a world scale financial crisis before the 2014 elections.
That’s where you should bet your money. For the scheme is a fantastically regressive pole tax upon the working class.
The idiotic MSM will not be able to spin the surge in taxation away from the Democrats.
The distress should logically bankrupt many, many, media outlets. They run on advertising — which just gets gutted to the bone during a crack-up.
Running automobile ads, real estate ads, is a total waste of money when the prospect base evaporates — overnight.
———
What we’re witnessing on a global scale is macro-embezzlement.
Like its common counterpart, the thieves take the money out via deceits running on for years. Then, the inevitable moment arises: poof the host victim realizes that the books are toast — and the stash is gone.
The bleeding stops, but only at the cost of a crisis. For most businesses a long running embezzlement is terminal. At the scale now witnessed, entire nations should evaporate — financially.
It took the Confederate States generations to recover from the destruction of the Confederate Dollar. The situation drove the southern economy down into barter — with all of the penalties therefrom.
Russia is still trying to recover from 1998.
———-
Putin now has
Iran
KSA
Egypt
Syria
in his pocket.
Iraq
Qatar
Emirates
seem next on his punch list.
Thanks, Barry.
To the Left, defunding the military is killing two birds with one stone thrown by the black crime mobs of Detroit.
Not only does it get rid of certain “unreliables” in the Utopian government, but it also frees up money for Obama loyalists and enforcers.
http://www.foxnews.com/opinion/2013/10/21/why-obamacare-is-fantastic-success/
The GOP is so stupid they can’t see it. There are no mistakes here. This is a planned purposeful attack.
Being hated on a personal level is deeply upsetting to normal socialized humans. Only the wolves or the sheep gone insane that starts eating meat, consider hate just part of the daily cuisine.
On an instinctual or genetic level, socialized humans tend to steer away from hate, hatred, or things that deserve hatred, such as evil or injustice. It upsets them to consider the existence of such things. Like Anne Frank, they default to an innocence, absolute assumption about the nature of humanity and the future.
For as much as Republicans are realists in DC, they also operate in a fantasy land between Marxist revolutions and the American heartland: DC. Where making a deal and bringing home the money, is important in the short run, no matter the consequences in the long term.
Stupidity, by Occam’s Razor, no longer explains all the relevant details of the phenomenon. Thus the complexity must necessarily increase.
Those who can kill without being commanded to, for their own personal goals and reasons, live at another level than most socialized humans just trying to get along to go along. To kill is to invite the hatred of all of the target’s family, clan, relations, loved ones, and friends/allies. Thus hatred is something warriors must armor themselves up against, whether you use righteousness, God’s will, or justice as your armor, matters not in the least. Humans need armor against the corrosion of hate in order to operate on the fields of battle.
If Obama and Democrats were that smart then they should be given leader for life status.
Reality check here: It’s a broken website, we experience broken web sites every single day (and in terms of private insurance, I’ve yet to have an insurance company that had a good website myself…Progressive Auto Insurance is sort of ok).
Republicans who have pinned their hopes to Obamacare failure based on website failure are going to be in for a rude awakening. People are signing up, getting coverage and quite often finding policies that are less expensive than what was avaliable before. The rest of us who are either in Medicare if we are old or employer provided coverage if we aren’t are seeing almost no changes….despite being promised by the GOP that our old people would be shuttered off to death panels and employment will dry up.
As for whether it’s all some grand conspiracy to do single payer. Well first of all any conspiracy that entails mapping out in intricate detail multiple steps down the line are in principle unworkable. A real failure of Obamacare is just as likely to result in an attack on Medicare as it is in expanding Medicare to cover everyone. Such things are impossible to predict.
Second, the Democrats have never been united behind single payer but the ACA’s advantage is that it leaves the door open to additional reform in either direction. If you think the way to go is private insurance for everyone, with a system of subsidy to help those who can’t afford it (in other words vouchers), nothing in the ACA prevents expanding in that direction and away from the single payer systems the US has (Medicare/caid/VA). If you think single payer is the solution, you can work with the ACA to continue to expand Medicaid if you like stingy UK style single payer or Medicare if you like cushy EU type single payer. Neither door is closed off, but advocates of both ideas have a love-hate relationship with the ACA because it doesn’t fully go thru either door and lock the other one for good.
Boonton:
This post doesn’t even mention the website fail. It’s not about the website fail. This sort of discussion has been ongoing from the right long before the website fail and is independent of it. The “it” here is Obamacare itself, and the strategy behind it.
As for your assertions about what has happened with Obamacare enrollment so far, I’m so glad you’ve gotten all the figures no one else seems to be able to obtain.
From what I’ve gleaned from reading many, many articles on the subject is that there’s already been a significant and sometimes large rise in the premiums people are having to pay for employment-based insurance—which does not involve the exchanges, but which represents the vast majority of people in the US not on Medicaid or Medicare, and many are very angry (and many can’t get on the exchanges to get government subsidies because the rules about their eligibility for them are more stringent). In addition, most of those who have signed up for the exchanges so far seem to be people who are getting huge savings and/or subsidies because they have health problems and had to pay tons for insurance before, or those whose incomes are just above 138% of poverty-level income and are therefore getting enormous government subsidies for premiums, or are signing up for Medicaid because they are under that income level. These are people who will cost the system a great deal. If Obamacare can’t attract more young, healthy, and very solvent self-payers, it cannot sustain itself economically and will fail. And as more and more businesses opt out of offering employee insurance and more people therefore are forced onto the exchanges, a higher percentage of them will be eligible for government subsidies than before, because they will then come under the more relaxed rules about getting subsidies that govern the exchanges. And the rest will be paying much more than they were paying when they got insurance from their employment, and it stands to reason they won’t be too happy about that.
That’s a quick description of the trajectory to the possible death spiral everyone’s talking about. The website fail could accentuate the problem, but a potential for the problem would have existed even had the website launch gone smoothly. This sort of thing was discussed as a possibility long before the website launch.
Whether or not the death spiral or other possible failures of Obamacare as designed were planned is the subject of this post. I offered various theories and arguments; at this point I actually think the either/or argument I advanced in the final paragraph of the post is the most likely one.
>adverse selection spiral
Oh come on. Obamacare was patterned after a proposal originally put forward by the Heritage Foundation and later expanded upon and implemented by none other than Mitt Romney in Massachusetts, as most of you should know, as it came up repeatedly during the Republican debates. The reason Obama and the Democrats chose this path was simply because they felt, quite rightly, that single payer would have no chance of passing (Hillary Clinton’s original health care proposals failed precisely because the health insurance industry came out heavily against it, and the resulting barrage of negative ads sunk it before it could even get to the point of becoming legislation). The legislation wasn’t “designed to fail” — the weaknesses in it are almost entirely due to political considerations — not wanting to make it too politically problematic.
For instance, the tax penalty for not getting insurance is probably too low to start with, but making it higher in the initial years would have been way too unpopular to pass.
The Massachusetts plan has worked just fine and is currently popular there. It has resulted in a much greater number of citizens covered. It hasn’t, however, bent the cost curve very much, and Obamacare has a number of provisions intended to affect cost growth which may or may not work.
But, the basic outlines of the plan are proven, they’ve worked in Massachusetts, and there’s no reason at this point to think they won’t work at least in some states. California’s exchange is working, for the most part. So is New York’s. We shall see what happens in other states.
For those of you who don’t know what it is, it is basically just this:
1) An insurance market that lets individuals and the self-employed buy insurance at group rates previously only available to large employers
2) Subsidies for lower- and middle-income people to be able to afford coverage
3) Laws that prevent arbitrary cancellation of policies for frivolous reasons (i.e., when the insurance company cancels your policy for minor errors in your application, when you get cancer or another major illness), that prevent insurers from charging different amounts to people based on their health history, and prevents them from denying coverage based on preexisting conditions, limits the amount they can charge older people to 3x what they charge the youngest
4) Expansion of Medicaid to cover more people
5) Mandates the creation of at least one non-profit insurer in every state owned by the membership
6) Prevents insurers from gouging by limiting how much they can charge above direct reimbursements to hospitals and doctors
The legislation actually reduces the deficit, according to the CBO. It’s a pretty minimal approach, and I really don’t see any alternative that maintains a private insurance market that would also achieve the goal of covering more people and allowing people with preexisting conditions to get insurance.
Oh, also: a mandate for employers with >50 full time employees to give health coverage (a similar mandate has been in place in Hawaii for years), and subsidies for small businesses to help them provide employer-based coverage.
Mitsu:
Actually, I’ve written tons about so-called Romneycare and how different it is from Obamacare and in what ways. I’m certainly not going to go through it all again now; you can search and read if you like. You are repeating Democratic talking points that are not correct; if you want to actually read what the Heritage Foundation actually wrote about the Romneycare model it liked, take a look and you’ll see how very different it was from Obamacare (including the fact that their vision involved much less regulation of the insurance products offered).
As the largely Democratic Massachusetts legislature discussed and then passed so-called Romneycare, it morphed into something rather different than that, and also different from what Romney would have liked. He vetoed many provisions of it but knew his vetoes would be overriden, which they were (legislature there was something like 85% Democratic). See the NOTE here for a fuller description. By the way, you can see if you read it that the individual mandate as originally envisioned would work differently than it does in Obamacare, and of course the constitutionality problem would not be an issue at the state level (that’s only an issue at the federal level; it is clearly constitutional for a state to do).
Oh, and just how successful Romneycare has been is a whole other discussion (one I don’t have time for at the moment). Suffice to say there are strong arguments to be made for both sides.
“not to mention needing 60 votes in the Senate.”
Really? Since when? Did Obamacare beat that threshold?
That’s like saying, “oh come on, Obama originally studied the US Constitution as it was originally written, it’s not like he will….”
We’ve kind of figured out the zombie propaganda pap regurgitation system so far.
People are under the misapprehension that con artists need smarts and that being “smart” entitles you to be Born to Rule a bunch of slaves called Americans.
How to say this, no, go back to the slave plantation system, where slave wannabe masters belong.
Hogarth Kramer:
Remember reconciliation? There were earlier versions of the bill passed in both House and Senate (back when the Senate did reach the 60-vote threshold, prior to Scott Brown). So after Brown was elected and they couldn’t get 60 votes, they passed the bill by “reconciliation,” a special process whereby it was not subject to filibuster and didn’t need a cloture vote, because it was just a case of “reconciling” the previous passed bills, and involved a budget issue.
See this for how they got to 60 Senate votes on the original, pre-Brown Senate bill. It’s quite a story, actually.
Mitsu…
Hawaii does NOT provide any subsidies for suffering small time employers so as to assist / subsidize their HMSA/ Kaiser plans.
(Their are only these two providers to choose from. Kaiser is the same as Kaiser on the mainland — an HMO. HMSA is a classic health insurance pool — a monopoly in the Islands for those who don’t want Kaiser’s restrictions.)
>the individual mandate as originally envisioned would
>work differently than it does in Obamacare
Granted, Obamacare is different from the original Heritage Foundation plan. But as you point out, the eventual Romneycare plan that got enacted was amended and it has most of the same features as Obamacare. While it’s arguable whether or not the differences that do exist will result in major differences in practice, I don’t see any obvious points of massive departure. Both plans have an individual “mandate” (really a tax), Obamacare’s tax/fine is lower at first and higher eventually, both have an employer mandate (Romneycare’s mandate starts at 11 employees, but the fines are lower, and Obamacare’s starts at 50 employees, but the fines are higher), both have subsidies for low income, Obamacare has subsidies for small businesses and Romneycare doesn’t, etc. But in general the overall outline of the two plans is pretty similar, and I don’t see where the differences would lead to a massive difference in outcome.
There is a state, as I mentioned in another post, where there was a massive difference: New York, where they tried to eliminate denying coverage for preexisting conditions without imposing an individual mandate — and that DID result in an adverse selection spiral which made New York’s insurance rates roughly double. That’s the main reason you have to have some sort of mandate (or tax incentive).
neo-neocon
1. Yes yes, you’ve read many articles about Gus in Somewhere USA announcing his employer healthcare is going up 50% next year. Problem is if you push Google a bit you’ll find quite the same article for the last ten years. In general both before and after Obamacare if there’s going to be a news article about employer provided healthcare changing, it’s usually in a bad way. Part of that is, of course, the nature of news. “IBM’s insurance going to be about the same next year as it was this year” doesn’t make for much of an article to turn into the editor. “Mill drops all health coverage”, of course, works better. I would hope, though, you’d do a bit better than simply troll around for all ancedotes of employer provided coverage getting worse in some places and declare it’s due to Obamacare!
2. Yes yes lots of sick people are itching to get insurance. But before you declare ‘cost death spiral’, you have a bit of a problem.
Are these people currently getting health care? This is kind of important because assuming they are getting care, someone somewhere is paying for it. If they jump into insurance then logically costs for that someone somewhere have to go down. You have a few options…Medicaid is one possibility. Employer provided coverage is another (perhaps they are spouses with someone who is covered or working a job just for benefits). If those people are no longer in those pools, then you get cost reductions there which you have to offset against the so-called ‘cost spiral’. If these people aren’t currently getting care, then we have a massive humanitarian problem here in the world’s richest country, which I’m sure you’d want fixed no matter what the cost.
And as more and more businesses opt out of offering employee insurance and more people therefore are forced onto the exchanges,
OK, and if a business stops doing insurance then the pool of those in the exchange wouldn’t be as sick as you make out. Likewise take home pay would go up (I assume employeees *wanted* insurance to begin with and would demand higher wages in compensation of a loss of $5-$7K per year no?!)
Seems you’re in a bit of a bind here not thinking thru your assertions beyond a single step. If the exchanges fill up with sick people, the employer pools would get a lot healthier and therefore cheaper. Why the rush then to dump coverage? Likewise if the exchanges fill up with employees who were getting coverage once from work, then where’s your ‘cost death spiral’?
f the exchanges fill up with sick people, the employer pools would get a lot healthier and therefore cheaper.
That’s like thinking the housing bubble caused by DC laws that favor Fannie Mae, was going to be economically viable.
You ignore the evil and corruption of government force. Thus your equations do not line up as perfectly as you would predict.
Once again please explain how you can predict employer insurance will shoot thru the roof if you’re also saying the exchanges will fill up with sick people?
Or are you going to tell me that because it’s ‘government’ all will be bad? I guess I might be expecting too much from the “Keep government out of my Medicare!” crowd.
Boonton,
My goodness—you post a question late at night, and are pissed if you don’t get an answer by the next morning?
The answer is rather lengthy, by the way. Consider the following lengthy answer just the tip of the iceberg of a discussion that could be had. I’m answering you not because I jump when a snarky commenter demands an answer, but because I find your points interesting and worth responding to. So I’ll ignore the snark for the moment. But understand that I may not be taking the time for such responses in the future; I do have other things to do.
An insurance “death spiral” may or may not happen (nor do I think I know whether it will or won’t). But if it did happen the most likely mechanism would be that the exchanges featured too high a percentage of high-risk patients in terms of health. Because premiums are figured by relying on projections of the riskiness of the population that will enroll, if that population is too risky, it would cause premiums to go higher and higher in an effort to catch up, and as the premiums went higher, the pool of people who would remain would be riskier and riskier (more ill and old; those whose other options outside the exchanges were even higher in price). But these would also be the people most highly motivated to enter the exchanges in the first place.
The question of whether companies offering employment-based insurance (let’s call it EBI) would stop offering it is a very different issue, although it could end up impacting the first question in various ways. It is certainly true that one can read many anecdotal accounts of insurance premiums rising and companies ceasing to offer EBI, but anecdotal accounts are not what I’ve been going on. I don’t have time to backtrack and find the many many articles I’ve read, but suffice to say they were serious studies of the issue. Of course, some of them said these things were increasing more than usual because of Obamacare, and some said they were not. I found the “increasing because of Obamacare” ones more compelling (and yes, they did compare the increases in price post-passage of the ACA to the increases prior to that).
By the way, the idea of insurance companies losing money on the exchanges but staying in them because they’re making money in other arenas to offset that just doesn’t make business sense to me. These are for-profit operations, and they don’t have to stay in the exchanges if it’s not productive for them. Why would they? I suppose some might for some reason (currying favor with the government???). But I wouldn’t expect this to ordinarily happen; they would cut bait on the unsuccessful endeavor and cut their losses.
Then there’s the issue of government subsidies, which only affect the exchanges (a smaller percentage of the people getting health insurance than through EBI). Government subsidies are offered only on the exchanges (not on other types of insurance purchase), based on income, 138% to 400% of the poverty level. More than half of Americans (I think it’s about 2/3) make under 400% of poverty level–don’t have time to find that website, either, but it’s a government figure. So that’s a lot of subsidies. The more higher income, non-subsidized people (or at least lower- rather than higher-subsidy people) who come to the exchanges, the less the government will have to pay, and the less likely the whole scheme is to need more revenue than can be raised without raising taxes even further. The need to raise a lot more revenue could sabotage the endeavor, but in a different way than the death spiral would.
So the exchanges need younger and/or healthier people to buy on them in order to keep premiums from rising and perhaps causing a death spiral. And they need more solvent people in order to keep taxes from rising. What’s more, if premiums rise, the government would have to make up the difference, so subsidies would rise, too.
Many younger people and healthier people may not see the point of getting insurance at all, and will opt for the penalty (which isn’t very enforceable anyway, as it turns out) and wait till they get sicker and older. That’s the spiral that could occur in the exchanges, and cause premiums to rise and rise, and cause the pool of people on the exchanges to be older and sicker still, those who have fewer affordable options because individual insurance would be too expensive for them, and who feel that they are too sick to go without insurance.
It is possible that the exchanges will also feature the poorer disproportionately because the exchanges, with their government subsidies, offer the best deal (you can’t get government subsidies any other way). And people who have access to EBI can only come to the exchanges and get subsidies if their incomes are pretty low (the formula is too complex to go into now, but it is estimated that only about 6-8% of them would be eligible in the first place), lower than what’s needed to get subsidies if a person doesn’t have access to EBI. So there would be a selection for the poorer EBI people to voluntarily choose to come to the exchanges, because the less-poor ones wouldn’t qualify for the government subsidies on the exchanges offer to sweeten the deal, and they could do better in EBI (especially with some employer subsidies).
I never suggested that if more and more companies stop offering EBI it would increase the sickness of people on the exchanges. As you point out, it would not, and could even make the exchange pool healthier. I did suggest, however, that it could affect the subsidies (rather than the death spiral), because as companies stopped offering EBI, more of their employees would be eligible for subsidies “than before.” That phrase “than before” probably wasn’t all that clear, but by that I meant that their incomes would now be evaluated under the more relaxed rules applied to people without access to EBI as an alternative (because their employer had dumped it), so that now a higher percentage of them could come on the exchanges and get subsidies than back when they still had access to EBI and were evaluated by the stricter rules. Back then, many more of them would have had to come on the exchanges paying full price.
As for your statement, “If…[the high-risk,less healthy] people aren’t currently getting care, then we have a massive humanitarian problem here in the world’s richest country, which I’m sure you’d want fixed no matter what the cost.” What I would want in an ideal world is not the issue; I would certainly want it fixed. The point is how best to do so, and what are the limits of that? “No matter what the cost” doesn’t and won’t happen with Obamacare, nor with single payer, nor with for-profit insurance, nor in any health care system in modern society, because health care is so complex and expensive. Cost must always be taken into account, and rationing of care occurs even if people don’t want it, because of the need to limit expense happens in all systems. The only question is who decides and on what basis.
In closing, the withdrawal of many companies from offering EBI (which could cause a lot of healthier people to come to the exchanges) almost certainly wouldn’t happen all or once, or even very much at the very beginning. As best I understand it, those describing the death spiral in the exchanges imagine the death spiral happening without that huge influx of people from EBI, and beginning at the outset of Obamacare or not long after, and then getting worse pretty quickly (before any such influx would occur). I have no idea whether this will happen, but the situation makes sense and certainly seems possible to me.
For example:
Boonton:
Obama’s people alluded to the death spiral themselves (without naming it that). According to Ezra Klein:
The quote, Klein writes, is what he was told by the administration during the spring and summer, when he repeatedly interviewed people connected with the enrollment aspect of Obamacare, especially an advisor named Simas. In an earlier piece of Klein’s, he wrote:
Curiously enough, for some reason, this group is “overwhelmingly male…majority nonwhite…[and] [o]ne out of every three lives in California, Florida or Texas.” Why so few women? Are women of that age more likely to have EBI, and therefore won’t need the exchanges? And is the group predominantly minority for the same reason—are young white men more likely to have EBI, as well? And if this is really the demographic Obamacare’s exchanges are going after, it also appears (I could be wrong about this; it’s just a guess) that although it might be a young and healthy bunch, it’s not an especially solvent one. Therefore, signing them up would go far to getting rid of the “death spiral” problem caused by the exchanges having too many old and sick people, but it may not do much for the other problem of having a lot of government subsidy. Although maybe its designers have already factored in high subsidies for this group? Maybe the subsidies are designed, more than anything, to sweeten the deal and get them into the exchanges, so they will provide the healthy bodies, if not the money, and the government will provide the money?
Interesting.
neo-neocon
This Sunday the NY Jets will play the Bengals. The Jets are having a decent, but not perfect season. The Bengals are doing much better, but again are not perfect.
Now a Jet’s fan will have reason to worry, a Bangals reason to hope but what could possibly happen is an almost infinite set of possibilities. But I’m not so concerned about things that can happen, instead things that can’t happen. If some pundit says the Jets will win, he might be right. If he says the Bengals will loose, he might be right too. But if someone says the Jet’s and Bangals will loose on Sunday then I would say he didn’t look at the schedule and realize they are playing each other. If he says that doesn’t matter, my ‘equations’ don’t explain everything….well then I’d say he’s a fool.
More logically, if you say some event will happen, X, that sets a line in the sand that requires other events to either happen or be prevented from happening. With that in mind, let me try to address your two good comments:
1. If the exchanges get swamped with the sick, where are they coming from? Well clearly not the very poor since they are likely on Medicaid or the very old since they have Medicare. YOu identify 50-65, which typically are people with jobs. So that means they are leaving the EBI pool.
2. You assert that EBI might start geting more expensive or less common. Well the primary requirements on EBI were letting parents put their kids on up to age 26 (unless they have a job that offers coverage) and the lifting of the lifetime $2M caps (which if you’re that sick you’re probably not going to be working much longer). Both went in effect before the exchanges so their impact should already be on EBI and *if* you’re theory is correct that sick 50-65 year olds are leaving for the exchanges that would certainly seem like a very good trade for them.
3. Klein’s piece is correct but about limited scope. It’s a bit like saying next Sunday is going to be a diaster for the NFL since a team is going to loose. Well yea but another team has to win. If the exchanges fill up with all the sick people, then all the other places that cover people will loose all the sick people. If sick people leave Medicare, that’s less gov’t spending on Medicare. If sick people leave EBI’s, then corporate insurance spending goes down and corporate profits go up or salaries go up (since health benefit spending is just a form of salary). If gov’t has to spend an extra $50B to subsidize the exchanges, then individual or corporate income has to go up by $50B. Now the hope is the exchanges will end up being a robust private market with a mix of healthy and sick people so insurance companies can compete with each other, but the system can work well if the outcome is exactly the opposite (in fact that might even be a better outcome, health insurance outside the exchanges would become more like other types of insurance, coverage for the completely out-of-the-blue diaster).
4. I’m a bit skeptical of the death-spiral theory because it hasn’t happened to EBI. Who did you say was the most expensive people to cover? 50-65 yr olds. Who gets covered by EBIs? Well employees who all get charged the same price for coverage. Let’s say your theory is right, why would a 22 yr old worker pay, say, $100 a month, out of his pay for coverage if his only medical cost in a year might be a single doctors visit? Even worse, since 20 yr olds typically are making less than 50 yr olds, the same price policy of EBI’s mean it’s even more of an incentive for the young to decline EBI’s. I’m sure the young do decline EBI more than the old, but not in sufficient numbers to make employer coverage totally unworkable. The reasons are probably because it’s not true that the young have no need for coverage and people aren’t masters of switching insurance on and off, they have a lot of uncertainty about their health.
Interestingly, though, even if the extreme was true, absolute no one in their 20’s takes insurance, the ACA still seems to work. Granted subsidies would be higher than expected but the system as a whole would work fine.
Boonton:
Don’t have time to respond at any length, but I’ll merely say two things—
The first is that, as I believe I wrote before somewhere, I have no idea whether the death spiral will happen (nor does anyone else). I am merely reporting and describing how people say it could happen, and how that might work. Those people are making assumptions about who comes on the exchanges, as are you. Who’s right? The second is that you cite no studies for your assertions, you merely make them (not that studies would necessarily prove anything, but at least they would represent some attempt at empirical data). For example, you suggest that the older people coming onto the exchanges would be coming from EBI—but that isn’t what I think will be happening, I think they’ll be coming from no insurance or the state high-risk pools, and either be unemployed, part-timers, or self-employed, or from work that doesn’t offer EBI. I think you’re wrong in that and several other assumptions, but perhaps you’re right. Time will tell, if Obamacare continues on its merry way.
neo,
Take your time, just let me know if you want to keep this thread alive since it has already slipped to page 2 of your blog.
A note: The advantage of figuring out what can’t happen versus what will happen is proof gets a lot more certain and a lot easier to do. To figure out who will win the game on Sunday you may consult the best Vegas oddsmakers and their expertise and skill still will only give you an approximation which could easily be wrong. But I can predict if one team loses, the other must win and I will be right 100% of the time and will require no studies, no citations from experts, nothing. You wouldn’t figure something so simple could outsmart so many people but you’d be surprised.
So let’s take the most extreme case possible. Every sick person who can runs to the exchanges. What will happen, no doubt, is the cost of subsidies will skyrocket. Fair enough, but sick people are coming from somewhere. Your buckets are EBI, Medicare, Medicaid, some other single-payer type systems (Tri-care for those in the military), people being treated for free today or people not getting treated today.
I don’t doubt you’re correct, many may be unemployed (but is the entire unemployment rate made up of just sick people? I think we have more sick than unemployed in the US!). If they are from state high-risk pools then that eases the burdens on the states and provides essentially a private sector solution to insurance for the sick (essentially ‘insurance vouchers’). If they are coming from the self-employed or workers whose companies don’t offer EBI, then you don’t have the extreme case. YOu have a mix of healthy and sick people (I assume on average people running their own businesses or working jobs are healthier, at least on some level).
Now if you are going to ask me for predictions that aren’t as easy, I’m going to guess the exchanges are not going to work out as bad as you are hoping. Right now EBI works pretty well but if you don’t have a huge pool of people with you it’s very hard to get a decent premium. Many insurance companies suspect the individual or small group seeking coverage are hiding some type of serious underlying condition and as a result the individual private market is horrible in many places. The exchanges will pool a lot of people together (including small businesses under 40 and later under 50 employees) so the opportunity to buy reasonably good coverage outside of EBI, Medicare or Medicaid will be available.