Pelosi Watch: Healthcare Exchanges

So one of the keystones of the Obamacare plan is the health insurance exchanges. These are the inventions, borrowed from Romneycare, that will supposedly heal the diseased health insurance market, right? They are the cure to what ails us, right?

Well guess what? In one of the most predictable developments in history, it looks like they’re not going to be ready in time:

Where was the contingency plan?

That’s what Joe Klein asks upon learning that Obamacare’s health care exchanges, a sort of government-run insurance supermarket, are going to delay implementation of most of functionality that was supposed to be available for small businesses. Instead of a choice of offerings, in many areas, they’ll basically have one. This is worse, not better, than the current markets.

Sure, the administration was surprised when so many states declined to operate their own exchanges, forcing the federal government to step in. But the administration doesn’t seem to have prepared for that possibility, even though it was an obvious threat by last year. Instead, they held open the deadline for states to declare, making themselves even later.

Savor that for a moment. When Obama’s healthcare supermarkets open, many of them will have one product on the shelves. Hugo Chavez’s supermarkets had a greater selection.

In addition to the lack of exchanges and the poor state of the exchanges, the insurance coming out of them is likely to be more expensive than the insurance available right now. I would say that’s another unintended consequence but … it’s kind of an intended consequence. The purpose of the healthcare exchanges is not to bring down the cost of healthcare. It’s to bring it up. Ezra Klein:

When people say that Obamacare will, in certain parts of the country, for certain people, increase premiums, what they mean is that something akin to the switch from Texas Inc. to Vermont LLC. Obamacare will force insurers to upgrade their products to meet a minimum level of comprehensiveness, lay down some rules limiting price discrimination against the sick and the old and the female, and then help people pay for the final product. It’s a lot like what happens if you move to an employer that offers better health insurance and helps you pay for it.

Uh, no, it really isn’t. What your employer does is voluntary. And the money comes from him, not the government.

The intent of Obamacare is to ensure that almost all Americans are covered by high-quality insurance that they can afford. To say that the law will move many Americans onto more costly insurance products is simply to restate part of that premise more negatively, and to leave out the effect of the subsidies, or the change in the underlying insurance product, is to mislead.

What Klein is admitting is that Obamacare is, at its core, a subsidy so that people can get more expensive insurance. This was not how this pile of shit was sold to us. We were told that healthcare costs were spiraling out of control, threatening the very existence of the Republic. It was implied, at least, that this was to make sure that people had a least a minimum of insurance, not a “high quality” plan. Now we’re being told that the purpose is to effectively outlaw cheap insurance. Now we’re being told that this is the equivalent of subsidizing everyone to live in a four-bedroom, two-bath house.

(I shouldn’t give them ideas.)

And then, of course, the liberals will act all shocked and surprised when healthcare utilization and costs spike again. They have never understood that people will use more of something when it is cheaper. If you give people subsidized (or God help us, free) insurance, they will go the doctor for every sniffle.

Oh, and about that “price discrimination” we’re eliminating (or, as it is known in more rational circules: charging people insurance premiums that reflect the costs they will likely incur). Guess what?

On Monday, the D.C. exchange’s executive board voted to prevent insurers from charging higher premiums to smokers than to nonsmokers — meaning nonsmokers are likely to pay modestly higher rates than if smoking surcharges were permitted. The District joins three states — Massachusetts, Rhode Island and Vermont — that have banned tobacco surcharges on their own exchanges.

Mohammad N. Akhter, chair of the D.C. Health Benefit Exchange board and a former city health director, said the authority had no hard data on what cost impact banning tobacco surcharges might have on nonsmoker premiums. But he said the vote furthers the board’s policy of encouraging broad participation in the exchange.

Emphasis mine. They don’t know what this will do to insurance premiums. They don’t give a blue fuck what this will do to insurance premiums. All they care about is getting more people onto subsidized policies.

In a statement, Akhter referred to tobacco use as a “pre-existing medical condition” and added that charging smokers more would be “in direct conflict with our efforts to help people quit smoking.”

I want you to wrap your brain around that statement. They want to get people to quit smoking … by eliminating one of the penalties for smoking! And a “pre-existing condition”? I once smoked. Tobacco is very addictive. But it isn’t leukemia. It is not a pre-existing condition; it is a pre-existing behavior. It is chosen no matter how addictive nicotine may be.

Oh yeah, this experiment in socialism is going to go JUST GREAT!

Comments are closed.

  1. Seattle Outcast

    These people are so fucking stupid – they don’t even know what medical insurance IS, but they sure want to regulate it…

    The end game is to force everyone into the wonderfully Marxist “single payer” version in which medical care starts a rapid decline back to 1930 levels of care…..for people that paid in chickens when their wife had a baby….

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  2. ilovecress

    If you give people subsidized (or God help us, free) insurance, they will go the doctor for every sniffle.

    I’ve always wondered about this point – Is this actually the case? Having lived under both systems, I only went to the doctor when I had to. Is there any data on this?

    And anyway, isn’t the logic flawed? How does where the cost of the coverage comes from impact on anyones decision to go to the doctor? Either you’re covered or you’re not.

    The only people who will go to the doctor more, are those who weren’t covered? Which will spike the utilisation – but from people who previously had no access to healthcare – which was sort of Obama’s point in the first place.

    Am I missing something in this?

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  3. Hal_10000 *

    cress, law of supply and demand. If you decrease the cost of something, people use it. My main experience with this was seeing first hand the military healthcare system and the private healthcare system. I’m exaggerating with the “sniffle” thing but the military doctors were swamped.

    There’s also been a lot of study on the effect of high deductibles on insurance (RAND, in particular) as well as low co-pays. The basic result is that when people pay more out of their pocket, they utilize less care. But the outcomes don’t decline.

    I think the socialization of American healthcare is unfortunately inevitable. What I hope is that we end up with a system like Australia’s where the patient pays and is reimbursed. And people can buy into more comprehensive plans if they can afford it. It allows the free market back in, to some extent.

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  4. Hal_10000 *

    Just to give you another exmaple from first hand experience. Medicaid has always been kind of weird. It’s “free” but the utilization is low because chronically poor people either don’t have the time or inclination. We woudl frequently not see a patient until their foot was literally falling off even thought they had coverage.

    I don’t know what the current situation was but in the 90’s, medicaid put in place a $2 copay for office visits (yes, $2). utilization feel and a lot of people complained that this was going to make healthcare outcomes worse.

    Probably not comparable as Medicaid has been massively expanded since then and covers more middle class people.

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  5. ilovecress

    But Hal – that’s not a law of supply and demand :-)

    The way I see it, insurance doesn’t act like a regular commodity. I suspect what you’re seeing is more people in the system, rather than the costs being lower? If you decrease the cost of something, more people can afford to use it.

    The difference is that the $:benefit ratio isn’t fixed for insurance – If you made iPads $50, you’d see more demand – becuase having 100 iPads is tangibly a good thing. When you pay your insurance premium, you’re making a bet with the insurance company that you won’t need to call them over the next 12 months.

    Put it this way – say you pay $100 a month for Health insurance privately. If it was $50 a month, would you use it more? Or perhaps you’d try and get your moneys worth if it was $500 a month?

    Then how does the Government picking up the check change anything?

    (I’m working in insurance pricing at the moment, and this concept isn’t in any of our behavioural analyses – but then again, the US might be different)

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  6. AlexInCT

    If you give people subsidized (or God help us, free) insurance, they will go the doctor for every sniffle.

    VIAGRA or Birth Control!

    Or doesn’t either of these count as a sniffle? :)

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  7. Hal_10000 *

    Sorry, I had a few points going past each other there. The problem is that the US system is not really a free market, so it’s hard to pin down behavior. You do have a good point in that behavior is very connected with health care utilization. As I noted, many of our Medicaid patients couldn’t be bothered to use their free healthcare. I’ll see if I can dig up RAND’s study on the effect of deductibles on utilization.

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