Monday, October 09, 2017

It Didn't Work As Its Proponents Claimed

In a lot of ways ACA overall is a net good (stipulating up front), but all the too-clever-by-half transforming the economics of the health care market did not happen and will not happen. The best bits were the Medicaid expansion (which John Roberts and sociopathic Republican governors gutted) and the general health insurance industry regulations. The exchanges were good for the people that they helped. That's no small thing, so when you say "the exchanges are bad" people get mad because people were, in fact, helped by them. But they did not and will not work as promised. In some sense the public option was not deemed necessary (aside from whether or not it was politically feasible, an argument I don't want to have for the millionth time), because the exchanges were supposed to magically transform the insurance market. That was always stupid, and now we know.

The ACA exchanges have become a last resort option used almost exclusively by those who qualify for tax credits, but they weren’t meant just for the individual market. A significant part of the law was dedicated to setting up small business exchanges, which were intended to expand to companies of all sizes. Some members of the Obama team honestly believed their new private insurance exchanges would be so popular with individuals and companies that they would rapidly expand to become the main way people get insurance.

One of Obama’s top health care advisers, Dr. Ezekiel J. Emanuel, even went so far as to predict that by 2025 fewer than 20 percent of workers would be getting traditional employer-sponsored coverage, because the exchanges would be humming with competition and low prices and crowding everything out.


Most importantly, before the law passed, Obama claimed a main purpose of it was to dramatically increase competition, telling Congress, “My guiding principle is, and always has been, that consumers do better when there is choice and competition. Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company.” This year, 34 states have five or fewer insurers operating in at least one county on their exchanges. Fewer than 5 percent of counties have five or more insurers for people to choose form on their ACA marketplace.

This isn't rocket surgery. This stuff was predicted by people other Emanuel and Cohn. The insurance markets are going to tend towards state/local monopoly unless rates are negotiated/set by the government, which is basically how the Swiss model works. You can have competition in insurance if you remove price setting by doctors/hospitals. There were a lot of false comparisons between Obamacare and the Swiss model - they both have competition! - but this crucial piece was missing.

Anyway, one can say it's a net good which deserves to be defended and also point out that it's a net good that is good *largely in ways that its "architects" did not focus on*. They liked the wonky competition and that stuff is a failure.