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ACA Fail Fractal
ACA Coverage, with a Side of Sky High Deductibles

The NYT has slowly begun to figure out that ACA doesn’t make health care affordable. A new piece in Grey Lady on Obamacare notes that sky high deductibles are making insurance unusable for exactly the people who need help the most. A taste:

“The deductible, $3,000 a year, makes it impossible to actually go to the doctor,” said David R. Reines, 60, of Jefferson Township, N.J., a former hardware salesman with chronic knee pain. “We have insurance, but can’t afford to use it.

In many states, more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more, a New York Times review has found. Those deductibles are causing concern among Democrats — and some Republican detractors of the health law, who once pushed high-deductible health plans in the belief that consumers would be more cost-conscious if they had more of a financial stake or skin in the game.

“We could not afford the deductible,” said Kevin Fanning, 59, who lives in North Texas, near Wichita Falls. “Basically I was paying for insurance I could not afford to use.”

We’ve long noted that the health of the U.S. medical system in the age of the ACA cannot be evaluated by top-line numbers—like how many Americans are insured—alone. Rather, we must look at how well insurance is actually serving Americans in their day-to-day interaction with the health care system.

Every indication so far is that, for far too many Americans, health care is unaffordable, ACA subsidies or not.

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  • Jim__L

    It bears repeating: For lower prices, figure out how to reduce costs. Expanded access will follow.

    • Andrew Allison

      Sorry, but what bears repeating is that the costs of health insurance and health care are separate issues. Insurance underwriting is about statistics. If, as in the case of ACA, you demand “affordable” premiums and that pre-existing conditions don’t count something, namely, the deductible, has got to give. The way to reduce health insurance costs is to expand the risk pool, the logical conclusion of which (like it or not) is Medicare for all. The solution to the cost of health care is cost transparency and competition.

      • Jim__L

        In the absence of reduced care costs, premiums are a zero-sum game. Expanding the risk pool is passing the buck, pure and simple.

        It’s not working.

        • Andrew Allison

          I (and the insurance underwriting profession) beg to differ.

          • Jim__L

            Are we talking about the same thing here?

            *The total cost of all the claims does not go down as you increase the number of premium payers*. To reduce premiums for some claimants, you need to increase premiums for non-claimants by the same amount. Zero-sum. Negative sum actually, if you consider losses due to administrative costs for the extra participants.

            If you reduce the *costs* of health care, on the other hand, the total cost of all claims goes down, which means everyone’s premiums go down. As premiums fall, more and more of the market can afford to pay them. This expands access in a sustainable way.

            How is underwriting math different than this?

          • Andrew Allison

            What changes is the cost per insured, and hence the premiums and/or deductible. The subject of the post is the deductibles that insurance companies have put in place in order to make ACA premiums “affordable”. The result, as we observe, is a death spiral wherein not just those who choose not to pay for insurance, but also those who qualify for subsidies but can’t afford care due to the deductible, bail out, thereby driving premiums and/or deductibles ever higher. Rinse and repeat.
            You’ll get no argument from me that the cost of healthcare in the US is twice that of other developed countries while producing inferior outcomes and needs to be reduced, but the subject of the post is insurance, not care.

  • iconoclast

    The next step that progressives will pursue, single payer, will be even worse on both costs as well as quality of care. Think Medicaid.

    • Andrew Allison

      Can you not grasp the difference between single payer and single provider? The US is the only OECD country which has not recognized that to minimize the cost of health insurance it must be mandatory. Medicaid is the provision of “free” healthcare, and its recipients get much more than they pay for.

      • iconoclast

        Medicaid is single paye, which is what you want. Use that and the rest of us will use insurance provided interstate without state interference in coverage regulations. Anything else simply forces providers to sell their services at politically-mandated prices.

        • Andrew Allison

          Well yes, the Medicaid payee is, like the provider of the subsidies received by 87%-and-counting ACA exchange beneficiaries, the taxpayer (which by definition the recipient is not). Are you willing to increase your tax payments to provide other people with better care? Furthermore, there’s only one interstate health insurance coverage, and it’s called Medicare. Does it really make sense to guarantee innumerable private health insurance companies who are replicating each other administrative overhead a 25% profit?

          • Jim__L

            No, we’re not willing to raise our tax payments. That’s pretty much the issue right there.

            There are ways to reduce costs. If we go the route the other OECD countries go, we’ll see that many of those savings will accrue to Medicare, as end-of-life treatment is a huge cost driver. Those savings might be redirected, although you have to realize savings before you can redirect them.

            I’m not sure you realize what you’re asking for, here.

          • Andrew Allison

            I’m perfectly sure what I’m asking for, namely that we stop confusing the insurance issue with the cost of care. How often must I repeat that OECD countries provide much better healthcare at much lower cost, but that’s not the issue? The issue raised in the original post, paraphrased, is that ACA is irretrievably broken because even the people who receive a sufficient taxpayer subsidy to afford the premium can’t afford care not because of the cost of healthcare, but because of the deductible necessary to make the premium affordable.

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