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The Cracks Start to Widen
Grey Lady Worried on Obamacare

With premiums expected to increase by twenty-five percent next year, even the New York Times has come to accept that the Obamacare is a costly and inefficient mess:

Premiums for midlevel health plans under the Affordable Care Act will increase by an average of 25 percent next year, while consumers in some states will find significantly fewer insurance companies offering coverage, the federal government said Monday […]

In many parts of the country, the available options are sure to become part of the political conversation in the election season’s closing days. And the rising costs and shrinking options all but ensure that the next president will need to make significant adjustments to the health law, something both Hillary Clinton and Donald J. Trump have promised.

The average increase of 25 percent in benchmark premiums on the federal exchange compares with increases of 2 percent in 2015 and 7 percent this year. Major insurers have pulled out of the public marketplace in many states, citing multimillion-dollar losses, and state officials have approved rate increases of 25 to 50 percent or more for some insurers that remain.

One in five consumers on the federal health insurance website HealthCare.gov will find only one insurer with offerings next year, the administration said.

One positive outcome can be attributed to the law: it has cut the number of Americans living without insurance. Still, the main question supporters of the law will have to answer centers on sustainability: is the health system that Obamacare establishes something that can last as it is currently constituted? Escalating costs are at the root of Obamacare’s woes, and any attempted reforms simply have to address rising costs first. As we’ve repeatedly argued, harnessing the potential of the information revolution is the best way to do so.

Unfortunately, at this point it doesn’t seem that this is the way things will go. With Donald Trump behind with two weeks to go, Democrats are turning their eyes to single-payer solutions, like the one being bandied around in Colorado (h/t Tyler Cowen):

Amendment 69 would alter the state’s constitution to create a single-payer health system known as ColoradoCare. The idea is to replace premiums with tax dollars, and coverage for residents will allegedly include prescription drugs, hospitalization and more. Paying for this entitlement requires a cool $25 billion tax increase, which is about equal to the state’s $27 billion budget. Colorado would introduce a 10% payroll tax and also hit investment income, and that’s for starters. California would look like the Cayman Islands by tax comparison.

Every other detail is left to the discretion of a 21-member panel. The board of trustees would determine what benefits are offered—say, whether your pricey cancer drug makes the cut. The board would also set reimbursement rates for doctors and hospitals, as well as patient co-payments.

The ballot initiative is currently not popular—the eye-watering tax bill probably has something to do with that—but make no mistake: this is the direction many in the Democratic party want to take things.

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  • Andrew Allison

    Quite apart from the fact that many of the 87% those who have Exchange coverage by virtue of federal tax subsidies can’t afford basic care due to the, literally, catastrophic deductibles, I question the truth of “One positive outcome can be attributed to the law: it has cut the number of Americans living without insurance.” It appears to me that the Administration, and thoughtless commentators, are conflating health insurance with Medicaid. Medicaid is welfare, and Medicaid care is ridiculously hard to find.

    • wri

      But once we all have Medicaid type coverage, at least we will all be equal — even if that means equally bad off.

      • Andrew Allison

        It doesn’t mean that at all. What it means, in contrast the the current horror show, is that EVERYBODY would have a basic level of care and private insurance would cater to those who wantmore. What part of even the people with ACA subsidies can’t afford care and Medicaid care is very, very hard to find is unclear?

        • wri

          I was not intending to argue with you. I take your point, but this string of commentary was about how long the search for a nirvana of universal coverage can go on. One possible result is that everyone is forced to take a certain level of minimal coverage and live with the consequences. This solves the cost and equality problems, because everyone is forced into a low cost (and likely low quality) system. It is theoretically possible to have a minimalist universal public health service with the opportunity for those who can afford it to add on coverage. This seems to make sense, but I think the political “egalitarian” idea underlining universal single payer helath care is intolerant of such a system. I understand that going outside the government mandated system for additional health coverage is illegal in Canada. Maybe you can pay for faster and better health care out of your own pocket (and out of Canada?). but you cannot buy insurance against this risk.

          • Andrew Allison

            I think the question should be how long will it be before the US joins the rest of OECD and institutes single-payer health insurance. The suggestion that single-payer means low quality is not borne out by the outcomes, which provide better care at much lower cost. I think that Canada is the only OECD country which bans the provision of private care for services covered by the national plan, but in practice the ban is not enforced and, contrary to your statement, private insurance and care are available there (http://www.canadian-healthcare.org/page6.html). Most, if not all, other OECD countries have vibrant private insurance and care.

          • wri

            I have some difficulty squaring your support for single payer health care with your support for “vibrant private insurance.” Seems to me that would be a mixed system, maybe something like France. I think any health care system will necessarily have to contain an element of public provided or subsidized health care. It’s a question of drawing the line and I don’t share your view that government provided care is better and cheaper — and apparently many other countries don’t either. In any event, I can’t see the downside to trying something else before defaulting to single-payer. I would like to see a full public discussion of the subject without each side condemning the other’s views from the outset.

          • Andrew Allison

            What I wrote was that in every country (including Canada) which has single-payer health insurance there is a private alternative for those who want it. You seem to be unwilling or unable unable to grasp the difference between insurance and care. By any objective measure, the countries which have single-payer insurance, even those which also provide single-provider care, deliver better care than the US. I’m utterly opposed to single-provider CARE, but the arguments for single provider INSURANCE are unassailable.

          • wri

            Well, I have to confess I don’t understand. I’m prepared to be educated. Are Britain and Canada single-provider CARE or single-provider INSURANCE — and what is the distinction? I should add that I can understand a single provider heath CARE system that allows for private insurance to enhance health care provided by the single-payer, i.e.government (if you can afford it). But you seem to be talking about something else.

          • Andrew Allison

            As noted in another response, Canada and the UK are mixed single- and private-provider, Medicare, and many OECD countries are single-payer, independent provider with private insurance, e.g. Medigap available. In other words, one does not require the other. The distinction is important because the manifest ills (pardon the pun) of single-provider are used to argue against single-payer.

          • wri

            My question (below) is not facetious. You’ve been all over my comments with quick replies. You have made a fundamental disinction between single-provider care and single-provider insurance. Can you explain what you mean?

          • Andrew Allison

            Happily. Consider Medicare. The insured pay insurance premiums to the government, the government reimburses PRIVATE care providers for services. This is also the case for the universal INSURANCE provided in many European countries. Some, like the UK, and the infamous VA, provide both insurance and care (something which I oppose).
            Why a single-payer rather than the present system? Most importantly, insurers providing ACA policies are guaranteed a 20% return, money which would be better spent on providing care. The also have administrative overhead which is four times that of Medicare. Similarly, the enormous overhead imposed on care providers dealing with numerous payers (I’ve seen estimates that 25% of the costs of a typical practice are spent on this) would be significantly reduced.Health insurance, as opposed to care, is simply a numbers game. Single payer would put everybody into the risk pool rather than just those who need care, thereby escaping the ACA death spiral already in effect, and a single payer would have tremendous leverage in negotiating reimbursement levels.
            Simply put, insurance is mechanical (premiums = reimbursement + overhead) whereas care is patient-centric. The arguments for single payer are as overwhelming as those against single provider, but conflating the two doesn’t make sense.

          • wri

            Ok, I think I get it. Based on limited knowledge, I think France has a system along the lines you suggest and it appears to work well. I would still differ from you in the role of government. Medicare is a great system — I know because I have been greatly benefited by it. I’m pretty sure it would be prohibitively expensive to extend Medicare, as it now is, to the entire population. Whether it could be pared back to form the centerpiece of a system I don’t know. I am more skeptical than you on government’s role. I know the argument that there would be an automatic 20% saving with government “insurance because of overhead and profit. Based on a life-time of watcihing government operate, I doubt savings would be anything like this — but you are right there would be a big difference in result if government were a payer rather than provider. I would be in favor of more patient choice and responsibility, such as health savings accounts (that don’t leave the poor exposed) and a system that preserved the independence and flexibility of providers (thus avoiding the mass consolidation and shrinking of provider and coverage options that is happening under the ACA). No doubt easier said then done.

          • Andrew Allison

            I think you overlooked the part about the universal risk pool for single-payer systems. You’re assuming that extending Medicare to the entire population would result in the same costs as the current (aged) risk pool. ACA is dying because only the sick and/or those eligible for significant (taxpayer-provided) subsidies are signing up. HSA’s already exist, and can be used for any proper medical expense, public or private. Not only are the contributions deductible in computing MAGI for ACE subsidies, but they effectively double the IRA deduction for the majority who have employer-provided insurance. The fact that the public has not been educated as to the benefits of HSA’s is disgraceful. Or perhaps the problem is that given the choice between funding an HSA or or buying a new car, 500-channels of garbage, er TV, or a smartphone, etc., most make the wrong choice and then expect society to bail them out when they get sick. Making medical insurance a payroll deduction would go far to solve that problem.
            Thank you for providing the opportunity to explain to you, and hopefully others, some of the fallacies around the health insurance issue and the importance of separating insurance from care.

  • seattleoutcast

    As one who has seen dear friends go into heavy debt because of this law, I can only say the NYT is complicit in fraud.

    • LizardLizard

      If Hillary is President, we will go to National Healthcare. Take a look at the VA to see what that would look like. Vote Trump.

      • Rick Caird

        I doubt even Hillary could get single payer through Congress. But, why take a chance.

        • LizardLizard

          RINOs will will over for her. Dems will lick her hands.

  • JR

    Um, no. Obamacare is like an Immaculate Conception of policy, perfect in every way. I pity the tea bagging faux news watching inbred hick who is porking his sister who thinks it can be improved in any way. People wanted Democrats. People wanted Obamacare. The people shall have Obamacare.
    On a more serious note, i think the biggest problem for the Left in this country is that they think they are winning because they are beating hapless Republicans. In reality, they face a much more implacable foe: arithmetic. The low fruit of public policy has been picked. What remains is staggeringly expensive. The Left keeps promising goodies like single payer even after it is crystal clear that we can’t afford it. In a war with arithmetic, arithmetic ALWAYS wins. Ask the Venezuelans how well the fight between arithmetic and Chavismo went.

    • Bob Parkman

      It’s often mentioned that unsustainable things must eventually stop, but it’s hard to predict exactly when.

      • JPL17

        And sadly, it may take generations for the Ponzi scheme to collapse, so by the time it does, voters won’t recall exactly which turn put them on the road to ruin.

        That said, perhaps there’s room for cautious optimism: e.g., is there any country in the world where socialism has been tried *twice*?

        • Dale Fayda

          Nicaragua.

          • JPL17

            Thanks, I’d forgotten about them. Though I wonder exactly how “socialist” is Nicaragua in Round Two? According to the World Bank and other sources, Nicaragua ranks “as the 123rd best economy for starting a business”, its economy “is 62.7% free with high levels of fiscal, government, labor, investment, financial, and trade freedom”, and it “ranks as the 61st freest economy, and 14th (of 29) in the Americas.” https://en.wikipedia.org/wiki/Nicaragua

          • Dale Fayda

            Same Sandinista president – https://en.wikipedia.org/wiki/Daniel_Ortega – as when they were a mini-Cuba.

          • JPL17

            Yes, I knew that. But what I was wondering was whether Nicaragua under Ortega II is “less socialist” than it was under Ortega I? The sources cited in my link suggest that it is. Indeed, so does the link you cited, which contains this suggestive quote: “Ortega’s policies became more moderate during his time in opposition, and he gradually changed much of his former Marxist stance in favor of an agenda of democratic socialism. His Roman Catholic faith has become more public in recent years as well, leading Ortega to embrace a variety of socially conservative policies; in 2006 the FSLN endorsed a strict law banning all abortions in Nicaragua.” So it’s at least possible that Nicaragua is less socialist now than it was under Ortega I.

            This is not to suggest that Ortega is any less corrupt or monstrous now than he was during his first presidency. But it does seem at least possible the country is less radically socialist than it was. I’d need to study the subject in much greater detail to have any firm opinion.

      • LizardLizard

        People of means will pay for their doctors privately, one way or another. For everyone else it will be VA-type “healthcare”. This was apparent from the beginning, but the “we want unicorns” set voted for it, and now they will get it, good and hard.

    • wri

      On the other hand, look what happened to Venezuela before it learned the lesson. Doubling down on government programs is in vogue now, in good part because, as you mention, there is no effective opposition. For the next four years or more even the token opposition will be be picking up the pieces after this year’s election fiasco. I think we are destined to go much farther towards government economic and social control before reality starts to dawn.

      • JR

        I agree completely. We will go more and more towards socialism until the economics become unbearable. I call it the Brazil scenario and ever since IRS gave Obama his victory in 2012 I’ve been convinced that we are heading towards that outcome. So far, unfortunately, my hunch has been proven correct. Our only hope is that higher interest rates will focus some minds, because as long as USG can borrow at these rates, there will be no incentive to change anything. I hope I’m wrong, but I’m afraid I’m right.

  • Bob Parkman

    Having healthcare insurance is not positively correlated to having access to healthcare nor is it positively correlated to improved healthcare outcomes.

    • LizardLizard

      Just shows, it matters what metric they use. Tic the boxes and let the people be damned. Because…. legacy!

  • LizardLizard

    Unaffordable and nobody in Washington cares.

  • Dude1394

    That they would have the balls to put that to an actual vote is stunning. The single payer option will not have an honest price tag and will not be voted on honestly. Just like obamacare itself.

  • Forbes

    >”One positive outcome can be attributed to the law: it has cut the number of Americans living without insurance.”

    This gives the law too much credit. in fact, it is to participate in a fraud–a intentional deception on Americans. It was argued that 47 million were without healthcare insurance, explicitly implying a healthcare crisis. Now 10-11 million are covered by Obamacare, and what? Has the crisis disappeared? Or merely shifted to affordability, Medicaid-like rationing, bankruptcy of state exchanges, an enrollment death spiral, et al.

    Like the usual bait n’ switch by politicians (you can keep your doctor, families will save $2,500), the Obamacare solution has created more problems, and expensive problems at that, than it solved. And of course the politicians and their sycophants who created the specter of a healthcare crisis–implying the problem of access–now move the goal posts to say the numbers without insurance have been reduced.

  • Boritz

    “One positive outcome can be attributed to the law: it has cut the number of Americans living without insurance.”

    The rational goal is not to have insurance as an end in itself but to acquire needed treatment. Fail.

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