The American Interest
Analysis by Walter Russell Mead & Staff
Obamacare Victories Carry a Heavy Cost

obamacare

Last week, Obamacare supporters rejoiced over new estimates that California’s insurance premiums would be lower than expected under the ACA. But this week they’re being more cautious in their predictions.

On Wonkblog, a pro-ACA outlet that cheered loudly when the California numbers came out, Sarah Kliff argues that success in the Golden State might not be replicable elsewhere. According to Kliff, California is one a few states to take an “active purchaser” approach to the ACA. This means that a state board has the power to select which plans will be available in the exchange, and can reject any plan whose rates are too high. Most other states, however, do it differently:

The vast majority of states…operate under a “clearinghouse model.” In that scenario, any health plan that meets a set of criteria gets approval to sell on the health insurance exchange. All 33 state exchanges that the federal government will run operate under this  clearinghouse model. So do 10 of the 18 state-run health exchanges (this includes the District of Columbia). Two states, Kentucky and New Mexico have not, according to Kaiser Family Foundation, addressed the issue yet.

In the final count, only six states are currently “active purchaser” states, so nationwide might not be as low as California’s projections suggest.

If that’s not enough to temper any lingering optimism, consider that the state had to make some significant tradeoffs to keep rates so low, as an LA Times piece reveals. Under the plans offered on the exchange, consumers will have access to far fewer doctors and hospitals. Blue Shield of California, for example, will give its exchange customers access to only 36 percent of its regular physician network:

“If we want to keep costs down, something has to give,” said Betsy Imholz, special projects director for Consumers Union. “At first blush, it seems like Covered California has negotiated some good deals, but in any given community we will see how this network issue plays out.”

Given the limitations in access, California’s cost savings may not benefit as many patients as promised. With Obamacare, even the good news is often bad.

Published on May 28, 2013 3:45 pm
  • ojfl

    And I still insist that low costs for individual plans do not mean much as in the aggregate the costs will be very high. Current lower priced plans are legislated out of existence and everyone on the lower end of the scale will be moved to much higher priced plans, one of the reasons why the higher priced plans could lower their rates, due to new economies of scale. But it still seems to me total aggregate costs will still go up significantly.

  • jeburke

    More BS. The state selects exchange plans and excludes those with higher rates. So Blue Shield and a couple of others concoct cheap plans with access to fewer docs (wanna bet that eliminates all the better docs with good reps). Wait until people who now have good employer-provided plans lose those and get thrown onto the CA exchanges where they can only get crappy ones.

  • BrianFrankie

    Hmm … So California uses a method to eliminate the plans that charge the most for their services. If only there were a name for such a scheme. Maybe I can coin a new term … how about: “price controls”? Yeah, that sounds good.

    Seems such a great idea, I’m amazed it hasn’t been thought of anywhere else or previously used. I’m sure it is destined for success anyplace that it may be tried. I look forward to hearing the hosannas sung to the California “price controls” by the citizens of that state in a year or two…

  • bpuharic

    And yet conservatives have failed to tell us why the US continues to have the highest healthcare costs in the world, in spite of the fact ‘govt healthcare in other advanced nations is of quality equal to our own

    Americans seem proud of failure, as long as it’s American failure.

    • Marty Keller

      Unless we compare apples to apples, this comment has little cogency. Without accurate data points, it’s difficult to assert with any accuracy “the fact that govt healthcare in other advanced nations is of quality equal to our own.” Perhaps. As to the silly “pride of failure” comment, all humans have failures, and most of us are unwilling to acknowledge them. This is not a particularly American trait. Why the animus against Americans on this?