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Wrong Target
Easy Come, Easy Go

In case you missed it, the latest bad news for the Affordable Care Act came via the New York Times this past weekend: Americans who signed up for coverage through the law are dropping their insurance at least in part because the plans are too expensive.

About 9.9 million people were enrolled in the federal and state marketplaces at the end of June, a drop of about 15 percent from the 11.7 million who the Obama administration said selected plans during the open enrollment period that ended in February.

Though there is no comprehensive data on why people drop or lose their marketplace coverage, enrollment counselors, health care providers and consumers say cost is a factor. In some cases, people lost jobs or their income dropped after they enrolled. Other people signed up for coverage only to decide later that they could not afford it. Still others dropped their insurance after their federal subsidies — intended to help pay premiums — were reduced or eliminated because the government could not verify their incomes or concluded that they were earning more than they had reported on their applications.

If only someone had predicted that the initial sign-up numbers celebrated by ACA employees might drop because of retention problems:

One point we’ve emphasized about this enrollment number is that it doesn’t tell us how many of those signing up were previously uninsured. The law was supposed to expand access to the previously uninsured, not kick people off their current plans and on to the exchanges. And there’s another way this announcement could be misleading. We don’t know how many of those seven million will pay their premiums. If Americans sign up now only to miss payments later, the initial enrollment figures will wind up telling us little about how successful Obamacare has been.

Parts of Obamacare, like its attempt to loosen the tight link between employment and insurance, are good, and Americans do not simply want to return to the pre-ACA reality. But the law is also nowhere near as successful as some of its supporters claim. Before the ACA, health care was too expensive for many Americans individually and for the nation as a whole. The ACA has not changed that fundamental reality, and this attrition is just one sign of that. America needs health care reform that brings down costs—we’ve suggested some policies toward that end many times—and until we get it, coverage numbers are not likely to prove very stable.

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  • Andrew Allison

    The Death Spiral has begun. Realistically, the only way to make premiums affordable is to increase the size of the risk pool.

    • Jim__L

      No. The way to make premiums affordable is to reduce the cost of health care.

      No matter how much you increase the risk pool, at some point you always run out of other peoples’ money.

      • Andrew Allison

        Of course reducing the cost of health care could reduce premiums. The trouble is that doing so will be a very lengthy and difficult process, hence my use of the word “realistically”. The risk pool can be increased at the stroke of a pen (by making insurance mandatory).

        • Jim__L

          Insurance is a zero-sum game. Lower premiums for one mean higher premiums for another. Has WRM dropped his “War on the Young” meme?

          • Andrew Allison

            Not exactly. For example, in the case of ACA, the “premium credits” paid on behalf of the 87% (rapidly, I suspect, headed for 100% as those who don’t qualify for subsidies find the premiums increasingly unaffordable) who receive them are paid by the taxpayer. If health insurance were mandatory, everybody would be paying a lower premium (because the overall cost per insured would decrease) than is being paid by those currently insured. One could certainly paint mandatory insurance as war on the young, but the fact is that the health care costs of those who lack insurance are borne by society. What it all comes down to is that somebody is going to pay for health care, the question is who and how.

          • Jim__L

            I’m a taxpayer. It’s still zero-sum. “The question of who and how” is what you’d call a “shell game”.

          • Andrew Allison

            It’s not zero-sum at all. The costs are, more-or-less, fixed but the population paying them is variable. The question of who it should be and how they should pay is the crux of the insurance issue (health care costs are irrelevant to this discussion — whatever they are, somebody has to pay for them).
            You as a taxpayer are already paying, via employer tax breaks, ACA subsidies, etc.) a significant part of all health insurance premiums. Wouldn’t it make more sense to acknowledge that reality, cut out the middlemen, and have single payer insurance (NOT single provider health care) paid for in the form of a tax? Medicare for all comes to mind.

          • Jim__L

            I think we’re talking about two different things — you’re talking about how it’s paid for, and I’m talking about how much it costs. I have little hope that “Medicare for all” would bring us any bright future, considering the fact that the federal budget can’t afford the Medicare we have now.

            My point is the hopeful one that VM has reiterated quite a number of times — health care costs are not “more-or-less fixed”, but can be reduced by innovations of various kinds, including but not limited to reducing transaction costs by rationalizing “sticker prices” for medical treatments, bringing down drug costs through pharmaceutical reform, etc. I have grave doubts that the Federal Government would have the proper incentives to reduce costs while enhancing service — the opposite may even be true.

        • FriendlyGoat

          I agree with you that reducing the cost of health care will be a “lengthy and difficult” process. We know that because we have been actively discussing it as a nation for at least 40 years—-with prices going up the whole time.

          • lord acton

            Brother Goat, right you are. The Rube Goldberg health care financing system we have in this country is a true marvel.

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