The Unaffordable Care Act

The Affordable Care Act AKA Obamacare is now approaching the death spiral its opponents predicted from the very beginning, and for the reasons they predicted. The Obamacare exchanges have attracted a population that is sicker than the law’s proponents expected. Why that should be so is a bit of a mystery; it was baked into the cake from the outset. At the same time younger and healthier people have declined to use the exchanges in sufficient number to make up the difference. Again, no surprise. The result is a significant increase in health insurance premiums, which has the effect of further discouraging young people from participation, which shrinks the pool of profitable premium payers, which puts additional upward pressure on prices ultimately causing the system to collapse under its own weight.


Paul Krugman doesn’t seem to think this is much of a problem, at least going by what he wrote in the New York Times. It is, he asserts, a mere bump in the road. But Aetna, United Health, and Humana disagree. They have essentially pulled out of the Obamacare exchanges in order to stem the flood of red ink washing over them, which is now running well into the hundreds of millions of dollars.


Consequently Avalere, a consultancy, predicts that for 2017 one-third of the country will lack any competition at all in the health care plans offered on the Obamacare exchanges. They estimate that almost 36% of exchange market rating regions will have only one participating insurance carrier offering plans, and that there may be some sub-region counties where no plans at all are available. Finally they find that some 55% of exchange market rating regions may have two or fewer carriers. The report is available here.


By way of comparison, consider that in 2016 about 4% of rating regions had only one carrier, and 33% had two or less. So expectations are for those numbers to explode over 2017 (safely past the election), with one-carrier regions increasing by a factor of almost 9. So it would not be an exaggeration to say that the system is on the brink of collapse, left on its own.


Needless to say, Progressives are arguing that the Affordable Care Act is (1) a great success that has (2) lowered costs but (3) still requires more money. So they are out hunting for a hobgoblin to blame for an obvious systemic policy failure that they still regard as a success that just needs a few tweaks. Leading the posse is Paul Krugman, who suggests that Aetna’s withdrawal from the exchange market is vindictive, motivated in part by a desire to exact revenge because anti-trust authorities turned down a proposed merger. While it is true that Aetna told the Justice Department it would leave the exchanges if the proposed merger with Humana did not go through, the reason for leaving is that the insurers, including Aetna, have been hemorrhaging money.


Krugman also charges that Congressional Republicans bear a lot of the responsibility for the non-problem problem because, well, they are Republicans. The mere fact that the whole Obamacare scheme was conceived and passed when the Democrats controlled both chambers of Congress and had zero Republican input and not a single Republican vote seems to have escaped his attention.


In any event Krugman asserts that it would be easy to fix the system. Surprisingly enough, all we need is an endless pot of subsidy money, this time accompanied by a “reinforced effort” to ensure that healthy Americans buy insurance “as the law requires”. Which is to say that the relatively poor but healthy (generally younger people) should be taxed to subsidize the relatively wealthy (older people).


So: does Nobel Prize winning economist Krugman truly believe that the young invincibles are going to willingly buy overpriced insurance that they don’t need in order to bail out the system? Unless he’s gone completely over the edge (always possible) he almost certainly does not. So he goes to the traditional Progressive first resort: the police power of the state. That’s what he means when he refers to the law’s requirements.


But the sudden devotion to the requirements of law seems to be a tad selective here. For example, I haven’t noticed a whole lot of Progressive concern about Hillary Clinton’s private e-mail system; or the finances of the Clinton Foundation; or the disposition of the Lois Lerner / IRS case; or the truthfulness of Hillary Clinton’s testimony (under oath) before the Benghazi committee. Nor have I noticed an interest by Progressives in holding the Obama Administration to account for its routine overstepping of boundaries in its issuance of executive orders, or its payment of $400 million in cash ransom to Iran. The list seems to be endless.



But these details are for ordinary mortals. Because Progressives are even now gearing up to treat another gargantuan policy failure as proof positive that we need to be even more progressive. If the November election produces a landslide for Hillary Clinton as now seems possible if not likely, we may very well get a very progressive House and Senate. If so, get ready for another run at a full socialization of the health care system, first through a “public option” eventually leading to a “single payer” system.


This, while doctors and other health care professionals are fleeing the system, in part because of the bureaucratization of medicine, an inevitable consequence of a government takeover. So under a President Hillary Clinton we can look forward to the possibility of increased demand for subsidized health care services, a reduced supply of providers and more bureaucratization. Which is to say that government will produce more of what it produces best: lines.



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