In the continuing debate over Obamacare, both the law’s champions and its critics are now focused largely on the mechanics of implementation. This is understandable. The insurance exchanges are supposed to launch October 1, most of the law’s other major provisions take effect January 1, and every week seems to bring fresh news of some delay or dysfunction for critics to highlight and defenders to justify or dismiss.
The technological architecture of the exchanges appears to be behind schedule and below expectations, and concerns about fraud and identity theft are especially grave. Some provisions of the law (most notably the employer mandate, some reporting requirements, and verification of eligibility for subsidies) have been found too difficult to implement and have been put off, at least temporarily, while others (like the CLASS long-term-care insurance scheme) have been found unworkable and abandoned altogether. Some major insurers have opted out of offering coverage in some states as a result of excessive regulatory burdens or price controls. Early premium data from some states suggest huge price spikes for key portions of the population, while employment data suggest the economic incentives created by the law may be undermining hiring and growth.
From here on, the fate of Obamacare obviously hinges on how it works out in practice, so it makes sense to pay close attention to such early indications. But lost in the commotion over these practical setbacks have been two important shifts in the underlying argument for Obamacare—one about how to build risk pools and the other about what insurance is for—that could prove at least as significant over time. Both have involved meaningful, if perhaps not fully intentional, concessions on the part of some of Obamacare’s defenders as they struggle to respond to unwelcome news; both point to the incoherence of Obamacare’s design and to the shape of a compelling alternative.
The health care debate is plainly far from over, and it has changed more this year than a cursory reading of the news about implementation would suggest.
Cost and Value
The first shift has occurred as the result of a chain of defensive arguments surrounding the early data about premium costs in the state exchanges that are supposed to open this fall. Those data have suggested that, in many states, some consumers—especially younger and healthier ones—will see major price increases in the individual market next year.
For instance, comparing detailed data about 2013 premiums compiled by the Government Accountability Office and preliminary 2014 exchange-premium data made available by eight states so far, Investor’s Business Daily reporter John Merline found earlier this month that “the average price for the lowest-cost Obamacare ‘bronze’ plan in eight states is 122 percent higher than the cheapest plan currently available in those states.” Premiums vary from state to state, and different analysts break down the numbers available so far in different ways, but all agree that for people who now qualify for the cheapest plans on the individual market, next year will bring far higher costs. That kind of price shock could make it very difficult to attract the sorts of young and healthy insurance buyers the new system will need to sustain itself.
Some defenders of Obamacare have sought simply to ignore or deny this problem. The president himself, in an August 9 news conference, said that people who are now uninsured are “going to be able to go on a website or call up a call center and sign up for affordable quality health insurance at a significantly cheaper rate than what they can get right now on the individual market.” But for a great many people, that will plainly not be the case.
Many other Obamacare defenders have responded to the premium figures by pointing to the fact that some people will qualify for subsidies in the new exchanges, which will effectively function as discounts on insurance premiums, provided on a means-tested sliding scale. But the emerging pattern of premium spikes suggests that for many young and healthy Americans, the subsidies will not be enough to make up for next year’s premium increases.