{"id":4066,"date":"2014-03-13T14:48:37","date_gmt":"2014-03-13T19:48:37","guid":{"rendered":"http:\/\/jimgworld.com\/blog1\/?p=4066"},"modified":"2014-03-15T08:29:19","modified_gmt":"2014-03-15T13:29:19","slug":"obamacare-in-a-tailspin","status":"publish","type":"post","link":"https:\/\/jimgworld.com\/blog1\/?p=4066","title":{"rendered":"Obamacare In a Tailspin?"},"content":{"rendered":"

Megan McArdle, an economic policy writer for Bloomberg, has published a series of articles over the past few months expressing doubt about the long-term viability of Obamacare. Ms. McArdle acknowledges that the Affordable Care Act of 2009 has had some positive effects. However, she has her doubts as to whether the government-private hybrid system that the ACA maps out can attain its lofty goal of providing affordable health care to the vast majority of American households, given the many complex problems that it has encountered and the many compromises that have been made by the Administration in the roll-out. Oh, and also the hostile political environment that the GOP and the general public have created for the ACA. It ain’t easy to radically re-design and re-arrange 16% of the American economy (and a terribly complex segment of that economy, one involving life-and-death issues affecting nearly everyone) within 5 years, especially when about 55% of the adult population is against<\/a> it. <\/p>\n

Up to now, I haven’t taken Ms. McArdle all that seriously. A lot of other writers, such as the redoubtably liberal Paul Krugman<\/a>, are arguing that teething pains are to be expected and that a lot of major government initiatives (including the 2006 Romney health care reforms<\/a> in Massachusetts) seemed very messy at first but eventually kicked-in and accomplished their major goals. But Ms. McArdle’s review<\/a> of a recent poll released by the McKinsey consulting company<\/a> is causing me to have my own doubts. In a nutshell, only 10% of uninsured adults using the new insurance exchanges (mostly thru the troubled federal web site and the various individual state care sites) have bought it by end of Feb, 2014. Most of the purchases that have been made through the exchanges are by those who already had insurance. The biggest issue appears to be high costs, even net of the subsidy that the ACA provides to lower-income households. <\/p>\n

Another recent survey by Gallup gives a more optimistic view. An NPR article notes<\/a> that this survey shows that the uninsured rate has fallen significantly in the short time since Obamacare fully kicked in. In the 4th quarter of 2013, Gallup found that 17.1% of working-age adults did not have insurance; by the end of last month, this had dropped to 15.9%, a 1.2 point drop. Ms. McArdle acknowledges this survey, but suspects that the effect is largely because of the Medicaid expansion for very-low income working families. The NPR article mentions that households qualified for Medicaid expansion (under $36,000 income) saw an uninsured drop of 2.8 points over this time, more than twice the average recruitment effect. <\/p>\n

So, getting people onto Medicaid seems to be easy, but getting more uninsured people to use private health care is not. The biggest issue appears to be the high price of what is available, even net of subsidy. Another NPR report<\/a> cites the example of an Hispanic woman in Virginia who was uninsured but did not qualify for the Medicare expansion. She checked out her options on the health exchange web site and decided not to buy insurance (despite the threat of an IRS “mandate” penalty). After considering the premium costs and the deductibles she would pay net of subsidy, and considering that she has been getting health care at a free clinic (and assumedly can continue to do so), a health insurance policy did not make sense to her, even if her quality of care might improve . . . and considering the restrictions that the more affordable policies place on what doctors and hospitals and drugs can be used, even the “quality” theory is debatable.<\/p>\n

As such, a lot of the young or working poor with incomes just over the cut-off for Medicare may decide to continue getting by just as they presently do (using free clinics, health fairs, hospital charity care if necessary, with an occasional paid MD visit). They don\u2019t seem worried about the ACA’s mandate fines (about $100 in 2014, $325 in 2015, and $700 in 2016). And as Ms. McArdle points out, it is becoming increasingly questionable as to whether those penalties will ever be collected, given how unpopular that would be with so many young and working poor families. Obama has made much use of \u201cdelays\u201d thus far in the ACA phase-in. Therefore, I can’t help but wonder if the mandate will fade into limbo through a “temporary delay”, one that will become politically radioactive. If the uninsured young and working class continue not to cooperate, the Democrats know that they would be committing suicide if they allow the penalties to take effect.<\/p>\n

Unfortunately, the overall design of Obamacare depends on the buy-in and cooperation of this group. If generally-healthy uninsured people do not fork over a part of their paychecks to the insurance companies every year (while those who are sicker and more in need of insurance coverage do), the costs of expanded coverage required by the ACA (i.e., no limit on pre-existing conditions, pregnancy and birth control benefits, allowing children to stay on a policy until they are 26, capped price increases for age, etc.) will either cause insurance policy costs to jump sharply, or the insurance companies themselves will either go bankrupt or bail out on the whole scheme. They were able to kill HillaryCare back in 1995 (remember the Harry and Louise TV ads<\/a>), and I’m sure they are ready to turn on Obamacare if it goes sour and threatens them. The ACA already has short-term subsidies for start-up losses that might be incurred by the private insurance carriers. Once those subsidies run out, I’m sure that the public would NOT support using more tax dollars to support Aetna, CIGNA, United Healthcare, etc. over the long haul. <\/p>\n

In sum, it looks like Obamacare is pitching down into a nose-dive and losing altitude. It still has a long way to fall, but it doesn’t have all that much time to catch itself before being swept into a fatal, unbreakable downward spiral. Obamacare’s popularity with the public has not improved<\/a> over the past 2 years, despite the phase-in of its benefits (and now its costs). Like Megan McArdle, I do not believe that Obamacare will be repealed outright; Obama would not have won the 2008 election had he not touched a nerve in the public about health insurance problems and unfairness. But the heart of the ACA (i.e., mandated purchase of insurance policies meeting minimum coverage standards and available with little or no price adjustment for health and age status) might well be gutted before or just after Obama leaves office, with enough reform features retained for the Democrats to save face. <\/p>\n

I hope that the uninsured young and working-class people come around and start making those insurance policy purchases, and do it soon. But if they don’t (early numbers show problems with young people<\/a>), Obamacare will go down as a failed social experiment, a well-intentioned collective attempt to deal with real problems caused within our complex, densely populated, relatively rich and technology-dependent nation. Hopefully we will learn from it all, but right now, there does not seem to be any easy, politically acceptable answer to the all the underlying needs and confusing problems. I myself have gone on record favoring a voucher-driven health care support system<\/a> with limited objectives, a system that would require more individual effort to gain the benefits, along with higher risk of severe consequences to personal well-being if such effort is not made. Obamacare tried to virtually eliminate the personal risks by setting up a complex government apparatus that makes it easy for you. Unfortunately, the whole plan turned out to be too complex, too difficult to set up and to understand and to make work properly, however well intentioned. <\/p>\n

Perhaps it’s a cultural thing. Americans are still a skeptical people, and a government program that says “we will make it easy for you, if you just do what we tell you” was bound to strike a nerve. Especially for a new program that heavily involves personal health and financial well being. And when that program starts giving confusing instructions and starts to stumble in providing what it promised, the average American loses his or her patience and trust very quickly. The old “rugged independence” instincts, however inappropriate they are in the extremely inter-dependent, high-tech world that we need in order to sustain so many people at such a high standard of living, come rushing back (as in Tea Party movement). Whatever the final answer to the health care crisis turns out to be in America, it will need to account for “the way that we are”. What works in Canada or Europe (or even Massachusetts) may well not work here.<\/p>\n","protected":false},"excerpt":{"rendered":"

Megan McArdle, an economic policy writer for Bloomberg, has published a series of articles over the past few months expressing doubt about the long-term viability of Obamacare. Ms. McArdle acknowledges that the Affordable Care Act of 2009 has had some positive effects. However, she has her doubts as to whether the government-private hybrid system that […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,7,8],"tags":[],"_links":{"self":[{"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/posts\/4066"}],"collection":[{"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4066"}],"version-history":[{"count":5,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/posts\/4066\/revisions"}],"predecessor-version":[{"id":4068,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=\/wp\/v2\/posts\/4066\/revisions\/4068"}],"wp:attachment":[{"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jimgworld.com\/blog1\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}