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Far too few people realize that much of the ACA plans' cost increases is due to Congress reneging on a government promise to mitigate risk in the early years th

by agar 10y ago

Far too few people realize that much of the ACA plans' cost increases is due to Congress reneging on a government promise to mitigate risk in the early years through "risk corridor" reimbursements. Undermining an opposition program, then pointing to its collapse as if it was always fundamentally flawed, is a very clever and effective piece of politicking. Insurance companies did not know the health, and thereby the cost, of previously uninsured people buying coverage under ACA. To reduce risk of the unknown, the government committed to reimbursing money lost due to underestimating risk (conversely, insurance companies would pay into a pool if they earned above certain thresholds). Over time, prices would meet an equilibrium as policy costs stayed low, allowing more healthy people to join the pool, which lowers coverage costs, which then lowers policy costs. Prices could be raised modestly to account for the difference, and government payments to insurers would ultimately end. However, Congress rejected payment into the risk pool and ultimately paid out only 12.6% of the promised funds. Many co-op insurance groups had to fold, others needed to dramatically increase premium costs to account for (a) the lost money, (b) the increased cost of the uninsured, and (c) the increased risk that the government wouldn't fulfill its obligations.[1] The current situation - limited choices, high premium costs, and resultant lower healthy person participation potentially leading to a "death spiral" collapse - is a direct consequence of these actions, not an inherent failure of the ACA. However, Obamacare gets the blame and Republicans can point to a failing market that they can repeal and, perhaps, replace. Very effective politics indeed. Just ignore the human cost, which certain politicians seem to have no trouble doing. [1] https://www.nytimes.com/2015/12/10/us/politics/marco-rubio-obamacare-affordable-care-act.html?_r=0 https://www.nytimes.com/2015/12/10/us/politics/marco-rubio-o...

dmix 10y ago
> then pointing to its collapse as if it was always fundamentally flawed On the inverse, I see many people on the left pointing to the number of people who have signed up as the primary indication of it's success as well. Which contains it's own notes of ignorance. Was the government not handing out fines to people who didn't sign-up? So they were basically forcing people onto the program? How could the numbers of sign-ups be meaningful then? Also, I couldn't imagine going without health care. You have to take what you can get otherwise the risks are significant. So considering it's an essential service, saying "look at the number of people using it" as an success indicator is like saying "plenty of people are calling the firemen, clearly they are doing a good job". There is a serious human cost here when people have their health plans doubling in cost... while the rest of the world has worked out far more functional systems. So those cost calculations should be relative to this high level reality, not some internal benchmarks between stages of mediocrity. It seems by not deciding to be free market nor socialized that the US is getting the worst of both worlds. It's easy to blame the republicans for this but the half baked socialized system that the democrats put forward was hardly a good solution. > Far too few people realize that much of the ACA plans' cost increases is due to Congress reneging on a government promise Have you considered that maybe the entire Democrat plan of getting to a socialized system via cuts and slivers in one direction, knowing full well that cuts and slivers will be done in the other direction is a terrible idea? Stop pretending that private companies can function efficiently in an ever more legislated environment, as if only more thousand page bills get passed that it will finally start working well... history has continued to indicate otherwise. Either a) embrace markets or b) go hard on selling the public on the idea of single payer public insurance. (I should note I'm in favour of public health insurance after living with it in Canada, despite typically being in favour of markets elsewhere)
- agar 10y ago
  Please don't assume my comment implies unvarnished support for the ACA. Except for the somewhat cynical last line, I tried to keep it fairly factual. If you do want my personal opinion, I'll give it here: 1. From an economic standpoint, single-payer healthcare fundamentally makes sense. Put everyone in a single pool to reduce risk, drive efficiency, and maximize negotiating power. 2. From a free market standpoint, the current model of tying healthcare coverage to your employer hurts both employers and employees. As an employer, why am I responsible for paying this "benefit"? If too many of my employees get horribly ill, my premiums go up to the point that I can't provide a competitive benefit; my costs increase, my employees' contribution increases, and my ability to recruit talent suffers. As an employee, why must I forego an entrepreneurial opportunity because I can no longer afford healthcare for my children without an employer footing the majority of the bill? 3. From an efficiency standpoint, the current model wastes tremendous medical resources (bureaucracy, physician time, lack of cost transparency, treatment limits, etc.). I have friends in the medical industry (doctors, executives, med tech providers), all of whom dream of a single-payer system. 4. From a constitutional standpoint, I believe healthcare falls under "promote the general welfare" and "secure the blessings of liberty to ourselves and our posterity." A national, taxpayer-funded health program is no different than any number of other government-funded programs that free us to maximize our potential as citizens. And yes, we pay taxes to fund those services whether we use them or not. So yes, I'm a believer in a single-payer model. Yes, I believe the ACA is essentially a handout to insurance companies. And yes, I was very disappointed when Obama took single payer "off the table." However, I also think it's better than pre-ACA, despite its flaws. And at this point, it's certainly better than the chaos that will arise from simply abandoning it. Understanding its compromises, I can't really envision a "replacement ACA" that will pass a Republican congress that can be better. If Congress delivers a better ACA, I'll happily embrace it. Heck, I'd even give credit to the Republicans if they just tweaked the ACA, renamed it "Winningest Solid Gold Trumpcare" and fully backed the result to make it successful. But I see no positive outcome if they go down the "repeal and delay" path.
  - twoodfin 10y ago
    1. From an economic standpoint, single-payer healthcare fundamentally makes sense. Put everyone in a single pool to reduce risk, drive efficiency, and maximize negotiating power. Like the U.S. military has maximum negotiating power with its contractors? I mean, who else is going to pay for the F-35? Monopsonies aren't inherently more efficient than monopolies.

by agar 10y ago

dmix 10y ago

> then pointing to its collapse as if it was always fundamentally flawed On the inverse, I see many people on the left pointing to the number of people who have signed up as the primary indication of it's success as well. Which contains it's own notes of ignorance. Was the government not handing out fines to people who didn't sign-up? So they were basically forcing people onto the program? How could the numbers of sign-ups be meaningful then? Also, I couldn't imagine going without health care. You have to take what you can get otherwise the risks are significant. So considering it's an essential service, saying "look at the number of people using it" as an success indicator is like saying "plenty of people are calling the firemen, clearly they are doing a good job". There is a serious human cost here when people have their health plans doubling in cost... while the rest of the world has worked out far more functional systems. So those cost calculations should be relative to this high level reality, not some internal benchmarks between stages of mediocrity. It seems by not deciding to be free market nor socialized that the US is getting the worst of both worlds. It's easy to blame the republicans for this but the half baked socialized system that the democrats put forward was hardly a good solution. > Far too few people realize that much of the ACA plans' cost increases is due to Congress reneging on a government promise Have you considered that maybe the entire Democrat plan of getting to a socialized system via cuts and slivers in one direction, knowing full well that cuts and slivers will be done in the other direction is a terrible idea? Stop pretending that private companies can function efficiently in an ever more legislated environment, as if only more thousand page bills get passed that it will finally start working well... history has continued to indicate otherwise. Either a) embrace markets or b) go hard on selling the public on the idea of single payer public insurance. (I should note I'm in favour of public health insurance after living with it in Canada, despite typically being in favour of markets elsewhere)

agar 10y ago
Please don't assume my comment implies unvarnished support for the ACA. Except for the somewhat cynical last line, I tried to keep it fairly factual. If you do want my personal opinion, I'll give it here: 1. From an economic standpoint, single-payer healthcare fundamentally makes sense. Put everyone in a single pool to reduce risk, drive efficiency, and maximize negotiating power. 2. From a free market standpoint, the current model of tying healthcare coverage to your employer hurts both employers and employees. As an employer, why am I responsible for paying this "benefit"? If too many of my employees get horribly ill, my premiums go up to the point that I can't provide a competitive benefit; my costs increase, my employees' contribution increases, and my ability to recruit talent suffers. As an employee, why must I forego an entrepreneurial opportunity because I can no longer afford healthcare for my children without an employer footing the majority of the bill? 3. From an efficiency standpoint, the current model wastes tremendous medical resources (bureaucracy, physician time, lack of cost transparency, treatment limits, etc.). I have friends in the medical industry (doctors, executives, med tech providers), all of whom dream of a single-payer system. 4. From a constitutional standpoint, I believe healthcare falls under "promote the general welfare" and "secure the blessings of liberty to ourselves and our posterity." A national, taxpayer-funded health program is no different than any number of other government-funded programs that free us to maximize our potential as citizens. And yes, we pay taxes to fund those services whether we use them or not. So yes, I'm a believer in a single-payer model. Yes, I believe the ACA is essentially a handout to insurance companies. And yes, I was very disappointed when Obama took single payer "off the table." However, I also think it's better than pre-ACA, despite its flaws. And at this point, it's certainly better than the chaos that will arise from simply abandoning it. Understanding its compromises, I can't really envision a "replacement ACA" that will pass a Republican congress that can be better. If Congress delivers a better ACA, I'll happily embrace it. Heck, I'd even give credit to the Republicans if they just tweaked the ACA, renamed it "Winningest Solid Gold Trumpcare" and fully backed the result to make it successful. But I see no positive outcome if they go down the "repeal and delay" path.
- twoodfin 10y ago
  1. From an economic standpoint, single-payer healthcare fundamentally makes sense. Put everyone in a single pool to reduce risk, drive efficiency, and maximize negotiating power. Like the U.S. military has maximum negotiating power with its contractors? I mean, who else is going to pay for the F-35? Monopsonies aren't inherently more efficient than monopolies.