Thursday, November 14, 2013

Obamacare Design Objective - Force those with insurance onto the exchange

"I know that there are millions of Americans who are content with their health care coverage — they like their plan and, most importantly, they value their relationship with their doctor. They trust you. And that means that no matter how we reform health care, we will keep this promise to the American people: If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you'll be able to keep your health care plan, period. No one will take it away, no matter what." - President Obama, June 15, 2009
Politicians stretch the truth all the time. That's what they're here for.  No surprise.  but this statement wasn't a stretch of the truth -  this statement is diametrically opposed to a core design objective of the ACA.

The individual market health care exchanges are set up to, in part, enable the  the (non-medicaid) poor, sick, and uninsured to get affordable insurance.  But for this risk pool to work, you need a bunch of people who can pay insurance and aren't that sick.  Namely, the 10-15M people who are paying for individual plans today.

If those 10-15M people don't join,
 - the pool is left with high cost participants, which
 - leads to higher premiums for the pool, which
 - furthers the exchange price disadvantage relative to the existing plans, which
 - further dis-incents those people to leave existing plans and join the exchange.

Thus, you have to have those people move from their current plans to the exchange (and before the death spiral above starts), or the whole edifice falls apart.

Forcing people out of their existing individual insurance plans wasn't a surprising, unintended consequence - it is a core design objective of the success of the ACA.

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Thursday, November 14, 2013