“If You Like Your Current Health Insurance, You Can Keep It”: DeLong Analytical Failure Weblogging, Chapter CCXI

Nicholas Bagley: is flummoxed at Obama’s current thinking about his “if you like your current health insurance, you can keep it” misspeaking:

Obama pairs apology with perplexing proposal: Now that the President has apologized for not being exactly straight… when he said… no one would lose their insurance… he wants to make it up…. But what exactly does the administration have in mind?…. I’m completely stumped. The Obama administration can’t just issue tax credits because it feels bad… only ‘applicable taxpayers’ can get tax credits… an ‘applicable taxpayer’ is defined as a taxpayer with household income between 100 and 400 percent of poverty. Nor can the administration delay…. Starting on January 1, 2014, all plans, whether on the exchanges or off, have to cover the ‘essential health benefits package’. That package includes cost-sharing requirements, a particular sticking point for most of these canceled plans…

I confess that that particular talking point simply hadn’t registered on my brain at the time.

It should have.

And I confess if it had registered I would probably have thought: “ACA creates exchanges and so improves opportunities for individuals and small businesses, and ACA provides subsidies. Why should anybody lose their health insurance?”

If I had been not-stupid back then, I would have noted that under the ACA:

1. The subsidies to insurance companies for the disappointing Medicare Advantage–i.e., Medicare HMO–plans were going away since Medicare Advantage seemed to be costing the U.S. Treasury a lot of money and yet delivering few if any health-sector benefits. Medicare beneficiaries who liked their Medicare Advantage–as they should: it’s heavily subsidized–and did not want it to go away would be pissed.

2. Insurers would have to step up their games and make sure all the plans they offered provided genuine comprehensive health insurance. This was a good piece of the ACA: the government is committing subsidies and operating the exchange, and so it needs to take on a quality standards-enforcing role.

3. Insurers would have to incorporate cost-sharing in their plans–would have to give insurance purchasers appropriate “skin in the game”. This has been a long-time right-wing demand for health insurance reform: that patients-to-be need to be made to think twice by feeling the pain of undertaking procedures not just in the hassle and the time and the anxiety and the… well, the pain; but also in their wallet.

4. In the new, changed health insurance marketplace, some of the plans insurers had offered would no longer be profitable from a marketing point-of-view.

If you had asked me a year ago and actually gotten me to think about the issue, I would have said that (1) was the thing to worry about, and the place where Obama had been significantly misleading. (2) I would have called a nothingburger: plans that aren’t really insurance would be replaced by plans that were insurance, and with the subsidy pools almost everybody would get a better deal. (3) I would have said was unlikely to be a step that would do much to improve the system but would not produce any Washington ripples, for (3) was something that both mainstream Democrats and all Republicans were invested in, with only left-wing Democrats whimpering about how rationing-via-pocketbook by means of copays was probably not a good idea. And I would have missed (4) completely.

And now I am, with Nicholas Bagley, flummoxed at Washington’s reaction. For nobody is worrying about (1), and everybody is worrying about (2), (3), and (4). Fixing (4) would require that we mandate that insurance companies keep offering their old plans at roughly their old prices: that would seem to have been ruled out by the initial decision to preserve health insurance companies’ role in the reformed system. (2) is really not something we want to fix. And (3)–well, that is a goal of reform for everybody except the whimpering left, even though Joe Newhouse taught me long ago that you often do not like what happens when people find their health care rationed-by-pocketbook via copays and other cost shares.

Any way to get this part of the conversation closer to the track it ought to be on?

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