Should-Read: Aaron Carroll: The AHCA Doesn’t Make Sense
Should-Read: Two possibilities:
- Paul Ryan and company are simply not competent–somebody put a real, highly punitive continuous coverage requirement into the ObamaCare Repeal bill; somebody else said “that’s too punitive” and changed it; and nobody did the addition.
-
Paul Ryan and company want this bill–if passed–to lead to an adverse selection meltdown of their (or, rather, Trump’s) health care exchanges.
Is there a third alternative?
Aaron Carroll: The AHCA Doesn’t Make Sense: “I’m having a really hard time with this…
…The Republicans hate the individual mandate. I get that…. They also, however, understand the need for some sort of carrot/stick to get healthy people to buy insurance so that we don’t get adverse selection and see the private insurance market enter a death spiral. So they need to replace it…. I’m not saying that you can’t replace the individual mandate.
Many… believe that too few healthy people are joining the exchanges…. To fix that, we could increase the size of the mandate penalty (stick), increase the size of the subsidies to make insurance cheaper (carrot), or both (carrot and stick). The AHCA plan, though… eliminates the stick… reduces the carrot… puts in a… 30% insurance markup if people lose continuous coverage…. That’s a tiny, tiny penalty in the scheme of things. Let’s say I’m single and I’m in my late 20’s, and insurance costs me $3000. With the promised $2000 subsidy, I’d have to pay $1000 more to get insurance. Or… I could just forego it this year, and if I need it next year, it will cost me $3900 (I will owe $1900). In just one year, I make money. If I skip a number of years, I can save even more. I’m not sure this is much of a stick….
Once I’m out of the market, I’m left alone. It’s not until I re-enter that I’m hit with the penalty. The longer I stay out, the longer I avoid the pain. It’s an inducement to remain uninsured. We know what needs to happen to reduce adverse selection. We need to make the carrots and/or sticks stronger. This seems to do the opposite. I don’t get it.