ACA’s Not-So-Great Rate Shock Debate

Lara Hoffmans, Forbes online, June 4 2013


It appears that the Affordable Care Act might not be so affordable. Well, depending on your point of view.

Turns out, when the state of California claimed premiums would fall under its new Affordable Care Act (ACA) exchange, the comparisons weren’t perfectly parallel. Or at all parallel. Comparing like plans, premiums are more likely to double, give or take (so argues, quite compellingly, this Forbes columnist). And the same appears true in Oregon—another state that has already unveiled insurance rates for its impending exchange.

Which has kicked up a maelstrom over whose analysis is right and who
is more politically motivated than whom. Fair enough and just what you’d
expect with an issue as heated as ACA/Obamacare (or whatever we’re
allowed to call it now). A better debate is: Why is anyone shocked
premiums are likely to be higher?

Even some ACA advocates
now admit, well yes, premiums in the exchanges will likely be higher,
but only because folks will get more bells and whistles. Regardless of
your credo, we can all agree, if the government mandates a certain level
of services when no prior benchmark existed, prices will rise.
Naturally! You can have all manner of panels and bureaucrats and
lever-pullers trying to cram prices down, and you can advertise it as
“affordable” all you want, but if you legally force people to buy more
of something that doesn’t grow on trees—regardless of the great (or not)
societal benefit of that something—prices will overall rise.

So it shouldn’t be shocking premiums will rise.

By the same token, ACA advocates shouldn’t be shocked that folks on
the other side are upset. Folks already had the option to buy those
bells and whistles. Some chose to, some didn’t—whatever the reason. Some
couldn’t afford it, but that group is just one part of the total pool
of uninsured. A bigger group (according to the US Census Bureau—an
outfit not known for advocating against the ACA) are those folks who,
theoretically, can afford insurance but don’t buy it. Or only buy the
barest minimum. Whatever the reason. Rolling the dice. Waiting for
eligibility at their employer. In between jobs. Prefer to self-insure.
Haven’t gotten to the paperwork yet. These are mostly young, healthy
folks who, rather ironically, will see the largest premium increases. Or
they can opt out and pay a fee. (A tax. A fine. Whatever we’re allowed
to call that now. )

You could make the case (and some try) that some of those folks not
buying the bells and whistles are choosing badly. Dum-dums who need the
government to tell them what basic level of care they need.

Except, it’s not care. It’s insurance. Health insurance and health care
are two different things. Health care is what you get when you visit a
doctor, nurse practitioner, acupuncturist, yogi or shaman—whatever
floats your boat. Health insurance is an increasingly mind-blistering
bureaucracy that divorces payment and decision making from actual health
care delivery—and seems set to get more mind-blistering in the future.
(Is there a single thing you buy, other than health care, that you and
the service provider both don’t know how much said service costs at
point of delivery?)

So maybe some of them are choosing badly. Maybe some of them are
choosing pragmatically. Where you fall on this issue largely hinges on
this age-old debate: Are more people dum-dums with their own money, or
are more people, overall and on average, prone to greater and more
prolonged fits of pragmatism? I won’t settle this debate here. And if
Socrates, Aristotle, Kant, Hobbes, Locke, Rousseau, Proudhon,,
couldn’t settle it amongst themselves, we probably won’t get this
resolved in the very near future either.

But surely, at least some of those folks choosing either no insurance
or a cheaper bundle are being pragmatic. They don’t see value in the
bells and whistles and likely won’t see the value when forced to pay for
it, once via much higher premiums and again via increased taxes. So
let’s make a deal. No more being shocked that ACA premiums will be
higher, and no more being shocked that not everyone is delighted about