What is the most likely path forward for the ACA exchanges?

by on October 29, 2013 at 10:21 am in Law, Medicine, Uncategorized | Permalink

I had lunch yesterday with a friend and I was asked that question (and I asked it in turn).  My answer, with some ex post editing, was this:

1. The chance of “no smooth resolution” for the health care exchanges crisis is now 60-40.  Not long ago I thought it was 20-80.

2. The Obama administration is claiming the exchanges might be ready soon to stem Democratic defections and to keep the policy locked in, but in reality they now know there is no chance for timeliness (NB: this sentence is true with 60-40 probability, not unconditionally true).

3. More parts of the thing will be working by late November, but not enough for it to serve as a functioning enrollment system, much less encourage “the invincibles” to sign up.  They will figure, correctly, they don’t have to bother with the whole thing until they hear from peers, and from the media, that the process is as smooth and as easy as Orbitz.  (Oddly, Tea Party attempts to get young people to resist the mandate have the counterintuitive property of increasing awareness of the sign up requirement.  Disengagement, not fiery opposition, is the real enemy of the law.)

4. Come January 1, hundreds of thousands of Americans will lose their individual coverage packages for not meeting ACA standards.  Most of them won’t have ready replacements.  This will be a big mainstream media story, not just a FoxNews story.  There will be easily identifiable victims, expressing sorrow or rage or both in front of the camera.  Left-wing bloggers will express outrage that Republicans express outrage over the existence of individuals with no insurance coverage.  Republicans will express outrage that left-wing bloggers express outrage, etc.

5. Democrats will propose various ACA fixes, and Republicans will reject them, claiming that the law requires a more fundamental restructuring.  That standoff will not be readily resolved and it will become the “new debt-ceiling crisis.”  Democratic defections will be a problem for Obama.

6. The exchanges will be mostly working by March 2014, but by then the risk pool will be dysfunctional.  In the meantime, real net prices will creep up, if only through implicit rationing and restrictions on provider networks.  The Obama administration will attempt to address this problem — unsuccessfully — through additional regulation.

7. By October 2014, no one will think the exchanges are a satisfactory solution, except for 17 state exchanges which will be running reasonably well.  Some of the state-level exchanges, by the way, will have more serious problems than is currently evident, mostly on the back end.

8. Chris Christie will campaign against ACA and beat Hillary Clinton in the general election.  Upon assuming office he will place price controls on the insurance plans in the individual market, repeal much but not all of the federal financial support for the Medicaid expansion, and keep many other parts of ACA, while claiming to have repealed the whole thing.  Enough Democrats will go along with this, as public opinion will have shifted toward the Republican side on this issue.  The individual market still won’t be working very well.  The exchanges will be working fine in the technical sense, but skittishness, political risk, and the adverse selection death spiral will have led the insurance companies to withhold high quality policies from that side of the market.

dmh October 29, 2013 at 10:35 am

Interesting. How, precisely, will Christie secure the nomination? If the primary were today, how would he do in Iowa and South Carolina, both critical early tests that he can’t afford to fail? I would say he has only about a 10-90 chance of passing those early tests.

aaron October 29, 2013 at 10:55 am

How’d Romney do in those states?

Rich Berger October 29, 2013 at 11:02 am

Christie is not going to be the nominee. First, many Republican primary voters will not have forgotten his role in propping up Obama in the run-up to the election. Second, he failed to stop the porker up storm “relief” bill by not insisting that the bill be restricted to bona fide relief. What the Republicans do not need is one more in a long line of unprincipled RINOS (Bush I, Dole, Bush II, McCain and Romney). Governor Walker is head and shoulders above Christie.

Also, Ted Cruz is chuckling. His stock will be much higher in next year’s government “shutdown”.

Moebius Street October 29, 2013 at 11:27 am

” What the Republicans do not need is one more in a long line of unprincipled RINOS”

Yet the GOP continues to nominate them. I think to make your argument, you’ve got to explain the mechanism for the change in this trend.

That includes explaining why ideologically superior candidates (Gary Johnson, Ron Paul) were systematically marginalized from the nomination process. It seems clear to me that the media had an active hand in this. And Christie is really a media darling. He provides the fireworks they love, so he gets the media attention. To overcome his momentum is going to be very difficult.

Peter the Shark October 29, 2013 at 12:32 pm

Of course the media has an active hand in this. The media is controlled by donors – and the big money doesn’t like radicals who shake up markets and make things unpredictable. The people who really control the GOP will never allow a radical right winger to win the nomination, and it is increasingly true that only pro-Wall Street candidates like Clinton or Obama can win the Democratic nomination.

F. Lynx Pardinus October 29, 2013 at 1:31 pm

“it is increasingly true that only pro-Wall Street candidates like Clinton or Obama can win the Democratic nomination.”

E.g. Cory Booker, the new Democratic senator from NJ.

Floccina October 29, 2013 at 12:52 pm

+1
Gary Johnson was the easily the most qualified moderate candidate in the race on either side and he got nothing.

Skip Intro October 29, 2013 at 1:49 pm

“Yet the GOP continues to nominate them. I think to make your argument, you’ve got to explain the mechanism for the change in this trend.”

It is hypothetically possible that your preferences are not widely shared, and the candidates selected are preferred by the GOP median.

Moebius Street October 29, 2013 at 2:31 pm

No doubt my own preferences deviate significantly from the norm, but that’s not the point here. The point to which I responded questioned why the GOP continues to nominate “RINOs”.

My *preferences* aside, given the field of nominees, only Johnson and Paul had a record of actually putting the GOP ideology into practice (smaller government, etc.). The other candidates used that language, but their records show them to actually implement greater spending, regulation, etc.

So I’m trying to figure out what the parent post *would have* wanted, and questioning why the GOP members continue to nominate the “RINOs” in preference to those that (be they better candidates or not) are objectively better examples of GOP ideology.

Skip Intro October 29, 2013 at 8:03 pm

I beg your psrdon, I misinterpreted your comment.

Stephen October 29, 2013 at 12:18 pm

Yeah, terrible idea for Republicans to nominate someone who is popular, even amongst women and minorities, in a very blue state. It’s not like the goal is to win elections.

Floccina October 29, 2013 at 12:54 pm

@Stephen the goal of winning is policy. Why win if you get the same policy as if you lost, thus the tea-party.

Noah Yetter October 29, 2013 at 2:55 pm

No, Stephen is correct, winning elections is in and of itself the goal. Politics will make much more sense to you once you understand this.

mark October 29, 2013 at 6:18 pm

Oversimplistic. Getting elected enables one to make some good policy. Importantly, it also enables one to prevent one’s adversary from making any adverse policy. Not getting elected enables one to do not much of anything. There is no fantasy world in which one gets everything one wants. There is only the real world in which there is a choice between the two states I mentioned and winning gets you more than losing.

Errorr October 29, 2013 at 2:37 pm

Genuine question and not trolling here…

What is the standard a RINO is measured against? Is there a platonic ideal Republican? How has this ideal Republican changed over the years? What are the core values that define Republican and where can disagreement allow variations in beliefs.

People talk about the base as if it were monolithic and uniform. What I’m curious about is what defines being a Republican in the future? Is social conservatism less or more influential than in the past? Is immigration a core issue? Is it all about taxes or is there more? Is there a major schism brewing between those who push hard for lowering taxes on the richest Americans and those who promote across the board tax cuts.

Deep down I am dissatisfied with the Democratic party and its extremists, but the nature of the party has always been more eclectic to the point that nobody could ever be called a Democrat in Name Only. The attacks against those with my belief are more populist criticism like neo-liberal or corporate schill.

Deep down I wish there was a center left party that would attract many of the more pro-business moderates. Although I think it unlikely as the corporate executives are often more concerned with taxes on themselves than pro-business policies.

Maximum Liberty October 29, 2013 at 6:06 pm

Forgive me this caricatured answer —

Q: What is the standard a RINO is measured against?
A: Agreeing with me.

Q: Is there a platonic ideal Republican?
A: Yes. One that agrees with me.

Q: How has this ideal Republican changed over the years?
A: It has never changed. I have always held exactly the same beliefs I do now.

Unfortunately, that caricature is not far off. Far too many self-identified conservative and libertarian Republicans identify anyone who disagrees with them as a RINO. Which means that your questions are good ones.

At one point, I saw someone identify the genius of the Regan coalition as defining anyone who agreed with any of four or five key conservative principles to be a conservative and a member of the coalition. The list was pretty good (and basic), but I can’t find it now. It was things like beliving in strong defense against communism, less government regulation and spending, lower taxes, family values, etc. But the key was that you only had to agree with one of them to be considered a conservative constituent.

Max

JWatts October 29, 2013 at 7:30 pm

The term RINO gets thrown around casually. There are IMO very few actual RINO’s. Other than Michael Bloomberg, I can’t think of any off the top of my head. Chris Christie is a Moderate Republican. However, he has no chance of winning the Presidency. He lacks the necessary charisma to win a Presidential election in modern America.

The Original D October 31, 2013 at 8:54 pm

Really? I think Christie is the most charismatic Republican out there. Then again I don’t vote Republican so he might be one of those “conservatives liberals like” a la Andrew Sullivan.

The Original D October 31, 2013 at 8:53 pm

The ideal Republican for the base:

* Opposes abortion and gay marriage. The last may not be as important come 2014, but he likely will still put up at least token resistance i.e. “states rights”

* Opposes affirmative action

* Opposes all gun control and argues that more guns are always better

* Says the ACA is an abomination that should be repealed immediately

* Opposes any and all tax increases, promises tax cuts if elected

* Wants to cut all government spending save Medicare, Social Security and Defense, though will still say that “entitlement reform” is necessary

* Promises to cut all regulations

* Promises to eliminate cabinet level positions/departments, particularly Education and the EPA

* Doesn’t have any reservations about the War on Terror or Gitmo – this likely will not be an issue in 2014 unless there is a major terrorist attack

* Is rich and can credibly claim to have pulled himself up by his own bootstraps

* No immigration reform until the illegals are all deported. Wants to build a wall along the border.

Those are the policy issues. The electability issues include:

* Has not been divorced

* No sexual harassment skeletons in the closet

* Has not hired illegal aliens, either directly or through contractors i.e. when building a house

* Says Obama is the worst president in history, should have been impeached “because Benghazi!”

* Wears a flag pen on his lapel (or whatever will be the current proof of patriotism)

Thiago October 30, 2013 at 5:38 pm

Ha, ha, ha. After Reagan, the man who tripled the debt, the “principled” GOP voters only voted for unprincipled RINOs (what about Eisenhower, Nixon and his price controls and Ford?). Any resemblance with the Communism apologists’ excuses (no, this is not the real Socialism) is not coincidence. I wonder, why would they vote for a non-RINO after 32 years?

Z October 29, 2013 at 11:14 am

You’re missing the point. Whether it is Tubby or some other squish, the next president will promise to fix ObumblesCare, not replace it. This mess is here until the money runs out.

Ad Nauseum October 29, 2013 at 1:12 pm

Did we ever have the money to begin with?

Morgan Warstler October 29, 2013 at 10:35 am

The large insurance companies will offer non-conforming plans to healthy individuals, that last one year. Each year (Sept) the healthy must re-apply to be underwritten, approved or denied by Oct. 15th. These plans will be Catastrophic HSAs and cheaper than they have ever been, because…

If you’ve become unhealthy, you will enter Obamacare during open enrollment. So there are NO LONG TERM sick on these non-conforming plans. With a $7K deduct, it’s basically just Hospitalization coverage – so $75 for individual and $200 for a family.

You will need to pay the fine ONLY if you are receiving a tax refund.

This could mean a savings of $10-15K PER YEAR for folks making $80K+

XVO October 29, 2013 at 10:54 am

That’s wishful thinking. At 65k income for a family of two the website says a minimum of $400 a month vs $120 now, with a 12k deductible vs $6k. Yes I was able to get on the website! Website problems may be overblown. Oh and 65k is too much for subsidies so don’t even go there.

This calculator was right on the money http://kff.org/interactive/subsidy-calculator/ for anyone who wants to get an estimate.

Everything you said was baseless, are you an advertiser for Obamacare? Where do you come up with this crap?

A Fake Mulp October 29, 2013 at 11:25 am

You really, really need to slow down and reread Morgan’s comment. Seriously.

Careless October 29, 2013 at 1:08 pm

Short and correct. Yes, you’re no mulp

Helena October 29, 2013 at 9:29 pm

An interesting result with that Kaiser calculator: Using a family of four with adults ages 47 and 45, there is a subsidy of $1894 annually at income of $94,200 but no subsidy at $94,201. That’s a mighty expensive dollar to earn. Generally, federal tax schemes avoid “cliffs” like this that result in a tax increase or benefit loss that vastly exceeds the increase in the taxed base — but they’re not uncommon in state tax codes.

Michael October 29, 2013 at 12:06 pm

I’ve already heard of small insurance agents offering non-compliant plans, I think you’re right that these may grow. Even for those making much less than $80k, these will be desirable. Let’s see, a catastrophic care plan for $120/mo plus a $90 tax penalty, versus $300-400/mo for a ObamaCadillac plan after subsidies? Even among the marginally healthy working class, the former will be attractive.

As the adverse selection grows on the official plans, the free market plans will grow in attractiveness even among those needing periodic care. The long term solution will be some privately run, federally subsidized plans for the long term ill, and a slightly more free insurance market for the rest. This will increase income inequality, and become a more visible separation between the upper middle class and the poor. The mandates will be quietly dropped somewhere around 2016.

mulp October 30, 2013 at 2:58 am

So, if a $6000 deductible Obamacare plan is caddy over insurance, what is the deductible for a true catastrophic plan?

MB October 29, 2013 at 10:39 am

I can’t see how you figure the exchenges will be working by 3/2014. The comment you posted the other was exactly right. The interfaces with private companies (i.e. insurance companies) will probably be working – they have every incentive to get it working. States and other government entities do not, in fact if they drag their feet – they will probably get money. Interfaces require give and take from both sides and right now states and other government agencies know they don’t have to give much, so the fed/hhs will have even more work to do.

mw October 29, 2013 at 10:43 am

do we get one of these with some light editing ex-very-post for your predictions on the prospects of medicare part d?

Michael October 29, 2013 at 12:17 pm

Democrats, deathly afraid of seeing free market based solutions work, will continue to work behind the scenes to undermine and defund Medicare part D at every turn. Bureaucrats at HHS will aide them at every turn. Similarly, expect HSAs and FSAs to become even more regulated and neutered than they currently are. The entirety of this policy maneuvering will occur well below the coverage of major news outlets.

mulp October 30, 2013 at 3:05 am

I would love to see free market insurance work.

Lay out a free market health care system that does not involve conservatives saying “no one was denied health care if they didn’t have money or insurance.”

Like, if you don’t have money or insurance, the EMTs will take you to the organ donation center for human euthanasia, screening, and organ resale.

Like for cars.

David Adinaro October 29, 2013 at 10:46 am

And #9: Aliens will inadvertently reveal themselves to be controlling the world through pundits and bloggers. This will happend when a final incredibly nonsensical thing is written\tweeted causing someone’s head to explode revealing the tiny aliens :)

Mark Thorson October 29, 2013 at 11:12 am

President Christie will have a fatal heart attack within 90 days of assuming office. Vice-President Cruz will then be sworn in as . . .

Chris October 29, 2013 at 10:48 am

I’ve never seen a single R-leaning think-tank advocate price controls. Pretty much every health care provider interest group hates them. If both ideologues and interests on the right oppose them, I don’t see why a GOP POTUS would ever push them. Applied to the individual market it might even cost the government money, by pushing folks to subsidized alternatives.

Noah Yetter October 29, 2013 at 2:58 pm

“…I don’t see why a GOP POTUS would ever push them.”

You mean like Richard Nixon did?

mike October 29, 2013 at 6:28 pm

Nearly 50 years ago at this point, do you really think that’s relevant?

JWatts October 29, 2013 at 7:47 pm

And Nixon’s price controls were disastrous. It’s not likely a Republican President would casually go down that road.

john personna October 29, 2013 at 10:49 am

If the current “high communication” design can’t be fixed in short order, I’d expect the system to be re-specified and simplified. The exchanges will definitely be giving smooth answers, though perhaps those answers will be rougher fee estimates, with 1-800 numbers of insurance providers for completion.

Todd October 29, 2013 at 11:02 am

Would Chris Christie even win his home State in a national election?

F. Lynx Pardinus October 29, 2013 at 11:08 am

He’s going to win the governor’s race next week by 30+ points.

Todd October 29, 2013 at 12:08 pm

Right, with strong Dem. majorities in both houses of the legislature. Totally different calculation for voters in an election for President. See: Al Gore, Mitt Romney

Ad Nauseum October 29, 2013 at 1:16 pm

Nope, he’ll be branded as a far right wingnut who hates women and minorities and a shill for big business and the Koch Brothers. It’s politics, whatever makes the least sense gets more votes.

F. Lynx Pardinus October 29, 2013 at 1:34 pm

“Nope, he’ll be branded as a far right wingnut who hates women and minorities and a shill for big business and the Koch Brothers”

Barbara Buono has been trying those exact talking points all year. Christie’s still up by 30+ points.

Ad Nauseum October 30, 2013 at 3:48 pm

In a New Jersey centric world that may be the case. In a national election, things could be very different.

Errorr October 29, 2013 at 2:39 pm

Nah, they will say that he doesn’t have the ability to be independent with the far right wingnut base of the party and can’t be the same type of president as he was a governor.

Largebill October 29, 2013 at 3:05 pm

Not a chance. He could get the nomination if conservatives are divided between several candidates. However, Christie is unelectable in general election. Couldn’t even win home state.

rz0 October 29, 2013 at 11:20 am

If the exchanges begin working, insurers will adjust their rates accordingly.
Amazing how many free market proponents seem to think private firms can’t react to changes in the marketplace.

Yancey Ward October 29, 2013 at 11:23 am

The real revelation will be the signup rates, which we will see by the end of March. The outcome was foretold by the experience of PCIP and the Oregon Medicaid study.

Z October 29, 2013 at 11:30 am

The elephant in the room has always been the hidden tax on the young and healthy. Unless they can force that group into the insurance system in the numbers they projected, the whole thing comes unraveled. So far, no evidence exists that those people will cooperate, much less in numbers that can make the math work. That’s the thing no one ever discusses about this law. It was just a concealed attempt to tax the young to pay for the Boomer’s health care. Whether it is through this law or some other, the only way the young will be paying for these aging hippies to get free Viagra is by force and even that is unlikely to work.

john personna October 29, 2013 at 11:37 am

How long do you think the wealth transfer in itself will be a political factor? Can one party claim free market principles, but protect the wealth transfer inherent in Medicare and Social Security forever?

Z October 29, 2013 at 12:04 pm

I happen to think the political parties in a social democracy such as ours are just the two faces of the ruling elite. Therefore, they can play ping-pong with the truth as long as the plates keep spinning. Therefore, the answer is “until the money runs out.” The answer to that is, “when the Fed can no longer buy up enough treasuries to keep interested rates at near zero.”

Errorr October 29, 2013 at 2:45 pm

I certainly can on a personal level. I believe we need much stronger push towards free markets, but I also favor a very strong socialized insurance scheme and redistribution. I don’t really see where the contradiction is. I rather all in-kind benefits be folded into some guaranteed income or negative income-tax form. Maybe it is because I advocate free markets because they work best and not as a requirement for promoting some individual liberty interest. I also believe that many industries need regulation because of the limited prospects for competition like utilities.

derek October 29, 2013 at 11:41 am

Aren’t we paying for the aging hippies to get Viagra anyway, through the taxes that fund Medicare? As I see it, ACA just expands government-funded healthcare to all age groups.

derek October 29, 2013 at 11:44 am

And surely no one is under the illusion that even the most hawkish budget conservatives are willing to go after old white people’s money.

Z October 29, 2013 at 12:07 pm

Granted, but it has been a hidden tax, mostly through money creation and debt expansion. Now it is in their face. I think in time, this will be seen as the strategic mistake. Raising FICA rates and/or adding new employer taxes like it would have been better. The less transparent the theft the better.

john personna October 29, 2013 at 12:15 pm

I’ve got to go back to Danish happiness. There is something perverse in our debate. A good segment of the US will respond to warnings about “European socialism,” as a bogeyman. I guess because we should insist we are best (exceptionalism) without knowing the metrics. More, avoiding the metrics.

The Danes enjoy all these social services we want (and more), but pay for them by tax. Compassionate conservatism.

Z October 29, 2013 at 12:41 pm

According to the latest demographic data, Denmark has 5,580,000 Danes and 590,000 non-Danes. Of those, 360,000 are non-European. How about we move the population of Detroit to Copenhagen and then the population of East Los Angles to some other city. Let’s see how Danish socialism holds up then. Maybe require the government to spend a quarter of its budget defending Lichtenstein, to complete the comparison.

john personna October 29, 2013 at 12:45 pm

You know, as I was taking a shower, I predicted this. This is the way it always goes at MR. “We can’t be as good as the Danes, because Mexicans.” I think that’s stupid and racist, but YMMV. Hell, in MR comments it might even be a valuable socially binding belief.

john personna October 29, 2013 at 1:33 pm

BTW, in a strange but true coincidence, my dad (a 100% ethnic Dane) spent 35 years teaching in predominately Hispanic East Los Angeles schools. So I am familiar with both cultures, and their interaction. There are certainly things that could be improved in east LA, but I don’t know of anything that precludes a more Danish system.

Jay October 29, 2013 at 2:08 pm

You mean other than having more than 50 times the population because small, mostly homogenous populations have differing policy requirements than large states many times their size?

Z October 29, 2013 at 3:06 pm

Well John, observations are not completely against the law here yet so some of us will keep making them. Take heart. That will not always be true. On the other hand, the Danish fertility rate says there will not be any Danes around to celebrate the end of observationalism so I guess it is a wash.

john personna October 29, 2013 at 3:07 pm

Perhaps you should complete that thought, Jay. Why does size of a country preclude taxation to pay for services desired?

john personna October 29, 2013 at 3:09 pm

Observe, Z: “Denmark is one of the European Union’s most active members in trying to recruit skilled workers from around the world. Denmark’s immigration policy, similar to the United Kingdom’s skilled immigration program, utilizes a points based system called the Danish Green Card to attract skilled workers from outside the EU. In addition, Denmark has a work permit system called the Positive List scheme for people who have a valid job offer from a Danish employer.

Doug October 29, 2013 at 12:36 pm

Medicare transfers wealth from under-65s to over-65s. ACA expands government healthcare but still transfers wealth from young to old by equalizing rates between those on the upper and lower end of 26-65. Overall ACA greatly transfers to 45-65 adults at the expense of 26-45 adults. Most 21-25 year olds slightly benefit from getting to be on their parent’s plan. 65+ suffers slightly because of medicare doc fixes tied to ACA.

But at the end of the day 25-45 year olds get shafted by the boomers yet again. Once boomers start finally aging into decrepitude and let go of their death grip on American culture, history will probably remember them as one of the worst generations.

Z October 29, 2013 at 12:42 pm

I’ve written elsewhere that their story will begin, “A generation of locusts chewed through every fiber of American culture…”

john personna October 29, 2013 at 5:42 pm

While the sensible Canadians looked sadly on?

Ryan Vann October 29, 2013 at 12:44 pm

Essentially. With that said, there is a stimulus policy basically baked into all this. The old decrepit boomers, alone in their nursing homes due to the complete estrangement they have caused their family members, will need people to come visit them and feign affection. Unemployment solved son.

Bill October 31, 2013 at 3:30 am

I hope my kids won’t remember me as one of the worst generations any more than I resented my parents on social security.

Bill October 31, 2013 at 3:23 am

I got FEHBP BC/BS- Viagra is not covered, wish it was! Me & Sandra Fluk need to have a coffee talk. $18 per a couple yrs. ago.

David C October 29, 2013 at 11:48 am

Wait…I’m confused….are you making a list of increasingly unlikely events? I will give you even money on any one of these events happening (I will take the “not going to happen” side).

john personna October 29, 2013 at 12:02 pm

Tyler has a lot riding on the “adverse selection death spiral.” Which seems odd to me, not least because no insurance company is going to have a majority new-policies via exchanges. Most have a large established risk pool, which is only shifted incrementally, with “finally, insurance!” types, but “grrr, don’t want insurance” kids as well.

Yancey Ward October 29, 2013 at 12:30 pm

LOL. Your understanding of insurance companies and the policies they sell is laughable.

john personna October 29, 2013 at 1:34 pm

But my view of MR comments is reinforced!

David C October 29, 2013 at 2:58 pm

Especially since there are mechanisms to prevent the death spiral, namely reinsurance, risk adjustment, and risk corridors.

http://www.newrepublic.com/article/115384/obamacare-delays-healthcaregov-problems-shouldnt-cripple-program

JWatts October 29, 2013 at 8:19 pm

There are mechanisms, but at root, they all require either a) forcing the young to sign up at higher than market rates or b) spending a lot more money than originally planned to cover the difference.

I suspect we’ll see a large amount of b. The question is how to fund all that spending. Eventually interests rates will start to rise and at that point our current deficits will start eating into other programs.

David C October 30, 2013 at 11:29 am

a) No one is paying “above market rates.” They are paying the market rate. Some people could pay less for their insurance under the old market but they could also be denied coverage for pre-existing conditions. What they are paying is the market rate for insurance under in a new market whereby no one (including them) can be denied coverage for pre-existing conditions and where everyone must buy insurance or pay a fine. Of those who may pay more for this better product are those who are both healthy and wealthy. If you’re poor you get subsidies or medicaid that will put you below market rates.

b) Whether they will spend more than originally planned remains to be seen. Regardless, this money is already going to be collected, so it is very unlikely to be deficit spending. Interest rates rising is a whole other issue and has little to do with the ACA beyond the tangential connection between the ACA, government and deficits.

txcon October 31, 2013 at 2:26 am

The three Rs you referenced only keep insurance cos afloat by increasing the federal govt subsidy. If my premium goes up or my taxes go up, I’m still paying more. So they only solve the death spiral problem by offloading it onto the treasury.

msgkings October 29, 2013 at 12:43 pm

Tyler’s always been a bit of an alarmist (bird/swine flu, Euro collapse, debt default, ACA collapse, etc). He’ll latch on to a thing and generally overstate the risk of the disaster outcome. Not a big deal, we all do that with something or another.

Generally the world muddles through in a fairly moderate middle way, things work but not optimally, change happens but slowly, etc. In the blogosphere the echo chambers (on both ‘sides’) make things out to be more apocalyptic than they really are. “Obama will ruin this great nation! Bush will ruin this great nation! yadda yadda”

The only time I can remember the outlier disaster being close to a real thing was the 2008 financial meltdown. As bad as it was, it could have been a lot worse and it almost was.

derek October 29, 2013 at 11:22 pm

His worldview is consistent though. I think his main argument for NASA is the threat of apocalyptic meteors!

Cambias October 29, 2013 at 11:49 am

Between the startlingly high deductibles and the immense incentives to not sign up at all, it seems to me that Obamacare will actually (at enormous expense) accomplish something that free-market libertarians have been urging as a solution to the whole “healthcare crisis” — decoupling medical costs from insurance.

Basically, from now on most day-to-day medical expenses will be paid out of pocket. We’ll finally get the chance to see whether that will encourage price competition, quality competition, and rational cost/benefit analysis by consumers. (I’m assuming, by the way, that doctors and patients will find a way around Obamacare’s attempts to set prices by fiat, because that’s so goddamned crazy it’s inevitable. After all, if I go to my doc for a non-covered visit, and hand him a twenty-dollar bill in the privacy of the examining room, who can prove it wasn’t just a social call?)

Michael October 29, 2013 at 12:25 pm

I really, really, want this to happen. But, one of the complexities is the interaction between individual and employer provided insurance.

Ryan Vann October 29, 2013 at 12:38 pm

I’ve considered this affect as well.

mulp October 30, 2013 at 3:25 am

Find price competition in sun glasses and prescription eyewear in the US.

Hint, the cost of these things in a nation like India and China is 10% of the price in the US. Almost all the brands are owned by two corporations who own all the retailers and thus no competitor can offer lower prices unless selling direct, essentially mail order.

Medical technology in the US is sold the same way, so a surgeon must bill you $1000 for a $10 manufacturing item, unless HHS sets a price on a surgery that prohibits that technology and then a special Medicare price of $700 is set for the $10 part, everyone else paying $1000.

Just had an implant finished today, and the high tech computer machined crown and post and screw cost $2000 installed and my dentist got a minority of it. If he does a standard crown made with manual labor by the dentist and lab tech making crown by manual labor, the cost is a $1000 with lots more work and time involved.

But the labor intensive dental work has no patents or licensing or royalties or tax havens to such up $1200-1500 of the $2000 in place of the $1000.

tt October 29, 2013 at 12:27 pm

(NB: this sentence is true with 60-40 probability, not unconditionally true.)

NB: you keep using that word ‘true’ . i dont think it means what you think it means

bmcburney October 29, 2013 at 1:11 pm

“Come January 1, hundreds of thousands of Americans will lose their individual coverage packages for not meeting ACA standards. Most of them won’t have ready replacements.”

Not “hundreds of thousands,” probably somewhere between 6 million and 7 million, but possibly more, will lose the insurance they have and like.

john personna October 29, 2013 at 1:57 pm

Why? I need education in this area. I thought it was only high deductible catastrophic policies being closed. Others? Could we bring back the high deductible with a requirement for a higher-than-deductible HSA balance?

PD Shaw October 29, 2013 at 4:37 pm

Its complex. Here is Bob Laszewski:

“The U.S. individual health insurance market currently totals about 19 million people. Because the Obama administration’s regulations on grandfathering existing plans were so stringent as many as 16 million are not grandfathered and must comply with Obamacare at their next renewal. The rules are very complex. For example, if you had an individual plan in March of 2010 when the law was passed and you only increased the deductible from $1,000 to $1,500 in the years since, your plan has lost its grandfather status and it will no longer be available to you when it would have renewed in 2014.”

john personna October 29, 2013 at 5:34 pm

I wouldn’t think that many of us old individual policy holders were actually making changes. I’ve let mine run.

(I might have learned this week that Kaiser encouraged me to get a $500 out of pocket colonoscopy a few months ago, because it will become free? Bad Kaiser.)

I hope no insurance companies encouraged policy changes to trigger this effect.

(Kaiser just sent me my 2014 rates, so I’m probably good, with my option to choose a new ACA plan.)

Jacob October 30, 2013 at 12:03 am

A $500 colonoscopy once every 10 years is much cheaper than treating your undetected colon cancer, statistically and across the entire risk pool. See pharmacoeconomic analyses here: http://cisnet.cancer.gov/colorectal/highlights/cms_report.html

mdv1959 October 29, 2013 at 4:44 pm

“Why? I need education in this area.”

Three main reasons why existing plans will get canceled:
1) Existing plans don’t meet minimum requirements imposed by ACA
2) Some insurance companies have/will pull out of markets where they can not be competitive.
3) Companies will end their own plans electing to pay the employer ‘penalty’ and redirect there employees to the exchanges in order to get out spiraling health costs (or because they’re cheap and evil, take your pick)

john personna October 29, 2013 at 5:41 pm

Those may add up, but I’m a little suspicious of this one-day blow-up from thousands to “millions.” I think I’ll suspend belief for a month or so.

bmcburney October 29, 2013 at 7:39 pm

“Those may add up, but I’m a little suspicious of this one-day blow-up from thousands to “millions.” I think I’ll suspend belief for a month or so.”

Feel free to suspend judgment if you like but there are 19 million Americans with individual plans and the administration’s own projection was that 67% of those plans would be cancelled. To date, the total of announced cancellations is already around 2 million (800,000 in New Jersey alone).

txcon October 31, 2013 at 2:30 am

The administration knew in 2010 it would be millions because they wrote the regulation that would make it so. http://investigations.nbcnews.com/_news/2013/10/28/21213547-obama-admin-knew-millions-could-not-keep-their-health-insurance?lite

bmcburney October 29, 2013 at 5:03 pm

“I thought it was only high deductible catastrophic policies being closed. Others? Could we bring back the high deductible with a requirement for a higher-than-deductible HSA balance?”

In order for the overall plan to work, young, healthy, people (especially men) must be forced into regular ACA plans so that they can subsidise others. Low cost, high deductible, plans and HSA accounts mostly benefit this group because they are less likely to use medical services on a routine basis. Therefore, this type of medical coverage must be forbidden to “encourage” them to join regular ACA plans.

john personna October 29, 2013 at 6:01 pm

For what it’s worth, I’d be fine with restoring good catastrophic policies, esp. those without lifetime benefits caps.

And most young will be old, and have their turn in the high risk category.

mike October 29, 2013 at 6:42 pm

“And most young will be old, and have their turn in the high risk category.”

With no guarantee that the cost-shifting regime in place now will be in place to benefit them then. Especially if the Democrats continue to be the party of the young nonwhite Vandal Generation and the older white Americans continue to be their political enemies and victims.

john personna October 29, 2013 at 7:31 pm

Again, voters overwhelmingly want to keep Social Security and Medicare, which work on the “we all get old” principle.

bmcburney October 29, 2013 at 7:33 pm

“And most young will be old, and have their turn in the high risk category.”

Unless circumstances change radically and in unforseen ways, most of the young, healthy, men now being “asked” to sacrifice for the baby boom generation will never receive benefits remotely commensurate to their monetary sacrifice today. They will always be poorer than they would have been had this never happened.

JWatts October 29, 2013 at 8:26 pm

“will never receive benefits remotely commensurate to their monetary sacrifice today.”

Current projects for the 30-40 year olds today is 75% of SS benefits and 50% of Medicare benefits compared to the current payout. And the ACA probably makes the numbers worse.

mulp October 30, 2013 at 3:33 am

What is a catastrophic plan? A $10,000 or $50,000 deductible?

It can’t be $6000 because that is an option for under 30 under Obamacare, and offered on healthcare.gov.

At least until the evidence is the docs and hospitals don’t get paid the $6000.

What is the forcing mechanism to ensure the $6000 bill is paid?

john personna October 29, 2013 at 9:13 pm

“compared to the current payout” does not mean that current young, especially those who manage to live long (with future tech) will not reap more (in more ways) than their current investment.

I guess it was wise of me to have my government sponsor cancer research before I got old? Not unrelated.

JWatts October 30, 2013 at 1:24 am

Yep, you can eat your Alpo for decades.

Bob October 29, 2013 at 2:19 pm

Every year, for the last 10 years, I’ve lost the insurance I had and liked, and got an inferior replacement, that covered less and costs more. So has most of working America. Why would the ACA be any different?

bmcburney October 29, 2013 at 5:11 pm

“Every year, for the last 10 years, I’ve lost the insurance I had and liked, and got an inferior replacement, that covered less and costs more. So has most of working America. Why would the ACA be any different?”

The main difference is that, in the past, if your carrier discontinued or substantially changed your low cost, high deductible, plan you could shop for another similar plan offered by another carrier. Although plans changed from time to time, insurers generally did not want to walk away from a profitable market by offering only high cost plans. Now, new low cost plans are forbidden by law so the entire option is no longer available.

mark October 29, 2013 at 6:23 pm

The difference is that the President and many other Democrats literally promised they would improve on that paradigm. They did not campaign on “we are going to give you more of the same”. The outrage is over the honesty of the hype vs the results, not the results vs the status quo.

GovCo October 29, 2013 at 2:00 pm

#4 understates and underpredicts.

This already a mainstream media story, not just a FoxNews story; don’t confuse NYT for the mainstream media, it’s mainstream for the affluent who want to be comforted.

And it’s millions not “hundreds of thousands” of Americans who will lose their individual coverage packages for not meeting ACA standards (not sure if thet includes all your GMU adjuncts and others who’ll be moved under the 30 hour per-week).

Largebill October 29, 2013 at 3:11 pm

Anyone even suggesting Christie run should not be taken seriously as a pundit. We have had this idiotic mindset among some “geniuses” in GOP circles that we win middle by running a moderate. Nope. Lose more of the base then you gain of the middle by nominating someone who doesn’t invigorate the base. The way to attract the middle is by nominating a candidate who can clearly explain and sell conservative positions on the issues.

Bill October 31, 2013 at 3:46 am

Once you clearly explain there is no more sell. You’re imagining a voter base that no longer exists.

Bill October 31, 2013 at 3:48 am

SADLY!

FUBAR007 October 29, 2013 at 3:14 pm

>>8. Chris Christie will campaign against ACA and beat Hillary Clinton in the general election.<<

Out of curiosity, do you think this has a 60-40 probability as well? Cuz I think this one's a bit…optimistic.

The GOP will only turn to Christie if they get trounced in 2014. Otherwise–and particularly if they manage to take the Senate–they'll be going into 2016 riding high, believing their own propaganda, and convinced the majority of the electorate is at last ready to embrace The Light And The Way(TM). They'll run to the right and choose a nominee accordingly i.e. Rand Paul (who will have Ted Cruz to his right to make him seem like the grown-up). Christie will be viewed as a RINO Neville Chamberlain and weeded out in the primaries. And that's if he even runs. Christie is, if anything, savvy, and may well hang back for 2020 if he doesn't think 2016 is worth the attempt.

Hillary, meanwhile, will use this rightward turn by the GOP to run as a center-right, latter-day New Democrat. If Obamacare proves to be the infinite clusterf**k you describe, and the GOP runs the table in 2014, she'll wash her hands of it, keep her distance from Obama, and run softly against it. She wants to be president worse than she wants to defend the ACA. On a side note: everyone seems to think she's going to run as Obama's successor for his "3rd term." Uh uh. Even if he leaves office with a net favorable approval rating, she's going to run as if he were just her opening act. Bill, too, for that matter. She'll position herself as the seasoned, reasonable professional, ready to defend the New Deal and Great Society against a rabid Know-Nothing GOP and mend, but not end, (read: cut the dead weight of) the programs of the well-meaning, but in-over-his-head Obama. Combine that with the "air of destiny" for being the first potential woman president (expect a healthy dose of "it takes a woman to clean up after the dipsh*t boys club" meme) and her peeling off bits and pieces of the moderate white GOP vote to compensate for any stay-at-homes in the Obama coalition. Once in office, she'll then do something similar to what you say Christie will do with Obamacare, just more watered down.

Benny Lava October 29, 2013 at 6:56 pm

This.

When you look at the playing field it looks like 2016 will feature guys like Rand Paul, Rick Santorum, and Ted Cruz. I think in 2016 Republicans finally get their Barry Goldwater (again).

Mark it here I see 2016 as Clinton vs Santorum with Clinton mopping up.

asg October 29, 2013 at 9:17 pm

Mopping up? I see what you did there

Bill October 31, 2013 at 3:58 am

Hillary as President, Bill is Sec/Gen of UN, our military all in baby blue helmets. BTW, one of the best comment threads ever – you folks are great!

Nick Longinow October 29, 2013 at 3:16 pm

Christie made some calculated decisions regarding SSM (so called anti-gay therapy) that strike too discordant a note with Christian right for them to ever vote for him. He’s becomes not much better than Hilary, on balance. If he would have supported a judiciary decision to allow SSM, out of knowledge his appeal would fail, then fine. Christians could accept that and see the reason in it. But, to silience speech in anti-gay therapy, on the basis on sketchy (very new, yet to be substantiated) research regarding the harm, casts him too much in the light of an knee-jerk leftist. Very disappointing to see him go that direction. Apart from that, found his policies and actions positive and helpful to a healthy state. Lost trust in him now.

Barkley Rosser October 29, 2013 at 4:29 pm

You may be right, Tyler, that there is ultimately a back-end problem for the national exchange that will prove fatal, and I agree that if things are not much better by 1/1/14, there will be a dramatic drop in support for ACA. However, when you forecast that there will be back-end problems for state exchanges, I have to ask, why do we not see those problems with the Massachusetts systems? Is it much different from these new ones? So far that system seems to work pretty well and is very poplular in MA, although one area where it has not done as well as forecast has been in keeping costs and premia down.

Nick October 29, 2013 at 7:13 pm

Tyler mentions 2016, but what about 2014 midterms? Will the affects be so overwhelming that low information voters will take notice in the midterm elections? Or is all the dirty laundry being aired now, and people will have this as a distant memory in a 2014? What is your expectation?

Timothyh2ster October 29, 2013 at 7:49 pm

I would to see a rule, (which is of course impossible), of commentary on ACA. No comments can be made until a clear statement is expressed on the current state of health care as the hopeless mess that it is, and if not ACA, what would the critics of ACA do.

JWatts October 29, 2013 at 8:44 pm

No comments can be made until a clear statement is expressed on the current state of health care as the hopeless mess that it is, and if not ACA, what would the critics of ACA do.

Unfortunately for you, we live in a country with Freedom of Speech, so I don’t feel in the least restrained by your silly desires. Furthermore, health insurance under Obamacare may well be worse that the current state of health insurance. The early results point to the critics of Obamacare being correct. Granted, this may all change, but it’s ridiculous to ignore the current mess and pretend it will all go away and that the end result will be an actual improvement on the status quo. You are certainly welcome to make that argument, but at this point you assuming your point of view is correct with scant evidence.

YetAnotherTom October 30, 2013 at 1:18 am

I consider myself a high information voting young person yet still have a hard time keeping up with the aca discussion. If my level of engagement is low, I can’t imagine how low it is for the people who would benefit from the law.

Sal October 30, 2013 at 10:14 am

The healthcare plan was a great idea for voters, until the bill came in the mail.

Faceless Commenter October 30, 2013 at 11:40 am

What if the Rs take the House and the Senate in 2016 and they pass a total repeal bill in week one and toss it on President Christie’s desk?

lonely libertarian October 30, 2013 at 1:21 pm

I have thought for some time that an alternative market would emerge that combined cash with price transparency and high deductible catastrophic plans with integrated life insurance plans that allow early access to death benefits for catastrophic and/or chronic care.

I could also see “Bridge” plans emerge that are designed to get folks to the next open enrollment window – but these will likely get blocked pretty quickly by regulations…

One thing that is going to be worth watching is when do people actually sign up for insurance – based on what I understand the recent announcements to be a potential marketplace subscriber would be an idiot if he signed up before either of the following….

1. He or she gets sick or injured.
2. March 31 if is he/she is healthy

Mike October 31, 2013 at 8:56 pm

In my humble Montana opinion I will provide a simple point which will nullify the Obama care debate. Wake up America, our country is in a state of systemic collapse, the fed is printing 85 billion of worthless paper per month a debt compounded in excess of one trillion annually. Energy is the current economic bubble supported by Geo – political strife perpetuated by politicians in a vain attempt to maintain crude prices above 96 per barrel while the US oil market is in a glut of excess oil inventories. Americans are poring their disposable income into the coffers of big energy creating a capital ship that is starving the private sector businesses that rely on consumers that find themselves short of cash for the basics such as food and shampoo. The markets are high on borrowed fed dollars and oil trades. In summary America went through the Dot com bust, Housing bust, and soon the oil bust which will be the final straw. America is nearing the Great Depression Recession when America arrives at the cross road of collapse no one will have health insurance whatever it may be and not worried about it rather food and shelter will be the priority. Shelter will be easy just pick a house that’s empty that said food and heat will be the main focus of Americans, and that means the super wealthy will be in the same sinking boat.

Pray America to whomever your god may be !

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