Here’s a sampling of the email responses to my recent Capital column in which I argued that if – and I mean if – the health exchanges survive the startup phase, they might change the way Americans shop for health insurance.
Jim Fiset wrote:
The exchanges could be good if they someday function – great – but the idea that healthy people will pay for the sick is a not likely. From my reading of left leaning news – the anecdotes of people signing up most are eligible for Medicaid or are getting $100 or $200 a month policies. This is only a fraction of the true cost to the federal government. You then need three or four healthy sign-ups to pay for the one big discount. Most of the “healthy people” are likely to be covered by an employer or have bought already and will switch to a subsidy if available. You may like to give free/subsidized healthcare for social reasons but to pretend this will work economically is burying your head in the sand!
Would be great if you could get actual numbers on this? I imagine this will be hidden unless some good business publication uses clout to gets the facts? Obamacare is a Trojan horse – get it in then figure how to pay – which in the end is just borrowing and adding to the deficit.
David Wessel responds:
You’re right that the exchanges will work only if healthy people sign up, too. And there are lots of young, healthy people who don’t have insurance, and there’s a lot of effort to sign them up. The exchanges need a broad pool of risks; that’s true of insurance in general. That’s the argument for the individual mandate.
Medicaid is an entirely separate issue. People on Medicaid aren’t in the exchanges. They’re on Medicaid and that’s a taxpayer-funded government program.
In exchange, some lower-income families will be eligible for subsidies; some won’t. Subsidies will effectively lower the premiums, and that’ll be important in getting more people to enroll. But from the insurance company point of view, it doesn’t matter: They get the same premium dollars whether the person is eligible for a subsidy or not.
Paying for the subsidies is an issue; the White House says all the other provisions in the law will offset the cost. We’ll see. But the concept of exchanges, as my column argues, may make sense in any event.
Robert Kane, Bartlesville, Okla., wrote:
Are you surprised that seniors like Medicare Part D? It is an extravagant, highly subsidized freebie. What is not to like? We will be really old or dead and gone when some one else has to pay for it?
David Wessel responds:
Several readers made this point, and it’s a good one. The Medicare prescription drug benefit is heavily subsidized by taxpayers – and it was passed with no visible means of support. That probably does account for some of its popularity. My point was only that it was initially unpopular and the whole go-online-and-shop-for-insurance concept was much criticized, but is now widely accepted among the elderly who have Medicare prescription drug insurance.
Steven Norehad of Chicago wrote:
I independently insure myself and my kids through a large Illinois insurance provider. My insurer just sent me a letter letting me know that my Health Savings Account policy will be terminated on January 1, 2014. I like this policy.
Problem 1: The government is forcing me to change. That is wrong. It’s none of their business. I spoke with my insurance broker this morning. He informed me that the only HSA policy offered thru this carrier comes with a $3500 individual deductible with a $12,500 family deductible. The cost is $712. Compare this with my current $3500 family deductible- all in. And no co pay. Pays 100% in plan. Let’s just say the Affordable Care Act option is a 30% increase over what I’m paying now.
Problem 2: – the politicians and their staff remain untouched by this monstrosity no one understands. How is that? They work for us?
ACA will fail. There is no doubt. What then?
David Wessel responds:
I can’t address your particularly situation, but, yes, some policies that previously were offered are essentially forbidden by the Affordable Care Act. It’s my understanding that most Health Savings Accounts still are permitted, though. I wonder whether you’ve shopped for insurance on Illinois’s exchange or checked with another carrier.
On your second point, I really think that’s a misstatement. Here’s what happened. Most workers with employer-sponsored coverage keep it. Congress decided to force members of Congress and their staffers to surrender their employer coverage and go to the local exchange. They are the ONLY workers with employer-provided coverage who are forced to do this. That was the original sin. The problem is that the exchanges weren’t intended for people (like most of us) whose employers pay much of the cost. So federal employees who have had health insurance partly paid by their employer (as I do), would have been forced to pay the full cost of our pocket; a huge pay cut. The administration tried to fix this administratively , and that’s caused all the controversy.
Here’s a fuller explanation from the National Review (which is hardly a left-wing publication).
Jeffrey Frankel of New York City writes:
From my (perhaps naïve) standpoint, the only important factor in determining the future success of the exchanges will be the cost of the insurance plans available on the exchanges. The glitches and snafus are all temporary background noise. With the exchanges, people who previously were uninsurable because of pre-existing conditions are now insurable, if they can pay the premiums. This is still a big unknown.
On a slight tangent, it’s unfortunate that Obamacare doesn’t do one crucial thing: treat employer provided health insurance as a taxable benefit. True, plans over certain dollar amounts may now have some taxable benefit, but I can’t imagine that this will affect many folks. I can’t think of any economic or moral argument why someone receiving health insurance through a job should receive that benefit tax-free, but someone earning the same salary but purchasing insurance through an exchange would not receive an equivalent tax benefit. I believe that employer provided health insurance is one of the largest tax give-aways we have. If we taxed all employer provided health care and used that money to lower prices of insurance plans on the exchanges, the exchanges have the potential to be very successful.
David Wessel responds:
On your first point, yes. A lot does depend on the premiums charged by insurance plans on the exchanges – and not only in the first year.
On your second point, the Affordable Care Act did make a small step in that direction by imposing a tax on so-called Cadillac plans, the most generous, as a way to begin to whittle down the tax-exclusion. Doing away with it is popular with economists and deficit-phobes, but not with the public and the politicians they elect.
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