The Obamacare Shock

[mota bhai 2,675]

The Obamacare Shock

By PAUL KRUGMAN

Published: May 26, 2013

The Affordable Care Act, a k a Obamacare, goes fully into effect at the beginning of next year, and predictions of disaster are being heard far and wide. There will be an administrative “train wreck,” we’re told; consumers will face a terrible shock. Republicans, one hears, are already counting on the law’s troubles to give them a big electoral advantage.

No doubt there will be problems, as there are with any large new government initiative, and in this case, we have the added complication that many Republican governors and legislators are doing all they can to sabotage reform. Yet important new evidence — especially from California, the law’s most important test case — suggests that the real Obamacare shock will be one of unexpected success.

Before I can explain what the news means, I need to make a crucial point: Obamacare is a deeply conservative reform, not in a political sense (although it was originally a Republican proposal) but in terms of leaving most people’s health care unaffected. Americans who receive health insurance from their employers, Medicare or Medicaid — which is to say, the vast majority of those who have any kind of health insurance at all — will see almost no changes when the law goes into effect.

There are, however, millions of Americans who don’t receive insurance either from their employers or from government programs. They can get insurance only by buying it on their own, and many of them are effectively shut out of that market. In some states, like California, insurers reject applicants with past medical problems. In others, like New York, insurers can’t reject applicants, and must offer similar coverage regardless of personal medical history (“community rating”); unfortunately, this leads to a situation in which premiums are very high because only those with current health problems sign up, while healthy people take the risk of going uninsured.

Obamacare closes this gap with a three-part approach. First, community rating everywhere — no more exclusion based on pre-existing conditions. Second, the “mandate” — you must buy insurance even if you’re currently healthy. Third, subsidies to make insurance affordable for those with lower incomes.

Massachusetts has had essentially this system since 2006; as a result, nearly all residents have health insurance, and the program remains very popular. So we know that Obamacare — or, as some of us call it, ObamaRomneyCare — can work.

Skeptics argued, however, that Massachusetts was special: it had relatively few uninsured residents even before the reform, and it already had community rating. What would happen elsewhere? In particular, what would happen in California, where more than a fifth of the nonelderly population is uninsured, and the individual insurance market is largely unregulated? Would there be “sticker shock” as the price of individual policies soared?

Well, the California bids are in — that is, insurers have submitted the prices at which they are willing to offer coverage on the state’s newly created Obamacare exchange. And the prices, it turns out, are surprisingly low. A handful of healthy people may find themselves paying more for coverage, but it looks as if Obamacare’s first year in California is going to be an overwhelmingly positive experience.

What can still go wrong? Well, Obamacare is a complicated program, basically because simpler options, like Medicare for all, weren’t considered politically feasible. So there will probably be a lot of administrative confusion as the law goes into effect, again especially in states where Republicans have been doing their best to sabotage the process.

Also, some people are too poor to afford coverage even with the subsidies. These Americans were supposed to be covered by a federally financed expansion of Medicaid, but in states where Republicans have blocked Medicaid expansion, such unfortunates will be left out in the cold.

Still, here’s what it seems is about to happen: millions of Americans will suddenly gain health coverage, and millions more will feel much more secure knowing that such coverage is available if they lose their jobs or suffer other misfortunes. Only a relative handful of people will be hurt at all. And as contrasts emerge between the experience of states like California that are making the most of the new policy and that of states like Texas whose politicians are doing their best to undermine it, the sheer meanspiritedness of the Obamacare opponents will become ever more obvious.

So yes, it does look as if there’s an Obamacare shock coming: the shock of learning that a public program designed to help a lot of people can, strange to say, end up helping a lot of people — especially when government officials actually try to make it work.

Edited May 27, 2013 by amriki bhai

[I AM NOT THAT GUY 5,715]

Krugman. Too bad nobody takes mental health seriously, or that guy would have been institutionalized years ago. He is like the left's version of Glen Beck.

[Pooky 3,786]

Krugman. Too bad nobody takes mental health seriously, or that guy would have been institutionalized years ago. He is like the left's version of Glen Beck.

Too bad that the example of California looks as if it won't be repeated in these (heavily blue) parts of the country. Nothing is official, but we've seen reports of premium hikes upward of 60% being mentioned by one provider here.

California may get touted early and hard, but if that state turns out to be an outlier, and the premiums rise elsewhere, as much as is being suggested, the 2014 midterms may prove difficult for the Democrats.

[mota bhai 2,675]

Too bad that the example of California looks as if it won't be repeated in these (heavily blue) parts of the country. Nothing is official, but we've seen reports of premium hikes upward of 60% being mentioned by one provider here.

California may get touted early and hard, but if that state turns out to be an outlier, and the premiums rise elsewhere, as much as is being suggested, the 2014 midterms may prove difficult for the Democrats.

If California can do it, so can everybody else.

That's an argument that won't translate well in a political environment dominated by soundbites and 30-second TV spots, though.

[Pooky 3,786]

If California can do it, so can everybody else.

That's an argument that won't translate well in a political environment dominated by soundbites and 30-second TV spots, though.

If this was a red state, I might not be surprised. It is, however, most assuredly blue.

[I AM NOT THAT GUY 5,715]

If California can do it, so can everybody else.

That's an argument that won't translate well in a political environment dominated by soundbites and 30-second TV spots, though.

Insurance in California is heavily regulated. Whether or not that applies to some of the less regulated states, Pooky has reasonable question.

[Darnell 8,478]

California is the example state? really?

anyone in Texas can purchase insurance NOW, as an individual, through 12 different HMO companies. Blue Cross / Blue Shield has the best rates, of course, but sheeyit ! I think to suggest California as a test case really speaks bad of California's barrier to entry for health insurance companies.

California Bu Hao ! (la )

[james&olya 1,121]

Krugman. Too bad nobody takes mental health seriously, or that guy would have been institutionalized years ago. He is like the left's version of Glen Beck.

Only difference is a Nobel Prize and his pesky habit of usually being proved right. Glen Beck, on the other hand, is a buffoon who is right only the same way a broken clock is ever right, by accident!

Your observations about mental health and institutionalization are relevant only in the fact that in countries like the former USSR that was a frequently used way to silence those who spoke truths that the governing powers did not want heard. Krugman is not afraid to challenge those in power or to go against the prevailing opinion. Fortunately, we still have enough civil rights in this country to prevent most of that sort of thing here. I am sure that the current proponents of austerity would like to have a tool to silence him along with Elizabeth Warren. The left has no need to wish for the silencing of people like Glenn Beck. Their idiocy eventually becomes apparent to all but the most foolish and ignorant!

[mota bhai 2,675]

Only difference is a Nobel Prize ...

A Nobel Prize just means Mr. Krugman is now in the same league as famous anti-American Islamic radicals like Yasser Arafat and Barack Hussein Obama.

[I AM NOT THAT GUY 5,715]

silence him along with Elizabeth Warren.

There is another loon,

[I AM NOT THAT GUY 5,715]

The left has no need to wish for the silencing of people like Glenn Beck.

No, the left would rather have temper tantrums and shout down contrary options. Folks like you on the loony left wear the same kind of fogged over "goggles" that the gun nutters will wear when they try to invade the nation's capital on July 4th with loaded firearms strapped across their backs.

[Mr. Big Dog 10,747]

California is the example state? really?

anyone in Texas can purchase insurance NOW, as an individual, through 12 different HMO companies. Blue Cross / Blue Shield has the best rates, of course, but sheeyit ! I think to suggest California as a test case really speaks bad of California's barrier to entry for health insurance companies.

California Bu Hao ! (la )

Funny, then, that there are nearly as many uninsured persons in TX as there are in CA and actually more children uninsured in TX than in CA. And that is with California having 12 million more residents than Texas. If health insurance is so easily accessible in TX, then why are so many people lacking it? Why does one out of every four Texans go without health insurance? Why is the percentage of uninsured so much higher in TX than anywhere else in the nation?

[I AM NOT THAT GUY 5,715]

I think to suggest California as a test case really speaks bad of California's barrier to entry for health insurance companies.

Insurance companies are regulated by the states, and regions within states. The insurance you get in Texas is not the same insurance you get in Oklahoma, even though the same company offers insurance in both states.

[Darnell 8,478]

Funny, then, that there are nearly as many uninsured persons in TX as there are in CA and actually more children uninsured in TX than in CA. And that is with California having 12 million more residents than Texas. If health insurance is so easily accessible in TX, then why are so many people lacking it? Why does one out of every four Texans go without health insurance? Why is the percentage of uninsured so much higher in TX than anywhere else in the nation?

It's always a personal choice, to purchase insurance. I have to assume, rightly or wrongly, that folk without insurance made a decision not to purchase it.

[Darnell 8,478]

Insurance companies are regulated by the states, and regions within states. The insurance you get in Texas is not the same insurance you get in Oklahoma, even though the same company offers insurance in both states.

Exactly ! Texas had a huge brawl 8 years ago about medical insurance, and after the fracas many cool things happened. One of them was that anyone could purchase medical insurance at a group-discount rate and have same coverage as someone who was a member of a group plan.

The regulation done in Texas could be easily copied in California, without any need for regulation and legislation coming in from the Obamarama Medical Plan.

This has been a topic in the yearly meeting of state insurance regulators, asking why California refuses to copy the Texas setup, for the last 5 years.

Shame on California for not plagarizing !