October 26, 2013
But What if Obamacare Works?
By ROSS DOUTHAT
IN last week’s column, I wrote about what might happen if the new health care law’s Web site remained a festering technological sore for months to come. (The answer: Nothing good.) But it’s still more likely that HealthCare.gov will be fixed by Thanksgiving and millions of Americans will (finally) be able to get a real look at what Obamacare is selling them.
What will they find? One way to understand what is being offered is to think in terms of three “mores.” Insurance à la Obamacare will be more expensive, more subsidized and more comprehensive than what was previously available on the individual market.
This may not be obvious if you’re struggling to log on to HealthCare.gov. But some of the state-level exchange Web sites are working well enough to enable illuminating window shopping.
Take the exchange in my native state, Connecticut. There the “more expensive” part of the new regime is readily apparent. If you look at Connecticut insurance prices for 2013 — that is, pre-Obamacare — on the online clearinghouse eHealthInsurance, monthly premiums for a 30-year-old in good health can start below $100, and under $300 for a healthy 60-year-old.
On the state’s new Obamacare-compliant health care exchange, by contrast, nothing is that cheap. The lowest priced (“bronze”) plan for a 30-year-old Connecticut resident has premiums starting at $224 a month; for a 60-year-old, the cheapest plan starts at $537.
These premium increases, however, don’t tell the whole story, because there are subsidies, which the Connecticut exchange helpfully calculates as well. If our hypothetical 30-year-old makes $30,000 a year, for instance, he or she would be eligible for credits that lower the actual cost of the cheapest plan to $115 a month. A hypothetical 60-year-old making $30,000 would see the cost of the cheapest bronze plan fall to zero. Over all, the premium increases only really bite as subsidies phase out — at incomes above $45,000, or about $62,000 for a family of four.
They bite, in part, because insurance companies now have to take customers with pre-existing conditions, which drives everyone’s rates up. But they also bite because buyers are getting more insurance than the older system’s cheapest plans offered.
Take those low-cost 2013 plans I mentioned above. A typical one — teased at $269 a month for a nonsmoking 60-year-old Connecticut man — comes with a $5,000 deductible, an annual out-of-pocket limit of $12,500, and all kinds of copays and coverage restrictions.
With some grandfathered exceptions, Obamacare makes those kinds of plans illegal. The out-of-pocket limit for individuals is capped at $6,500 a year, preventive services are fully covered, and various “essential benefits” as well.
If we ever get beyond the follies of HealthCare.gov, the politics of the rollout will probably be defined by how (and how vocally) middle-class Americans just above the subsidy threshold react to this “pay more, get more, subsidize other people” deal.
Some of them will be buying for the first time, spurred by the mandate’s penalties; many others will be shopping for a new plan because their previous ones no longer meet Obamacare’s requirements. Will they be grateful for more comprehensive coverage, even though it’s being forced on them and has higher premiums attached? Or will they feel they were misled by the president’s “if you like your insurance plan, you will keep it” rhetoric, and drive a further backlash against the law in 2014 and beyond?
Where the underlying policy debate is concerned, meanwhile, what you think about the three “mores” basically determines whether you belong on the left or on the right. To liberals, more is simply better, and the disappearing low-cost plans deserve to vanish, because they left purchasers potentially exposed to way too much financial risk. (Even the new bronze plans are really too stingy in this view — which is probably why, if you qualify for subsidies, the Connecticut Web site deliberately nudges you toward the pricier silver plans.)
Conservatives agree that these cheaper plans create more risk. But they also create a sensitivity to price — and with it, a curb on cost growth — that’s rare in a system where third-party payment has made prices opaque, arbitrary and inflated. And for a society that pretty clearly spends far too much on health care, sticking with catastrophic coverage frees up money — thousands for individuals and families, billions for the government — to spend on something other than the insurance-medical complex.
Yes, for some that money would ultimately get eaten up, and then some, by unexpected bills. But for others it might be money saved for retirement, money that pays for child care, money used to hire a contractor or buy a house. And for the public sector, it would be money for all the priorities — liberal as well as conservative — that are being undercut by rising health care costs.
This is why the law’s critics believe Obamacare might be a long-term failure even if it survives its launch troubles and works on its own terms for a while. It’s not about the good things the reform delivers: those are real enough. It’s about whether there are too many other goods, for too many people, that the law’s three “mores” end up crowding out.