Some of us saw this coming ... (On the "cancellation" problem)

Saturday, June 01, 2013

Obamacare implementation: it's all about how people are supposed to perceive it

by digby

There is a lot of chatter about how people are supposed to react to the new health care exchanges. Hostile pundits seem to think that everyone's going to scream bloody murder at the potential rate increases while supporters of the plan think people who have to pay more will be fine with it because they are getting more for their money.

Hostile analysts like Avik Roy put it this way, writing about the new analysis of the Health Care exchanges that came out of California this week, showing that rates will go up, but not as much as experts had expected:

One of the most serious flaws with Obamacare is that its blizzard of regulations and mandates drives up the cost of insurance for people who buy it on their own.

Ezra, who I'm calling a supporter for these purposes, responds:

Some people will find the new rules make insurance more expensive. That’s in part because their health insurance was made cheap by turning away sick people. The new rules also won’t allow for as much discrimination based on age or gender. The flip side of that, of course, is that many will suddenly find their health insurance is much cheaper, or they will find that, for the first time, they’re not turned away when they try to buy health insurance.

That’s why the law is expected to insure almost 25 million people in the first decade: It makes health insurance affordable and accessible to millions who couldn’t get it before. To judge it from a baseline that leaves them out — a baseline that asks only what the wealthy and healthy will pay and ignores the benefits to the poor, the sick, the old, and women — well, that is a bit shocking.

According to the hostile analyst, Obamacare will hike rates because of added regulations and mandates. According to the supporter, Obamacare will hike rates because it makes the system more fair and offers better coverage. It's simply different interpretations of the same thing --- you'll notice that both agree that rates will be hiked. And both agree that it will be because the policies offered will be better due to the requirements of Obamacare and the elimination of pre-existing conditions --- also known as regulations.  (They also agree elsewhere that some of these rate hikes will be mitigated by the fact that poorer people will have subsidies that will help them.)

So the argument appears to be around how people are supposed tointerpret these changes, not what's actually happening. And it's concentrated around those people who are in the private insurance market already, many of whom will not qualify for subsidies but will see their premiums go up.

I will use myself as an example of how this plays out. I'm an older Californian, a decade away from medicare. A person my age needs health insurance but it tends to be quite expensive on the private market. My husband and I are lucky to be very healthy and had no pre-existing conditions. Nonetheless, we had to go without insurance for a time and when we became financially healthy enough to afford to buy it we went to an online "exchange" called eInsurance to compare rates. (This functions in similar fashion to the exchange the government is setting up, subject to Obamacare's new rules and regulations.)

The thought process was this, and it wasn't complicated: how much insurance can I afford? In a perfect world, we would have bought the insurance with the low deductibles, co-pays and out of pocket maximums. We knew that the odds of one of us getting very ill over the next few years is higher than before and that it was likely to be extremely expensive. We weren't living in denial. So, it's not that we didn't want the higher priced, full-service plan. We simply couldn't afford it. I am going to guess that's true for many people, certainly those who are older, middle class people like us.

At this point, I'm not even sure if the subsidies are tied to gross income or adjusted gross income so I'm not going to guess how it will work out for us. Maybe we'll qualify for subsidies, in which case, huzzah. And I'd be thrilled if our coverage is better and our out-of-pocket maximums are lower. Right now, the deductible is so high that it doesn't pay for us to use our insurance a good part of the time so we get some routine tests done through health fairs and the like because it's cheaper. It would be nice to have that whole thing streamlined.

If it turns out that we have to pay more (and yes, get better coverage) I'm going to be able to tell myself that it's for the greater good, that poorer people are now going to have health coverage, that those with pre-existing conditions are now getting the care they need. And for me, the bleeding heart liberal, that's something I am willing to accept. Indeed, during the health care debate I signed on to this knowing that was likely to happen.

But somehow, I don't think that argument is going to work on everyone. Appealing to the better angels in people who are going to find their rates have gone up and then pointing out that they're getting more for their money is actually fairly insulting. People who buy their own insurance know exactly what they're getting for their money --- most of them invested hours and hours learning all about that when they bought it. We're the most educated people in the country about the private insurance market. I just don't think it's reasonable to expect that all of those who are going to be paying more will be happy about it and lecturing them about how other people are now going to be covered is likely to make a good number of them very angry since that's exactly what they hate about all government programs.

I can guarantee you that the Avik Roy explanation that their rates have gone up because of "mandates" and "regulations" is going to sound very convincing to an awful lot of people. And they'll hate the fact that poor people are getting subsidies and not them. I don't know how many of them are out there --- the private insurance market is fairly small, after all. It's possible that a few naysayers will be so drowned out by the millions of low-income people with subsidies and the beneficiaries of the medicaid expansion that nobody will hear them.

But I really don't think that those who are trying to explain the virtues of Obamacare should count on that. If this is a debate that goes beyond one's personal needs and extends into citizenship, egalitarian principles, universality and the common good, it would have been smart to have made it about that from the beginning rather than obsessing about "bending the cost curve" and otherwise implying that people would be paying less. I never thought advocates were very honest about that and it's going to be a shock to some of those who will pay the price.

As I said, I'll have to find a way to pay the higher price if that's what happens. But I made my choices before knowing exactly what the trade-offs were and I don't need to be told that my "better coverage" under Obamacare will be worth it. I always knew better coverage was a good thing. I just didn't have the money. California is an expensive place to live. And I'm personally happy that we will all be pitching in to make it possible for the poorest and sickest among us to have health care. I don't need convincing on that --- I'll do my part without complaint.

But I'm going to guess that only the 20% of people in this country who identify as liberal like me will automatically accept that explanation as reasonable. It's going to take a more compelling argument from personal interest to convince the other 80% that the middle class paying higher rates was what Obamacare was all about. Luckily most people are covered by the government or their employers so this won't affect them. But the enemies of Obamacare are sure to exploit anyone who makes a fuss. I wouldn't be sure that these arguments I'm hearing from supporters will carry the day.

Update:  If I were the one making the wonkish argument for Obamacare, I think I'd emphasize the fact that while premiums may go up in the private market initially, the plan will eventually do something about this, which will likely lower costs all around eventually. A few of the more open-minded types who are usually hostile to government regulation might find it convincing.  Might.