Monday, November 22, 2010

Will Health Reform Save Lives?

Over at the John Goodman Health Policy Blog, Mr. Goodman points out the absurdity of thinking that "uninsurance" is a useful predictor of health status.  Because most uninsured people are uninsured for only a few months, it's not a useful explanatory variable.  Frictional uninsurance is linked to unemployment.  If individuals owned their own health insurance, the problem would be a lot smaller.

One commenter believes that Obamacare's exchanges will help, because people will own their own policies as long as they're in an exchange.  However, you only get the subsidy if you choose your plan from whatever set is available through the state-based exchange.

To date, California is the only state that has established an Obamacare exchange. (Massachusetts and Utah were pre-Obamacare.) It will have a politically appointed 5-person board that will selectively contract with carriers, and they will have to offer plans that meet the approval of the bureaucracy. It’s as if you could only buy your car from the DMV.

Furthermore, they will not be long-term plans for two reasons. They will likely only offer plans with a term of one year, like Medicare Advantage, because it will be illegal to charge actuarially accurate premiums and the plans will have to negotiate risk-adjustment with the exchanges’ boards. This is the way Medicare Advantage works and the carriers will surely find that migrating the Medicare Advantage system (called Hierarchical Condition Categories) is the easiest way to operate in the exchange.

Second, if you get a job with health benefits (which some will), you will have to drop your exchange plan and take your employer’s, until you switch jobs again.

Of course, this is all fantastical dreamweaving: The exchanges won’t open up until January 2014, by which time Obamacare will surely have been repealed. So, any time spent designing exchanges is wasted time.

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