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The Obamacare Exchange

Having trouble logging on to healthcare.gov? You're not alone. In the meantime, here's an exchange you can easily access--an email colloquy about the Affordable Care Act.

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As the government shutdown enters its second week, Republicans in Congress continue to demand changes to the Affordable Care Act, better known as Obamacare, which took effect October 1st. Americans, meanwhile, are finally getting to see the law in action, as the uninsured have begun signing up for coverage on health care exchanges across the country–or trying to, at least. Below, an email colloquy between senior editors Erica Grieder and Nate Blakeslee on how the debate looks from Texas. 

Erica: Nate, you strike me as someone who’s generally in favor of the Affordable Care Act. Now that the exchanges are live, the Texas Public Policy Foundation has just crunched some numbers about what the premiums for individual plans will be in Texas, compared to what they were before the ACA. They find that under the Affordable Care Act, average premiums for individual health insurance policies will increase regardless of age–and for some people, the rises will be pretty staggering. Before ACA, for example, a 35-year-old man could get a cheap policy for an average of $78 a month; now, the cheapest policy would cost an average of $178. (Average premiums are going up for women, too, although before ACA women were typically being charged more for health insurance than men.) Do you think that’s a problem?

Nate: Hmmm. I’m supposed to be writing about Texas grapefruit for our upcoming food issue. But if the government isn’t working, why should I? These charts TPPF created are handy, but I wonder: Why would we want to know how much a policy costs before the government subsidy? After all, the majority of people who get coverage under the ACA are going to have a portion of their premiums paid by the federal government. It’s a key component of the program, so why leave it out? I am reminded of previous forays into the intertwined realms of public policy and numeracy that have not ended well for our state’s most prestigious think tank. Wild assertions about recent increases in public education spending, for example, which turned out to be based on the group’s use of “raw numbers” instead of inflation-adjusted numbers. The numbers in this new ACA chart strike me as a little undercooked, too. Are raw numbers better for you, like raw food?

Erica: Well, here in Texas we’ve definitely seen some pretty bad math latelyno argument there. But I don’t think these numbers are politically motivated. First of all, no one could calculate the subsidies without knowing what the premiums themselves would be. That doesn’t seem unreasonable. Eligibility for the subsidies is based on income, but the subsidies themselves are based on the costs of the plans–so that the subsidy gets bigger or smaller based on the gap between what the subsidized person is expected to pay and what the insurance companies want to charge for it. Since the exchanges didn’t go live before October 1st, the subsidies couldn’t be calculated before today either. 

Nate: But we know who will get subsidies and who won’t already, so why break the info into two charts, unless you are trying to cast the ACA in the worst possible light? For most people, the price you pay for the coverage isn’t the price that appears on this chart, in other words. So why publish it?

Erica: A lot of people aren’t going to be getting subsidies, and even for those who are, I think it’s worth knowing what the actual premiums are. The subsidies in some sense represent a transfer of wealth from the government–in other words, the taxpayers–to the insurance companies. That’s one of my main qualms about this law, by the way, I’m not against redistribution, but I’d prefer we focus on forms of redistribution that direct resources more directly to people in need, like the food stamp program, rather than redistribution to profitable companies.

Nate: I agree the insurance companies got what they wanted, like they almost always do. But if the ACA is a sop to insurance companies, then the food stamp program is a sop to grocery stores and farmers. That’s why it’s in the farm bill, after all.

I worry that the TPPF chart is comparing apples and oranges. One reason the inexpensive policies offered now are so cheap is that they are so crummy. The newly regulated policies may cost more (pre-subsidy, that is) but will offer lower deductibles, co-pays, etc. So they are worth more. But don’t chalk me up in the “ACA is a work of genius” category. It’s definitely sausage. In my opinion we’d be better off without health insurance companies at all. Why not try a single-payer system, like they have in Canada? Our health outcomes, costs, etc. couldn’t possibly get any worse. 

Erica: Right, they’re pretty crummy plans now, which is part of why they have such a low uptake rate despite the fact that they are (or were) pretty cheap. And I should probably note that Texas is one of the states where you’d expect to see a huge rise in insurance premiums, precisely because our private insurance market was pretty cheap to begin with. Avik Roy had a nice article over at the National Review explaining this: when Romneycare took effect in Massachusetts, premiums on the individual market did decrease, but that’s because it was already really expensive to buy private health insurance there. Most states, though, are closer to Texas than to Massachusetts in this respect. 

And “crummy” is kind of in the eye of the beholder, isn’t it? If you’re a young adult, the odds are that you don’t actually need health insurance at all. That’s not a right-wing talking point; that’s the actuarial calculation that makes insurance work. Some young people will get sick, or get injured, but as a group, they’re expected to contribute more to the risk pool than they remove. That’s why the ACA has an individual mandate–it wouldn’t work without one, because a lot of healthy people would decline to buy insurance. And it makes sense that they’d be reluctant: when I think about my brothers, for example, they need that $150 a month to put gas in their car, or to put toward their student loans.  

Nate: I hear you. But your brothers probably don’t use their car insurance much either, even though the man forces them to buy it. I myself paid for public schools for twenty years before I had a chance to use them for my kiddos. And you and I aren’t using Medicare, Social Security, SSI, etc, but we are paying for it. Every piece of the social safety net we have today was once new, and every new program was met with dire predictions about the expanding state choking off free enterprise, individual initiative, and the like. And yet those programs are immensely popular two or three generations down the road. What’s a little more socialism on top of what we already have? We will still be the capitalist juggernaut tomorrow morning that we were yesterday.

Erica: Well, people are required (in most states) to carry car insurance to protect other people from financial loss. You’re allowed to take the risk of covering your own repairs, if you need them. In general, though, I agree–we’re all part of society, and we don’t get to pick and choose how our taxes are distributed. But young people, as a group, are really struggling to get their feet under them at the moment. So given the current context, the fact that the burden of ACA falls most heavily on them should be considered. It’s true that at some point young people are going to get old, but they’ll be in a better position as old people if they can use their 20s to finish their education, pay down their debts, and start a career. Many of their parents managed to do that, but today’s young adults are having less success in that sense, for a variety of reasons.

Nate: Did you see the piece on the government shutdown by Dylan Matthews on Wonkblog? Apparently the never-ending battle over Obamacare is all James Madison’s fault. We never should have had separate executive and legislative branches. 

Erica: Yes, I did see that. To be honest I was a little surprised by it, because I don’t feel nostalgic for the 1960s as a great period for American political discourse. I did agree with his point that there’s an inherent tension between the president and Congress over who has more power, but I’ve always seen that as a feature rather than a bug, because it keeps them both in check. But in any case, I hope the grapefruits are going well. We’ll have plenty of time to continue this discussion endlessly for the next few decades. 

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