Obamacare Exchanges Unlikely To Have Much Care To Offer

Reason 24/7ReasonWhen last we tuned in to this ongoing drama that is Obamacare, one of the authors, Senator Max Baucus, suggested that it had turned into a "huge train wreck" and maybe it's not ready for prime time. Why would the good senator say such an unkind thing about his legislative baby, even if he did have to pass it to find out what was in it? Well, there are actually quite a few reasons, but lately, people are saying that Obamacare will have damned little to offer most people, even if state and federal officials can get the much-touted exchanges up and running.

From Stateline:

The White House sums up the central idea behind the health care exchanges in the new federal health law with a simple motto: “more choices, greater competition.”

But even some stalwart supporters of the Affordable Care Act worry that in many states, people won’t have a lot of health insurance choices when the exchanges launch in October. ...

Individuals and businesses with up to 100 employees will be able to shop on the exchanges, and people who can’t afford coverage on their own will get government subsidies to help them. About 26 million Americans are expected to purchase health insurance through the exchanges.

But it is unclear how many insurance carriers will decide to seek approval for selling their products through these online marketplaces. Insurance companies have been mostly silent about their plans, with some citing uncertainty about federal and state rules as a reason for holding back.

Some fear that any uptick in competition will bypass those states where doctors are in short supply and the number of hospital systems is limited. A recent analysis by the American Medical Association found that a single insurance company held 50 percent or more of the market in nearly 70 percent of local markets nationwide. 

On top of this lack of competition, some of the new federal regulations may push up premiums, at least in the short term. For example, under the health care law insurers will have to cover everyone, including people with pre-existing health conditions. Insurers are likely to raise their premiums to cover the cost of insuring these people who are less healthy.

The mandate that everybody must have insurance is intended to balance this new cost by adding a huge number of young, healthy people to the risk pool. Many of these people, figuring they wouldn’t need health care, have been taking their chances without coverage. But because the federal penalties for not having insurance are so small, especially before 2016, many of the healthiest people may continue to decline coverage.

So ... The latest concern, building on earlier concerns about bureacratic delays, regulatory missteps, economic impossibilities and a fundamental failure to understand how people respond to incentives, is that many health insurers will simply say, "no thanks, we'll sit this one out." That will leave the exchanges, over which so many political battles have been fought, as the equivalent of butcher shops in the old Soviet Union, with open doors, and empty shelves.

Follow this story and more at Reason 24/7.

Spice up your blog or Website with Reason 24/7 news and Reason articles. You can get the widgets here. If you have a story that would be of interest to Reason's readers please let us know by emailing the 24/7 crew at 24_7@reason.com, or tweet us stories at @reason247.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Sevo||

    So, what happens if they give an exchange and nobody comes? (old farts will get it).
    I certainly don't understand all of the law (which seems common), but thought there was some sort of provision for a default choice, meaning every exchange would have at least one choice. Not true?

  • thom||

    If the exchanges don't work I suppose we'll be told that single payer is our only remaining option.

    "Well, we gave your capitalist market based solution a try, and it didn't work. "

  • Sevo||

    "Well, we gave your capitalist market based solution a try, and it didn't work. "
    That'll be the claim, regardless of the facts

  • thom||

    We're not dealing with people who care about "facts".

  • Heroic Mulatto||

  • Sevo||

    You've been flogging this; are you pissed at the NFL draft?

  • Heroic Mulatto||

    Nah, not a football fan by any means.

    8 years of marching band, freezing one's ass off in the bleachers does that to you.

  • Tman||

    I did that, even played drums and carried a stupid Bass drum for two years, and I still love Football.

  • fish||

    She's pretty easy on the eyes but the music sounds like a bag full of stray cats being beaten with sticks! I guess marching band will do that to you!

  • Heroic Mulatto||

    Let me guess, you have no soul.

  • Dweebston||

    I'll be honest, after the third repetition of "something something Ferrari something," I recalled that I don't listen to much music the lyrics of which I understand, let alone that furren jazz.

    So... yes! I've no soul.

  • Austrian Anarchy||

    So I guess the next solution is to make more laws to fix this one.

  • Drake||

    The government regulated the health insurance industry down to a handful of companies long ago. The states got into the act with a wild array of mandates - all different from every other state - that the insurers have to keep track of (with lots of lawyers and computer programmers) and comply with.

    Now, in that environment (a few highly regulated companies in an industry that isn't very profitable), they thought exchanges would magically lower prices and improve services? Assholes.

  • Palin's Buttplug||

    That will leave the exchanges, over which so many political battles have been fought, as the equivalent of butcher shops in the old Soviet Union, with open doors, and empty shelves.

    The market speaks.

    Of course insurers will have their existing business without the taint of cartel.

  • Tman||

    lately, people are saying that Obamacare will have damned little to offer most people

    "LATELY???"

    http://youtu.be/vD94dVu8lqQ

  • Austrian Anarchy||

    Yes, just since it was Hillarycare. As in "using the formation of the universe as the origin on the time line, lately people are saying that Obamacare will have damned little to offer most people."

  • k0nane||

    "A recent analysis by the American Medical Association found that a single insurance company held 50 percent or more of the market in nearly 70 percent of local markets nationwide."

    Translation: "A recent analysis by the American Medical Association found that Blue Cross Blue Shield holds 50 percent or more of the market in nearly 70 percent of local markets nationwide.

  • Sevo||

    "Translation: "A recent analysis by the American Medical Association found that Blue Cross Blue Shield holds 50 percent or more of the market in nearly 70 percent of local markets nationwide."

    Medical care is so screwed by the government, I'm not sure there's really an answer to this, but, did BC/BS figure out the market better than the competition, or did BC/BS simply rent-seek better than the competition?

  • The Last American Hero||

    In the earliest days, BCBS was somewhat innovative in finding a way to form a national alliance of plans operating in different states. Once they achieved critical mass, the rent seeking began.

  • Marshall Gill||

    And the rent seeking is extensive at this point. I will never forget how they lobby to have drugs which they now pay for made OTC sooner, so their clients would have to pay for it out of pocket.

    BC/BS: We use your premiums to lobby government to decrease our costs at your expense.

  • Sevo||

    The Last American Hero| 4.23.13 @ 9:22PM |#
    "In the earliest days, BCBS was somewhat innovative in finding a way to form a national alliance of plans operating in different states."

    So they worked the 'no cross state line' reg? Did they work to get it passed?

  • Stormy Dragon||

    Not necessarily. In some places, it's Aetna.

  • Sevo||

    Did they game the rules the same way?

  • Adam330||

    There's actually not just one Blue Cross Blue Shield. They are a bunch of them. Some are affiliated with one another and others are not.

  • Archduke Pantsfan||

    Currently on the twitterbox Matt Welch is being schooled on music from 1974.

  • Sevo||

    Hope he doesn't have to put up with a lot.

  • 10percenter||

    I still do not understand why the government is spending money to create "exchanges". It's just a market for health insurance plans, right? Isn't that what a broker does already?

  • Adam330||

    Because the exchange makes it easier to regulate them. Don't comply with our rules, you are banished from the exchange. It also supposedly was going to integrate the whole subsidy system into the purchasing system, but we'll see how well that actually works.

  • Politics Debunked||

    re: "That will leave the exchanges, over which so many political battles have been fought, as the equivalent of butcher shops in the old Soviet Union, with open doors, and empty shelves.

    Except they won't be, there will be some insurers who will obviously cater to that market, this is a favor to them. Obviously the prices will be too high but they will be touted as being better since they are government approved to be listed. Most of what is behind the healthcare mess, and Obamcare, is crony capitalism which benefits *some* special interest if you look closely.

    This provides details on the myriad ways the healthcare mess was created by crony capitalism and how Obamcare makes it worse, not better:

    http://www.politicsdebunked.co.....healthcare

  • Legate Damar||

    My brother is on the small council, if you will, of his state's attempt to establish an exchange. It's not going well at all. He's very measured and non-partisan with his speech (even in private) since he's a high-ranking appointed official in a purple state, but he assured me 10 months ago that there was a zero percent chance that his state's exchange would be up and running on time. And that was before the administration stopped providing useful answers to the states (now, requests for clarification are met with boilerplate statements that have been issued before, so they're functionally refusing to answer questions on how to do it.)

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement