ObamaCare Grapples With Tough Dilemmas That the Market Solved Long Ago

An advisory panel of experts set up by the Obama administration gave this expert advise yesterday, according to the Washington Post: The administration ought to emphasize affordability over breadth of coverage, when implementing the law.

 Explains WaPo:

 [The Affordable Care Act aka ObamaCare] sets out 10 general categories — ranging from hospitalization to prescription drugs — that all new insurance plans for individuals and small businesses must offer starting in 2014. It also states that the scope of the essential benefits package should be equal to that of a "typical employer plan."

But Congress did not specify whether this referred to the more generous plans sponsored by large employers or the more minimalist versions bought by many small businesses. And it gave Secretary of Health and Human Services Kathleen Sebelius ultimate authority to decide both how much more detailed to make the package and what to include in it.

If she adds little to the legal requirement, the market could end up split between cheap, bare-bones plans of use only to the healthy, and exorbitantly priced full coverage plans financially out of reach of many sick people who need them most.

If she adds too many requirements, premiums for all plans could soar — with consequences for not just individuals but the success of the law as a whole. That's because many healthy people could decide to pay a penalty instead of buying pricey insurance, skewing the risk pool toward the sick and causing premiums to spiral higher.

That would also cause a spike in the subsidies for health insurance premiums, which the law requires the federal government to offer low-income people, hammering the national budget.

The committee proposed that the law be interpreted to require that the scope of benefits be equivalent to a typical small-employer plan.

In other words, Sebelius' dilemma is whether or not to take away a perfectly good option—catastrophic coverage—that the market currently offers patients. And the expert advice is that she should not. I'm not sure whether to applaud this dawn of wisdom or weep that the Obama administration needed a panel to tell it the obvious.

What's next? An expert panel advising the administration that GM should, after all, keep its wheels round?