2018 MIDTERM ELECTION
Time: D H M S
MIT health economist Jonathan Gruber was the Republican Party's favorite stock villian during the absurd King v. Burwell (formerly Halbig v. Burwell) Supreme Court saga which raged throughout the first half of 2015, in large part because of his tendency to have a bad case of diarrhea of the mouth when speculating about the reason why certain sections of the ACA were written the way they were.
Anyway, he was one of the players during the establishment of the ACA, having helped put together the overall "3-Legged Stool" model for the individual market healthcare exchanges in the first place:
At the health law’s core is a “three-legged stool” approach to reforming these markets: new rules that prevent insurers from denying coverage or raising premiums based on preexisting conditions, requirements that everyone buy insurance, and subsidies to make that insurance affordable.
...The truth is that all three legs of the stool are necessary to assure affordable coverage. The first “leg” is regulations that require insurance companies to offer insurance to any applicant with premiums based on age (and tobacco use) and not on underlying health status. Insurance companies are also prohibited from excluding coverage due to preexisting illnesses.
This is a highly popular reform, but it doesn’t work in a vacuum. If insurance companies must charge the same price to people whether they’re sick or healthy many healthy people will view this as a “bad deal” and not buy insurance. This results in higher prices that chase even more people out of the market. The result is a “death spiral” that leads only the sick to purchase insurance at very high prices. Several states tried such community rating reforms—offering health insurance policies within a given territory at the same price to all persons without medical underwriting—in their nongroup markets over the past two decades, and sharp rises in insurance prices ensued along with rapidly shrinking market size.
This fact motivated Massachusetts in 2006 to add a second “leg” to the stool: a requirement that all residents purchase insurance. In this way the state could ensure a broad distribution of health risks in the market and fair “communityrated” pricing to all.
The problem with this solution in a vacuum, however, is that many families cannot afford health insurance at those community-rated prices. Massachusetts therefore added a third “leg” in the form of subsidiesthat make health insurance affordable for those below three times the poverty line (as well as some targeted exemptions from the mandate for those who were above the subsidized level but could not afford coverage). This reform has shown very encouraging results, with the number of uninsured in the state falling by 60 percent and nongroup premiums falling by 40 percent.
Anyway, Professor Gruber is back today with a piece in Politico in which he offers his 2¢ about how the ACA is faring a year after the brouhaha over King v. Burwell has settled down.
He talks about the Medicaid expansion "woodworker effect", which I've written about umpteen times...
One big reason for Medicaid’s surge is the so-called “woodwork” effect: increased enrollment among people who were eligible under the old system but who didn’t “come out of the woodwork” to sign up until the concentrated effort to get people enrolled under the new law. This woodwork effect has occurred in both expansion and conservative non-expansion states. And it likely arises from factors like the individual mandate to get covered, streamlined enrollment which makes it easier to sign up and general attention to health insurance coverage under the law.
He talks about the fact that the CBO vastly overestimated how many employers would kick their employees off of their existing ESI coverage onto the exchanges (which, again, I've written about many times):
That’s not what happened. In fact, employer coverage has not eroded at all, according to most recent estimates. My recent work with Harvard School of Public Health researchers Molly Frean and Benjamin Sommers confirmed that neither eligibility for large tax credits in the exchange, nor eligibility for Medicaid appears to have led individuals to abandon their preferred workplace insurance. Nor have employers by and large scrapped covering their workers.
We’ve found that enrollment rates in states that were more supportive of the health law and set up their own exchanges were roughly twice as high as those states that relied on the federally run exchanges. There are exceptions, though. For instance, even though Florida has a Republican governor who vehemently opposed the law, on-the-ground advocates have led a robust and successful enrollment effort there.
...and he goes into several of the causes of the unusually high rate hikes being asked for this year, including the Risk Corridor Massacre, the "Invest then Harvest" carrier strategy (which mostly backfired), the SEP conundrum and the carriers simply flat-out underestimating just how expensive their new enrollees are to treat.
It's a good article, highly recommended.