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The press and Congress are trying hard to bring down President Obama based on the problems in the early implementation of the PPACA exchanges.  The screwed-up web site was bad enough. But that's getting fixed; even the Republicans realize that.  So instead they're harping on the most ridiculous thing ever, President Obama's statement that "if you like your current insurance, you can keep it".

To be sure, whoever came up with that phrase was blazingly incompetent. It sounds like something Mark Penn might have coined.  It began as a more qualified statement about group plans, not all plans.  But somewhere it got changed to include the individual market, where the Exchanges come in to play.  I suppose the President assumed that literally nobody liked their rotten individual-care plans.  But he forgot that a politically-motivated person can be dragged out to say just how much they love anything, if it hurts Obama!

So now Congress and the President are stumbling all over themselves to preserve individual plans that don't qualify as real insurance under the ACA.  They were supposed to go away, but now these fake insurance policies are getting at least a year's reprieve.  And the actuarial balance of the ACA is in danger, as the "young invincibles" are assumed to be the major customers of the defective plans, and their participation in the Exchanges is assumed to subsidize us older folks.  (I'm not sure if that's actually true or merely conventional wisdom, though.)

But who actually benefits from these potential last-ditch changes?  Follow me below the orange extra-strength Tylenol capsule to see why about 1% of the population is again having too much power over the rest of us.

The health care 1%ers aren't the filthy rich.  The filthies don't need help -- they can buy Platinum or even private Iridium plans, and they often get concierge care from exclusive medical practices. If they're rich enough they can self-insure, though their tax advisers no doubt recommend otherwise, since having insurance cuts your hospital charges (what the insurance companies pay, and your co-pay) by about 75% vs being uninsured.

No, the 1% here are the ones who just might benefit from existing individual health plans.  That's about it.  It's a tiny number of very healthy young people who actually might come out ahead.  Let's look at why.

First off, only about 5% of the population today has individual plans.  More people are in group plans.  And why not?  The individual market truly sucks!  Since I'm self-employed, I am potentially a customer for these plans, but since I actually do have a business, and don't qualify for subsidies, I was able to buy a small-business group plan for a group of one family, mine.  The Romneycare exchange came along but was still more expensive.  The ACA exchange is comparable to Romneycare so at least for now, I'm probably better off in the small-group market.

The pre-exchange individual market, what Republicans euphemistically called "patient-centered", is characterized by underwriting, in which the insurance company looks at each applicant as an individual, and decides what the risk is of insuring them.  Serious pre-existing conditions result in a flat no.  Otherwise, the price just goes up depending on your needs.  High blood pressure, blood sugar, or cholesterol, zap!  And if you do get insured, it's no guarantee of coverage.  In many cases policies got rescinded when a major claim was made.  In other cases claims were refused because they were assumed to be part of a pre-existing condition that the patient had failed to disclose.  And even if you were covered, the policies often had lifetime or annual caps that limited the insurance companies' responsibility.  It was, in large part, junk insurance, even if it was ridiculously expensive.

So why would anyone like this?  Let's take the 5% of the public now in this market and divide it into groups.

One group consists of people who already hate their plans.  Mostly they don't like the price, the lack of coverage, the limited networks, the deductibles, or some other generic problem in this farcical industry.  Many of these people might have tried to actually collect on their plans.  I suspect this is the largest share.  And they're waiting for the exchanges to work so they can sign up.  If they're very patient, they may have signed up already.

One group consists of people who don't trust their plans, but aren't sure if Obamacare would be better.  Some have never made claims against their plans.  Since most individual plans have high deductibles, people are likely to go years without meeting the deductible.  Since they know this, they assume the plans are covering catastrophic risk, and assume they're sufficient.  So they may be happy with their plans so far.  But if they get a better deal, they'll take it.

Another group consists of people who think their plans are the cats' pajamas, but haven't made claims on them yet.  They may have low premiums, but don't know what is covered or not.  So they're happy thinking they're insured, and concerned that the ACA-compliant plans will cost more.  They might however support the ACA if they knew what they were missing, what risks they were being exposed to.

The final group consists of people who actually like their plans and do understand them. These people are the ones who the underwriters are looking for, mostly young and healthy.  They have no pre-existing conditions and no serious risk factors.  They haven't made major claims.  So they get a reasonably low price for now.  Of course the price would skyrocket after their first major claim, but they don't expect that to happen to them.  These people actually do lose in Obamacare, since real insurance involves risk pooling.  While the ACA has helped hold down rates on average, not everybody comes out ahead, and these are the luckiest fraction of the individual market who end up paying more.

I estimate that this latter group, the ones at least temporarily hurt a bit by Obamacare, are about 1% of the population.  And the whole polity is bending over backwards to make sure they can keep the policy they like.  They're being trotted out all over the news shows.  It's bad politics and it's even worse for the overall system.  But the administration has allowed the conversation to be hijacked with these few people as the pawns.

The conversation needs to be re-oriented.  The PPACA allows everyone to have real insurance, and it finally puts a lid on rates.  It helps many more people than it hurts, and while the "hurt" is merely a slight increase in premiums, the help is life-saving.  We do incredibly stupid, costly things in the name of saving lives against "terr'ists", yet doing something smart that costs a few lucky people a little bit is looked at as a major disaster. It's time for some energetic responses, not fearful kowtowing.

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Comment Preferences

  •  asdf (1+ / 0-)
    Recommended by:
    Neuroptimalian

    I am one of those 5% who have my own plan, but I do not fit into any of your groupings.

    I like my plan, I like its coverage, and its price is much less than any plan available on the exchange.   I have pre-existing conditions, and  I have made many thousands of dollars in claims against the plan.  And, contrary to the nonsense you have written, the insurer is prohibited by law from cancelling my policy or individually raising my rates.  Instead, it is Obama who will be cancelling my policy and raising my rates.

    •  But, you forgot something... (0+ / 0-)

      But that's only because you live in one of the few states that really regulate that.  Everyone else is at the insurance company's mercy.  You are one election away from a rump GOP legislature changing all that.  If all states already had Obamacare protection, well, there would be no need for Obamacare.  Sadly, the opposite is true and the trend is to go bad.  For example the GOP idea to allow interstate policies.  Voila. Your protection would be over.
      BTW it is the insurance company that is canceling your policy.  All existing policies renewed this year were already grandfathered.  

      •  But it is the Administration Regs that drives it (0+ / 0-)

        The Administration created regs that set the cutoff for grandfathering in 2010.  They set it up so even the slightest changes to a policy would eliminate the grandfathering.

        Nothing forced them to write such a restrictive reg.  They could have used 2013 as the cutoff date, or had looser grandfathering qualifications -- they chose not to because it would have hurt ACA's financial viability.

        The key to ACA is forcing people to buy broader insurance policies -- but not all of the coverage is required by each customer -- this excess coverage generates revenue to pay for the newly expanded medicaid enrollees.

        So, this displacement of the market was -- in fact, expected and desired by the Administration.  What they didn't expect was the kind of reaction they are getting.  

        So to blame big insurance for simply following the Administrations regulatory scheme is crap.

        •  What insurance is "required"? (0+ / 0-)

          You suggest that "excess" coverage is not "required by each customer".  What coverage is excessive?  The point of universal coverage is to have everything covered by insurance or by patient payments, rather than eating uninsured coverage, which is a big expense for many hospitals and providers.

          If a plan has a payment cap, then if a person gets really sick (say, cancer, or needs a transplant), then their insurance will run out, and either they're sent home to die, or their coverage goes unpaid.  Not many people can swallow a $300,000 bill!  And new cancer drugs are generally priced in the thousands of dollars per month, even for just a pill, not because they cost much to make but because they can get it in the US and have patent protection. So having no prescription coverage is also a risk that leads to externalization (unpaid bills).

          ACA prices for young people are really low -- at least compared to us old pharts -- and they're allowed sub-bronze "catastrophic" plans.  I think they're a bad idea but it's a political compromise. Universal insurance should not be voluntary, and it should not be based on a guess that one doesn't need real insurance, just a plan that sends you a little when you need a lot.

    •  What is the coverage? (0+ / 0-)

      Most of these cheaper plans have benefit caps.  That makes a big difference in actuarial cost.  You might like it because you don't think you'll hit the cap but it's not hard.

      A few states do ban pre-existing condition exclusions, but they're very much in the minority.

  •  Kaiser Foundation surveyed consumers who (0+ / 0-)

    buy their own insurance in the individual market. I thought you might be interested in the report.  At the linked page, scroll down and click on 'Report" (.pdf)

    The survey identifies the demographic characteristics of individual insurance buyers and it also looks at their attitudes and opinions. There are approx. 14 million consumers and the policies are diverse, including a guaranteed issue offering for people who would be disqualified by medical underwriting.

    It's definitely not one uniform type of consumer or one type of policy.

    The insurance companies don't want to keep these policies because they expect the individual market to wither in the next year or two.  50% of the policy holders drop their insurance after a year.  That business is expected to migrate to the exchanges. As the old risk pools dwindle, they will become impossible to insure. Rather than allow that portion of their business to drift in unexpected directions, the insurers thought they could cancel millions of policies and blame it on the Affordable Care Act.

    There is no existence without doubt.

    by Mark Lippman on Sat Nov 16, 2013 at 07:38:18 PM PST

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