The line taken by the president’s speech [on October 21], and by the White House more generally, is that while these problems are unfortunate, they’re just not that big a deal. “It’s important to remember the website alone is not the Affordable Care Act,” Jay Carney said last week.
This seems to be the administration’s line every time anything goes wrong with this system. In July, we learned that the employer mandate was being delayed, but don’t worry, because that’s not really essential. Now we learn that the much-touted exchanges aren’t really essential, either — in his speech this morning, Obama helpfully pointed out that you could also sign up by phone. One begins to wonder if Obamacare consists of any actual thing, such that one could ever definitively say that it had happened or not happened . . . that it was working or not working. Perhaps Obamacare is just a dream that lives on in the hearts of the men and women who designed it. As long as they draw breath, Obamacare did happen, and it is working.
Perhaps. But that is not the impression that I was given when those daring dreamers were working to pass it. Back then, Obamacare’s architects frequently spoke of the “three-legged stool”: guaranteed issue, community rating and the individual mandate. Guaranteed issue meant that no one could be turned away. Community rating meant that insurers couldn’t effectively deny insurance to sick people by quoting them policies that cost a squintillion dollars. And the individual mandate prevented the pricing death spiral (known to economists as an “adverse selection problem”). Take away any one of the legs, and the stool would tip over.
But there was also a fourth leg, always acknowledged but not always numbered: the subsidies. Without them, the mandate wouldn’t work, either politically or practically, because you can’t order someone to buy insurance that costs 50 percent of their take-home pay. And the wonks, and the journalists covering them, tacitly understood that there was a fifth leg: the exchanges. You can’t order people to get insurance if they don’t know where to buy it, or if the only quote they got from the one company they called cost more than they could afford.
The exchanges were also broadly understood to be needed to get young, healthy people into the system. Somewhat naturally, almost every story you’ve seen about a new enrollee — including those told by the president this morning — has focused on someone who couldn’t buy insurance before, or who had very expensive insurance. But it’s not surprising that those people are fighting through the system to get coverage; they would pull themselves to the top of Mount Rushmore using only their teeth if that’s what it took to get a cheap insurance policy. What we need to know is what is happening among the people who didn’t need Obamacare to help them buy insurance, because insurers would be perfectly happy to sell them a policy without it. Those are the folks whose premiums will cover treatment for the rest.
As Yuval Levin says, “The healthy young man who sees an ad for his state exchange during a baseball game and loads up the site to get coverage — the dream consumer so essential to the design of the exchange system — will not keep trying 25 times over a week if the site is not working. The person with high health costs and no insurance will.” One might add that he’s probably not going to call into the call center, wait three weeks to get his PDF application mailed to him, review it and send it in, wait another week or two for notification about his subsidy eligibility, and then (finally!) call back yet again to check out his policy options. Some will, of course. But at every tedious step, you will lose people.
In other words, whatever the administration says, the exchange is Obamacare — at least, the Obamacare I was told about during the debate over health-care reform. The one that didn’t destroy the individual insurance market, or cause costs to spiral out of control.
—Megan McArdle. To put matters a bit more pithily, increasingly, it looks like Obamacare : Barack Obama : : Katrina: George W. Bush. Except that Obamacare may actually cost more lives.