Saturday, April 05, 2014

Klein on PPACA (Obamacare)

Klein is right on about some big things:
  • Obamacare is here to stay, and Republicans would be well-advised--politically as well ethically--to focus on improving it, not continuing to pretend they can end it.
  • Doing so would give them an opportunity to pursue a favorite issue, the need for malpractice reform (maybe they could take some real chances, make that their own Obamacare moment, and actually do some lasting good).
  • The fact that each state has so much leeway in how to implement it is crazy and needs to be fixed.
But off-base on some important details, inherent in the nature of health insurance:
  • There should be a broader variety of options (lower premiums, higher cost-sharing)
  • Likewise a broader variety of coverages ("if a family believes it receives all the mental-health counseling it needs through its church", it should be required to pay for that coverage).
The problem here is self-selection. Should young people be able to opt-out of coverage for heart disease? Fit people out of diabetes? Down this path lies expensive complexity that ultimately adds no efficiency to the system.

Likewise the idea of more options for cost-structure. I already am in the camp that believes the options that exist are problematic. If I expect to be a low-utilizer, then I will go for the cheapest coverage (bronze). Even if I guess wrong, and get diagnosed with an expensive chronic disease, in a guaranteed-issue environment (aka, Community-Underwriting), I only have to wait the remainder of the year, for the next open enrollment, to sign up for a much more generous plan.

So the point is that self-selection will make having too many options actuarially un-viable. Better to make the most of the situation by keeping it stick-simple, and thereby reducing administrative costs.

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