Thursday, October 31, 2013

Shock Til You Drop

Now that the Republicans have suddenly discovered that they’re so concerned that Obamacare works — after years of trying to kill it — they’re latching on to the straw that was handed to them when insurance companies began sending out cancellation notices to people whose policies don’t meet the minimum standards set by the law.  Horrors!  The whole law is crafted on a lie!  Rate shock!  Augh!  Impeachment!

Except that’s nowhere near reality.  Brian Beutler explains.

Some people who receive these notices will be pleasantly surprised to find that the most similar new plan offered by their current provider is actually cheaper than their old one. Others will be told that a similar plan will cost more. What they won’t be told, because insurers don’t want to downsell or advertise for their competitors, is that they’re likely to find a different plan available through their state exchange that’s closer to the same price or cheaper. If they can’t find a cheaper one, then there’s a decent chance that federal subsidies will reduce their out-of-pocket costs. It’s only the remainder — and it’s likely to be a small remainder — that genuinely will have no choice but to either pay more money (in some cases significantly more) or pay a fine and go without coverage.

That remainder will be higher than it needs to be if people are discouraged from shopping around. Healthcare.gov isn’t helping in that regard. Neither are insurers or the conservatives who are pretending to care about rate shock.

And that’s really the point I was making on Monday. Conservatives only care about these problems insofar as they can be used to trash or undermine the law in its entirety. That’s why they never, ever mention any of the millions of people who will or are already benefiting from the law. If they did, they’d have to entertain solutions to these problems that don’t essentially kick a tent pole out from underneath the system.

The disruption we’re seeing in the individual insurance market is mostly by design. And it’s mostly a good thing. Until October, the individual market existed to sell insurance to people who needed it least. Rates were low for healthy people precisely because their old, sick neighbors were priced or locked out of the system. They were also low because many of the policies on the market didn’t actually fulfill the function of insurance, which is to hedge against financial catastrophe.

Obamacare eliminates each of these enormous flaws by 1) regulating insurance so that it covers lots of stuff and genuinely protects people from medical bankruptcy, 2) making plans available and affordable to the ill and elderly by banning price discrimination against sick people, and only allowing insurers to charge the elderly three times as much as the young for equivalent coverage, 3) providing subsidies to the poor and middle class to make coverage affordable.

In other words, the piece-of-crap policy you got from Flighbynight Medical, the one that wouldn’t cover you if you had a pre-existing condition or had a deductible that was higher than what you paid for your first car, is no good anymore.  You’re better off getting rid of it.  The exchanges — when they work — will find you something better and probably cheaper, and if they cost a little more, you’re getting a lot more for your money.  To continue the car metaphor, you’re being asked to trade in your beat-up 1988 Yugo with the shot tranny and no brakes for a brand new Mustang and the government will help you make the payments.

It’s not a perfect law; show me one that is.  And the carrying on by the GOP when they really don’t give a shit about the people who are covered by it in the first place isn’t a shock, either.

4 barks and woofs on “Shock Til You Drop

  1. people whose policies don’t meet the minimum standards set by the law

    There needs to be a lot more noise about this. All the clamor so far is the Reichwing nonsense about people’s policies getting cancelled. Nobody is talking about the fact that the insurance industry has for decades sold worthless paper to folks who bought it assuming it was actual health insurance – and getting for their troubles and their dollars the privilige of being told that nearly everything their medical professionals recommended wasn’t covered. The real scandal isn’t that these people are now being moved to something that will actually work for them – it’s that the insurance industry has been pushing snake oil all this time and nobody has cared (and some don’t care even now).

  2. I’m reminded of the extended warranty I bought for my new 1984 Subaru. It was supposed to cover the entire powertrain arse to tip, but when the oil sender unit blew out and drained the crankcase in the middle of Longmont, Colorado, it turns out it was the ONE piece not covered by the warranty. A couple of calls to the Boulder County District Attorney’s Office of Consumer Protection took care of it.

    BTW, do you know anyone who has ever bought an “extended warranty” for anything more than once?

    • NO.

      But then again, it was a 1984 Subaru: you really DID want an extended warranty on one of those. Remind me to tell you about the time Dad’s caught fire at the York toll plaza on the ME Tpk.

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