Further Thoughts on the Exchange Rollout

The unfolding disaster of the health insurance exchanges created by the reform law is grabbing all the headlines.  This will undoubtedly be a long-running situation, as it is not possible to quickly repair such a complex piece of software, particularly when there will be constant demands to put the fixes in place as quickly as possible, which means there will be inadequate testing.  The unintended blessing of the exchange malfunction is that most people have not been able to see either the premiums they will pay, the cost-sharing they will incur or the level of benefits.  Those few who have, have been startled by the large increases in their current plan’s cost, or if they were uninsured, by how much more the plans are costing than the administration suggested they would.  It is very likely that most younger and healthier people will not enroll and will take the risk that they incur a relatively small penalty.  This will create a worse risk pool than the administration or the health plans anticipated, which will lead to losses and higher premiums to cover those losses, which will make the plans even less attractive to younger, healthier workers.  This is a typical insurance “death spiral” and it will be very difficult to avoid.

What is really being demonstrated here is that there is no “fairness” about reform or forced insurance buying.  There is nothing fair about making health people pay for the health costs of unhealthy ones, particularly when so much of the spending on high-cost individuals would have been avoidable if they had engaged in healthier behaviors, like not smoking, not becoming overweight and getting some exercise.  Forced universal insurance removes the consequences of these unhealthy behaviors, which only encourages their spread, leading to even more health costs to be passed on to others.  What would be fair is to make individuals face the consequences of their behaviors.

Another aspect of “reform” which is being ignored is the Medicaid expansion, which gives individuals far better benefits and coverage than is available under either employer-sponsored insurance or on the exchanges for individual consumers.  This is grossly unfair as well and again, the unfairness is exacerbated by the fact that many of these Medicaid recipients engage in very poor health behaviors, for which they are not penalized at all and many make no attempt to work or are in low wage jobs because they made no attempt to get an education and gain job skills.  Medicaid should not be a federal program, there is no reason for that except the desire of Congresspeople to exercise even more power in an attempt to secure votes.  Shifting money out of states to create a federal program to provide health care for people in that state is blatantly wasteful and inefficient.  Medicaid should be turned back to the states, where the voters in each state can decide what they think is appropriate in terms of helping low-income people with health care costs.  And the states should mandate use of community health centers where ever that is possible and should penalize recipients who smoke, drink, use drugs, don’t lose weight and engage in other poor health behaviors.  Anything less makes suckers out of the taxpayers.

And if we want a true health reform that improves quality and lowers spending, individuals should be responsible for paying out of their pockets as much of their health care costs as possible, which only a catastrophic insurance that would cover unavoidable serious illnesses and conditions.  But don’t hold your breath waiting for this much more rational and fair system to arise.