Did Obamacare’s Champions Simply Misunderstand the Nature of the Uninsured Problem?

by Reihan Salam

Megan McArdle raises the possibility that the uninsured problem in the United States might not be quite as bad as many of us had assumed as (1) the number of people who are uninsured at any particular moment is considerably higher than the number of people who are continuously uninsured over a longer period of time; (2) we often rely on self-reported data to determine the size of the uninsured population and the incomes of the uninsured, and self-reported data isn’t always reliable; and (3) the fact that the transitional high-risk pools established under Obamacare attracted only 100,000 people rather than the 400,000 people HHS had anticipated is suggestive — if the pre-existing condition problem was smaller than expected (and we don’t know if that’s true, but that’s one possible reason for the underenrollment), something similar could be at work with the broader problem. Elsewhere, Megan addresses “doc shock” — how consumers are reacting to narrow networks on the exchanges. I’m a fan of narrow networks. Yet I’m also a fan of an approach to health-system reform that is less of a “big bang” than the Obamacare approach, and more of a gradual transition to a more coherent set of subsidies. The emerging political backlash against narrow networks is discouraging, but hardly surprising. 

Thomas Miller of the American Enterprise Institute has a short article on the kind of health system conservatives ought to build in a post-Obamacare world, which is well-tailored to a scenario in which the challenges facing the uninsured, and the underinsured, is not quite what Obamacare’s champions imagined it was:

So what should we do instead? First, allow willing parties to find each other in more transparent and accountable marketplaces. Dial back the ACA’s dense set of counterproductive benefits mandates and insurance price controls. Second, replace the unpopular and ineffective individual mandate to purchase Washington-approved insurance with new incentives to maintain continuous coverage instead. Individuals who stay insured would be assured of guaranteed renewability without new health-risk rating, plus protection against exclusions for pre-existing health conditions. Similar guarantees already existed for the employer group market under federal law almost fourteen years before the ACA was ever enacted. They should be extended to the individual insurance market.

What about the much smaller number of Americans who might nevertheless be at risk of being left behind? Greater reliance on state-administered high-risk pools that are more effectively financed (with significant federal taxpayer support) and better structured to set a reasonable cap on non-standard rates can ensure that no one will be “uninsurable” by facing premiums for coverage that are either unaffordable or unavailable due to their health status.

Over the next few months, we are going to see a new round of new legislative proposals aimed at replacing Obamacare, which will face tremendous scrutiny. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.