I’m not going to burden you with many personal thoughts on the PPACA, hereafter referred to as Obamacare, since they can be boiled down to a simple” I hate it” statement. What I am going to do is offer several really good links that I’ve curated from lots and lots of articles which I’ve read on the subject over, say, the last 10 days. They aren’t the most incendiary and actually are more analytical than they are partisan.
One specialist said that as many as five million lines of software code may need to be rewritten before the Web site runs properly.
1. There is zero chance that rewriting five million lines of code is the answer. Either the solution is a lot simpler or there is no solution other than to start over.
My instinct from the outset was that starting over was the right answer. I am not alone.
That’s the start of an excellent blog post which posits that the real problem here is one of management and organizational structure. Mr. Kling notes that the government is attempting to create the world’s largest health insurance brokerage and didn’t recognize the task it set for itself, let alone organize for the creation. The article isn’t pro or con Obamacare, just a rational review of the business disciplines necessary to do what the government purports to want to do.
Yuval Levin dispels the myths surrounding the supposed “death spiral” adverse selection could cause Obamacare. As he points out, the law is written in such a way as to insulate participants from rate increases assuming they’re eligible for subsidies. How does it do that? By getting the taxpayer to pay for any premium increase while holding the payment of subsidized participants constant. Effectively, all the talk you’ve heard about the “death spiral” is strictly speaking specious. But, there’s always a but isn’t there, complex systems undergoing stress have a tendency to break at points other than that of maximum stress.
In other words, if premiums for coverage purchased in the exchanges were to double or triple in 2015 because of severe adverse selection, people eligible for subsides would still pay the same amount they did in 2014 (assuming their incomes didn’t change) and the federal government would pay for the entirety of the increase. Subsidized beneficiaries would therefore not feel the effect and the healthy among them would not necessarily have much reason to flee the exchanges.
The Congressional Budget Office estimates that about 86 percent of the people who buy coverage in the exchanges in 2014 will receive subsidies. The technical problems limiting enrollment may mean that figure is even higher (since the incentive to enroll is much greater if you’re eligible for subsidies than if you’re not). Those individuals would not feel the effect of second-year premium spikes, which means the result of such spikes, if they were to happen, would likely not fall into the usual pattern of an adverse-selection spiral.
Instead, the sort of severe adverse selection the exchanges may experience would dramatically increase federal spending and would drive unsubsidized exchange participants (other than those in very poor health) and many insurers out of the exchanges. It could also destabilize the portion of the individual market that remains outside the exchanges, since it will not be possible to keep the parts of the individual market that are inside and outside the exchanges quite separate (in no small part because Obamacare requires insurers to treat plans they sell in those two markets as drawing on a single risk pool). And it would be difficult to shield the employer-based insurance system from such effects too; if the exchange system were to become simply an ultra-expensive and poorly formed high-risk pool, the entire insurance system would pay the price.
Do read his entire piece. It’s not nerdy and it will likely give you a good sense of the architecture of the bill and the consequences, both designed and unexpected, of that architecture.
If you’re not reading Bob Laszewski then you have not interest in Obamacare or you’re probably misinformed about what’s going on. He’s an industry insider who so far as I can tell has no partisan axe to grind. He’s content to analyze the developments of the law in relation to the reality of the health insurance market. The post I’ve linked to is a discussion of the problems that the Obamacare IT system is encountering with the interface with the insurance companies. It’s not a sexy as malfunctioning websites but every bit as problematic. Take a look at it, read some of his past posts and bookmark his site if you want to stay up to date on what’s happening, positive and negative.
Finally, a little bit of humor to spice up a pretty dull subject.
Jeffrey Zients, a member of the President’s staff, has been designated as the point man to turn around Obamacare. He has been billed by the White House as a management consultant guru type with loads of private industry experience in consultancy. They omitted the part about his affiliation with rapacious, greedy, job killing private equity funds. Turns out that one of his past employers was Bain Capital. Oh, the irony.
And Megan McArdle has been doing great work reporting on Obamacare among lots of other things. Today in an article about the adverse selection problem she suggested that there was a date which we should circle on our calendars.
As the deadlines approach, we’ll probably see the younger and healthier people rushing to sign up. If we don’t see a spike in purchases starting on the day after Thanksgiving, we should get really, really worried. But that’s still a long way off.
To which one of her commenters responded that she had given new meaning to the term Black Friday.