Thursday, May 30, 2013

Note to Ezra Klein: Obamacare is Much Worse Than Just Guesses

Ezra Klien at WaPo writes:
We’re in a bit of a whack-a-mole period with the Affordable Care Act’s insurance exchanges. Each week brings new data from a new state on the premiums insurers intend to charge on the exchanges. Some weeks bring revised data from old states. But it’s worth stepping back and keeping two things in mind. 
The first is that all these numbers are simply guesses. Really. That’s it. California’s numbers are guesses. Maryland’s numbers are guesses. Oregon’s numbers are guesses. Vermont’s numbers are just guesses. Everyone is just guessing.
Insurers have to decide now how much they’ll charge next year. Once they’ve settled on a price and the exchanges open, that’s the end of it. They can change the price in the second year. But they can’t change it in, say, February of 2014.
The problem is that insurers don’t know what their costs will be next year. So they’re guessing. They’re guessing who will enter the exchanges. They’re guessing who will choose to buy their coverage. They’re guessing whether healthy, young people will obey the individual mandate or pay the penalty. They’re guessing what price they’ll need to be competitive against other insurers, given differences in the networks, benefits, etc. But as they’ll admit to you with a bit of anxiety, they really are just guessing. If they get it wrong by being too expensive, they’ll lose customers. If they get it wrong by being too cheap, they’ll lose money.
We’re covering those guesses in the press. When they come in low, we say it’s good news for Obamacare. When they come in high, we say it’s bad news for Obamacare. But we don’t really know whether the guesses are right or wrong either.
This is somewhat true, but the real kicker is that the guesses, as I pointed out yesterday, are subsidized guesses. The government has rigged the system to provide major incentive for insurance firms to low ball their premiums by subsidizing low premiums, subsidies that must be paid for by other health insurance organizations and the federal government (that is, taxpayers). The big jump in premiums won't occur until after the subsidies are pulled in 2017. Right now, it's a scam so that MSM talks about the low premiums without the full background---, that is, the taxpayer supported subsidies of the insurance companies exchange programs.

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