NEW YORK TIMES: …Margot: It’s been a few weeks of bad news about the Obamacare marketplaces. On Friday, we learned that UnitedHealth has decided to pull out of Obamacare marketplaces in two states. The week before, the Blue Cross and Blue Shield Association put out a paper offering not-too-subtle hints that some members were losing money. Reed, you wrote recently about how surprising stasis in the employer insurance market means we can look forward to much smaller Obamacare marketplaces than most people expected when the health law passed. And the parade of struggling start-up insurer companies has extended to Maine’s Community Health Options, one of the co-ops that had long been held up as one of the most successful. Health insurers need to submit their rates to regulators in the next few weeks — or decide to exit markets. Should we be worried about a health insurance apocalypse?
Reed: I think people have a tendency to catastrophize, especially when it comes to Obamacare. UnitedHealth, which is one of the nation’s largest health insurers, has only reluctantly embraced the new market, and the company is always held up as an example of why the sky is falling and why Obamacare is going to crash and burn: If United can’t make it, no one can…
Margot: Yes, I think this is one of the contradictions of the Affordable Care Act’s design. The whole idea was that competition between the insurance companies would help to hold down prices, the way it does for, say, electronics or groceries. In order for that system to work, you need people to actually switch plans if their plan starts charging more than the competition. The fact that people are actually switching seems like a sign that this market is functioning as it was designed. But as you point out, all that churn sure makes it hard for an insurer to make money by investing in its customers’ long-term health. But the individual market, pre-Obamacare, also had a lot of churn… (more)
NEWSLANC EDITOR: Why not pass a Value Added Tax as have other advanced nations to ntirely fund national health care? Cost of the tax would be largely offset for those already partly insured by their companies through mandating that company cost of health care be added to workers pay.
Then everyone would be covered and most of the problems discussed in the article would no longer exist. It’s called “Medicare for everyone.”
As things already stand, half of American healthcare is funded through the government. Big components are the Medicare and VA programs.
