It’s not news when the train doesn’t wreck

With the central element of the Affordable Care Act (ACA) — the health care exchanges — slated to go online in October, there’s been a lot of concern about how these exchanges will be implemented.  17 states (including Minnesota) have elected to build their own exchanges, 27 states are defaulting to the federal exchange, and seven states are doing a hybrid model based on the federal exchange.

Opponents of the law, naturally are going all gloom-and-doom on the implications (even going so far as to take a quote by Democratic Senator Max Baucus where he worried about a “train wreck” out of context to further their cause).

But what if it doesn’t turn out to be a train wreck after all?  There have been some interesting developments in recent weeks that lead one to believe that strong, proactive management of exchanges by states can lead to positive results.

In Maryland, the largest insurer in that state (Care First) proposed a shocking 25% increase in premiums for 2014, which was widely cited as a troubling statistic for the ACA.  But nearly every other insurer in the state has proposed premium increases below 10%.  Care First either stands to lose a significant amount of market share, or they’re going to have to lower their rates.

In California, meanwhile, proposed premiums on their health care exchange have come in significantly lower than predicted.  2009 Congressional Budget Office projections anticipated that a “silver” plan (one that covers 70% of expected health care costs) would have a yearly premium of $5,200, while an actuarial firm projected an annual premium of $5,400.  When the actual prices were released yesterday, the actual average yearly premium for a “silver” plan is going to be about $3,300, or 35% lower than the CBO projection.

Oregon’s health care exchange is seeing similar patterns to Maryland.  After releasing the costs for all of the plans that will be on its exchange earlier this month, two large insurers have asked to come back and lower their prices after discovering that some competitors were pricing the same coverage for less than half the cost.

Meanwhile, we’ve seen evidence that health care inflation has been slowing substantially.  Provisions of the ACA have contributed to this trend and further policies, such as increased use of competitive bidding for Medicare-paid medical equipment slated to roll out between now and 2016, should only continue it.

These sorts of things should provide us here in Minnesota with hope that our health exchange — named MNSure — will be able to deliver coverage to citizens at a reasonable cost.  Minnesota has always worked hard to give our citizens access to health care and that should only get better under the ACA.

From a political perspective, we too should also remember that what voters tend to value about these sorts of programs is the real-world impacts on their lives.  Opponents of Medicare thought that implementation problems (that did happen) would end up undermining the program and resulting in its repeal.  Opponents of Medicare Part D thought the same thing.  In both cases, what opponents of those programs discovered is that voters ultimately liked the fact that they were guaranteed health care as a senior citizen and that they liked programs that helped them pay less for their prescriptions.  Outright repeal of these programs today is essentially unthinkable.

Ultimately, I think we’ll find the fact that the ACA ensures that you’re always going to have access to our health care system in a reasonably affordable way is going to outweigh any implementation problems at the beginning of the program. In fact, if states that are actively managing their exchanges end up producing better results, it may become a political liability for states that have chosen to actively fight implementation of the law.  After all, if dysfunctional California can build a working exchange with lower-than-expected health insurance premiums, why can’t Texas?

[Image courtesy of the Alexandria Echo Press, is of a 1904 train wreck in Osakis.]


10 Responses to “It’s not news when the train doesn’t wreck”

  1. In order for an accurate comparison of rates in Maryland, would you have to know what each insurers rates currently are, and what they covered, versus what they are now forced to cover, and hence the amount of the increase?

    In other words, the 25% increase is directly due to ACA mandates for coverage which will increase rates for ALL insurance companies. The only difference in rates of increase, depend upon each plans current coverage model versus ACA mandates.

    CareFirst is likely lower than most due to their coverage model, that you voluntarily choose when picking a plan. It should also be noted that BCBS is a non-profit health care model. So it’s certainly not about greed, but rather about keeping premiums low, which is no longer possible under the “affordable” mandates.

    • Well, no. One of CareFirst’s plans was selected as the benchmark plan for Maryland, which indicates that they are pretty closely aligned with the requirements of the law — and the plans for which they are requesting large increases are not radically different in coverage.

      It is true that there is a wide variation of proposed rate swings across the CareFirst products, but even for the benchmark plan, they are riding at the high end of the overall distribution among all of the companies.

      • The link is meaningless as to how CareLink rates compare to other providers, and as to why they are proposing 25% increases. Nor do I see anything on this as it relates to changes brought about by Un-ACA.

    • It’s a horribly flawed comparison. See these takedowns:

      “And while all of us are susceptible to hyperbole or selective intepretation from time to time, Roy’s column was something else entirely. He plucked out two examples of people who would pay more in California, pretended they were emblematic of the system as a whole, then accused other writers of being irresponsible.”

      “Roy got his 146 percent by heading to, running a search for insurance plans in California and comparing the cost of the cheapest plans to the cost of the plans being offered in the exchanges. That’s not just comparing apples to oranges. It’s comparing apples to oranges that the fruit guy may not even let you buy. …

      Comparing the pre-underwriting price of this plan to those in Obamacare’s exchanges is ridiculous. The plans in Obamacare’s exchanges have to include those people. They can’t turn anyone away or jack up rates because of a history of arthritis or heart disease.”

      • So that’s why Obamacare is so expensive. Duh. If you have to cover all of these things, the rates are going to naturally go up. That’s just a given. And we’re seeing this from the day the laws were implemented. there is nothing affordable about Obamacare. The government cannot mandate something for nothing.

        • Rates go up for some and down for others, and you get the assurance of still being insurable even if you get sick. Not to mention we end the free-rider problem.

          • Who can rates possibly go down for? And how does this prevent free-riders at ER’s? Illegals are participating in Obamacare now?

            • Who? Several groups, like people who have chronic conditions or people who are approaching 65.

              It prevents free-riding by citizens. The illegal problem is still out there, true (although it’s my understanding that illegal immigrants would be able to buy policies on the exchanges without subsidies under the ACA).

              • If you can find one documented person who has lower insurance rates due to Obamacare I’ll donate $100 to the Red Cross.

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