Is health care reform finding its footing—or fatally flawed? MIT economist and Affordable Care Act (ACA) expert Jonathan Gruber and Cato Institute Director of Health Policy Studies Michael Cannon share opposing viewpoints on the current state of reform.
Obamacare has so far functioned as an income transfer program in which middle income people finance Medicaid expansions and health insurance subsidies for the poor and near-poor. Most uninsured middle class people have so far declined to purchase insurance because the coverage isn’t worth the price. Their taxes are subsidizing coverage for others. It seems unfair to hit them with an additional tax for refusing to buy insurance for themselves, especially when that coverage is less valuable than the coverage they are subsidizing for others.
Obamacare’s “pay more, get less” regime has made remaining uninsured an economically rational decision even for millions of people who are eligible for subsidies. Which may explain why the government is underachieving in its efforts to persuade millions of people to buy a product they just don’t think is worth the price.
A patchwork of experiments across the country are trying to better manage these cases. The Center for Health Care Strategies, a policy center in New Jersey, has documented such efforts in 26 states. Some are run by private insurers and health care providers, while others are part of broader state overhaul efforts. The federal government is supporting some, too, through its $10 billion Innovation Center, set up under the Affordable Care Act.
Poor Krantz still believes the ultimate solution is “single payer.” But another liberal who encountered 1095-A hell has seen the light. San Francisco resident and former Obama supporter Melissa Klein exposed her ordeal with Covered California last week. The state exchange botched her 1095-A and then insisted she had never enrolled despite invoices she showed them documenting her premium payments. After hours in OPH, her case remains unresolved, and she can’t file her taxes. How is it, she wondered, that “Amazon can ship something to NYC in an hour,” but the White House and Covered California “can’t create a health care system that functions”?
Klein concluded, better late than never: “I no longer believe that the government should mandate health care. … A great idea is just an idea if you can’t execute. And the government has proved time and time again, it can’t execute.
One problem is that only about 5% of families have children and are supported by low-wage earnings; another is that higher minimum wages cause some workers to lose their jobs. Advocates of a higher minimum wage argue that the number of workers who gain far exceeds those who lose. Whatever the credibility of this calculus, there is yet another problem: If someone’s income is arbitrarily increased thanks to a legislatively mandated wage increase, someone else must pay for it.
Since economic evidence indicates that higher minimum wages don’t significantly affect employers’ profit rates, advocates instead say that employers will pass on these increased labor costs by raising the prices of their goods and services—and that “society,” or more affluent consumers, will pay these costs.
But will low-income families earn more from an increase in the minimum wage than they will pay as consumers of the now higher-priced goods? My research strongly suggests that they won’t.
As the federal government and states continue to refine their exchange websites, they may want to take fuller advantage of insights from behavioral sciences regarding the influence of design architecture on people’s choices. For starters, we believe that the websites should downplay powerful connotative labels such as bronze, silver, and gold. In addition, they should deemphasize complicated tables of financial information that lay out cognitively overwhelming details about premiums, copayments, deductibles, out-of-pocket maximums, and the like. Instead, they should make it easier for shoppers to estimate total annual costs under a series of plausible scenarios, such as expected utilization based on previous spending history, as well as under best-case and worst-case scenarios. Finally, when the influence of design architecture on choices is unknown, designers should partner with researchers who can run experiments to inform the process.
Health insurance exchanges have the potential to revolutionize U.S. health care markets. To maximize this potential, we think it’s incumbent on states and the federal government to minimize the potential for the public face of these exchanges to bias people’s choices. Supreme Court Justice Louis Brandeis once observed that a “State may . . . serve as a laboratory; and try novel social and economic experiments.”5 The current health exchanges represent one very complicated experiment; we hope that state and federal decision makers are observing the outcomes.
All told, four million adults in nearly two dozen states fall into the gap, and Texas has the most, nearly one million. Though it is impossible to know how many of these people are trying to bolster their incomes, enrollment counselors around the country say they routinely help people think through whether they can scrape together extra income to qualify for financial help.
“If they are self-employed and clean houses, we calculate how much do you get per house?” said Elizabeth Colvin, who runs an enrollment program through Foundation Communities, a nonprofit group here. “Could you do one extra house a month?”
“Sometimes they’re like, ‘I’m doing all I can; I can’t do any more,’ ” she said. “But then sometimes they’re like, ‘Yes, I’m actually looking for a part-time job right now.’ ”