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Home Publications Blogs Beat the Press NPR Expert Tells Listeners that Republican Controlled States May Keep Residents from Getting Insurance

NPR Expert Tells Listeners that Republican Controlled States May Keep Residents from Getting Insurance

Monday, 21 October 2013 07:20

That was the implication of a claim by Bob Laszewski, a health policy analyst, interviewed on Morning Edition. Laszewski told listeners that the problems with the mechanics of the exchanges could be a problem for insurers:

"They're very worried about only sick people showing up for coverage, because only sick people are willing to go through the gauntlet."

If it turns out that the exchanges in the states run by the federal government produce such a serious skewing of applicants that it becomes unprofitable for insurers, then it's possible that these states would end up without insurance provided through the exchanges. This would be an interesting outcome since it would mean that the states that refused to set up their own exchanges will have succeeded in denying their residents of the benefits of the Affordable Care Act. On the other hand, states like California, New York, and Kentucky, which did set up their own exchanges, seem to be signing up people with few problems, so presumably the insurance markets in these states will work as expected.

As a practical matter, it really doesn't matter if the people who sign up in the first few weeks are skewed toward the sicker segment of the population. It will only matter if this continues to be the case through 2014.

Comments (6)Add Comment
written by skeptonomist, October 21, 2013 9:00
The penalty for not buying insurance is trivial the first year, so it seems to be a no-brainer for young healthy people to refuse insurance, and buy it later if they get sick. So probably there will be some skewing, and it may go on for several years until the penalty reaches maximum. But are insurers "very worried"? Whether they are or not, they are offering good rates. This seems to indicate that they are committed to the program, although I suspect that they may be planning to raise rates later. For this and several other reasons things are not going to settle down for several years - insurance companies are probably aware of this.
Stop Calling Obamacare Insurance
written by Last Mover, October 21, 2013 9:03

This highlights a major flaw of what is called health care "insurance".

True insurance is about random risk. Any pre-existing condition that influences that risk must be accounted for when selling such insurance under competitive market conditions.

When pre-existing conditions are instead used to offset each other, like young versus old, sick versus healthy and so on, that is not insurance. That is mere averaging of the cost in question.

This is what health care "insurance" has morphed into in America. This is how the insurance cartel maintained its grip on market power through Obamacare, through the individual mandate that forces everyone without insurance to contribute anyway.

It is not "insurance". It is a framework designed to continue protecting private insurers as useless, wasteful bill collectors for health care providers. The difference is now they must compete to some extent on price ... to continue collecting an unnecessary cost of health care.

This is what most of the complexity of terms and conditions for Obamacare is about, maintaining the right of insurers to collect their fees at the subsidy trough before the rest gets split up for provider cost. It still wins out in the end because average cost falls over a broader base.

If it was really about insurance, there would be no concern whether enough younger, less sick members were signing up compared to too many older, more sick signing up. Each group would pay according to its risk (including subsidies built into Obamacare for low income).

That is not what happens. To claim that Obamacare could fail because not enough younger, less sick members are signing up, is equivalent to admitting that when they do sign up, they are getting overpriced insurance they do not need, where the excess is siphoned off to pay for the older, more sick.

It is cost averaging plain and simple, not insurance. The average paid by one side who incurs low cost on the system, is used to subsidize high cost incurred by the other side. That is why there is concern not enough low cost users may sign up.

If it was true insurance, it would not matter.
last mover
written by ethan, October 21, 2013 3:55
I really enjoy your comments -- sarcastic ones and serious ones are both informative -- but when you say "If it was .. " instead of "If it were ..." I begin wondering if you isn't a computer not a learned English speaker.
How to make your state non-competitive
written by deanx, October 22, 2013 4:47
I have a co-worker who moved from New York to Florida and was shocked he had to wait until Obamacare to get any coverage for a pre-existing condition. NYS has had 'guaranteed issue' for years now and didn't realize this would effect him.

My daughter is a successful entrepreneur and small business owner. She was shocked at how much she will save in the NYS exchange, it effects her business planning.

This is all to say, States with Good Insurance will become more competitive, especially for the young innovators.
written by watermelonpunch, October 22, 2013 11:45
@ ethan ... Britain English is non-Native English to Americans, ironically. And the part of the U.S. where I live, dangling participles & ending sentences with a preposition, are absolutely part of the local dialect, let alone to mention conjugation. LOL ;o) :P

@ deanx: New York State has been pretty progressive with stuff like this all along.
But right now, states that have governors & state reps, who want to shove it to the people (like in PA), have it in their heads that they can make the state competitive by making it lousy for the people and great for businesses - big businesses... even despite evidence to the contrary (like in PA).
I do hope that the example of states like New York, will make it even more clear to people that some state officials are making it lousy... on purpose.
There is evidence this is already happening, as Tom Corbett is almost universally hated by people all across the political spectrum in PA.
State Insurance Regulators vs. ACA?
written by jhecht, October 23, 2013 4:34
Has anybody looked into what state regulators are doing about (possibly) standardizing policy coverages, terms, and conditions? Which legal jurisdiction is going to adjudicate claimant disputes for an insurer that is not licensed in a particular state but sells coverage over a federal exchange? It looks like states that are running the exchanges may have a different set of companies on their websites compared to the federal exchanges. It is not obvious to me that all the regs and statutes have been worked out between the feds and states. That is, since all insurance is regulated at the state level (exceptions being flood and maybe a couple of other lines of business) how are disputes going to be adjudicated when you purchase coverage from an out-of-state insurer? For auto insurance, each company has to set up a subsidiary. So if you look at the consolidated statutory annual financial statements, you'll see that a company like Liberty Mutual has 50 licensed companies to do business in each state.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.