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The Problem with Obamacare's "Rate Shocks"


Ross Douthat weighs in on the debate over whether California will see “rate shock” under  Obamacare. He notes that the question surrounding health care reform isn’t whether premiums will go up for the young or the old; there will be “losers” in any health care reform, right or left. The question is, rather, how much Obamacare will raise premiums by, and whether the increase will be high enough to doom the law:

If “rate shock” just means “some healthy/young/well-off people pay a little more for insurance,” then liberals are right to downplay its significance.

The unanswered question, though, is whether that “a little more” will actually be — or gradually become — a lot. And that’s what’s getting left out of some of the liberal brush-offs (yes, I’m looking at you, Chait) of the “rate shock” issue. Whatever young people’s attitudes toward insurance in the abstract, if rates go up way too fast, they almost certainly won’t buy into the new system, opting (whether consciously or semi-accidentally) to pay the fine instead. And that kind of mass opting-out is basically Obamacare’s worst-case scenario…

Read the whole thing. The riverboat gamble known as Obamacare may or may not work; we expect both the friends and the opponents of the system will be disappointed with what is likely to be a messy, mushy reality. But it’s interesting how many mainstream pundits don’t seem to mind saddling struggling young people with higher costs that subsidize the middle aged. There was a time when helping young people off to a good start in life was a central preoccupation of American politics and wonkery; that time, it is clear, is long past.

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  • Anthony

    “There was a time when helping young people off to a good start in life was a central preoccupation of American politics and wonkery.” WRM, it’s called generation outlook and sustainability; once signal value helping to attract emigres to the promising U.S. as well as important component to a country’s social capital. ACA’s impact generationally is presently open to speculation.

  • bpuharic

    WRM seems good at describing problems, not so good with alternatives or solutions

    Fact: Premiums always go up. Fact: The US free enterprise system has given us the most expensive healthcare in the world. Fact: We do not have universal healthcare. Fact: cost effective, universal healthcare systems exist across the world.

    Yet we haven’t taken advantage of the road trod by every advanced country in the world. Why? Our system, which WRM seems to approve of, is a failure, an abject failure. Yet the solutions we’ve come up with seem cobbled together and designed to protect the status quo rather than being innovative and efficient.

    • lasveraneras

      Lie: “The US free enterprise system has given the world the most expensive healthcare (sic) in the world.” Anyone who believes the pre-Obamacare health care system was based on free enterprise principles is seriously deluded. The direction and level of federal, state and local government interference in the operation of our health care system had long ago turned the institutions providing goods and services into government sponsored enterprises (GSEs), not private firms which compete freely in the market place. Notice the differences between computer firms in terms of cost effectiveness, which operate with little of no government intervention – lower prices AND better performance -, and health care entities (from hospitals to pharmaceuticals), which are effectively controlled by government bureaucrats – sharply rising prices for little or no improvements in productivity. Yet, in spite of the stranglehold applied by counter-productive government rules and regulations, the U.S. health care system has across the board better survival rates for all major illnesses than Europe. The solution is NOT more government control. The solution is the liberation of health care suppliers to operate efficiently and effectively.

      • bpuharic

        I think you need to get a dictionary and look up the word ‘lie’ since you don’t know what it means.

        Virtually every advanced country has a state funded healthcare system.

        We don’t. See those words? We don’t.

        You can make up whatever distortions you want to excuse the failure of your fundamentalist, almost creationist like worship of the ‘free market’, but the fact is, it failed. Period.

        Our life expectancy is actually worse than many advanced countries, and last year 26,000 people died due to lack of access to healthcare since they didn’t have insurance.

        The fact is your view is already a failure. Handwave all you want, Houdini. Your view simply doesn’t work

        • Tom

          And, as usual, you managed to completely misunderstand what was actually said.

        • Jason in SD

          I see this term a lot, “advanced country.” What characterizes an “advanced country?”

    • Jim__L

      America does have a near-universal health care system — for our seniors. It is driving this country into bankruptcy.

      This demonstrates that America can’t (yet) make universal work.

      If Lefties think they can make Universal work, they’re welcome to work on Medicare to demonstrate their competence. In the meantime, we need to repeal ObamaCare.

      • bpuharic

        And yet the entire advanced world does what we can’t. Proud of that failure are you?

        On the other hand we HAVE tripled the income of the richest 1% over the last 30 years

        No wonder the middle class class can’t afford healthcare. We’re busy bankrolling the wealthy.

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