The curious task

by Russ Roberts on November 21, 2013

in Curious Task, Health

The real problem with ObamaCare isn’t the web site. The real problem is that ObamaCare tries to manipulate the insurance market in ways that people didn’t expect and don’t like. Sandhata Somashekhar and Ariana Eunjung Cha report in the Washington Post:

As Americans have begun shopping for health plans on the insurance exchanges, they are discovering that insurers are restricting their choice of doctors and hospitals in order to keep costs low, and that many of the plans exclude top-rated hospitals.

The Obama administration made it a priority to keep down the cost of insurance on the exchanges, the online marketplaces that are central to the Affordable Care Act. But one way that insurers have been able to offer lower rates is by creating networks that are far smaller than what most Americans are accustomed to.

The decisions have provoked a backlash. In one closely watched case, Seattle Children’s Hospital has filed suit against Washington’s insurance commissioner after a number of insurers kept it out of their provider networks. “It is unprecedented in our market to have major insurance plans exclude Seattle Children’s,” said Sandy Melzer, senior vice president.

The result, some argue, is a two-tiered system of health care: Many of the people who buy health plans on the exchanges have fewer hospitals and doctors to choose from than those with coverage through their employers.

A number of the nation’s top hospitals — including the Mayo Clinic in Minnesota, Cedars-Sinai in Los Angeles, and children’s hospitals in Seattle, Houston and St. Louis — are cut out of most plans sold on the exchange.

In most cases, the decision was about the cost of care.

In Seattle, the region’s predominant insurer, Premera Blue Cross, decided not to include the children’s hospital as an in-
network provider except in cases where the service sought cannot be obtained anywhere else. “Children’s non-unique services were too expensive given the goal of providing affordable coverage for consumers,” spokesman Eric Earl­ing said in an e-mail.

People aren’t going to put up with this. Either ObamaCare is going to be dismantled or the government is going to take over the insurance industry. The latter is an unlikely possibility given the botched logistical performance of the roll-out of ObamaCare. I just don’t see how these kind of unexpected changes are going to survive politically. They keep coming and they’re creating a drumbeat of dissatisfaction for a lot of people. The political system will not ignore those feelings.

A non-transparent way of bending the cost curve–incentivizing insurance companies to offer what is considered second-class coverage, just isn’t going to fly.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

–F.A. Hayek in The Fatal Conceit.

 

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