I was reading John Graham’s post, What is To Be Done with Health Insurance Exchanges, Post-Obamacare?, and could not resist saying the federal health insurance exchange is a lousy tool to fix these health care problems. Here are my reasons.
1. The cost of health care for people with high cost, pre-existing conditions is being spread across a fairly small group of people buying their health insurance via the exchanges. If health care for people with pre-existing conditions is society’s responsibility than the cost should be spread over a much larger group of people. Until we solve the problem with paying for pre-existing condition health care in a more equitable manner, health insurance exchanges will be plagued with high risk premiums and are likely to fail.
2. Health exchanges in general are a lousy way to subsidize health insurance for people earning less than 400% FPL if you want to control health care costs. This is the same problem faced by expanding Medicaid. The Oregon Medicaid experiment leads us to speculate that this group of people will consume more health care services without an improvement in health care outcomes. A health insurance credit is probably a step in the right direction of simplifying the subsidy system while providing subsidies and cost control incentives.
3. With the market distortions from pre-existing conditions and subsidies and overall incompetence in the roll-out, it is hard to imagine health insurance exchanges as an adequate substitute for the fair, unbiased health insurance market place we expected in 2013. As a person who has purchased health insurance from eHealthinsurance.com in the past, I have to assign blame for the overall incompetence of healthcare.gov to politics. The ACA made purchasing health insurance unnecessarily complicated. When you combine the public’s unfavorable view of the federal health exchange with its history of being a political football, this would be a good time to look at a replacement that involves less federal government and political partisanship. The original ACA plan relied on state exchanges and we should go back there in a modified form. My personal favorite idea is to simplify the enrollment process and replace the federal exchange with state exchanges run in cooperation with insurance companies and insurance marketers. eHealthinsurance.com and other companies like them already had the infrastructure in place. You can call this the Halbig solution with adults in the room. If we cannot get rid of the amateurs in the federal government we should at least minimize their damage.