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“America Cannot Be A Humane Society If We Leave 15% Of Our Population Uninsured”

November 12, 2013

One of those must-reads in support of the national health care law appeared in The Wall Street Journal opinion pages today, but no one will be shocked that the article was not written by the paper’s editorial team.  Instead professor Alan Blinder a professor of economics and public affairs at Princeton University and former vice chairman of the Federal Reserve crafted the article.

It says exactly what this nation needs to know about the Affordable Care Act.  In part the professor writes….

If we could get people to turn their attention from PR to policy—a big if—they would see that little has changed. The three central elements of ObamaCare are insurance reform, getting (most of) the uninsured covered, and containing the upward spiral in medical-care costs. Each remains in place.

Regarding coverage, while the health-exchange website’s problems are causing delays, they will be fixed—though I’m not sure I’d bet on Nov. 30. (If the administration makes that deadline, someone deserves a medal.) The initial enrollment period might have to be extended a bit, which would require some other adjustments. But even with delays, most of the uninsured will be able to get covered.

Nor are the central elements of insurance reform affected by the technology glitches. Millions of people under the age of 26 are already benefiting by being kept on their parents’ policies. Pre-existing conditions will no longer prevent people from getting health insurance. Annual and lifetime limits will go the way of the dodo. Americans will like all that.

Regarding cost containment, some of the law’s planned demonstration and pilot programs, designed to test various cost-reducing ideas, might be delayed. But they won’t be abandoned. Delays will hurt a bit because these experiments were destined to take years to complete in any case, and our political system is not known for patience. But there is at least some reason to think that the “affordable care” part of the act may be working already. The rate of inflation of medical costs has tumbled in recent years.

All that said, no big social policy ever goes exactly as planned. Two additional hazards that have garnered relatively little attention to date worry me.

The first is the behavior of the “invincibles”—young people who, statistically speaking, are at little risk for high medical bills. To make universal coverage work, the government needs to bring them into the insurance pool as counterweights to the high-risk people. But the “individual mandate” is not really a mandate. The law allows people to opt out by paying a modest fee: just 1% of income in the first year, which is a mere $500 for someone with a $50,000 income. That is a pittance compared with the cost of most health-insurance policies. If many low-risk people stay out of the pool, we have a problem: The insured pool will be less healthy than the total population.

Second, there’s the behavior of businesses with more than 50 employees. Some companies that now cover their workers with costly health-care plans might decide to drop that coverage once the exchanges are up and running. The penalty for leaving workers uncovered is just $2,000 per person per year, and the exchanges will make insurance available to all. So pure self-interest will push firms to drop coverage. Will we rely on altruism, peer group pressure and employee demands to push back?

Considering all these problems, is the game worth the candle? Absolutely—because the status quo ante was so unacceptable. America cannot be a humane society if we leave 15% of our population uninsured. America cannot be an efficient society if we spend 50% to 100% more of our incomes on health care than other countries, and yet don’t get better health outcomes. We can’t let a botched website get in the way of goals that big.

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