Economics, Health Care, Pethokoukis

What we learned about Obamacare today: November 4, 2013

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This morning Scott Gottlieb, Joseph Antos, and Thomas Miller evaluated the rollout of Obamacare thus far and discussed its future. Here are some of the main points from each scholar. Watch the whole event here.


  • The Medicaid Part D site went through much more testing and has much more functionality than the Affordable Care Act one. The ACA site doesn’t even let you put in the name of your doctor.
  • In ACA’s case, you’re seeing a failed marketplace. Part D was designed to de-risk anyone who participated early on. It was difficult to lose a lot of money at the beginning of the program, so you saw a lot of entrepreneurs get into the market and create Part D plans. With ACA you can only profit as much as the government will allow, but you can lose without limit.
  • By capping the medical-loss ratios, you guarantee that only the incumbent players are in the marketplace. New insurers can’t launch without losing a lot of money in the initial years. Anyone who would have gotten in with ACA would have gotten in now.
  • You see some big insurers not getting involved with the marketplace because “offering plans on the exchanges is a bad business deal.” These insurers can go outside the exchanges and offer bronze only plans and thus create nice risk pools.
  • For more information, check out Gottlieb’s latest article on the subject.


  • Speaking about tech surges: a big factor is human nature- people do things at the last possible moment. One of those moments is the December 15th deadline. That’s the day for a tech surge. However, it’s also a week and a half before Christmas. People can think of a lot to do with money before Christmas other than buy insurance.
  • Another surge date is March 31st. The young healthy people who have held off will sign up if they feel something coming on. But if they don’t, they will wait until October.
  • The penalty was made to stop the “death spiral.” However, the penalty will never rise close to the cost of subsidized coverage. It is unlikely that the penalty will be collected. After March 31st sometime, Obama will probably announce that they will exempt people from a penalty for 2014. The mandate will have minimal if any impact this year.


  • The promises of ACA actually have to meet with “does it work” now, and there is a mismatch.
  • The inevitable was unavoidable in the way this plan was designed and going to unfold. What we are seeing are not bugs in the software but features of the system.
  • The administration is facing its worst nightmare- visible victims. Those losses are visible before the gains. The paternalism head pat is more visible now.
  • Can they patch this is up? The ACA is a chain, interconnected, so if one piece doesn’t work it cripples the next.
  • One political takeaway: the big thing at stake is tarnishing the bigger government brand. This doesn’t look good for the next election season for Senate Democrats. You’ll see internal and external blame shifting.

Now here are a few things we learned about Obamacare today.

1.) AEI’s Scott Gottlieb says that “2015 Will Be Worse For Obamacare Than Its 2014 Debut As A Result Of New Burdens The White House Is Saddling Onto Insurers”:

According to one recent analysis, just one or two insurance carriers are serving exchanges in more than half of the country’s 2,500 counties. The problem is that the law was tilted against the health plans at its inception. These challenges are being magnified by the Obama team’s present day decisions that will discourage plans that sat out of the market in 2014 from entering in 2015….

Hospitals and drug makers aren’t going to subsidize the purchase of healthcare for the healthy beneficiaries that insurers need in order to make these new exchanges viable…. Drug makers want to find patients who will use expensive medicines. Hospitals want to find local residents who are uninsured but are being frequently admitted to the hospital for chronic and costly conditions.

2.) Did you know: “Millions of people could qualify for federal subsidies that will pay the entire monthly cost of some health care plans being offered in the online marketplaces set up under President Obama’s health care law, a surprising figure that has not garnered much attention, in part because the zero-premium plans come with serious trade-offs.” Based on three separate estimates by “Wall Street analysts and a consulting firm…up to seven million people could qualify for the plans.”

3.) Sarah Kliff tells us “Five things we know about Obamacare’s shoppers.” Here are some of her graphs:

4.) Marc Thiessen, one of AEI’s own, weighs in on Obama’s “keep your plan” promise:

After Obama began telling Americans they could keep their plans, White House aides discussed using media interviews “to explain the nuances of the succinct line in his stump speeches.” But they decided not to do so, because “officials worried . . . that delving into details such as the small number of people who might lose insurance could be confusing and would clutter the president’s message.”

Yes, no need to “clutter” the president’s message with confusing details — like the fact that millions of Americans being told by the president that they could keep their plans were being knowingly misled.

5.) Read a Q&A with Matt Cartwright here to see why “‘History will smile’ on Obamacare.”

6.) Insurance premiums in Alamaba are on the rise, and it could be a result of “lack of competition”: “Because it covers about 90 percent of the Alabama individuals and families who buy policies directly, BlueCross faces little competition and few reasons to lower prices, critics say.” The situation is not unique to Alabama. Some other states that have “single companies dominat[ing] individual insurance” are North Carolina, New Hampshire, and Arkansas.

7.) Find out “How political fear was pitted against technical needs” with

For weeks that spring, a tug of war played out inside the White House….members of the economic team and Obama health-care adviser Zeke Emanuel lobbied for the president to appoint an outside health reform “czar” …. In the end, the economic team never had a chance: The president had already made up his mind, according to a White House official… Obama wanted his health policy team… in charge of the law’s arduous implementation….

By late summer, CMS officials were frustrated with CGI Federal, which repeatedly said that certain features of the exchange were ready when they were not, several officials said…. White House officials say they were focused on whether there would be enough insurance plans for sale in the new marketplaces and on whether enough people would enroll. They say they didn’t have a clue how troubled the Web site’s operation was. Only during the weekend after’s Oct. 1 opening did the president’s aides begin to grasp the gravity of the problems, the White House official said.

8.) Did Obama get “carried away with health care reform”? Glenn Harlan Reynolds at USA Today thinks so. “If the federal government can’t handle the website, how’s it going to do on the rest?”

9.) For an update on the issues and how Senate Dems are responding, Kaiser Health News has a round-up of articles, including “Critical Weeks Begin For Health Law Rollout,” “Health Site Flaws Test Democrats’ Unity as Attacks Rise,” and “Officials Rebuff Call To Suspend Health Site.”

10.) Megan McArdle asks “Can Small Business Handle Obamacare?” and examines “a new report from the National Federation of Independent Business, the trade association for small businesses.”

11.) Finally, check out this New Yorker cover:

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