(Updated) Obamacare insurance exchanges may not be good deal for young and healthy

We’ve been treated to a lot of left-side whooping and cheering about insurance soon to be available on the Obamacare (ACA) exchanges, how they will bring prices down, and so on. I admit that hearing them, I was feeling optimistic myself, and my overall reaction to the ACA could generously be called “mixed at best.”

In fact I hate the ACA for what it does to Medicare — it makes sure that actual single-payer health insurance will never be available to people under 65. In basketball, they call that occupying the lane and blocking out the opponent.

For example, see here — “Barack Obama’s economic legacy: His four must-have items” — and check out item one. Yep, there it is, sitting right on top:

How can we afford not to focus on health care?  We can’t.1. Health care “reform” — a privatized alternative to Medicare expansion
2. A “grand bargain” in which social insurance benefits are rolled back
3. Plentiful oil & gas and passage of the Keystone Sludgepipe (KXL pipeline)
4. Passage of the Trans-Pacific Partnership (TPP) trade agreement

It’s the first thing he tackled with his big Congressional majority, and he won. Big Insurance and Pharma were provided for; legacy item one accomplished; next up, taking away your Social Security benefits.

Now comes RJ Eskow, who along with people like Wendell Potter, actually knows this stuff. Among other things, he was a numbers guy at AIG, which despite what you’ve heard, was once an actual insurance company, and a huge one. For more on Eskow and his analytical skills, go here. He’s quite good with health care data.

Which is why I was interested to discover this, a short clip from a recent Virtually Speaking Sundays show, this one with RJ Eskow and Cliff Schecter. Here they discuss the coming rollout of ACA insurance on the exchanges.

Host Jay Ackroyd asks Eskow if the ACA insurance is a good deal — because if it’s not, then healthy people will opt not to buy it and choose the penalty instead. (This is called “adverse selection” — selecting not to do something — and it’s a big deal in health insurance circles, since it leaves companies covering only sick people.)

Eskow’s answer: If you’re healthy and young, no, it’s not a great deal. Here’s the clip. It’s short (five minutes) and eye-opening:

Popular Health Internet Radio with Jay Ackroyd on BlogTalkRadio

Note, by the way, that there are four “levels” of plan available on the exchanges: bronze, silver, gold, platinum. There’s a reference to these plan levels in the clip. (I’m surprised there’s not a “cardboard” plan for the really cash-strapped, but maybe they’ll add that later.)

Note also Eskow’s point about being roundly attacked for putting forward this data. There are a few partisans on the Dem side who really do want to protect the “idea” of Obamacare more than they want to deal with its reality. Shame on them, say I.

The whole show is here, and it’s a good one. The first half discusses the ACA in much more detail, and the second half discusses Syria, the president, and the way various outcomes could influence the 2016 election.

Your bottom line — According to Eskow, if a healthy 25-year-old chooses not to buy ACA insurance, that could easily be a “rational decision,” as opposed to a political one. Our Betters and their campaign-donating friends — gotta love them. Or not.

UPDATE: Just to be clear, the problem I have isn’t with the idea of health insurance and the need for the covered pool to include the healthy. The problem is the way that pool is created.

As my recent twitter conversation with Sean-Paul Kelley discussed, there are two ways to get healthy people into the insurance pool:

Make it a requirement (as in Medicare)
Offer incentives (as in Obamacare)

If you offer incentives, you have to live with the fact that people will opt out. And Eskow is pointing out just that — based on the incentives designed into the plan (i.e., the high prices), people will opt out. Bad news.

That is, he’s not recommending that people do opt out. He’s pointing out the danger that people will opt out. “Adverse selection” kills insurance plans, and Obamacare has an “adverse selection” hole in it because it’s designed, first and foremost, to protect insurance company profits, and second, to create a covered pool. Medicare is just the opposite. Sorry that wasn’t as clear as it could have been.

UPDATE 2: Eskow adds via email:

Some of the commenters seem to think it’s a telling point that “auto insurance isn’t a good deal until you have an accident,” or “they’ll be glad to have insurance when they get sick.”

But that misses the key point: The question isn’t whether insurance is a good idea. The question is whether this is good insurance at a good rate. Young people won’t be “glad” they have this insurance if they get sick and the discover they have to pay $10,000 in out-of-pocket costs after thinking they were insured.

Good insurance at a good rate, decisions we all make. Thanks for the clarification, Richard.


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Gaius Publius is a professional writer living on the West Coast of the United States.

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