I had lunch recently with a friend and I was asked what I thought was likely to happen to Obamacare health exchanges, a marketplace that is meant to allow people to switch health insurance providers or take out a policy for the first time. My answer, with some ex post editing, was this:
- The chance of “no smooth resolution” for the healthcare exchanges crisis (caused by low uptake and technical malfunctions) is now 60-40. Not long ago I thought it was 20-80.
- The Obama administration is claiming the exchanges might be ready soon to stem Democratic defections and keep the policy locked in, but in reality they now know there is no chance for timeliness (NB: this sentence is true with 60-40 probability, not unconditionally true).
- More parts of the thing will be working by late November, but not enough for it to serve as a functioning enrolment system, much less encourage “the invincibles” (young, healthy people reluctant to take out insurance) to sign up. They will figure, correctly, they don’t have to bother with the whole thing until they hear from peers, and from the media, that the process is as smooth and as easy as Orbitz. (Oddly, Tea Party attempts to get young people to resist the mandate have the counter-intuitive property of increasing awareness of the sign-up requirement. Disengagement, not fiery opposition, is the real enemy of the law.)
- Come 1 January, hundreds of thousands of Americans will lose their individual coverage packages for not meeting Affordable Care Act (ACA) standards. Most of them won’t have ready replacements. This will be a big mainstream media story, not just a FoxNews story. There will be easily identifiable victims, expressing sorrow or rage or both in front of the camera. Left-wing bloggers will express outrage that Republicans express outrage over the existence of individuals with no insurance coverage. Republicans will express outrage that left-wing bloggers express outrage, etc.
- Democrats will propose various ACA fixes, and Republicans will reject them, claiming that the law requires a more fundamental restructuring. That stand-off will not be readily resolved and will become the “new debt-ceiling crisis”. Democratic defections will be a problem for Obama.
- The exchanges will be mostly working by March 2014 but, by then, the risk pool will be dysfunctional. In the meantime, real net prices will creep up, if only through implicit rationing and restrictions on provider networks. The Obama administration will attempt to address this problem – unsuccessfully – through additional regulation.
- By October 2014, no one will think the exchanges are a satisfactory solution, except for some number of state exchanges, which will be running reasonably well. Some of the state-level exchanges, by the way, will have more serious problems than are currently evident, mostly on the back end.
- It will be left to the next Republican administration to fix.
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