Friday, September 9, 2016

Who could have seen this coming?

Even the Chicago Tribune has realized it.  Obamacare has failed because of easy-to-predict adverse selection.

  •  Obamacare allowed consumers to sign up after they got sick.
  • Obamacare straitjacketed insurers wasn't flexible enough so that people could buy as much coverage as they wanted and could afford — not what the government dictated.
  • Too many carriers simply can't cover expenses, let alone turn a profit, in this rigidly controlled system 
  • Obamacare couldn't lure them in, couldn't persuade them to buy on the chance they'd get sick.


  1. To stem the exodus of young healthy people from the public exchanges the following should be considered: 1. Redefine the essential benefits to exclude preventive health services and other services without strong evidence of health benefit (reduce cost). 2. Increase the community rating (risk stratification) to more realistic levels to allow the healthiest consumers to pay much lower premiums. 3. Increase the penalties for not buying health insurance to incentivize healthy consumers to buy into the exchanges. This would be quite unpopular! John Zic

  2. The Affordable Care Act (Obamacare), like most legislation, is riddled with portions of it which should remain intact as well as with other portions that need to be changed or discarded. As Obamacare was being formed there were many opportunities for all parties to come together and create legislation that would result in a long term positive solution. However, as with most problems, the three questions in the book which are used to isolate problems were not asked. If the questions of who is making the decision, does the decision maker have the incentive to make a good decision and does the decision maker have the incentive to make a decision were asked, most if not all of the problems with Obamacare may have been avoided.
    The decision of what to include in Obamacare was made by lawmakers who, if not aware of the correct decision to make, had the means to consult the right persons to make decisions. Unfortunately, the lawmakers did not have the right incentive to make the right decisions. Affordable healthcare for Americans should have been the focus but instead the lawmakers were more focused on keeping their political parties happy than doing the work that their constituents needed them to do. There will hopefully come a time when political parties can set their differences aside and if anything look at the countries problems from a purely economic viewpoint. By using economic reasoning as opposed to political reasoning they will understand that all decisions and actions have a cost associated with them.
    The current costs associated with the problems in Obamacare include, to name a few, time taken away from working on the country’s other problems, an increase in political infighting, and financial uncertainty in households. An old adage states “Without your health, you have nothing.” If the lawmakers kept that in mind while developing Obamacare they would understand that we’re a weak country in all areas if we’re an unhealthy country. The more time workers spend home sick or the more time children spend outside of the classroom leaves less time for them to achieve their goals which in effect hurts the country as a whole.