Why The White House Is Panicking About ObamaCare

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(Photo credit: Alan Cleaver)





Last week's announcement that the employer mandate will be delayed for a year and that income verification for people getting subsidies will also be delayed are the latest signs of trouble. The next shoe to drop may be the failure for people to obtain (ObamaCare) insurance — even if it's free or highly subsidized.

Consider this:

· About one in every four individuals who are eligible for Medicaid in this country has not bothered to enroll.

· About one in five employees who are offered employer-provided health insurance turns it down; among workers under 30 years of age, the refusal rate is almost one in three.

Think about that for a moment. Millions of people are turning down (Medicaid) health insurance, even though it's free! Millions of others are turning down their employers' offers. Since employees pay about 27% of the cost of their health insurance, on the average, millions of workers are passing up the opportunity to buy health insurance for 27 cents on the dollar.

You almost never read statistics like these in the mainstream media. Why? Because they completely undermine health policy orthodoxy: the belief that health insurance (even Medicaid) is economically very valuable, that it improves health and saves lives, and that the main reason why people don't have it is that they can't afford it.

Welcome to the huge disconnect in health reform. On the one hand there are the people who are supposed to benefit from health reform. On the other hand there are the people who talk about it and write about it. I think it's fair to say these two groups almost never meet.


· We have made it increasingly easy in this country for the uninsured to obtain health care after they get sick.

· We have also made it increasingly easy for people to get health insurance after they get sick.



"At Parkland Memorial Hospital both uninsured and Medicaid patients enter the same emergency room door and see the same doctors. The hospital rooms are the same, the beds are the same and the care is the same. As a result, patients have no reason to fill out the lengthy forms and answer the intrusive questions that Medicaid enrollment so often requires. At Children's Medical Center, next door to Parkland, a similar exercise takes place. Medicaid, CHIP and uninsured children all enter the same emergency room door; they all see the same doctors and receive the same care.




Against this conclusion, advocates of "behavioral economics" might argue that people don't know what's best for them. They have to be "nudged." Seeing a football star on TV encouraging young men to enroll in a health plan might do the trick. But for the Obama administration that doesn't solve the problem. People need more than an initial nudge. They have to be nudged every month.


Under ObamaCare, similarly situated individuals are going to be expected to pay a monthly premium the way they pay their utility bills. But with this difference. When people don't pay their electricity bills, the utility cuts off their electricity. When they don't play their rent, the landlord throws them out in the street. But when they don't pay their health insurance premium, what happens then? Not much.

Why is it so important to the administration to have people enroll? If they don't enroll in Medicaid, I don't think it matters very much. But if they don't enroll in private plans sold in health insurance exchanges, it will matter a great deal. Remember, these will be artificial markets in which insurance will be underpriced to the sick and overpriced to the healthy. A lengthy, complicated enrollment process will further discourage those with no health problems.



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