On Obamacare’s individual marketplaces: Less choice, but compared to what?


A lot of folks are commenting on this New York Times piece on health insurance premiums in the new marketplaces established by the Affordable Care Act. Basically, people entering the new insurance exchanges should expect cheaper premiums compared to the existing individual market, but that affordability will come at the cost of less choice among providers (alternatively, smaller networks).

Here’s the gist of Robert Pear’s article:

When insurance marketplaces open on Oct. 1, most of those shopping for coverage will be low- and moderate-income people for whom price is paramount. To hold down costs, insurers say, they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. And those health care providers will, in many cases, be paid less than what they have been receiving from commercial insurers.

Some consumer advocates and health care providers are increasingly concerned. Decades of experience with Medicaid, the program for low-income people, show that having an insurance card does not guarantee access to specialists or other providers.

Kevin Drum characterizes this as honest-to-heck problem, writing “I suspect that this one really will be a bit of a festering sore.” Others, I’m sure, will use it to advocate slapping the dunce cap on Obamacare and support, at least, delaying it for a year. Yet a good bit of advice when approaching any issue on the ACA is to take a deep breath. Then, more often than not, take a step back, keeping everything in its proper context and ask “Compared to what?”

The context for this story is this; the difference between 2013 and 2014 for the uninsured and those without ESI is the current individual marketplace versus the individual exchanges under the Affordable Care Act. That also happens to be the difference between whatever the current state regulations apply to the individual marketplace versus guaranteed issue, community rating, and subsidies in every state exchange. So the proper question when people bring up the point that, starting in 2014, the choices in the individual exchanges will be limited, is “Compared to what?”

Well, compared to 2013. Which is to say, that for many people the actual counter-factual to having limited choices on the exchanges would have been ‘nothing’ in an alternative timeline without the ACA. In that context having limited choice in 2014 doesn’t seem so bad.

Another thing to remember as it relates to access issues: when folks argue that “[d]ecades of experience with Medicaid” makes them worried about access to care, they should keep the following graph in mind:


As Krugman brings up here on Medicaid and “limited choice on providers,” such access is generally increased when people have something—anything—compared to being uninsured.

Of course maybe 2015 is a different story, but do we really think people with exchange coverage will prefer a policy change that returns them to the pre-ACA status quo? That is, a return to less coverage, or more realistically; no coverage and truly, drastically, reduced access? Perhaps to some conservative and Republican politicians, but the broader picture will be a Overton Window for policy fixes to the American health care system that has drastically shifted away from ‘nothing’ as a viable alternative.


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