Friday, December 06, 2013

Obamacare's chief economist does not raise the important "and then what" question.

In a recent interview Dr. Jonathan Gruber,a MIT economist whose name is closely linked to ACA gave a broad outline of who gains and who looses as the legislation becomes operational. See here for details of the interview in the New Yorker article.

Here is the brief overview.

80% of folks are basically "left alone", as they will keep their employer sponsored medical insurance.
3% loose as they will no longer have their individual policies.
14% are winners as they will now be able to obtain medical insurance.

Since there seem to be many more winners than loosers, from a utilitarian perspective, the greatest good for the greatest number has been achieved  and ACA must be considered a success .After all, you know to make an omelet..

So, he seems to say " not much here to see, move one"

   However, there is much more to it than recitation of the alleged head counts of the various Gruber categories.

Economists such as Walter Williams and Thomas Sowell in talking about the economic way of thinking emphasize the importance of asking "and then what ". For example, if some one praises rent controls as providing affordable housing for the disadvantaged, the then-what question might lead to a discussion of how such measures typically result in a shortage of available housing , lower quality of the housing and possible black market behaviors and non-price based rationing.

Had Gruber asked the and-then what question in regard to ACA he might have begun a discussion about how much policies would cost in each subset-would the 80% be paying more or less and would the coverage be better or worse or unchanged. Or even as some reports indicate  (even one by the CBO) that significant numbers of the " left alone" 80% might loose their employer provided health care insurance although not necessarily for reasons directly related to ACA..See here.

The and then-what question could lead to consideration of the issue: will there be enough physicians to care for the significantly increased numbers of folks who have an insurance card. Will insurance companies be reimbursing health care providers at their current rate? Will insurance plans offer significantly less choice as to providers? Further, rules issued from HHS have put providers on the hook for service charges not paid by insurance after a policy holder defaults on their monthly premiums.See here. How far will the rule makers at HHS go as they are continually modifying the law go to minimize any lose insurance companies might incur in the exchanges? See here for a detailed analysis of some of the efforts from HHS to minimize those potential loses.Basically HHS rules changed the 90 grace period to a 30 day period during which insurance companies were at risk for reimbursement of of services rendered .

This day to day, or week to week, ad hoc, de facto central planning  which  "readjusting" of the provisions of Obamacare  as they were written continues in the rule making offices of HHS regularly shredding what is left of the rule of law. The lobbying and crony capitalism continues long after the president signs the law. The article 11 , section 3 part of the Constitution ( " he shall  take care that the laws be faithfully executed" ) might just as well never have been written.

How will the $ 700 billion cut in Medicaid funding which in part pays for Obamacare impact the care Medicare recipients receive? How will the $170 Billion cut in Medicare Advantage impact the quality of care of care of folks on those plans?

Gruber's discussion ignores the secondary effects and only looks at the head counts of those who keep insurance,those who loose it and those who gain it ignoring the cost and quality of coverage and access to care issues that are the unintended consequences.

You can easily see why the " and then what" question is something ACA apologists would rather not dealt with.





1 comment:

Walter Bond said...

My first response on seeing your title: “of course he doesn’t.”

The field of “health care economics” reminds one of the old schoolboy joke about the Holy Roman Empire.