About those Obamacare premiums: what do we value in a health care system? | Arkansas Blog

About those Obamacare premiums: what do we value in a health care system?

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Here’s a thought experiment. You’re a healthy young man working a good job with benefits. Your boss announces that she’s considering eliminating health insurance for any of your co-workers that are old or sick. Or they can keep their coverage, but they’ll have to pay sky-high rates. But the good news is that you can get a really, really cheap rate. What would you say?

Obviously, opinions will vary, but in my experience, most people are okay with their co-workers getting guaranteed coverage at the same rates. When I’ve used employer-sponsored health insurance, my employee contribution has been higher than my actuarial risk profile says it should be because of my riskier co-workers. Maybe I’m alone in this, but I’ve never thought of this as particularly unfair. It’s just how insurance pools function, and of course those that are healthy could become sick (and those that are young will become old).

Obamacare makes the individual private market, where a small sliver of Americans currently buy health insurance, more like the sort of insurance pool that a large employer would have. Currently, the private market uses exclusion and price discrimination to create an unusually low-risk insurance pool. For a healthy person that makes the market a paradise for finding low premiums. For sick people, it can be a disaster.

Obamacare opponents have pointed to the fact that the cheapest plans available on the pre-Obamacare private market in Arkansas (and elsewhere) are significantly less expensive than the Obamacare plans. This is true (though the Obamacare plans offer more coverage and protections, and many will get subsidies to offset the sticker price). But remember: I can get a sweet deal from Blue Cross today precisely because they keep sick people out, or charge them exorbitant premiums.

If folks want to complain about premiums going up for some people who purchase their own private health insurance, that’s fine, but they should acknowledge the tradeoff. Which do we value more: cheap rates for the healthy or coverage and security for all? Again, opinions will vary. But it seems strange to defend a health care system that is bad for sick people, the very folks who ultimately need health care.


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