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http://krugman.blogs.nytimes.com/
News from New York: it looks as if insurance premiums on the individual market are going to plunge
thanks to Obamacare. This shouldn’t come as a surprise; in fact, the
New York experience perfectly illustrates why Obamacare had to look the
way it does. And it also illustrates why conservatives should be
terrified about this legislation, as it takes effect. Americans may have
had a lot of misgivings in advance, thanks to vast, deliberately spread
misinformation. But I agree with Matt Yglesias
— unless the GOP finds even more ways to sabotage the plan, this thing
is going to work, it’s going to be extremely popular, and it’s going to
wreak havoc with conservative ideology.
To understand what’s happening in New York, you have to start with what almost everyone at least pretends to believe: Americans shouldn’t find it impossible to get health insurance because of pre-existing conditions that aren’t their fault. Two decades ago, New York tried to deal with this by imposing community rating: insurance is available to everyone, and the price doesn’t depend on your medical history.
The problem was that this created a death spiral: young, healthy people didn’t buy insurance, worsening the risk pool, driving up premiums, driving out more relatively healthy people, etc., until you were left with a rump of very ill people paying very high rates.
How do you deal with this? Well, ideally, Medicare for all. But since that wasn’t going to happen, you improve the risk pool by requiring everyone to buy insurance — the individual mandate. And since some people won’t be able to afford that, you also offer subsidies. Voila! ObamaRomneycare!
Where does the money for the subsidies come from? Partly by reducing corporate welfare: reducing overpayments for Medicare Advantage, reducing tax breaks for very generous insurance plans; partly with new taxes on the wealthy.
And while a few people will be hurt — young, healthy individuals too affluent to qualify for subsidies, wealthy taxpayers, etc. — a much larger number of people will be helped, some of them enormously.
Does this amount to “redistribution”? Well, yes — not as an end in itself, but yes, a lot of people will be made better off at the expense of an affluent few.
And Yglesias is right: there will be bobbles along the way, but this is going to become an immensely popular program. By the time Liz Cheney challenges Hillary Clinton’s reelection campaign, there will be signs at the rallies declaring “Don’t let the government get its hands on Obamacare!”
Conservatives are right to be hysterical about this: it’s an attack on everything they believe — and it’s going to make Americans’ lives better. What could be worse?
To understand what’s happening in New York, you have to start with what almost everyone at least pretends to believe: Americans shouldn’t find it impossible to get health insurance because of pre-existing conditions that aren’t their fault. Two decades ago, New York tried to deal with this by imposing community rating: insurance is available to everyone, and the price doesn’t depend on your medical history.
The problem was that this created a death spiral: young, healthy people didn’t buy insurance, worsening the risk pool, driving up premiums, driving out more relatively healthy people, etc., until you were left with a rump of very ill people paying very high rates.
How do you deal with this? Well, ideally, Medicare for all. But since that wasn’t going to happen, you improve the risk pool by requiring everyone to buy insurance — the individual mandate. And since some people won’t be able to afford that, you also offer subsidies. Voila! ObamaRomneycare!
Where does the money for the subsidies come from? Partly by reducing corporate welfare: reducing overpayments for Medicare Advantage, reducing tax breaks for very generous insurance plans; partly with new taxes on the wealthy.
And while a few people will be hurt — young, healthy individuals too affluent to qualify for subsidies, wealthy taxpayers, etc. — a much larger number of people will be helped, some of them enormously.
Does this amount to “redistribution”? Well, yes — not as an end in itself, but yes, a lot of people will be made better off at the expense of an affluent few.
And Yglesias is right: there will be bobbles along the way, but this is going to become an immensely popular program. By the time Liz Cheney challenges Hillary Clinton’s reelection campaign, there will be signs at the rallies declaring “Don’t let the government get its hands on Obamacare!”
Conservatives are right to be hysterical about this: it’s an attack on everything they believe — and it’s going to make Americans’ lives better. What could be worse?
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