Megan McArdle Imagines the Next Six Months

It gets ugly:

Tough-Times-AheadJust how bad could this get? Well, here’s one scenario, maybe not the most likely, but possible: The exchanges aren’t ready by Dec. 1. In fact, they continue to experience problems in January and February. The administration’s poll numbers continue to plummet, and the reputation of the exchanges is such that come spring, young people don’t bother to sign up — or are afraid to hand over their personal data to such a buggy system. The insurance pool is much smaller, older and sicker than expected, which is to say, much more expensive than expected. The administration comes up with small emergency patches, like allowing people to keep their old policies for a few more months. But that makes the pool of people insured through the exchanges even older and sicker than it otherwise would be.

Meanwhile, sometime between March and June, the other shoe drops: People who bought exchange policies realize that the restricted networks insurers created to keep the premium costs low cut out the best hospitals and doctors. A newly insured child with cancer cannot get into a top pediatric hospital because her insurance has zero coverage for out-of-network emergency care. Tearful Mom goes on the evening news and says that she thought when they went on ObamaCare, that meant they were safe, and why can’t I take my baby to Philadelphia Children’s Hospital, Mr. President? That particular story will be fixed, through some combination of private charity, insurer PR sensitivity and government intervention. But there will be more of these cases that don’t make the papers. The folks who had no insurance and are now on Medicaid may be quite glad of their insurance, but those people don’t vote in large numbers. The middle-class voters who thought they were getting much more out of this law are disenchanted, maybe angry.

By June, insurers are filing their rate increases for next year. But there are already lawsuits being filed over the limited networks and rumblings about legal remedies in the legislature. They are paying out much more in claims for each customer than they expected when they set rates, and while the “risk corridor” reinsurance provisions mitigate some of their losses, they do not turn losses into profits. And public anger over all the downsides of the law — the policy cancellations, the malfunctioning exchanges, the extremely narrow provider networks — makes it look very likely that Democrats are going to lose the Senate in 2014. The law now seems to be in danger — not in danger of outright repeal, but in danger of death from a thousand cuts, as legislators roll back anything that’s unpopular — like, say, the individual mandate. (More)

Comments (19)

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  1. Billy says:

    “The exchanges aren’t ready by Dec. 1. In fact, they continue to experience problems in January and February.”

    I view this as not only possible, but likely.

  2. Wilbur says:

    “The administration’s poll numbers continue to plummet”

    Once upon a time I would have said we might as well hope for impeachment, but this is probable.

    • JD says:

      I don’t think that there is any precedent for impeachment just because the President is just doing a bad job.

      • Wilbur says:

        There is one for lying on your birth certificate.

        • JD says:

          Well if there is definitive proof within the next 3 years then we’re good, although so much damage has already been done, I don’t know if it matters.

      • Dewaine says:

        Did you hear about NYT reporting that the employment numbers were doctored to make the President look good before the 2012 election? If that was traced back to him, there would be an impeachment.

  3. Tom G. says:

    “young people don’t bother to sign up”

    They have no incentive to, even if the reputation of the exchanges is good.

    • JD says:

      It will be interesting to see how the administration handles this, because young people are crucial to the whole thing. I’m sure they’ll end up settling on an incentive program for young people, maybe free college for signing up?

      • Dewaine says:

        Probably right. Look for them to pass the negative impacts into other areas of the economy. Then, when health care is being propped up by everything else they can say “look how great health care is!”

        • Perry says:

          They’re already involving celebrities to try to get the message out.

          • Dewaine says:

            And they are putting out advertising directed at young people, but these “social pushes” never have the expected impact. People respond to financial incentives much, much more than gimmicks.

  4. Wiliam says:

    “like allowing people to keep their old policies for a few more months”

    They can allow it all they want, it won’t have insurance return to the markets they have already abandoned.

  5. Adam says:

    “It gets ugly”

    You mean uglier, right? It’s already pretty ugly.

  6. Jackson says:

    “Democrats are going to lose the Senate in 2014”

    I’ll start the AC, cause its got its work cut out for it if hell is gonna freeze over that soon.

  7. Kilian says:

    “The middle-class voters who thought they were getting much more out of this law are disenchanted, maybe angry.”

    The way America’s voting system works, its not so much a function of how many people are angry, but where they are and the concentration. Just having lots of angry people is much less effective than having a few angry people in the right spots.

    • Perry says:

      Middle class would do it. That was part of Obama’s campaign promise to protect the middle class. I don’t see it happening.

  8. Erik says:

    Meagan can hope for the worst. The Koch brothers can continue to pay college age folks to convince other college age folks to “Opt-Out.” Red state can continue to stall and blame.


    Healthcare reform is the law of the land and it is in all our best interest to make the best of it. Otherwise we settle for the worst. And that my friends is simply Un-American…