Wednesday, March 30, 2016

O'Care at 6: Fewer, Sicker, Costlier

Yeah, about bending that cost curve. Something sure got bent:

"Consumers who signed up for Blue Cross Blue Shield health plans through the Affordable Care Act’s insurance marketplaces these last two years tended to be sicker and incurred greater medical costs than people with BCBS coverage through their jobs."


This is the manifestation of the insurance term "adverse selection." Briefly, adverse selection occurs when you encourage, and reward, riskier behavior, accomplished in this case by the implementation of guaranteed issue and immediate coverage of pre-existing conditions.

Folks with few or no health problems tend to shy away from buying insurance that they're pretty sure they won't need or use, while folks with chronic and/or expensive conditions tend to over-buy (which, of course, makes sense from their point-of-view). It's exacerbated, of course, when they're rewarded for doing so by premium subsidies.

But wait, there's more!

"Original CBO projections show 24 million fewer people have insurance today ... based on the CBO's own numbers, it seems possible that Obamacare has actually reduced the number of people with private health insurance."

That's right, not only are the newly-insured sicker, there are even fewer less-sickly folks signing up at all. In fact, the government's own  metrics belie the (always phony) claim that "If you like your plan, you can keep your plan." Obviously, that meme's been long and well debunked, but it bears repeating if only to underscore the whole train-wreck.

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