« The Weeds

Is Obamacare Failing?

2016-10-26

Ezra, Matt and Sarah go deep into what's going wrong with Obamacare's rising premiums — and take on a research paper that helps explain a lot about Gilmore Girls (really!)

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This we support, is also sponsored by Nature Box, gotta, nature, Baxter, Comstock weeds for fifty percent off your first order. The following podcast contains explicit language. Let's get this party stated. I have been falling for some shallow white has been and is a voluntary approach, welcome to another episode of the weeds boxes. Policy, podcast mechanically network for by my colleagues s, air, cliff and as recline and and you two could join as a colleague, oh my god, while other non midway early, I'm not on the world market, sound a job as open at box dot com that I think weeds listeners would be particularly interested in all our jobs are more than I'm in a mention here are can be seen in box media dot com under the careers page again box media dotcom, but we are
the hiring an editor and separately, a writer for our new economy. Algae site, new money or also looking for a policy editor I, which can apply throughout the same, become editor route. We are looking for a foreign policy staff. later I so these are, I think so- some good jobs for four wonky people who the joy the weeds without hear from you again, its box media dotcom, go to the queerest page. You there are other open jobs there to all throughout the organization to check it out. If you seems like a place you might enjoy working, and I actually also have another request. I M doing some reporting on Obamacare right now and the rate increases. I am looking to chat with people who are facing rate increases who are on the market place deciding what they want to do with their health insurance? I would love to talk to you. I loved we thus nerves. I love talking about Obamacare and I really want to know how you are thinking about these premiums, whether those seven year budget. I was we're happy to hear from some medicating really is the last time I put out a colleague this, so
You are one of these people who buys insurance on the Obama care marketplace. Drop me a note. You can reach Sarah at vocs dot com you can reach. group email at weeds at boxed, I'll, come and look forward to hearing from some of you in speaking of the Obama care rate. Increases if you're buying insurance on Obamacare, there's a decent chance that You have got in a very big deal for next year that you the letter from your insurance companies saying that you're premiums are going to go up. two more than they have any other years, so it, as is probably, already known to many of our listeners. We got news this week that Obamacare premiums for the mid level benchmark plan. We can I do think we really need to explain. A cocaine is important area. Let's see, let's go into the weeds so we hear something other benchmark plan. This is a plan. on average covers seventy percent of an enrolling cost soap, and- and this is kind of level coverage- Jude, usually kickin- thirty percent Insurance Bank. Since seventy percent,
and they use one plan in particular to figure out how much subsidies everyone is going to get so ideal world a bunch of insurance plans submit silver level plans. These plans are cover. Seventy per and of enrolling costs and the new government through all these plans and they find the second lowest costs, one is, let's say, and plan charges like too There's a month, one charges to thirty one charges to sixty. They say: ok, the two Thirty one like that is the benchmark plan and this benchmark plan determines how many subsidies people. So they say this is a mid level plan. We're not gonna make like the best plan affordable to you, but we will make this mid level plan. fordable and will give you subsidies. You only have to spend a certain percent of your income to afford this mid level plan. two very important too. How Obamacare works in its very important, too the affordability of Obamacare. So what
we learned this week- is that these benchmark plans are going to go up twenty two percent in most of the Obama care on average across most the Obama care markets. This way bigger than any other year, the first year they rose, half percent. Last year there are seven point: five percent- and this year up to a twenty two percent increase on bump bump bump bump which is raising some very serious and fair questions about again about the sustainability of Obama care. I think we have these questions raised first, when a lot of insurance companies dropped out seeing them raise stem now that these premiums have gone up in the entrance eggs in the premium increases to me. They kind of speak to the same problem that there are there there two different part sides of the same coin, which is that the people who have signed up for the marketplace, there are fewer of them than expected. They are much sicker than expected, and this makes it very hard to ensure these people with cheaper
premiums, thieves in insurance companies, essentially making one of two decisions using them, leaving the market, which is the decision to make this summer and using them raising premiums, which is the decision that they're making now and it all stems from who is signing up for a bomb, a care and that population being much smaller and significantly sicker. Then Democrats and the drafters of upon the carrot expected. Ok, so a couple things here that I think are important trend, a rap around the story. One is that one goes to the benchmark silver plan subsidy. So what is happening here is, we are all reporting it correctly, as premiums are going up on average by twenty two percent, but for people premiums are going up on average by twenty two percent. There often not going up at all, because the subsidies are tied to the plan itself and as a plan increases in costs due to the subsidies increase in their generosity, because the subsidies are not a fixed our mouth.
Having what percentage of your income you can spend on a plan. Your income would have to be the thing. The changed for the subsidy level to change in your income is not the thing that re there, that is changing, so This does not mean nobody is paying the new cost. It means the people paying the costs are, on the one hand, folks who are not subsidized in the marketplace, which is roughly twenty three percent and twenty seventy percent and too, of course, taxpayers Ryan. Three, there's about that with this, as a group we forget about that later, Levitt, if you read Mikey Renee with them on Wednesday on vocs stuck here- users, the third group, this actually even more and which is seven million people who buy coverage off the market place who are affected by the exact same rate hikes end such another good.
I want to leave out and might be eligible for Sub Maisie aren't getting their years, has their buying out so that bit of a debate about like how much these people are- and we know very little about the right to buy off marketplace, but there are a lot of them. Ok, so one thing here, though, just we really have to keep in mind, because I think it very important to be precise about what is the problem here and I think some degree? This is gonna, be what we end up arguing out in during this segment. I think the thing people think will be the problem here is that people who don't have much money are about to find the health insurance became unaffordable. That's probably not going to happen very often, it will happen for the seventeen percent who make and roughly, let's say three hundred percent of the poverty line. Could subsidies phase out radically then and phase out completely at four hundred percent, and and that's that that's a native garnish, be concerned about, but beneath that I don't think you can see a huge change in affordability
what you are seeing are a couple things that are really significant. One problem that you're gonna to have here is that if this is not a one time, correction in the market- and it might be, subsidies were much lower than we expected for the first couple of years of Obamacare and, and it looks like- ensures underpriced them potentially because they made bad estimates of house the population be and potential because you are trying to get the largest share of the market and then raise prices on people once at a customer base. Octave either way insurance or not finding the Obama care marketplaces to beef overall, a very profitable place to operate in order to make them more profitable to trying to do a big premium hike or leaving the markets entirely in just giving up. But the result of that is that it is. You wrote today Sarah about a thousand counties or down
one insurance issuer so and in the recent I think it's really important is that if you are trying to keep costs down long term and you turn of competition law from you need more than one. One issue are and just gave it that in contact that's a huge change in twenty. Sixteen was a hundred eighty two countries with one ensure when our up to nine hundred and sixty in just one year. There are huge huge state into that's gone from Obamacare. Having these competitive market places were different. Issuers are fighting each other for people's business to basically this being I mean there, someplace Eridu lot of competition, but in much of the country Obamacare now has a single issue and its lacrosse Beauchamp. It's a pact between the federal government in Bucharest, blue shield, to make this programme work, and so the marketplaces themselves are failing are beginning to fail across a broad swathes of the country in their promise, which was to have, competitive dynamic underlying them, and then the final thing, I think, is important. Here, This really will matter going forward. As Sarah said we
Spain Obama has fewer people in the marketplace, and we expected we thought by now there be accordingly sepia, roughly twenty million, it's really roughly ten million. That's made it hard to get enough folks in there for them. a stable peaceful. So what we I need to find out is there's gonna, be this big rate increase it does that DR healthy people out and make the risk, but worse or because a lot of these plans that are outside the more places or grandfathered are beginning to expire, because the individual mandate is getting tougher and tougher because just this is going on for a long time. Do people keep coming into the marketplace and now that the prices stabilize with this rate, increase we begin to get a more stable, more predictable risk, pull that interest, can price around and build businesses round and that question the question of are weak, directing the market so that it can function better or is this the beginning of the market? Breaking such it won't function at all in places like Arizona that to me, as it is, is the big unknown here
I feel like until I dug into this report when some earlier generations of these Ike Obamacare scare stories they come out. I had Diane a little bit of mental cartooning thing and I had focused on the sort of worst. You know like most overblown critical story is, and I looked back and unlike look ok, yes, individual people are not going to see, particularly like poor people are not going to see health insurance now become unaffordable and, in particular the sort of republican critique leg. Oh, your health insurance has become too expensive. So, let's make sure you have no health insurance link, it makes no sense right. There's two whatever extent the problem is that people are not getting affordable.
insurance deep Republican Obamacare agenda, which is to repeal it does not solve that problem it in any way, and that had gotten me like Canada, defensive about about the whole thing. But when you stepped back- and you look at the underlying dynamic here- whether it stabilizes is that you have a market places that are being held by the subsidy is wait. They are not the mandate and the quality of the plans and the and the magic of competition? What whatever, which was to do? It is not getting people who are arming three hundred four hundred five hundred percent of the poverty line into these kinds of poor swayed, and there was an important part of like the broad idea. But why are we doing this at all right, like that? The problem space was defined, not as we need to find a way
to put more money into the pockets of low income. People cassettes conceptually very easy problem: love the bombs ages, others. How can we find a cost effective way of creating a american version of Universal healthcare system that will not have these gigantic gaps in it and the the idea of an individual mandate so that there would be a broad risk pool of sliding scale subsidies so that poor people would be able to participate, but even notice right. It's like when you would describe the three legged stool. The baseline assumption was that by getting everyone to participate, middle class people too,
would be able to afford the premiums, and then you would need subsidy is joint sure that poor people could also participate, and what's really happening is the opposite of that right. If you are poor enough, the government will give you a huge coupon to go by health insurance, and so you do it. I mean it's you just like throwing money away, but by not doing it, but if you, if you aren't eligible for that coupon, the system that has been set up is just not that appealing it's it's. It's not that good. So, to the extent that, like one of the aspirations of the affordable care act, was to be no create a programme, that I don't know executives ape like that people would like right. The way that like, if you can run, was like, let's not have social security, people would say. No social security is good. I like us again, you are like, let's not have high school said say no like high school is good
I felt like a guy school. You know, like links social service that, like people, would use an embrace right and the exchanges are failing to do that? right. They are succeeding at subsidizing. People who are eligible for subsidy, just as the larger law does a lot more than the exchange rate and so like putting a lot more money into Medicaid is getting a lot more people automatic which is amazing for them. The exchanges themselves are working a little bit like I like a medicate plus, particularly in these areas, where it's really just blew Koran, inefficient, Medikit wait any any we raise is, I think it really does we raise the whole from the left critique of the affordable care act which was like? Why are we doing this? Rightly? What is the point of this extremely complicated
apparatus and, like the second cheapness silver plan benchmark, you know whatever, whatever whatever it does not seem like we have discovered a better way of delivering healthcare to people or of collecting revenue necessary to make sure that everybody has insurance like this enormous rube, Goldberg contraption, that is not giving many people meaningful choices. It's not creating like workable solution for middle class self employed, ball in terms of ways to just boost the incomes of low income. People is very round about, right I mean you could just give everybody checks and they could them to buy insurance or by skittles are or whatever they want. You couldn't just expanded, Medicaid more any. It really does seem to me like now. It's going to fail in the sense that, like the programme must end, but there
unless a substantial change is made like through Congress. that is not going to achieve the like lofty goals that were set if you're anything like me, you know sometimes you wanna snack end. If what's a wound snack on his junk food, you gonna eat junk food and it is not great. So if you want a short and live a healthier life, he would start snacking healthier with nature box. It makes next that actually taste great and their better. For you, the great with high quality ingredients that are free from artificial colors flavors of sweeteners. You can feel ok about snacking. I like some their dried fruit stuff. They got great apples, it got great pairs. They also have some in a slightly more indulgent, principally things and there that that I also ask for- and they recently made, this was even better. You can order as much as you want, as often as you want with no minimum perched required anythin cancelling anytime I. So it's really simple you than a nature box, dot com you check out their snapped cattle
There are one hundred smacks to choose from there, always adding new stuff. Do you choose what you want? They deliver read your door, it's easy, but nature backs you'll, never get bored is new stuff there, each month, it's inspired by real customer feedback and it for some reason. Something comes you don't like it. They will replace it for free is a good opportunity to try something new, I'm so right now, you're, safe, even more because nature boxes offering offence fifty percent off your first order. If you got a nature box, dot com, slash reads: you gotta Nature Box, tat, complex weeds that we get credit. You get. Fifty percent of the first order, Nature box, tat, calm, slash it's hard to think back to five years ago and how much the goalposts have shifted, but they really in the view of what what about my care would be. An who would serve has changed a lot and I always has a major behalf. Yes, on this point, everybody should read circles. Article called quote is alarming care, failing, whereas I think the best eyes are you as you, as does a great interruption,
so I was actually, as I was working on, that peace last night I was reading through old and on budget office reports, as one is want to deal in back in. Thousand nine. This Cvo, which is the kind of non partisan Scorpio. In Washington. They estimated that forty three percent People would pay their entire premium. That you'd have this really big group of middle income, people who almost half of the marketplace and now we're at seventeen percent. So that's really a shift in who we thought was going to use the marketplace that there was this expectation. I think, as our probably member from covering this, that it would be like of some kind of version of kayak that we would have liked a lot of peace and that would builds the buyer that people you know you'd have this more would be a lot of plans of a lot of land you a lot of drawing on pay humor and now I think you're right, there's this kind of critique and the left wing. What's the point of doing this with private insurance, we essentially built to fail, because our working with these four
but insurers, who are more beholden to their shareholders than they are to the people buying insurance? Of course, this was going to work, wasn't going to work. I I dont share that view cause, I feel like we see versions of this working elsewhere in the world and that we made some political decisions that those fault for the problems in the market based right now isn't solely on. The fact decide to work for poor profit ensures its on how we decided to regulate them, and I know that this is something you ve written on, but the You do see other countries like Switzerland that do have these insurance systems that rely on private insurers and what they do is really just like regulate the shit out of it like theirs. How many more regulations on the ensures there are so many regulations on the people that their individual mandate fastening discussion. With them. They rheinart Health economist at Princeton, who was, and how they throw you in jail you don't have insurance there, they give you move to a new place in Switzerland and you don't ever insurance and ninety days they pick a plan for you
dark. Garnishing your wages and if you somehow train avoid those that you can go to prison and We can have landed in the middle where we chose we wanted to work with private insurance companies, but we It really set up an infrastructure for us Look. You wrote about earlier this week, Matt that we chose a super weak mandate. Wear it. pretty? It's? It's a strong mandate of your poor if seven hundred dollars that a lot of money when you're around like two hundred percent or a hundred fifty percent of the poverty line- it's not I must mention when the alternative, actually, when the alternative is a very heavily subsidize insurance. When you get up to, I think I'm an earlier health is analysis on this when you get up to two hundred percent to the poverty line, which isn't super super high income that, like twenty thousand for an individual, it's already cheaper to pay the penalty than it is to buy insurance. So I think this kind of Rube Goldberg Scheme, other countries have made
work like they ve set up regulations that make this type of system work. We, I think, mostly for political reasons, didn't want to go all the way and I think you're, seeing the consequences of that play out and the could have difficulty the marketplace as having now I want to say it's not as other countries, California is making this work. Massachusetts made this working in a day way in and has continued to think I have a pretty functional healthcare market. It is the case that, as I began this piece of finish it because that's how lost my peace is gonna bet, but the first line which I like is did Obama care is succeeding. schools failing in its ambitions and disproving something Republicans really actually needed to prove. and what I mean by, that is one thing that I think it's easy to forget about here in this conversation were folks on this. The laws covering a lot of people, its covering them with health insurance they like, and it is under cost
There are some big things. Obamacare is doing reasonably well that were part of the gold. They were not that they were not, though, the ambitions for the law, which was the the Hopefully, the lava transition to a new kind of healthcare system that would be a bridge between us and a kind of Denmark like Health, healthy. I think one way you see where this is failing in a relaxed. What Sarah was saying about about middle income? Folks, if you go back three years and you read what people are saying was going to happen to destroy the law into the opposite thing, the idea was it: employers were going to dump into the marketplace, because be so appealing to them and to their employees to just take advantage Uncle SAM subsidies and to just stop offering help, ensures that in just never happened and, on the one hand, its potential good. It never happened. I ve been a big shift from employers to taxpayers in terms of in terms of cost, but on the other,
and it's meant that if that's been part of these marketplaces not being attractive to higher income and also to healthier applicants, but it it has work much better in states that have been committed to making it work and instead said, have really try built a marketplaces, it's also think been better more populous states wanting the year to seeing here. Isn't it you know of Europe? California, and and probably in some, the very big counties in California like Allay or San Francisco. A lot of ensures want to be and so there, and so the marketplaces can work pretty well. If you're in a much more world state much more war county, it's just running health, insurers, hard and, is in as much of but upside to competing there, and so in places where a competition based marketplace does not work, on the place where there is a strong incentive for competition. But the final point here- I do want to make an end. This goes over to amount was saying there are somewhat strangely to competing theories of health reform happening and Obamacare.
But then you see, one of them is a traditional left theory, if helped form, which is continue expire ending single payer insurance systems to a larger and larger fraction of the population, and so we did with Medikit the. is a tradition, republican theory of help reform. It's been abandoned by Republicans, but it's what Mitt Romney didn't Massachusetts? It's what you saw as the sort of republican alternative in the nineties to Clinton CARE, and that is to create these regulated market places of private and who have a certain set of government. positions on them, but it's not that heavy. You have an individual mandate, a great personal responsibility and so on, and if you look at what Republicans want to do with the healthcare system in other places like Medicare, they want to create exchanges. The Paul Ryan Plan for Medicare is to do Obamacare like marketplaces in
the care. What is happening right now is that a lot of Republican said the girl chortling over the problems Obamacare having, but in a more long term way what's happening here. Is that the argument for just expanding simple government programmes is strengthening the nope. I think that a lot of as best menacing lotta Democrats would like to go back and just try to put their eggs into the bring Medicare down to age. Fifty five and bring medicate up to three hundred percent of the poverty line basket then just gotta, keep doing that slowly and create a single pair system by by a sort of work inches. Meanwhile, Republicans have wanted Obamacare to fail, but they don't want this theory of regulated private markets to fail, because a lot of places where the full need some kind of subsidized option and either you're gonna have a regulated private market of private options or you're gonna,
a single pair system, so you could fix Obamacare, you could fixes marketplace and you can make the individual mandate stronger it. You can make the subsidies better, you could make a lot more wraparound. You could add national health insurance plans or public option to put in more competition mechanically. What you would do here is not actually that complicated, but without a political party that wants to fix it. It won't get fixed and in what I think is a little bit. An ironic is not quite the right word but understand why Republicans you dont want to fix it. They feel burnt by Obamacare. They feel is rammed down their throats. They dont like the law, etc, etc. But I think from the shore hum put potential political profit that that that offers him not fit miss letting the stand as a reason that you don't want to do this kind of expansion of a government services, and instead you want to go to single pair out is not long term will be good for concern.
You know I am wondering I do want to say this, because I agree with what both budgetary measures and that the problems here are largely political in nature. It's not conceptually unworkable, as we see it in other countries is, but also that I am not personally like one of the hard core single payer activists, but I do sympathise a lot with their position and I do wanted like speak up. For their point of view, because, like the whole critique of the hard core single payer activists, is it they were putting forward a politically plausible thing, and then they would say well, look. We have all these other countries in Canada Alibi words and they will be saying. Ok, but I mean you have to think not about like. Could we, I think Hillary Clinton herself was saying this and Barack Obama like not like. Could we do this if we started from scratch, but like in the real world, could we make this work, but that's exactly this ensured that the individual mandate has failed right like could you in fury
total regulate insurance company so tightly that people would be willing to accept non purchase of health, Sharon's as a serious crime with serious consequences. But like can you actually in partnership with care and anxiety, put together, has not had an hour In an I admit, to having been an amazing revolving door thing, it's Merlin, Taverner right, yes, former ceo, so you must go much further into the boy right I mean to someone in defensive of the revolving door, acts in Massachusetts, where this works pretty well. What reason that it works well is actually that the health care industry, healthcare providers are such a dominant force in Massachusetts. Is political economy is a huge said medical research. They provide a lot of healthcare services to a broader New England kind of market and
for a long time during the implementation of Romany CARE, the head of Massachusetts, Blue Cross was a former democratic state. Senator univer lack hopped over there to like make the big nonprofit insurance rider like ITALY is very cosy out of people in the major Boston hospitals in the insurance community and in the state government who, like all of them collectively like wanted this to and they were all gonna get paid and they were all gonna have a nice when replies and like it did work. A mere as a whole, though, has a. in some ways too much of an arms length relationship between these different players. You don't have like the kind of trust where insurance come
These will be like shore will become heavily regulated, utility is, and in exchange, the government warlike heard all these new customers our way and then also insurance companies. Don't pull well read like when Democrats or passing the law? They are constantly talking about how they were like standing up for the insurance companies when they weren't, but it's a really hard to say, you're, standing up to the insurance companies, while talking about where you can pay a five thousand dollars and if you don't go by the insurance companies product, so young and its also by the way just getting now in- and this is a single air point, much harder for the government to serve the internally if they possess blue crossbows shield, like their fucked grey one. But this is where I do think one threat of observe hopeful. It's right, which is that
I was the governors of world states which are not all many red states are not that rural and some whirl states are not that red, but there's a large block of soda planes. He states that are very heavily republican, very heavily world with this system, is working terribly and we're. Honestly, though, they have like just a big basic problem with the fact that, like not that many people live there, so there's not that many health care providers. So this not much competition, and it's like hard to make things work go. years of those states who want to make the lives of citizens of Wyoming and get out were on the back
sky and wherever else better, are going to have to come up with something else to do and are going to have through the waiver process like more opportunity to request the ability to like come up with something that they will then be necessarily like taking responsibility for trying to make work. I think there's like strong political incentive for Republicans. Do not do that its genuinely unfavourable circumstance being a low population density, whirl state, and if I could just avoid taking responsibility for it and say, like ours Obama's fault, you know I would, but with every passing year, particularly I couldn't wins the action, the balance of risks of like well. Ok, I'm I ducking responsibility for this verses. Like am, I actually failing to address a problem that is annoying people. You know, do come in
in detention with each other, and we have seen this already in a number of the medical states. You no word for public and governors will say: look I don't know. This was not my idea to do this. Medicate expansion, but like here something I want to put on the table and I do think we will eventually start to see some more that on the exchanges and- and I simply selling workable or comment, but what are they gonna do like? I don't see any more states building their own market places just because, like most of them, a number there are built of ultimately shuddered Connect Kentucky like the poster child. Obamacare marketplace was closed this year by Governor Mount beverage. I think you're right on Medicaid. That gets a clear thing that people are missing out on a thing that changes over time. I might not get the days ago right here, but I know one Medicaid launched initially in nineteen sixty five, only about half the states signed up and took until the nineteen eighty to get the last state Arizona on board and expanding medicated soberly was this. You know multi decade quest to get
everyone signed up and were actually, I think, click on the same trajectory feels weird little. Governors are still rejecting Medicaid but actually looks very similar to the initial decision about Medicaid, I'm not sure, there's a tonne that states can do to make the market places where better, I think, there's some stuff on the edges of California. Think, as I like doing a lot of things, I think California is very advantaged by their large population like the Florida marketplaces. Also working amazingly and end, the governor hates, like the state, is doing no work to make it work, but it's a place at all of people. A lot of insurers are interested and selling their a lot of Milosevic love and care and on profits have set up shop to work on enrollment. So I hard for me to see like one whether it's a big problem like as we mentioned most people on the market places are getting pretty heavy subsidies there. They might have to switch plans, but you know of your in if you're, unlike Oklahoma, vertically
You just have one plan you're not going to switch plans, because there is just one one: insurers selling you coverage. We actually know becomes that that disruptive, that much of a problem or what even estates what state could do about it. I think we need to just be clears were having this part of the discussion in what the assumptions of it are so again. If this is a one year thing of a twenty two point: five percent increase, and next year it's a six point. Four percent increase. No state is going to have it inside your. Do anything right, they'll, just let this thing kind of continued on, and I think this goes to your piece about the medical dedicated nation of Obamacare. What man, I think, you're saying here, is ok, let's say we're going to collapse scenarios. Let's say that we have a state where there's no insurers who want to participate- or you know we see another year- seventeen percent increase in stuff like that, where it really getting non manageable and you have a crisis. You have to do something about so there. I think.
What Obamacare does have is a waiver process where or than like, rebuilding the marketplace. You could build anything you wanted in its place the promised it's a tunnel worked I'd like to create a everything. You've reported Sarah Lot on Vermont effort to use the waiver process to get single payer, which is basically crashed and burned, but you could do a lot of things to about that are very clever. talked Republicans about this in Ramallah. Manoeuvre has had a peace on this at. I agree to some pieces of in disagreed with others, but but one thing I think he says it is correct- is dead. One problem with the way for process is that, if forces you to hold to olive Obama, cares basic assumption about what it will do. So you you have to say you have to prove to the government that you will be covering as many people with ass comprehensive coverage. S Obamacare now. I am not a fan of reducing the covers many people, part of that sentence, but I do
it would make sense. Portuguese, we are seeing that the coverage levels and Obamacare are not proving that attractive to people of is not that we are seeing a market responsive, focusing. I really want this and by giving me good health insurance, you know I'm in a Russian is marketplace. I think it makes sense to draw that down one of the funny, twists of all this, is that one of the most interesting Obamacare reform plans right now is cosponsor by TIM Cain and most people, I think, have forgotten this plan happened, but it was about two years ago and Mark Warner and Mark baggage and TIM Cain and above of other kind of polish state, Denmark, that's an immensely democratic baggage, came up with a plan called the cotton. I forgot what I've heard of copper, but in it it had the copper plant. I created the bills in the ice and what the copper plan does is. So you may know what, though the lowest level the bronze and Obamacare sixties asked me. Sixty sixty something s
briggs it under fifty percent actuarial value like that is a very sparse plants here that it is only gonna, you're gonna, have plans- are only can cover fifty percent of what of your expected healthcare costs, but doing something in the waiver process? Sixty percent extra seeds of bringing down to fifty you know you could do more. Things were essential benefits to allow more catastrophic plans, ok, I mean. I think that if you start going to this kind of scenario, that the right thing to do is to. power the waiver process up and give states more flexibility, because unless the Obama or that Demonstration really does have a way to meet Nobody cares goals, despite the fact that Obama care in a certain number of states is failing to meet those goals itself. I think they have do at a certain point being compromising down the gulls yeah. I agree with
That guy, I just want to say and unresponsive, Sarah, that my thinking by this is that when you look at there's, a bunch of issue is going on with with the exchanges, but but the issue in heavily rural areas, I think, is largely room by the fundamentals of those areas like nothing to do with the marketplace. Its just the case that if the biggest city that's anywhere near, you is really small. That city is not going to contain very many health care specialists and it will be except they will have a lot of pricing power. It's really not going to be a good dynamic to have like a bunch of different insurance companies competing for contracts with like just one hospital. It's not that it's not efficient to deliver health care services,
To rural areas, if you are the governor of Bio meaning, that is just a problem that you have been to some extent grappling with for decades, but the M in different governors but it becomes more. A tyrant away only comes more intense over time. As for, like various reasons, healthcare just becomes a more and more important, more more costly industry weighed, and so one thing that those areas rely on very heavily is that the Medicare programme makes some special allowances for that the needs of of areas as long as you have the federal government having sort of out a stream of money for health care, and you have a state that has some like fundamental problems with attracting an adequate quantity of healthcare providers. I think it just it has to be very TIM
I have to say I want to come up with something that I can submit to each has. That will get me like something that is useful rather than going into a system where fewer and fewer people sign up and therefore theirs. some less subsidy, less and less purchase like your overall state, like healthcare infrastructure, is sorted decaying now. What does specific mechanics of like? How do you do that? That waiver process, instead of our unity, is hard but ages? My point is these: these plain states not the deep South states where they have a lot of these, your provider counties but also cities, but the places where they really don't like they ve now kicked out most of their pork, barely democratic senators, who used to try to solve these problems for them and they are going to have to come up with like something to do, because people,
people want doctors. Private employers are going to find it difficult to purchase health insurance in states where no one wants to sell health insurance. Why don't think you're seeing carriers drop out of the employer market like that, doesn't seem to be a problem in these states, and I think that's the point you make. the mechanics of this. Our hard think. That is why I do not expect to see much use of the waiver process at all. Moves. Love, love. This comes from writing about Vermont, which wanted to make a waiver works so badly in had like the entire political infrastructure. Medical infrastructure, like everyone, was rooting for single pair and it basically collapse the fact that it would shift so much of the burden of healthcare and taxes in a way that even in Vermont, didn't feel reasonable ended. One reason to it, I kind of think of it almost like a scale so one that, on the one hand, it's really hard to design a waiver tat grew that Croatia is really to design a waiver that can hit all the points that the administration wants and then you're
you're. Talking about the end of the day, like a pretty small part of your population, like we have national ten million people getting coverage of the marketplace and a country with about three hundred and thirty million people. So, even though this is a population, we talk, allied, it's a very small population. So when I look at that, calculus of requires allow of work? No one else has done it before you don't like a plan you can take from another red state, unlike bring into your state and then like a pretty tiny population. You're talking about I'm just pretty sceptical that governor who generally opposes the law, would do much to fix it and would face significant political consequences for not taking a
I regret that, although I'm just for no reason given that it has now impossibility the rapid ain't gonna, throw out more, I think fun fixed ideas, which is, I think, something again that if we lived in a political system, more people wanted to make this work or wanted to have a bunch of things happening simultaneously. That that could help make it work. Is you can do something that was three pronged like this one? Is it you Could you could first just drop down the actual value requirements and it took fifty or something in that area? I think the essential benefit that the difficulty of meeting the essential benefits requirements is actually overstated, but nevertheless you could drop Adam.
I miss you can give people a lot more room to experiment and even without using the waiver process, it would be easier for interest offer truly catastrophic policies. You know you could have things like that. That might be more appealing. Young people can already get catastrophic policies, but it might be more appealing to say forty five year old. You don't have that much money, but have enough. So that's one thing, but simultaneously, because the competition is really a problem producing these rural states. I think this is really strengthen the case for a public option at the very least, a public option that, with sugar in markets have fewer than that have three or fewer issuers. So I think like that, would make a lot of sense, and then there is a idea that was in seminars campaign. Hillary Clinton has embraced it. It was killed at the end of the Obamacare process by Jo Liebermann by the way, to allow Medicare by and for folks fifty five an up, and I think that is a really good
on a lotta levels. But one thing it would also do is take people whose health care costs are quite high and bring them into a system or give them access to a system that is good negotiating for them. That is quite cheap for what they need. That is going to be the system. They're gonna be the ten years anyway, and so it just makes a lot of sense, and it would, in a like, at the stroke of a moment, create more actuarial balance for a bomb, a correct self, and so many did those three things and what you could do is you could have. On the one hand, market places were lot more like what Republicans think will work and and and would want right now places it have much less in the way of regulation of the insurers, much more catastrophic insurance. That kind of thing, a public option to ensure this competition in places where there wouldn't otherwise be competent. And a medic hereby, and so the folks who you know- and this has been the case and in health insurance just broadly the folk like the older- you get the sick or you get the harder. It is the structure, a health insurance market in a framework away that how that works
You and you can just give them and on ramp using say, Obamacare subsidies or even not using Obamacare subsidies into into Medicare. Now again, he's gonna happen no, but I think it would make sense in Mama care. There is actually a requirement that the government find to national plans to cover the entire country. It's called the Multi state plan and it was working for a little bit is that there was a phase and that ever get like that. You know you're one. You, like twenty states you're to twenty four and then, like eventually scaling up, I think over three or four years, an entire country, and they did your one, I think, just with Blue Cross blue shields and that a kind of just one way, and no one ever really talked about it again. I think there are some escape hatch that like made this regulatory early, it shows the drafters thinking about like this exact pro. On that. They're gonna be these rural areas, the country that are not going to attract a lot of carriers- and these
when they came up with which I am veto, is not a public option, a thing: ok, we're gonna find two partners who want to be national carriers and they couldn't and those partners and big it speaks to why, if you're going to do a national plan you're going to need to build it yourself versus like on a partner. I think they're too big No, I just want to put on the table here at the end of the conversation, one again is whether what we are seeing right now is a market correction or a fundamental instability, a lot of experts by another. I've been hearing from seem to think it's a market correction to that things were too cheap and now they're going to be expensive and and but that will make things work in it will turn the stability over time, and then you just going to be back on the course we were six months ago, where you just kind of muddling through raid. It's not fulfilling anybody's wildest dreams for the
plan, but it is in a state of crisis by any means, so that I think, is just one thing that a lot of his conversation, I think, has proceeded from the premise of crisis, because right now we're talking about some very bad news for Obamacare, but it is clear that that is going to be a perpetual aid of existence for the law? The other thing is: how does having Hillary Clinton President, just someone who is not Barack Obama's president change incentives around this? I dont think it changes m dramatically, but one thing that really is different now is that it is that the way the political debate proceeds? Is it Hillary Clinton who did not vote for line, because you secular state also differently talk about it
huh. Oh, she has the ability to have stated position, which is different really from the one Obama is able to hold and in a way that fills credible to people of veto can amend it right like let's forget how to fix a lot has problems. I am perfectly happy admitting the problems like. Let's go forum on that and Republicans, I think you know if this key goes bad like one question, for them is really: can they staying a pure, a sort of repeal and replace position at a time when Obama, when, like the namesake of Obama, cares not with about anymore right in the same way that Barack Obama was president when no child left behind problems became completely. Honourable. If George W Bush had been precedent during that, I think that that debate would have,
it differently, but because Obama was president, it was a little bit easier for everybody to tread of just ultimately come together and fix it, which they sort of. I don't know how well people think the fix works or is working bushy sort of quietly did. I think, one of the big questions of Obama Karras, for years from now. After you know like or five years from now, does it end up in a similar position? No child left behind where its nobody's political problem. exactly in the same way, so it's a little bit easier fur from multiple sites to come together and fix it. This is not something for next year, but I do think it is possibly true for five years correspond quickly On this point before I move on, and so I have become opening a lot reporting on this. I've come to side with people who I think it's a one time. Courts correction, I think it is, there might be an exception and few states, like you, look at Arizona, it has a hundred and sixteen percent rate increase like that could cause some very serious problems, wild, it's really crazy, but what things I think we need Who's here is not enough
something I felt like. I lost sight of them during the original healthcare to govern role. and when busily no one was signing up there. All these issues with the website it wasn't working, but at the end of the day, they actually ended up for that first year, meeting their enrollment target and unite talk to a lot of people who dealt with a life bullshit trying to sign up and like we're constantly trying and where things are reminded me, what I think is very easy to forget if you are used to having health insurance that it really sucks not to help ensure and sick it, the people who are buying insurance in the marketplace, tender already like buying it for a reason they put up with finding a decent part. and come on these premium I was emailing with a upholstery is actually just doing focus groups with Obamacare. these earlier this week, who sang there's a lot of griping about the increased premiums, but at the end of the day, because anglo diamond and keep my plan that I'm gonna stick with it, then you health insurance, but this really socks and it was a helpful reminder-
that. Allow these people really value the product they are buying and are not going to leave them can place in droves, even if they are in the unsubsidized population. One bit of pushed back onto the dynamic you described is how you get a pretty sick population right that the people like when you look at why Europe Ten million, and not twenty million like some amount about delta, is people who are healthier not signing up, and I got. Why should you don't write a thing like this tend to eleven million population like the we're gonna we're not going to see that I don't think we're gonna like massive growth up to the Scipio projection. I dont think we're going to The scenario where, like the marketplace false, like eight million, are seven million next year. only by that. I just I just think that for them to figure really had like this, I'm a good course the they need to have people who don't need healthcare so badly. like a lot of you, a lot of enjoying healthy right, you need someone who's like. I would rather spend
Sixteen hundred dollars and get health insurance then spend seven hundred dollars. To the IRS and not get health insurance, but not like, because your ill, but just like for the insurance valiant right he had ended and I think a lot of these different trends like Paul in another direction. From that it, because I think you know you will have to think right if you're an insurance company and you are operating in a state that has only one company on the exchange and the population on the exchange is overwhelmingly composed of people below two hundred percent of the poverty line. Right you have no competitors and you have it rice, insensitive customer base, like aren't you gonna, keep Jack, improving up a lot. I mean not meant to say we'll- have a national average of twenty
percent, because obviously most people live in states that have a lot of people living in them. Either maps can make this look bleak, Balikh, not that many people living in rural areas, but in the places where it's there right. It seems like you know, you really do want to you just want to avoid having any given years increase, be like so gigantic that you tempt a competitor to come it right, but your tongue meant not sober desirable markets. Customers were not that price sensitive and it doesnt cause the system to collapse, because it's in is structured as an entitlement programmes. The biblical game with subsidies at some point, just the whole kitten caboodle gets into the mix of like budget negotiations especially The president is not someone. Who's like personal legacy is on the line here and some others can be saying that will. Why are we spending this like open, ended quantity of money for a subsidize program that not many people you is that like is
doesn't pole? Well, you know like how how politically defensible does this become whence it stops being the case that the costs are coming envelope projection? presence. There are some downward pressure on premiums. I know we're going super. No, we hundreds have been quite right, but if you do have the metal laws, ratio provision which requires us to eighty. Eighty percent of premiums on the individual market be spent on Karen, then you do a rate regulation where there is typically in most states some levels review some of those they actually have to prove it in some places. This is totally fucked up at this point, where you have Georgia's insurance, commissioner, I think it was talking Look at these are terrible rates that are going up and are ergonomic dismissed Obama care of the kind of like being level about what high rates were coming in in it stay, I don't wanna. Things are actually protecting. Obamacare budget wiser now is the fact that enrollment is low. So even though it where's per
per person. Subsidies are likely much higher than we had expected. The actual overall spending on subsidies is lower than we it would be just because peculiarity hands. It is about right, given the premiums were also lower than expected when they were, but its catching. I understand, but I just decide, I recommend was going off hand point but I'd be supervised to know our per person subsidies lower higher than expected So I gave me a little their higher because you have such a low income populations you're, paying a larger percentage of the premium rate because you have a population that most ILO presented had because on average, if you had more people are three hundred to four hundred percent. really loves like. I think there is an assumption. I have to look back and six zero did that's what they definitely thought more high income. People would be involved that forty three percent were hang there on putting behind zero zero subsidy live like realises, puts the put up at an average rate, have your averaging now yeah, but but that's different ends,
and I know this is probably not that a brown serve runs, really hear somebody at about one. Seventy, five percent of poverty. There getting larger subsidy per se than weeks. My honour, because the premium via large yeah guess agree are at times in recent years so this week, gotta pretty clean and simple paper for you there's a lot of methodological weeds but there, but the take away, as is pretty clear that it's interesting, it's just a fairy Jonathan Wrath bound and Catherine Massey. The papers called do grandparents and great grim and matter multi generational mobility. In the? U S, nineteen, ten, to twenty thirty, and as I saw my favorite title, so here's a point. One question: people had multiple generations of kids. you'll, never believe tagging along a little about click back up. So one thing that people have been increasingly talking about in this are wonky political way is not just income inequality but is sort of income mobility across generations,
and the normal way that you study, that is, you compare, fathers decides and you see how it goes, and we have a finding that there is a lot of sticking us in the United States from fathers. Two sons compared to in many north northern european countries similar amount, as in the UK and in ITALY, and we also find that this has sort of increased along with income inequality. so common sense says, though, that, like families extend further back in time than that, and when you talk about someone like George P Bush right, it seems relevant not just that his dad was the governor of Florida, but that his uncle was governor of Texas and Present United States that his grandfather was also present. The United states that his great grandfather was United States. Senator right did that's like the the Bush family. It goes back like a ways and in fact, if you keep looking at the Prescott said the boy
Is there like important Americans for many many many many generations? The problem is its hard to study that kind of thing rigorously across a broad population, but with these guys did was they they looked at census data. They do the senses every ten years- and you know one thing they do. Is they ask you about your income, but they also ask you like who is in your family, so you can create link census, data that max you know so, and so was like a little baby and nineteen forty and then he had children in nineteen sixty or seventy, and that those kids are grown up in that in the two thousand are or twenty ten senses. So you can start looking at the impact on grandparents and in what they find that there's a pretty strong grandparent, a fact, and-
is seemingly meaningful. Great grandparents fact accept, even on the time horizon their studying it it's hard to get great grandparents I'm so they say just looking at that. The great grandparents means that you are under estimating income persistence by about twenty percent right so like the old finding on the United States was that there is very little income mobility and the new finding is that there is even less I'd like you to to unpack what that finding me. So well, what was the persistence estimate before and what does it mean that we are underestimating by twenty percent, That is a great question as to what the twenty percent is exactly at twenty percent of. So it says that it would so these visitors, multiple interpretations of what is its right, but the ascent
You have about. Seventy percent steadiness between fathers and signs in the traditional finding and that there's tends to be over the gap between fathers and sons about a twenty percent snap MAC too, like where the grandparent all in Florence was not to understand that ok, so evident, snap, acme, so we'd be means that there is a large tendency if your dad was poorer than your grandfather. There's a large tendency for you to be richer than your dad, o entertained and vice versa, right that you tend to regret certain someone who is grandfather was not exact exactly exactly so that so that you know, if you're, if your dad and his grip and his dad we're about the same and your poor than your dad, I'm an popularize us so we're talking about a Gilmore girls,
yes, so you were so the Gilmore girls, which is a wonderful show now on that flax- and I am outing myself- a somebody's watched more than a couple episodes of it. You have that the grandparents who are rich, then Lorelei, whose like a charismatic fuck up, Rory who, because the grandparents are rich, gets to go to a fancy school and thus emotion, the entire television series, but also becomes richer herself in later life, as results on charity Gus to be like a blogger journalists like us, the average I mean at the beginning of the content, the blogger journals content gave you can go from a lot of people doing before those two year, re wreck and unknown, so this is actually great today- say, there's multiple interpretative, I'm really. I think this is really about I'm pretty proud of that. There is great Y know
when they say this. Multiple interpretations of the grandparent effect right. One possibilities it out. One come one possibility is that it's a Gilmore girls, phenomena right we're late really the word trademark worthy the wealthy, grandparents, literally step area and intervene in to boost Don't worry writers, economic status outcomes right. So another interpretation of this that there are differences, regret Gregory Clark who looked alighted at Sweden says this is He says that a lot of the income drop that typically the income drop, is a little bit of of a pseudo income to write that it's not that Lorelei is a charismatic fuck up. So much as that liberalized parents are rich, so she goes to a fancy school and she just like decide to be a poet. Aha survivor income is lower work at a hotel, as it might be.
No no one hears. What I'm saying is good, because it is a Dutch. Its utter really believe. Laura lies. A fuck up regards I've. I'm trying to think of a good show that exempt why's that smell, but I take it. I mean we all I will go and I went to a fancy private high school in New York, all the parents. There were super rich when I look around at what my classmates are due relatively few of them. Are business tighten sir right, so you would see like these huge income dropbox, but then it's well so and so has an award winning document. Yes, I was actually can be used, hugged eventually filmmakers in exile. No people unpleasant, there's two elements to one is that this is actually a person who is able to transmit to their children a lot of social capital and per strange and clout. They go to fancy places and travelling fancy circles, and the other thing is that the life choice to go be an award winning Documentary
maker is predicated on the fact that you know mom and dad can help you out and a pinch. You know that their wealth will ultimately be inherited by you, so it's not important whether you personally amass enormous. Concept of savings, and so there can be a lot of some short term bound seen us between. Like do you have like lawyer and Wall Street guys. Do you have like academics and documentary film makers, but you're, actually seeing a consistent higher the prestige. I mean we're example. This would be somebody like when John Rockefeller was a senator rain, get a part of the wealthy Rockefeller family. I think he did not make a great deal of money over the course of his life, unlike a ladder, senators being a just like air to an informed
Fortune he didn't like do a lot of paid speaking on the lecture circuit. Wages have sound stuff like that, but it's part of being apelike rich in fancy family over the whole course of generation. You have politicians and that family of land for past you have guys who invented a giant humble, but it, but so the point here is that what we want is being identified hears is: is it mechanism right and what the study of showing is one that privilege goes multiple generations down. and an end to what you're saying and in terms of their be multiple Norbert interpretations? Is it sometimes what we think we see one wave at the two generations, studies can mislead us is it you are seeing people whose income is lower, but that is in part because the higher income at our peril gives him freedom to maybe make other choices not having to work as much about economic security can be a documentary film maker, not that there is anything wrong documentary film making. You could be a blogger as well. I like
One reason to know any blogger, but you know like me my parents aren't by any means rich, but my dad works at a university, so I could at the time I went into blogging. It did not look You can pick a career, we made any money there and but I felt safe, knowing that you know fifth things when bad, they can help me out, but then the next generation you often see the descended sort of go back up the income or back the income thing because you're not gonna, hurt the money from their parents. They need to make more money, but they also did a lot of culture prestige and allowed them to make more money or something else is in regular Clark stuff. If I'm not wrong, doesn't have a genetic component to his arguments, yeah, maybe he's a little his alone dodgy as to what he's trying to say. he finds, and so the challenge of doing this Multi general research right is like how do you get good data that stretches back across enormous
spends of swedish administrative? Did it ever have. Sis is not what he is able to know as usual. It would be nice if you could re run this sense, a study with some administrative data from the IRS, which would give you a more detailed information about people's financial circumstances, including you dont, directly report wealth on your taxes, but because you have to report investment income, you can make some good infringes about it, which is what's really missing from a lot of the senses. it is like. Do you just get grandpas money right, I mean presume: will you do in many cases, but it's hard to what is a privilege mechanism. Here is actually really pride, so what clerk does because he wants to look at centuries long spans of time. So he looks at people's, alas, you miss, which I know some people have raised. Various concerns about. You know he d, as one study in Sweden has one study in China. I am not like an expert
and swedish naming conventions so I've? I've got a little shy about treating this as as definitive about which he at least claims to show is significant persistence across like four five hundred year in terms of like who work, who are the doctors in Sweden, and so for that. I think he really reaches for genetic explanation when he looks China because he says that you see multi generational inequality persisting across like the mouse period and he he argues that it is unlikely that a western democratic society is embarked on a we d, it is a programme that is more ambitious than the Chinese Communist Party and that what you were saying there is is a purely genetic element. What did that's true or not hinges on your interpretation of chinese surname Data, which I really am not, but they said
data. It did not go as far back to really tell you what's happening, but it's like pretty clear cut. I think that this sort of conventional to generation estimate is giving you are having twenty. Sends a lot right. I mean that's it. That's a significant under count of the long range persistence absurd of the weeds. If you're listen to the words, you might be stayed in the as reclined show this week, which is an interview with Joseph Stiglitz, Nobel Prize Winning economist us. He should go check that out, but whether or not you go check that out we are grateful that you stuck around today. Thank you tore producer, a theme Shapiro reads the box to come and pay reproduction and we'll be back next week. also aid from three episode: YAP, the dream, lives, mutual, never die.
Transcript generated on 2021-09-14.