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More Thoughts on the Health Insurance Exchange

After yesterday's post on the weakening of the Health Insurance Exchange, a Hill staffer e-mailed some related thoughts that are worth publishing. In particular, she notes that closing the Exchange to the employed is going to do terrible things to those who find their employment status undergoing rapid, or even occasional, change.

I’m sorry, I don’t normally like to make your blog interactive, but the other issue with a weak exchange (that seems to be the direction that our committees are going in) is that it doesn’t resolve the continuity of coverage issues that we have in the current system.

For example, let’s say the Washington Post goes under. You are no longer covered by your employer so now you get to go into the exchange. Which is great because, unlike the current system, you’ll still be covered for however long you are out of a job. Then let’s say you find a job with the New York Times. Large company. They offer employer sponsored benefits. Now you are out of the exchange again. You lose what you got in the exchange and are forced to go with the NYT plan (until they go under and you end up back in the exchange.) So apart from all of the great points that you make in your post, you aren’t reforming the system so that insurance companies are forced to make long term investments in the health of their subscribers (because who knows how long they will be there) and you also forego a lot of the administrative saving that would found.

Incidentally, I quite like to make my blog interactive. Keep the e-mails and analyses and tips coming!

By Ezra Klein  |  June 30, 2009; 9:32 AM ET
Categories:  Health Reform  
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Charlie Baker (CEO of Harvard Pilgrim health insurance in Mass) has some interesting data on churn in Mass (where there's a 'connector' and the small group and individual markets have been marged):

Posted by: AronB | June 30, 2009 10:22 AM | Report abuse

So then the question is why is Congress so hell bend on destroying the very advantages of proposed exchange system? Why is White House not involved in this and say such a change is unacceptable? It is true that the issue may not be that significant to White House from political point of view. But this is a classic case where 'incompetent law makers' are letting down advantages of a well intended system and it will be too late when Bills are finalized to reopen this topic.

This brings to mind what happened in Alternative Energy. Green had an excellent article in The Atlantic about how over the years American Congress and White House followed 'flip-flopping' policy and made lasting damages to America's Alternative Energy Market. Health Care has more involvement from Government and these Congress folks are hell bend to prove that how they can screw Americans further. Otherwise it is really hard to understand why in the world the basic idea like 'continuous exchange membership' is nixed. Why are not these exchanges national? What is the harm in keeping them always open for an individual regardless of job status when 'mandating of coverage' is the case?

It is not just what Krugman calls these Congress members as 'anti-science'; they are 'anti-information' too. As someone blogged here sometime back, 'asymmetry of information' is the basis of capitalism. It is the arbitrage of information. The goal of a regulator who wants to reduce and control costs is to remove opportunities for such arbitrage as much as possible. And here we have our Congress to create impediments in that idea and diluting it to a point where it is meaningless. Sad part is it portrays clearly the helplessness of American people. Despite all these 'on-line town halls' and political meetings; our law makers and executive branch do not get even simple messages and can not devise a simple policy. It is frustrating and in a way humiliating to we voters.

Nothing what we do matters, in the end these lobbyist will screw us and our law makers merely allow that.

Posted by: umesh409 | June 30, 2009 10:35 AM | Report abuse


that was a very poignantly expressed comment... particularly, the last two paragraphs.
when i listened to pawlenty talk the other morning about health care reform, suggesting vouchers for people who couldnt afford medical procedures, as a way to solve our problems, i wondered how people like him become elected as overseers for society.
how does one affect sweeping change, when people who are entrusted to do the right thing and work for justice.....dont?
how can power and influence corrupt people so much, that they lose complete touch with the suffering and afflictions of other people?

Posted by: jkaren | June 30, 2009 10:59 AM | Report abuse

Just a remark that all these complications--strong plan, weak plan, exchange, pre-existing conditions, coops, job loss, etc., etc., etc. would dissappear under a rational efficient system like Super Medicare fo All (HR676) which would not cost us any more than we are now spending (probably less).

Posted by: lensch | June 30, 2009 11:01 AM | Report abuse

I think this touches on an important topic you don't hear much about. When the CDC does the National Health Insurance Study, they break people into 3 categories: current (uninsured at the time of the interview), intermittent (uninsured at least part of the year prior to the interview which also includes persons uninsured for more than a year), and long term (uninsured for more than a year).

"Intermittent" doesn't get as much play as it really should but statistics show that's where some real vulnerability lies. Worth noting that seasonal workers, people who haven't been at a job long enough to qualify for insurance, or people who don't qualify for benefits because they can only work part time due to family obligations; these people are still uninsured. 74% of the uninsured have a full time worker in the family (urban institute).

People should feel free to complain about potentially being taxed on their health benefits, but, alternately, if they lose their job they'll find that buying a policy on the open market is now 30% cheaper thanks to the exchange and the reform, thanks to the prescience to think of those in the intermittent category.

Posted by: ThomasEN | June 30, 2009 11:06 AM | Report abuse

National Health 'Interview' Study. My bad.

Posted by: ThomasEN | June 30, 2009 11:09 AM | Report abuse

Yes, it's likely that many of the differences between plans would be lessened, even with a private/exchange plan. However, one issue I rarely see discussed is that of deductibles and out of pocket limits. Let's say I work for my employer from January - April, and am covered under their plan. I have an expensive health condition, so I've satisfied the deductible and out of pocket caps by March. Then, I get laid off and go to the exchange plan. Unless there's some mechanism for giving me credit for my previously satisfied limits, I start all over again. With deductibles routinely north of $1000, and out of pocket limits that, even in my current reasonably good corporate plan, at $4000+ a year, that adds up -- especially if I find another job in October and am switched to a third plan.

Two jobs and a period of unemployment could result in out of pocket costs of $15,000 or more in this scenario, unless something is done to either allow people to keep the plan they have until the end of the benefit year or to allow credit for previously satisfied limits.

Posted by: jaye_eldridge | June 30, 2009 11:43 AM | Report abuse

Who works at this exchange? And how are they paid? Or is this just some kind of federally developed online program consumers can log onto?

Posted by: anne3 | June 30, 2009 11:48 AM | Report abuse

If we have to fund health care through employers, I want a voucher from my employer that I can use in the insurance exchange so I can pick my favorite kind of coverage and get the size of a national risk pool to keep my premiums low. Whether the voucher is taxed is a separate issue. I personally want to have the benefit taxed because it is income that I am getting from my employer. Perhaps a small tax break to encourage employers to provide the insurance voucher.

Posted by: srw3 | June 30, 2009 11:55 AM | Report abuse

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