What Everyone Knew About Obamacare and Wouldn't Say

Most people don't pay close attention to politics. [Link]

The law’s supporters have made some quite reasonable points in response -- that rate shock was an unfortunate but necessary consequence of broadening coverage to people with pre-existing conditions, and it may not even affect that many people. You can’t make even the nicest of omelets without breaking eggs. And some of them did mention this at least once during the run-up to the law’s passage.

They’ve also, however, made some arguments that were, at the very least, extremely ill-considered, such as saying that the insurance people had before wasn’t “real insurance” and implying that they are too stupid to know what’s good for them. As product marketers will tell you, when customers complain about a product change, here’s what not to do: Declare that your customers are idiots who don’t understand that they didn’t actually want the thing you took away from them. If you don’t believe me, just ask the folks on the New Coke team.

There’s also a growing trend toward suggesting that either the people complaining about rate shock or their insurers are engaged in some sort of nefarious behavior. I’m pretty sure thatDavid Frum and Bob Laszewski are neither lying nor too stupid to understand what is happening with their insurance policies, and David’s experience basically matches mine shopping on the Washington exchange -- not shopping for some outside policy that might be more expensive than the marvelously cheap insurance that I’ve seen people insisting must be available on the exchanges.

Nor do I find it easy to believe that nonprofit insurers such as Kaiser Permanente, with a strong commitment to accessible and affordable insurance, are sending these letters to spite the government or cheat their members. If they’re sending cancellation letters, I tend to think that this is because those letters have to be sent.

But the most interesting line of defense is, essentially, that “we always knew this was coming.” The Official Blog Spouse chronicled the emergence of this meme last summer, and it hasn’t changed much since. It’s interesting because it’s both completely true and completely false -- depending on who you think “we” is.

It’s absolutely true that every policy wonk who was writing or speaking about the law in 2009 and 2010 understood that it would mean premiums going up for at least some people, many of whom would lose insurance that they would have preferred to keep. Who it would be depended a bit on how the law unfolded, of course, but at a minimum, young, healthy people who made more than $46,000 a year could expect to pay higher premiums for the same level of coverage. They had to; mathematically, it was not possible for coverage to expand and everyone’s premiums to go down -- not unless you spent more in premium subsidies than the government could afford.

But I think it’s also clearly true that the majority of the public did not understand this. In 2008, the Barack Obama campaign told them that their premiums would go down under the new health-care law. And the law’s supporters believed it.

Q. Obama says his plan will save $2,500 annually for my family. How?

A. Through a combination of developing efficiencies in the system, expanding coverage to all Americans, and picking up the cost of some high-cost cases. Specifically:

-- Health IT investment, which will reduce unnecessary and wasteful spending in the health care system. Examples include extra hospital stays because of preventable medical errors and duplicative diagnostic tests;

-- Improving prevention and management of chronic conditions;

-- Increasing insurance industry competition and reining in the abusive practices of monopoly insurance and drug companies;

-- Providing reinsurance for catastrophic cases, which will reduce insurance premiums; and

-- Ensuring every American has health coverage, which will reduce spending on the “uncompensated” care of uninsured people who end up in emergency rooms and whose care is picked up by institutions and then passed through higher charges to insured individuals.

The part about reinsurance was always nonsense; unless it’s subsidized, reinsurance doesn’t save money for the system, though it may reduce the risk that an individual company will go broke. But the rest of it all sounded entirely plausible; I heard many smart wonks make most of these arguments in 2008 and 2009. However, it’s fair to say that by the time the law passed, the debate had pretty well established that few to none of them were true. “We all knew” that preventive care doesn’t save money, electronic medical records don’t save money, reducing uncompensated care saves very little money, and “reining in the abusive practices” of insurance companies was likely to raise premiums, not lower them, because those “abuses” mostly consist of refusing to cover very sick people.

But that information did not get communicated very well to the public. The administration reiterated that, in Obama’s words, “We will keep this promise to the American people. If you like your doctor, you will be able to keep your doctor. Period. If you like your health-care plan, you will be able to keep your health-care plan. Period.” They also promised that the average family would save $2,500 a year on premiums. There was no fine print about how some folks would lose their insurance, be forced into narrower doctor networks, and see premiums rise, even though they seem to have known what was going to happen.

And the wonk community did not exactly hasten to disabuse them. The risks of higher premiums for some were acknowledged in an aside, but they were not headlined. Unless you were reading volumes of writing about health care very carefully indeed, it wasn’t hard to miss that little detail -- at least one former Democratic staffer whose boss voted for the law seems to have been unaware that this was a possibility until her rates increased. 

For that matter, I still see regular commenters on the liberal wonk blogs that I read repeating the canards about cost savings from uncompensated care, preventive medicine and so forth. I know that many of them were reading those blogs when they pointed out that these things aren’t true, but it doesn’t seem to have sunk in, perhaps because these pronouncements did not get quite as much airtime as analysis of the benefits of the law. 

In other words, the wonks were living in what I think of as “Expertopia.” It’s a shiny, happy place where everyone knows all the salient facts that the experts have agreed on. The problem is, everyone else was living in the real world, where what “everyone knows” is some compendium of anecdotes from friends, the political speeches they watched, and what they managed to read on the Internet or hear on the news in five-minute bursts snatched from their workaday lives.