By Dan Calabrese ——Bio and Archives--October 14, 2015
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Some churn is inevitable, but the Congressional Budget Office estimated two years ago that some 13 million would participate in 2015, and its most recent revision in March of this year still pegged the figure at 11 million. The CBO nonetheless now projects ObamaCare will more than double in size in 2016 to 21 million, and such a growth spurt is probably necessary to stabilize the insurance markets. But don’t count on the attrition problem going away given ObamaCare’s high and rising costs, as well as its low quality that is approaching Medicaid levels of coverage. The plans simply don’t offer good value for the money. In a new working paper, Wharton economists Mark Pauly, Adam Levine and Scott Harrington estimate how much better or worse off the non-poor uninsured are under ObamaCare. They measure the cost of the plans, the benefits of consuming pre-paid medical care and out-of-pocket payments without obtaining coverage. They conclude that, “even under the most optimistic assumptions,” half of the formerly uninsured take on both a higher financial burden and lower welfare, and on net “average welfare for the uninsured population would be estimated to decline after the ACA if all members of that population obtained coverage.” In other words, ObamaCare harms the people it is supposed to help. This is not a prescription for a healthy, durable program. Markets have also been disrupted by a cascade of failures among the ObamaCare co-ops that were intended as a liberal insurance utopia. These plans were seeded with billions of dollars in federal start-up loans and were supposed to work like the credit unions or the electric collectives of the Depression era. No profits were allowed, advertising to introduce new products was restricted and industry executives were barred from management. As it turns out, attempting to outlaw expertise and incentives tends not to produce good results.
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