Obamacare’s class problem

Maybe this is obvious! Here’s my crude, relatively unwonky framework for thinking about the ongoing troubles of Obamacare (specifically, of the Obamacare exchanges): It’s a class problem. The exchanges are attractive to lots of heavily subsidized near-poor Americans, but distinctly less attractive to middle class Americans with incomes above 4-times-poverty, about $48,000 for a single person. (That’s the point at which subsidies disappear and the exchanges become a much-less-good deal).  Most of the middle class doesn’t have to use Obamacare, of course, to their immense relief — they get coverage from their employers. (Some, like freelance writers, have no choice. They have been known to complain.)

Why is this lack of a middle class participants a problem? Not because “programs for the poor are poor programs.” (Some are, some aren’t). Two other reasons:

1) We’re all human beings with the same health problems — but poorer Americans tend to be less healthy, so premiums that cover a poor-heavy risk pool will be higher than the “one true price” that would cover a risk pool made up of everybody. Middle class people thrown into this unhealthy risk pool wind up paying higher prices than they should have to pay. **

2) Different tastes. If you haven’t had health insurance because you can’t afford it, you might rationally be happy with any access to a regular doctor at all. If you’re middle or upper class you probably want access to the best doctors and the best hospitals. Not surprisingly, with a huge near-poor presence and no big middle class presence Obamacare is evolving to serve the former group: Medicaid-like packages with low prices and short lists of maybe-not-quite-as-top-tier docs (sorry, make that “narrow … networks that are especially adapted to the needs of lower income consumers”) have driven higher-end plans off the playing field. In some places, it’s hard to get a plan with top doctors and top hospitals on the exchanges even if you are willing to pay extra for it.  More reasons for the (healthy) middle class to look at Obamacare the way a traveler views a seedy hotel — something to be avoided if possible. ***

It’s not easy to see how this core problem can solved without somehow getting more middle class people off their employer plans and into the Obamacare pool, something they won’t want to do as long as — well, as long as there aren’t more middle class people like them in the Obamacare pool, which won’t happen as long as the plans are too expensive and too Medicaid-like,  which won’t change unless there are more middle class people in the pool ….

— Tinkering with the subsidy structure, a la the just-defeated Ryancare, might improve the mix a bit at the cost of leaving many poor Americans insufficiently subsidized and uncovered.

— Lowering the cost of the policies (by limiting “essential benefits,” for example) would also ease but not eliminate the underlying tension.

— Making the insurance mandate really coercive– with stiff penalties — is likely to be highly unpopular (who wants to be forced to check into a seedy hotel?) while failing to solve the problem, simply because there are too few middle class people to coerce. They’re squirreled away on their employers’ plans, and they ain’t comin’ out if they can help it.

Note that Medicare does not have this problem. Americans of all classes are in the Medicare system and good doctors are still (as of this writing) available. But even extending Medicare down to age 55 (from the current 65) or offering a public option (i.e. to effectively “buy into” Medicare) wouldn’t be a cure for Obamacare’s class problem: Those moves should again make  Obamacare policies much cheaper — in this case by removing the higher risk patients from the pool. That alleviates the symptoms.  But the insurance offered to whatever age group is left on the exchanges will still be overpriced for higher income people.

I suppose with enough money, anything can be fixed: You could slather the exchanges with such rich subsidies that they’d be a good deal for the semi-affluent as well as the semi-poor. That sounds awfully expensive, though. Would it be any cheaper than Bernie Sanders’ famously costly Medicare-for-all?

Or you could figure out some politically palatable way to knock millions of middle class people off their employer plans. Good luck with that.

Any help with this dilemma appreciated. …


** — They do get at least one benefit they may not have had before: Insurance companies can’t kick them off if they get sick. Not enough to make the exchanges appealing apparently.

***-  Alternate analogy: When I was in Cleveland for the GOP convention, I needed some groceries late at night. The only open store was in a nearby, very poor neighborhood. The shelves were filled with highly suspect off brands —  Count Chocula would have been a welcome, healthy choice. The stuff wasn’t even that cheap. A valued local institution, maybe — but I would never voluntarily shop there again if a more Gelson’s-like alternative was available. Let’s say Obamacare is not the Gelson’s of health insurance.