The announcement that Aetna is pulling out of the health insurance exchanges in 11 states (out of a total of 15), because it has been losing hundreds of millions of dollars, is just the latest piece of evidence that the Affordable Care Act–aka “ObamaCare”–is not working.
As my co-author Doug McGuff (an emergency room doctor) and I warned in our book, The Primal Prescription, the legislation has put health insurers in an untenable position, where they must offer coverage to people they know they will lose money on. We predicted in the book that the mounting problems with the heavily regulated “private” health insurance market would lead to calls for more government intervention and, ultimately, to a “single payer” system.
Besides the tragedy that all of this was predictable–and indeed predicted by many other free-market economists besides us–it is frustrating to hear ObamaCare’s apologists now acting as if these problems are surprises. For example, here is how Paul Krugman tried to do damage control in an August 19 piece, on the news about Aetna pulling out of most of the exchanges:
The story so far: Since Obamacare took full effect in January 2014, two things have happened. First, the percentage of Americans who are uninsured has dropped sharply. Second, the growth of health costs has slowed sharply, so that the law is costing both consumers and taxpayers less than expected.
Meanwhile, the bad things that were supposed to happen didn’t. Health reform didn’t cause the budget deficit to soar; it didn’t kill private-sector jobs, which have actually grown more rapidly since Obamacare went into effect than at any time since the 1990s….
So what’s the problem?
Well, Obamacare is a system that relies on private insurance companies to provide much of its expanded coverage…And many of these private insurers are now finding themselves losing money, because previously uninsured Americans who are signing up turn out to have been sicker and more in need of costly care than we realized.
Now from reading the above assessment, you would sure walk away from Krugman’s column thinking that the critics had only warned about budget deficits and private-sector job loss. You would think that the cost of providing coverage to sick Americans was not something anybody had warned could lead to disaster.
But of course that is nonsense. Critics warned from the beginning–well before the ACA legislation was passed–that this system would set up a vicious cycle in which sick people signed up for coverage, driving up premiums, which then made healthy people drop out of the system–thereby driving up premiums even more. The term for this process was “death spiral.” (Here’s just one example of many, from June 2015.)
Furthermore, we know that Paul Krugman knew about this concern. You know why? BECAUSE HE MOCKED IT about one year ago. Specifically, in April 2015, in a blog post titled, “Remembrance of Death Spirals Past,” Krugman wrote:
Kenneth Thomas has a nice post about how those pooh-poohing the achievements of the Affordable Care Act are moving the goalposts….
But the question isn’t just whether the law is good; it is who has some credibility. So far, enrollment is growing more or less in line with the projections of supporters, once you allow for the refusal of half the state to expand Medicaid, while costs are coming in below projections. So the supporters are looking pretty good on the prediction front.
Meanwhile, what were the opponents saying? Right-wing “experts” were predicting a death spiral in which only a small number of sick people would sign up, and premiums would soar. This didn’t happen.
So, of course, conservatives have ditched the people who got this so completely wrong, and started listening to those who got it right. OK, I know, sick joke.
Thus, as of April 2015, Krugman knew full well that there had been people warning that the private insurers weren’t going to be able to stay profitable under the rules of the Affordable Care Act, and Krugman was mocking them, saying they should be “ditched” because of their failed predictions.
Well, the “expert”–yes Krugman used quotation marks–on this particular occasion was John Goodman, whose predictions are looking pretty good right about now. You can compare Goodman’s 2014 post (which Krugman mocked) with Goodman’s post from last week, and see that they are consistent. Indeed, you can see that Goodman back in 2014 correctly warned about what is now happening before our eyes.
In complete contrast, let’s review the predictive record of Krugman. Just last fall, the giant health insurer UnitedHealth announced that it was probably going to pull out of the ACA exchanges, because it was losing money on those policies. Critics were saying, “See! We told you ObamaCare wasn’t going to work!” but here’s how Krugman dealt with the PR problem, back in November 2015:
To the right’s dismay, scare tactics — remember death panels? — and spurious legal challenges failed to protect the nation from the scourge of guaranteed health coverage. Still, Obamacare’s opponents insisted that it would implode in a “death spiral” of low enrollment and rising costs.
UnitedHealth Group made a splash by announcing that it is losing money on the policies it sells on the Obamacare exchanges, and is considering withdrawing from the market after next year. There were some puzzling things about the announcement, leading to speculation about ulterior motives, but the main thing to realize is that UnitedHealth, while a huge provider of employment-based insurance, is actually a fairly small player in this market, and that other players are sounding much more positive.
Thus, back in November 2015, Krugman was still mocking people who had warned about an enrollment death spiral, and he minimized the problem of UnitedHealth as if it were an isolated company, perhaps motivated by things besides the fact that it was losing boatloads of money on the ObamaCare policies.
Well, I guess the least we can say is that at this point, Krugman is no longer mocking people who had warned about the problem of the insurance pool being dominated by sick people. Now he’s just pretending that it’s a brand new thing that nobody had anticipated.
In closing, I note with irony that it was Krugman who said people who had made bad predictions about the effects of the ACA should be dismissed, in favor of those who had gotten it right.