The Republicans’ Uncertainty Strategy

from The Incidental Economist at http://bit.ly/2tsERpl on June 29, 2017 at 01:01PM

Together with Craig Garthwaite, a professor at Northwestern, I’ve got an op-ed in the New York Times on the consequences of the Republicans’ strategy to sabotage the Affordable Care Act.

The health care industry consists of a dense network of public-private partnerships. Even programs widely viewed as “government” insurance, like Medicare and Medicaid, depend on private hospitals, doctors and insurers.

Such arrangements can work only if private firms trust that the United States will be a reliable partner. Historically, this hasn’t been a problem.

That appears to be changing. A decline in trust has already caused health insurers to rethink their relationships with their increasingly erratic federal partner. They’re demanding higher premiums to account for the greater risk. Blue Cross Blue Shield in North Carolina, for example, has said that its planned rate increase of 23 percent next year would be only 9 percent if it had more certainty from the federal government.

Many other insurers have abandoned these partnerships altogether. According to Health Secretary Tom Price, 49 counties won’t have a single insurer on the exchanges in 2018.

Here’s the kicker:

Republicans appear not to have reckoned with the broader consequences of their uncertainty strategy. For example, Paul Ryan, the House speaker, wants to convert Medicare into a voucher program in which the elderly will shop for private plans. How will that work if insurers, burned by the Obamacare experience, are unwilling partners?

This is perhaps the greatest irony of the Republican actions. Republicans (including one of us) have long believed in the benefits of even greater privatization of government services. But how can any company in any sector trust the United States after seeing health insurers treated so shabbily?

@nicholas_bagley

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