The fatal conceit of Obamacare is that ‘We’re just going to make everybody buy our health insurance at the federal government level; young and healthy people are going to go into the market and pay for the older, sicker people.’ So the young healthy person is going to be made to buy health care, and they’re going to pay for the person, you know, who gets breast cancer in her 40s. Or who gets heart disease in his 50s.So take a look at this chart. The red slice here are what I would call people with preexisting conditions. People who have real health-care problems. The blue is the rest of the people in the individual market — that’s the market where people don’t get health insurance at their jobs where they buy it themselves. The whole idea of Obamacare is the people on the blue side pay for the people on the red side. The people who are healthy pay for the people who are sick.It’s not working, and that’s why it’s in a death spiral.
I am unsympathetic to Paul Ryan’s position.
Those unsympathetic to Ryan’s position quickly seized upon the last two sentences as revealing that Ryan simply doesn’t understand the fundamental concept of health care.” The whole idea of Obamacare is the people on the blue side pay for the people on the red side. The people who are healthy pay for the people who are sick,” Ryan said, which: of course. Insurance is always about those who don’t need insurance at the moment paying into the insurance pool for those who do. It’s how insurance works. Insurance companies balance the amount people pay as premiums to allow them to cover the payouts for expenses.
As the Atlantic’s Derek Thompson pointed out, this isn’t only a feature of pooled insurance — it’s a feature of the insurance you yourself pay. “Even a one-person insurance market only works if your in-flow years pay for out-flow years,” Thompson wrote on Twitter. “It’s still ‘healthy-you’ subsidizing ‘sick-you.’ ”
When Ryan says, “It’s not working, and that’s why it’s in a death spiral,” the implication offered is that the “it” refers to the idea of insurance overall and that, therefore, insurance itself necessarily doesn’t work. Which, of course, isn’t the case.
Ryan’s overall presentation of the way Obamacare works is accurate. To offset the costs of having to cover everyone — since Obamacare makes insurers cover even those who are already sick — the system needs young, healthy people to pay in. That’s why there’s a mandate to have coverage, so that there’s enough money coming in to pay for everyone. Those reading Ryan unsympathetically — generally on the basis of the snippet above — see Ryan as simply not understanding that the “fatal conceit” he offers is the core value proposition of insurance.
I am sympathetic to Paul Ryan’s position.
What Ryan is arguing, his senior aide Brendan Buck said on Twitter, is that the balance of money coming in to money going out is out of whack in the Obamacare system. The fatal conceit isn’t broadly that healthy people should pay for sick people, as those unsympathetic might hear him saying. It’s that the Obamacare system isn’t yielding enough money from the healthy to pay for the sick. If you watch the video through that lens, Ryan’s comments sound different. He doesn’t explicitly say that the financing is broken, but “it’s not working” is easily understood as referring only to “pay for,” not the whole sentence, “The people who are healthy pay for the people who are sick.” That is, the people who are healthy paying for those who are sick is not working in this case. Whether you agree with Ryan in that regard, whether you agree that the economics aren’t playing out, you can see how that’s the point he’s trying to make.
The big question about Obamacare all along was whether enough young people would join the system to offset the costs of covering those who are sick. Barack Obama didn’t sit down with Zach Galifianakis on “Between Two Ferns” simply because it was funny; he did that interview because he knew young people watched the episodes, and he wanted to urge them to enroll. The Obama White House put a lot of effort into getting young people to sign up. Ryan’s argument? They didn’t persuade enough young, healthy people to participate.