One day soon I will presumably receive a notice from the D.C. health exchange informing me how much my family’s health insurance will cost for 2015. That I’ve not yet been made privy to this salient bit of information mere weeks before I have to decide whether to change providers is a function both of the low level of competency that can be expected of any government dabbling in commerce as well as the politicization of the exchanges.
In its first year of existence, the D.C. government’s health exchange has worked much as I anticipated—not very well. It took months to navigate the website to actually purchase insurance, and the communiques from the exchange have ranged from irrelevant to unhelpful to factually incorrect.
However, its existence—more precisely, my ability to buy insurance at a price unaffected by my family’s health status—saved me thousands of dollars and was what allowed me to quit my job and start my own business. But the ability to obtain health insurance at a reasonable price is more than just a boon for me: More broadly, insurance that no longer unduly locks people into jobs could ultimately be beneficial for the economy. Whether the current exchanges manage to achieve this has yet to be determined.
The horror show of Obamacare has caused some to forget “job lock” and other dark aspects of generous, employer-provided health insurance. A personal illustration: Twenty years ago I was completing graduate school and applying for academic jobs. I limited my search to states contiguous to my home state of Illinois, which in retrospect was a lousy idea. The only school that showed any interest was the University of Wisconsin, Oshkosh, a public university with 12,000 undergraduates.
But I clearly did not impress them: After my first interview there was no contact, and I continued applying for other jobs, to no avail. Two months later—and still no job in sight—I received a call out of the blue inviting me for a second interview.
Upon my arrival, an indiscreet faculty member let me know I was the third choice of the department, but the first two candidates had bowed out. The sticking point for each, it turned out, was a law requiring new state employees to pay for their health insurance during their first six months on the job.
The rub was that, being a state government entity, the university provided health insurance that was very, very good, and the price reflected it: $15,000 per year ($24,000 in today’s dollars). My starting salary, on the other hand, was just $40,000. That meant, after taxes and pension contributions, more than half of my take-home pay would go to the insurance company. For a new professor of English or music at the school, where starting salaries then were closer to $30,000, paying for insurance meant six months of penury, but it was what every new faculty member chose to do.
Except for me. I told the dean I would accept the job and forgo health insurance for the first six months.
The dean (a Marxist in good standing) did a double-take and carefully explained the disaster that could befall me, a 27-year-old male in perfect health with $500 in the bank and no dependents (besides a bartender), should illness strike. I said I was willing to take that chance. Visibly bothered, he repeated his spiel, only more slowly. Not wanting to scotch my first job, I feigned listening carefully and responded that, upon his measured advice, I would purchase health insurance before starting.
I called an insurance agent friend for advice who told me to not piss away money I didn’t have on a health care plan I didn’t need. I survived the interregnum without incident and for good measure went another four years without seeing a doctor, during which time my employer paid handsomely so that I had first-dollar coverage for any malady that might arise.
Understandably, the Obama admin-istration, during the battle to pass the Affordable Care Act, talked about the outsized role health insurance has played in people’s labor market decisions, with many staying in jobs they would prefer to leave or taking jobs that weren’t their first choice because of insurance. They were right about that. However, that aspect of our labor market may not change much in the next few years: While the must-carry provisions of the new exchanges mean that people with preexisting conditions are now guaranteed they will be able to purchase health insurance and not have to pay more for coverage than the healthy, the price—at least for those whose incomes don’t merit a subsidy—isn’t all that cheap, and most of the exchanges remain somewhat dysfunctional. The hassle factor this imposes deters people from obeying the law and obtaining insurance, fines be damned. If too many people go this route, premiums go up, which will deter still more people from purchasing insurance.
And even if the exchanges magically begin functioning as promised, there’s little indication that the Affordable Care Act will lower the growth of health care costs. This remains the bigger threat—not just to our health care sector but to our country’s fiscal health. While the administration insinuates that insuring more low-income workers will result in these people getting their illnesses treated by primary care physicians rather than going to the emergency room when sick, thereby saving oodles of dollars, the data don’t bear this out: Studies that looked at the dramatic expansion of Oregon’s Medicaid rolls found, unsurprisingly, that the easier we make it for people to get health care, the more of it they consume, and not necessarily in a way that reduces future costs.
What’s more, many labor market decisions are still deeply entangled with health insurance choices. In the two decades after my Oshkosh years, I acquired a wife and kids, mortgage, pension, and a few of the accoutrements of middle-class life. In 2013, I was contemplating launching my own business. I had savings to soften a bumpy first year, but the cost of health insurance for my family was daunting—over $30,000 a year for a plan that wasn’t quite as good as what I was getting from my employer, a cost greatly increased by myriad preexisting conditions in the family.
With the state-run exchanges coming down the pike I realized that, at least in the first year, I would be able to purchase health insurance at a reasonable price. So I left my employer in July 2013 and launched my consulting firm. In November 2013, I duly filled out my application to purchase insurance on the D.C. health exchange. After that, nothing happened: The only further communication I received from the exchange was a flurry of letters and emails informing me I had the right to have my communications from the D.C. exchange sent to me in any of 20 different languages, including Irish and Navajo.
After a number of ignored emails and phone calls, I contacted a health insurance “facilitator” to see if she could help me. No dice. She did manage to make the D.C. government verify that the information I had sent them—copies of passports, utility bills, and tax statements—showed that my family did exist and resided in the District, but we still weren’t able to buy insurance going into 2014.
The D.C. exchange assured me that they would straighten things out by mid-January and allow me to buy insurance retroactive to January 1. But it wasn’t until mid-March that we managed to buy insurance. And actually paying for insurance did not end our travails: The exchange mistakenly applied my payments for March and April to January and February instead, which led to our insurance being canceled on April 1, necessitating another flurry of calls and letters. A few months later we received a letter again threatening us with immediate cancellation unless I delivered copies of our passports. Resolving this one was trickier because, upon calling the exchange, the people there denied such a notice was sent until I forwarded a copy to them.
One statistic from my enrollment efforts: In four consecutive months, I spent over 500 minutes on the phone with either the D.C. health exchange or the health insurance company we selected.
Recently, with premium increases for 2015 presumably about to be announced, I thought it might make sense to go on the exchange’s website and see if they had updated prices for competing plans. After 20 minutes of trying to log in without success, I gave up, vowing never to get on the site again.
Helping people who don’t have employer-provided health insurance obtain coverage is a worthy goal, and one Republicans could have devoted more attention to when they were in power. The Democrats, as is their wont, addressed the problem by inserting government into the middle of it, with predictable results.
Republicans could choose to play the adults in the game and try to do something to reduce health care costs: impose a cap on the deductibility of employer-provided insurance that affects more than a token number of workers, for example, although the 2008 election showed what a political loser tackling that issue can be.
But unless Republicans manage to claim the White House in 2016 and add a half-dozen senators, proposals to repeal Obamacare feel pointless, since Democrats won’t dare loosen its strictures without a gun to their head. Failing that, the only hope is that the various exchanges start functioning much more smoothly than they have been, and that enough people remain in the market so as to avoid the dreaded death spiral, where higher prices chase away buyers, which further increases prices and further deters buyers until no one but the heavily subsidized and those with literally no other options remains.
I may be one of those who seeks other options: After my consulting firm completed a successful project for a big client, the president of the firm invited me to lunch and inquired whether I might be open to his firm acquiring my firm and making me a partner. My first, reflexive, question was to ask about their health insurance.
Ike Brannon is president of Capital Policy Analytics, a consulting firm in Washington.
