While President Obama was in Boston on Wednesday to deliver a speech at Faneuil Hall, he was also scheduled to attend a private meeting with friends and supporters. One of the well-wishers in attendance was Jonathan Gruber, an M.I.T. economist and an architect of both Mitt Romney’s health-care plan in Massachusetts and Obama’s Affordable Care Act.
Gruber’s specific expertise is predicting the effects of changes to health-care policy. His models of the insurance market helped convince both Romney and Obama of the importance of including an individual mandate in their respective plans. Wednesday morning, as Gruber was preparing for his meeting with Obama, I asked him for his thoughts about the various troubles plaguing the rollout of the A.C.A.
Gruber’s view is that, at the moment, the technical problems associated with healthcare.gov are only a “DefCon 4 problem”—mostly just a political headache for the White House. (Five is the lowest level of alarm on the U.S. military’s defense-readiness-condition scale; one is the highest.) In her testimony before a House committee on Wednesday, Secretary of Health and Human Services Kathleen Sebelius promised that the exchanges would be fully functional by November 30th. If she’s right, then this episode may be a mere speed bump, and one that will soon be forgotten, the same way that early problems implementing Romneycare were.
But if the Web site isn’t working by the end of November, Gruber thinks the difficulties with A.C.A. implementation will escalate to DefCon 3. By that point, some people may not be able to sign up for a plan before January 1st, when health coverage begins for people who bought plans during the open-enrollment period that started on October 1st. “Those people whose plans are now being dropped would be screwed,” Gruber said.
If the problems linger until late February, Gruber thinks we will reach DefCon 2. The law requires everyone to have health insurance by March 31, 2014, or face a penalty. Obviously, the government can’t tax people for failing to buy a product that is unavailable. In that case, Gruber said, “Obama will have to delay the individual mandate.”
Right now, shopping for an insurance policy and enrolling online still doesn’t work for most users. But Gruber argued that it might not be necessary to fully repair the Web site to forestall disaster. If, at the very least, the site allowed consumers to shop for insurance online, then buyers could enroll over the phone or through a paper application. It would be akin to how the Internet worked in about 1994: you could browse and compare products online, but you still called a 1-800 number to make your purchase.
Finally, Gruber was frank about the issue that has caused the President so much political pain this week: the oft-repeated promise that any American who liked his health-insurance plan could keep it. It turns out than many people—probably millions—will not be able to keep the exact plans they currently have.
But the details and context are important.
Gruber broke down the A.C.A. “winners” and “losers” for me. About eighty per cent of Americans are more or less left alone by the health-care act—largely people who have health insurance through their employers. About fourteen per cent of Americans are clear winners: they are currently uninsured and will have access to an affordable insurance policy under the A.C.A.
But much of the current controversy involves the six per cent of Americans who buy their own health care on the individual market, which the A.C.A. has dramatically reformed. Gruber argued that half of these people (three per cent of all Americans) will have little change to their polices. “They have to buy new plans, but they will be pretty similar to what they had before,” he said. “It will essentially be relabeling.”
The other half, however, also three per cent of the population, will have to buy a new product that complies with the A.C.A.’s more stringent requirements for individual plans. A significant portion of these roughly nine million Americans will be forced to buy a new insurance policy with higher premiums than they currently pay. The primary reason for the increased cost is that the A.C.A. bans any plan that would require a people who get sick to pay medical fees greater than six thousand dollars per year. In other words, this was a deliberate policy decision that the White House and Congress made to raise the quality—and thus the premiums—of insurance policies at the bottom end of the individual market.
“We’ve decided as a society that we don’t want people to have insurance plans that expose them to more than six thousand dollars in out-of-pocket expenses,” Gruber said. Obama obviously should have known that his blanket statement about “keeping what you have” could not apply to this class of policyholders.
Gruber summarized his stats: ninety-seven per cent of Americans are either left alone or are clear winners, while three per cent are arguably losers. “We have to as a society be able to accept that,” he said. “Don’t get me wrong, that’s a shame, but no law in the history of America makes everyone better off.”
Photograph of Kathleen Sebelius by Chip Somodevilla/Getty.
