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Race To The Bottom: Competition In The Exchanges

The news isn’t good for the ObamaCare exchanges. For the coming year expect higher premiums, higher deductibles, narrower networks and an overall market that has stopped growing. That last fact is the most alarming. Since January, 1.3 million people have dropped out of the exchanges. If the only ones who remain are the old and the sick, the prospect of a death spiral looms larger.

Don’t blame the insurers. They are doing the best they can, given the incentives created by Obamacare rules and regulations. President Obama promised a new health insurance market place—one in which health insurers would no longer discriminate against chronic patients with pre-existing conditions. What we have is worse discrimination than we had before.

At the time of enrollment, insurers face perverse incentives to attract the healthy and avoid the sick. The conventional wisdom in the industry is that healthy people buy on price. Only the sick spend time looking to see what doctors and facilities are in the health plan’s network. Only the sick pay close attention to copays and deductibles—especially for medications for chronic conditions.

John C. Goodman is a Senior Fellow at the Independent Institute, President of the Goodman Institute for Public Policy Research, and author of the widely acclaimed Independent books, A Better Choice: Healthcare Solutions for America, and the award-winning, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and the National Journal, among other media, have called him the “Father of Health Savings Accounts.”

New from John C. Goodman!
A BETTER CHOICE: Healthcare Solutions for America
Obamacare remains highly controversial and faces ongoing legal and political challenges. Polls show that by a large margin Americans remain opposed to the healthcare law and seek to “repeal and replace” it. However, the question is: Replace it with what?

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