First and foremost, we believe that universal health insurance coverage is a noble, legitimate, and attainable goal. But understanding the interlocking complexities of the $3 trillion U.S. healthcare industry might be too much for any government to handle, no matter how competent. As a policy matter, the healthcare industry must become more market driven, not less, and consumers must become more price sensitive. We took our own stab at what ACA 2.0 might look like, but it’s a hugely complicated endeavor, especially if you’re not a health policy expert.
Today, we’d like to discuss the status of the Affordable Care Act in the District. The District has worked hard to comply with ACA’s mandates. They announced early on that they would build their own exchange, DC Health Link, and migrate consumers over to it. In light of this story in last week’s Washington Post, and President Obama’s announcement that consumers can retain plans outside of the exchanges, it’s vital to understand the challenges DC Health Link faces and to have a plan for dealing with them.
In the Post story, it seems the Senate finance committee asked the four insurers that are participating in DC Health Link to report the number of actual paid enrollments they’ve received. As of 10/31, that number is five. DC Health Link uses different statistics to measure themselves. They claim that as of 10/21, 321 people who’ve created accounts have selected a health plan. This amounts to putting a plan in your shopping cart, but not purchasing it. It seems 164 people have asked for an invoice — another step towards enrolling, but still not there. Amazon does not book revenue when a customer puts something in their shopping cart. Revenue is only counted when the customer pays, so the only true metric is how many people have mailed a check.
As importantly, the demographic composition of those who’ve signed up is crucial and yet unknown. If DC Health Link doesn’t end up with a critical mass of young, healthy people, the exchange won’t work. That’s why it’s crucial that DC Health Link enroll a large number of congressional staffers who are generally younger and healthier.
But even using the most generous assumption — that all 321 people who’ve put a plan in their cart to date will buy a policy, without dramatic increases, DC Health Link will not have a viable risk pool.
If you want DC Health Link to be viable, you’ve got make it too painful to stay out of the exchange and you must reject the President’s proposal to allow individual policyholders to stay out of the exchanges. DC Health Link should ask ACA regulators for permission to implement a much harsher penalty for non-compliance with the individual mandate. The tax penalty should be equal to the out of pocket costs of an individual’s premium, and it must be enforceable. The District’s Office of Tax & Revenue would be empowered to enforce the penalty through wage garnishments, liens and by other means.
As a rule, we’re not big on coercion, but if we are just talking about the specifics of how to make DC Health Link viable, you have to make the penalty for non-compliance extremely painful. We’re not saying this is great policy, but if you want it to work…