Prices on the insurance exchanges that will make their debut on Oct. 1 will, by broad consensus, mostly be higher than you were paying before,* but lower than some studies had projected. And why is it lower? The answer, it appears, is that state and federal regulators have been pushing insurers to hold the cost down. In some cases, insurers have simply pulled out of the market, as Aetna did when Maryland asked it to lower prices by 29 percent. In other cases, such as Kaiser Permanente in California, the companies have gone ahead offering high priced insurance that few people seem likely to buy. But it’s been clear for a while that most of the insurers who stayed on the exchanges, at least in states with aggressive pricing policies, have been keeping their costs down by restricting the number of authorized providers in the policies they offer on the exchange.
People with the limited policies available on the exchanges are going to frequently brush up against the fact that their policies don’t cover what other people have covered -- and they’ll be especially mad if the Affordable Care Act resulted in their employer cancelling their old coverage and “dumping” them onto the exchange. That’s going to be a near-term political problem for the Democrats who supported the law, who have tended to imply that the law was going to let everyone buy top-notch coverage for very little money. But over the long term, it’s going to be a really ugly political problem for everyone. The first time a cute child’s limited policy keeps him out of a top-notch research hospital, that kid's parents, and the activists for whatever disease he has, are going to turn him into a poster child on the nightly news. Legislators and regulators are going to be under severe pressure to expand coverage to prevent these sorts of sad stories: slapping limits on the cost-sharing insurers may impose on out-of-network providers and expanding the treatments that are covered. This is approximately what did in the HMO revolution of the early 1990s, which did a good job of controlling costs until voters got their legislators to put a stop to it.
As the cost-controls erode, the prices will rise, and then the regulators will go back to insurers demanding better cost control. Who will win that cycle? The only way to know is to stay tuned. But whichever way it turns out, it’s not going to be the kind of show that anyone enjoys.
Anyone, and I mean anyone, who's enjoying this show is an idiot. A complete buffoon.