Sabtu, 01 April 2017

The Obamacare Unraveling

I usually leave Brad DeLong and Paul Krugman alone. If you haven't figured them out by now, you are beyond my help.


In particular, Brad a few years ago made fun of me for "predicting" in 2013 that Obamacare exchanges would unravel due to adverse selection. I have so far  resisted the temptation to needle Brad about that as, well... the Obamacare exchanges unraveled due to adverse selection!

But, unbelievably, Brad is doubling down. While recommending again a snarky 2015 Krugman piece, in which even Krugman was not naming his snarks, DeLong writes:
Who is he talking about? John Cochrane, among others:
John Cochrane (December 2013): What To do When Obamacare Unravels: “The unraveling of the Affordable Care Act presents a historic opportunity for change….

…Next spring [2014] the individual mandate is likely to unravel when we see how sick the people are who signed up on exchanges, and if our government really is going to penalize voters for not buying health insurance. The employer mandate and ‘accountable care organizations’ will take their turns in the news. There will be scandals. There will be fraud. This will go on for years…
As you may have noted, there was no adverse-selection meltdown of the ObamaCare exchanges in the spring of 2014...
OK. Mea Culpa. I got "2014" wrong. Though not "this will go on for years." It took three years longer than I said. (And I will admit, I did not think hard about how long it would take before writing "2014")

The insurers pulling out of exchanges, the swaths of the country with only one insurer left, the policies that are nice cards in your pocket but don't actually pay for much, the skyrocketing premiums... it all took three more years.

But of all this, Brad seems completely unaware. What, Obamacare is going just swimmingly? People (other than those getting subsidies and medicaid) are just delighted with their nice low premiums and great coverage? Insurance companies are all swarming to provide exchange policies? Just what rock did Brad crawl out from under? He continues
And what has been Cochrane’s reaction to the failure of his confident prediction? The closest to an acknowledgement of error I can find is:
John Cochrane (July 2014): Ideas for Renewing American Prosperity: “ObamaCare and Dodd-Frank are monstrous messes…

…Long laws and vague regulations amount to arbitrary power. The administration uses this power to buy off allies and to silence opponents. Big businesses, public-employee unions and the well-connected get subsidies and protection, in return for political support. And silence: No insurance company will speak out against ObamaCare or the Department of Health and Human Services…
Shorter John Cochrane: Never mind that all my predictions were false. ObamaCare is a disaster. And insurance companies are not happy with it–they have just been intimidated by fear that Obama will somehow come after them if they speak ou about what a disaster ObamaCare is for them.

Perhaps in a decade, there will be a column by Cochrane pretending that he always knew that on net ObamaCare was profitable for insurance companies—which would rather be in the business of making money by efficiently processing claims than by exploiting adverse selection.
One date is "all my predictions?" What insurance companies dare speak out against Obamacare or HHS? What insurance companies are finding exchanges profitable? What insurance company "efficiently processes claims?" And where do I sign up?

A strange affair. I don't mind at all it being pointed out when I'm wrong, especially about "predictions." Economics is not that good at unconditional predictions ("what will happen?" vs. "how will a policy change things?")   It's strange to be ridiculed when, for once, I was right! At least in the direction, if not the speed of events.

Update: My views on what should replace Obamacare are here, see especially "After the ACA" and "health status insurance."