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October 30, 2013 10:04 AM Panic in the Insurance Markets

By Ed Kilgore

Demonstrating once again that they are infinitely willing to change course and pick up any available rock to hurl at the Affordable Care Act, Republican pols and their conservative media allies are aflame this week about people with existing policies in the snake pit of the individual insurance market being forced to give them up and buy terribly expensive new policies that give them stuff they don’t need or want, like, say, actual insurance against major medical costs.

Brian Beutler put it best this morning:

The disruption we’re seeing in the individual insurance market is mostly by design. And it’s mostly a good thing. Until October, the individual market existed to sell insurance to people who needed it least. Rates were low for healthy people precisely because their old, sick neighbors were priced or locked out of the system. They were also low because many of the policies on the market didn’t actually fulfill the function of insurance, which is to hedge against financial catastrophe.
Obamacare eliminates each of these enormous flaws by 1) regulating insurance so that it covers lots of stuff and genuinely protects people from medical bankruptcy, 2) making plans available and affordable to the ill and elderly by banning price discrimination against sick people, and only allowing insurers to charge the elderly three times as much as the young for equivalent coverage, 3) providing subsidies to the poor and middle class to make coverage affordable.

Now truth is that there’s huge annual churn in individual insurance policies anyway, and would be without the Affordable Care Act, and that a lot of the policy cancellations we’re hearing about are very simply the result of insurers not being able to hike premiums or boost exclusions or deductibles for extending the same old policies. But most of the caterwauling is over a small minority of a small minority of a small minority: people who don’t have employer-based insurance, and want bare-bones policies (or no insurance at all), and don’t qualify for the Obamacare subsidies that will reduce actual costs. Yes, these people deserve a hearing, and adjustments could be made in the law that will reduce the trouble they have with it, but at the moment they’re just being used to attack ACA generally. There’s scarce an argument about the horrific “rate shock” facing healthy individual policyholders that isn’t ultimately an argument against insurance—risk-spreading via broadly constituted pools of people—itself.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

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