Why has their plight attained such singular prominence? Several factors have come together. The news media has a natural attraction to bad news over good. “Millions Set to Gain Low-Cost Insurance” is a less attractive story than “Florida Woman Facing Higher Costs.” Obama overstated the case when he repeatedly assured Americans that nobody would lose their current health-care plan. There’s also an economic bias at work. Victims of rate shock are middle-class, and their travails, in general, tend to attract far more lavish coverage than the problems of the poor. (Did you know that on November 1, millions of Americans suffered painful cuts to nutritional assistance? Not a single Sunday-morning talk-show mentioned it.)
Chait is right that some degree of redistribution is inherent in the very concept of insurance. Redistribution is not the core design flaw in Obamacare. The core design flaw is that Obamacare had its priorities upside down: it put coverage expansion first; cost control a very distant second. What we are discovering now is that without cost control, coverage expansion quickly devours itself.
That self-devouring is the process dramatized by the price shock on the exchanges…but the real harm will come in the months ahead, less visibly, as employers confront the same stark shock that the individual purchasers are confronting today. Employers can’t shirk the fines as easily as individual purchasers can. But they can still make the rational choice to pay the fine and dump their employees into the exchanges, where they will encounter the same hostile math that I faced last week. The sick will sign up; the well will drop out; and the prices will keep rising and rising and rising—until either the system crashes or else the government steps in to assume an ever-expanding role as cost controller and price subsidizer.