President Obama delivered a very apologetic presser today on the problems with the Affordable Care Act, but the most remarkable moment was when Obama basically admitted he never really understood how his signature law would actually work.
He claims to have only realized in the past few weeks that buying insurance on an exchange is an inherently complicated and often confusing process. From Obama [7:00]:
But even if we get the hardware and software working exactly the way it’s supposed to, with relatively minor glitches, what we’re also discovering is that, you know, insurance is complicated to buy. And another mistake that we made, I think, was underestimating the difficulties of people purchasing insurance online and shopping for a lot of options, with a lot of costs and a lot of different benefits and plans, and somehow expecting that that would be very smooth, and then they’ve also got to try to apply for tax credits on the website. [...]
Because the bottom line, ultimately, is I just want people to know what their options are in a clear way. And, you know, buying health insurance is never going to be like buying a song on iTunes. You know, it’s just a much more complicated transaction. But I think we can continue to make it better.
This is truly remarkable admission. One of Obama’s big promises in selling his law to the public was that it would make buying insurance insanely easy. It is a promise he repeated all the time and seemed to really believe.
For example, just six weeks ago Obama was still claiming the exchange would make buying insurance basically as easy as getting a song on iTunes. He said this about the launch of the site last month:
Just visit healthcare.gov, and there you can compare insurance plans, side by side, the same way you’d shop for a plane ticket on Kayak or a TV on Amazon. You enter some basic information, you’ll be presented with a list of quality, affordable plans that are available in your area, with clear descriptions of what each plan covers, and what it will cost. You’ll find more choices, more competition, and in many cases, lower prices — most uninsured Americans will find that they can get covered for $100 or less.
This is not a small mistake or another too rosy promise. This basic concept is the foundation of the law.
The idea private insurance exchanges will magically drive down price and improve quality through competition was based on the assumption that buying insurance could be made so incredibly simple that almost everyone would be able figure out which plan was best for them. For this kind of competition even theoretically to work the consumers needed to understand trade offs with the all the different options. If you can’t buy insurance extremely simple the whole concept won’t deliver.
One of the main reasons I had so little faith in the supposed promise of these exchanges is because I know ACA wouldn’t make this process simple enough. This is why even in countries that use a system that appears to resemble the basic design of ACA, such as Switzerland, they require extreme plan standardization.
Obama didn’t just admit he never fully understood his signature law, he seems to indirectly acknowledge that the whole thing is conceptually flawed.