There are two reasons Obama’s “you can keep your insurance” promise has become such a big political problem for Democrats. The first is that is was lie, and people don’t like being lied to.

This wouldn’t be as big a deal though if it was only technically a lie. If almost every person in the individual market gets cheaper and better insurance I don’t think there would  be as much complaining. The problem for Democrats is that a decent number of healthy people are having their plans cancelled and experiencing rate shock. People are seeing their premiums go up or the quality go down as they are moved into a risk pool with less healthy individuals.

This was not an unforeseen accident. Democrats made the policy decision to subject this group of middle class individuals to rate shock to partially pay for their law.

The law’s coverage expansion cost money and there are basically only three ways to pay for it.

  1. The government just spends money. A good chunk of the coverage expansion is paid for with exchange subsidies but Democrats decided it was important to keep the CBO score
  2. Make healthy and young people pay much higher premiums to indirectly subsidies the premiums of the sick. This is causing rate shock for many people right now.
  3. Force drug companies/hospitals/insurers to stop radically overcharging everyone. The same drugs and procedures cost significantly more in the United States than any other country. Our health care system also has an insane amount of administrative waste.

Democrats cuts deals with the health industry in exchange for political support of the law. The result of these deals is Democrat chose to pay for most of the coverage expansion via option 1 and 2.

If Democrats had passed drug re-importation, a public option, all-payer for exchange plans, early Medicare buy-in, etc… they could have driven down the actual cost of health care by hundreds of billions of dollars. This would have allowed Democrats to expand coverage without needing to make healthy people who currently have individual policies pay more. Probably not every single incident of rate shock would have been eliminated, but it would have been reduced to a tiny minority.

Instead, Democrats decided to side with the industry and now they are reaping the political whirlwind of their policy choice.

Photo by Ramberg Media Images under Creative Commons license.