How not to help the uninsured

If McKinsey’s numbers are approximately right, then at the very least, we should reassess what we thought about the individual insurance market. Before Obamacare, experts believed that a lot of people wanted to buy insurance, and they were willing to buy insurance that cost, say, 10 percent of their income, but couldn’t find insurance in that price range — or couldn’t buy it at all because of their pre-existing conditions. The numbers in the McKinsey study would suggest that this group was actually very small.

It should also make us question the whole decision to include the exchanges in Obamacare, because in this telling, they’re mostly giving subsidies to folks who were already buying insurance. Of course, they may be very happy about their subsidies, but I doubt that “subsidize people who are already buying insurance” would have been in the Top 10 on anyone’s policy agenda. A clean Medicaid expansion probably would have delivered more coverage at less risk of destroying the individual insurance market.

One more result: If the McKinsey numbers turn out to be correct, I think we should expect that the individual mandate will simply not be enforced. Otherwise, we would be “helping” the uninsured by raising the cost of the insurance available to them, and then fining them hundreds or thousands of dollars for not buying it. I believe the technical term for this is “political suicide.”

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