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OPINION - It's not the tech problems at healthcare.gov, it's the price

by Chris Conley

NEWS BLOG (WSAU)  When I go on vacation I make my own travel plans on the internet. I shouldn’t. I waste huge amounts of time going back and forth between web sites. Dozens of travel options pop up, sometimes with only a few dollars difference between them. Yet back and forth I go, in the name of getting this rental car for $10 less, and this, nicer, hotel for $5-a-night more. No human travel agent would put up with that. If the trip is too expensive, I’ll browse the price but won’t buy.

I think that’s what’s happening with Wisconsin’s health insurance web site. People are going on it and are having sticker shock. For people who don’t get large government subsidies, the gold and silver plans are too expensive. Lower-income residents get more support, but are also most likely to be attracted to the less-expensive bronze plan. Then they read about how lousy the coverage is. (The bronze plan is a 60-40 split with a very high deductible.)

So what is the consumer behavior when the choices are bad and the price is too high? People look but don’t buy. That’s what’s happening.

But just like President Obama wouldn’t let the GOP derail health care reform with debt ceiling and budget stalemates, he’s not going to let it die on the vine because of price and web site issues. The simplest solution is to push the individual mandate back a year. That may yet happen as we get closer to the December 15 enrollment deadline. There may be other developments. Suppose in high-health-cost states the feds come up with their own federal health care, put it on the exchanges, and let it be offered alongside private plans. There might be a double-subsidy – the cost of the plan, on top of the tax credits people get to pay their premiums. Perhaps in blue states Medicare might be put on the exchanges. Imagine being able to buy BadgerCare through the exchanges. Private plans wouldn’t be able to compete with the ultra-low co-payments, no deductibles, and small out-of-pocket expenses.

The Wausau Daily Herald reports that fewer than 50 people in Wisconsin bought health insurance through healthcare.gov. Much of that is because of the lingering (and inexcusable) technical problem with the site. But that needs to be viewed in context. The coverage is lousy and expensive. That’s the underlying problem. Obamacare is at risk of flopping until it’s addressed.

Chris Conley
10.18.13