Roni Caryn Rabin and Reed Abelson have an important piece in the New York Times on how Obamacare implementation is going to cause unsubsidized premiums on the individual health insurance market in New York State to fall by about 50 percent. With subsidies in place for many people, that’s going to be a huge windfall to the state’s residents. The haters are out in force already on Twitter to observe that this is happening due to special state-specific features of New York that won’t impact people elsewhere. That’s true, but this is a big deal anyway.
The first reason is that New York is a really big state. Its almost 20 million residents account for more than 6 percent of the American population. In terms of the number of people impacted, a huge improvement in the health insurance market in New York is a bigger deal than a huge improvement in New Mexico, Nebraska, West Virginia, Idaho, Hawaii, Maine, New Hampshire, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, D.C., Vermont, and Wyoming combined. So it’s true that if you live outside New York state this is not good news for you, personally. But if you’re capable of some human empathy, then it’s good news for an awful lot of people and you might care about that.
But this is also important because there’s a lesson here. At various points, the Affordable Care Act’s critics in Congress have suggested that they might be interested in keeping the popular-sounding aspects of Obamacare—the community rating, the guaranteed issue—but just scrap all that unfortunate mandate talk and tax increases. The New York experience shows why that won’t work. That lesser plan is essentially what New York did some years back, and the consequences were enormous premium hikes as the state’s market was rocked by adverse selection. Affordable Care Act implementation, by adding the nasty elements back in, is fixing a huge problem that other states don’t suffer from but that would exist everywhere if Conrgess took the approach of just doing the easy parts. People in the know on both sides of the debate are perfectly aware of this, but the mirage of the New York-style alternative to Obamacare has played heavily in congressional debates, and the example of New York goes to show that just because a policy mix is totally unworkable doesn’t mean nobody will try it.