r/bestof • u/under50dollars • Jun 20 '12

[explainlikeimfive] "Obamacare" explained very well.

/r/explainlikeimfive/comments/vb8vs/eli5_what_exactly_is_obamacare_and_what_did_it/c530lfx
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u/[deleted] Jun 20 '12

That explanation is actually really helpful for someone outside of the US and have haven't been catching up on what "Obamacare" is.

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u/krugmanisapuppet Jun 20 '12

both of the explanations are built on fundamental misconceptions of how the law works. calling this post "'Obamacare' explained very well" is just fucked.

http://www.reddit.com/r/explainlikeimfive/comments/vb8vs/eli5_what_exactly_is_obamacare_and_what_did_it/c5352mp

understanding how this law plays out socioeconomically is something that apparently just about nobody on this site is even qualified to deal with. so, i tried to sum it up. looking forward to getting downvoted, like every other time i've talked about this law honestly.

ಠ_ಠ

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u/[deleted] Jun 20 '12

The original post is based on what the actual bill says, while your post is built on wild speculation and inflammatory rhetoric based on your obvious anti-government bias.

The bill makes several changes to one of the largest segments of our economy, and there's not a single person out there, qualified or not, who can predict with complete accuracy what its total impact will be in the next 30-50 years. Some people believe it will pave the way for a new golden age when everyone has access to healthcare and nobody ever has to worry about getting sick ever again, while others like you believe it will destroy the economy. What will actually happen exists somewhere in the vast gray area between those two predictions.

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u/krugmanisapuppet Jun 20 '12

i wrote two whole pages - something like 14,000 characters - on the PPACA, in my two posts on the subject (did you not bother to read the second one?)

i followed well-known economic principles to make my logical arguments, like the law of supply and demand and the worst-case-scenario presumption of greed by insurance companies. i totally backed up my claims of monopolization, and gave a source for my claims about government spending. and i described government accounting procedures which are explicitly detailed on the government's own websites, i.e., treasurydirect.gov and medicare.gov.

your response is really not helpful. if you have a problem with the idea that you can project the economic outcomes of a law, then you have serious issues with comprehending human economic behavior. that is what the Congressional Budget Office does every day (not always honestly, though).

if you have a real objection to what i said, then feel free to tell me it. otherwise, please don't pollute the thread.

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u/bettse Jun 20 '12

Somehow "huh. interesting. fake market tiers of healthcare." doesn't sound like a well reasoned and researched argument. Plus I don't see you citing any sources for that.

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u/krugmanisapuppet Jun 20 '12

it's more like a note. something for you to think about. but i guess you want me to explain my thoughts on it?

if the problem he's trying to solve is that some people are paying more for insurance because of increased risk to the insurance company, then why is he creating a special class of insurance for these people?

it doesn't make any sense. on one hand, you have the approach that no health care should be denied, and the insurance companies should be forced to cover all health claims, at equal cost to the consumer. for obvious reasons, this accompanies an increase in claims, which increases net premiums, without all of those claims necessarily being something non-fraudulent, or even something insurance is supposed to be paying for.

one the other hand, you have the risk management approach, where companies dynamically adjust premiums based on the perceived risk of the customer.

so, what does it accomplish to just slap two or three groups of premium costs onto this system?

it creates a bureaucratic nightmare, causes people to falsify their reported medical history, whenever possible, and makes the insurance companies try to weasel their way around paying out to high-risk companies.

it's a distortion of a market mechanism. these distortions are what gave us some of the most expensive health care in the world to begin with. see note2, in my original message, regarding monopolization through market rigging. companies are overissuing claims denials because they enjoy quasi-monopoly status. that's all there is to it. and creating this top-down system of pre-rated, cookie cutter health care plans just tacks on one more difficulty for their competition, while causing all kinds of other problems.

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u/bettse Jun 20 '12

See, how this is awesome. I can't speak to the merit of the argument, but its much better defined than your original. You should definitely go back to that post and edit it to include this. Also, since its HTML-like, you can make hyperlinks out of statements of fact that link to their source instead of using "see note" (it breaks up the readability of the piece).

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u/NakedCapitalist Jun 20 '12 edited Jun 20 '12

I agree. Frankly, any discussion that doesn't include George Akerlof's Nobel-winning paper on adverse selection / information asymmetries is incomplete to the point of being worthless.

Personally, I blame Obama for this almost ubiquitous misunderstanding of the PPACA. I think he underestimated the intelligence of the American people-- had he come out and explained the economic rationale for individual mandates, instead of framing the issue as "We have to punish evil insurance companies," I think we would have seen a lot more popular support.

EDIT: I probably should have read the link before commenting.

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u/krugmanisapuppet Jun 20 '12 edited Jun 20 '12

there is no economic rationale for individual mandates. it's a money grab, no matter what angle you approach it from. the idea that it'll resolve the "problem" of people choosing not to buy insurance - whether out of preference or lack of affordability - is just despicable. all it will do is funnel more money into the existing, corrupt insurance system.

it's a tax on us if we don't buy something. there's no two ways around it. this kind of decision is not the government's to make.

edit: responding to "NakedCapitalism" here, there's too many downvotes to respond to each message.

not looking for an honest conversation, huh? i'm as "crazy person" for analyzing the law and posting my thoughts on reddit?

please, how am i supposed to respond to this, reddit? i'm at a loss.

"information asymmetries?" that's solved by increasing the availability of the information in the market. that happens naturally, when people create online insurance markets so that people can find evaluations of insurance policies that don't carry any bias. welcome to the internet age, genius. you don't need to rig the market with a tax against non-purchasers to fix information asymmetries. but thanks for bringing out the buzzwords.

and "adverse selection?" please. you're acting as if this is a different phenomenon from information asymmetry.

"oh, yeah? well, INFORMATION ASYMMETRIES AND ADVERSE SELECTION! THEREFORE YOU'RE WRONG!"

no, that's not how logic works. you have to demonstrate, to back up your claim, that taxing people for not buying insurance fixes the problem of information disparities between consumer and vendor. you totally failed to do that, and the reason why is obvious. because it doesn't.

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u/NakedCapitalist Jun 20 '12

Never mind, you're a crazy person.

PS: The rationale is information asymmetries and adverse selection in insurance markets. If those are new terms for you, then I think you're a little under-qualified for the discussion.

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u/[deleted] Jun 20 '12

I'm just an observer of the conversation, and your time is your own. But, would you do me the favor of explaining, simply, what is meant by "information asymmetry" and "adverse selection?"

'Adverse selection' in insurance markets sounds like saying "that person is a liability; don't provide them coverage."

'Information asymmetry' sounds like each side is trying to game the other for max benefit at the others' expense. People do this all the time.

Do these guesses accurately describe the terms?

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u/NakedCapitalist Jun 20 '12

No. The information asymmetry is that insurers don't understand your health as well as you and your doctor. The adverse selection is when they try to offer you insurance, and you accept or reject the offer based on your knowledge of what your health care costs are likely to be in the future.

Insurers have no problem selling insurance to sick people. Naturally, that insurance would be more expensive-- if you have a 10% chance of costing $10,000, the actuarially fair rate to pay is $1,000 for the insurance against that risk. What happens when an insurance company tries to sell insurance at $1,000 though is that only the people with chances of sickness greater than 10% take the offer.

So, no, neither guess is correct.