Skip to main content

There are tradeoffs to Obamacare

By Aaron Carroll, Special to CNN
updated 10:46 AM EDT, Wed September 25, 2013
STORY HIGHLIGHTS
  • Lower-cost insurance could come at the cost of fewer choices of health care providers
  • Aaron Carroll: Insurance companies have been doing this for years to keep costs down
  • He says just as there's no policy that is perfect, there are tradeoffs to Obamacare
  • Carroll: One way to fix this is to have a public option, which might have a larger network

Editor's note: Dr. Aaron E. Carroll is a professor of pediatrics at the Indiana University School of Medicine and the director of its Center for Health Policy and Professionalism Research. He has supported a single-payer health system during the health care reform debate. He blogs about health policy at The Incidental Economist and tweets at @aaronecarroll.

(CNN) -- It seems difficult to open a paper, turn on TV or visit a website these days without hearing some awful new "discovery" about Obamacare and how it's going to end the world. More often than not, these claims are overblown, designed to get attention and score political points.

This week, the New York Times published an article explaining that the savings many people hope to see in lower-cost insurance could come at the cost of fewer choices with respect to health care providers. This is very true.

If we want to be realistic about health care reform, we have to acknowledge that everything comes with a tradeoff.

Aaron Carroll
Aaron Carroll

In order to make insurance cost less, private insurance companies have to make use of the tools available to them.

In the past, they could have tried preferentially to cover healthier people and refuse coverage to those with chronic conditions. That leaves a cheaper risk pool, which results in lower premiums.

But Obamacare no longer allows that. If we want guaranteed issue and community ratings (so that no one can be denied insurance and no one can be charged more for being sick), then insurance companies must use other strategies to save money.

In the past, insurance companies could have tried to issue policies that didn't cover as much. Policies with skimpier benefits are cheaper, too. But Obamacare sets minimums with respect to what qualifies as comprehensive coverage. So that tool was taken away as well.

Obamacare: Everything you need to know
GOP plan links Obamacare to shutdown

In the past, insurance companies could have set lower annual or lifetime limits, which confines their risk and allows them to sell insurance at a lower price. Or, they could have set really high deductibles or out-of-pocket maximums. These, too, are now more tightly regulated.

So what's left? How can insurance companies make health care cheaper so that they can deliver lower premiums to people and attract more business?

Well, one thing they could do is limit their administrative costs. But if you ask insurance companies, they tell you that they are already running pretty lean. They also like to make a nice profit, and they like to pay their executives well. So they are left with one really good option: Pay less for care.

How do they do this?

One way they've been doing it for years is to contract with certain doctors and hospitals to provide care for their beneficiaries for less money. Providers will agree to this because it guarantees them a certain amount of business. Insurance companies like it because it means they can pay less, charge lower premiums and sell more policies. And that is how many plans in the health care exchanges will compete for your business.

Please understand that this is nothing new with respect to health insurance. At my job, there are a number of different plans offered to employees. The most expensive plan allows us to see the widest range of physicians. There's a cheaper plan available, but my kids' pediatrician (whom we revere) isn't in that network. So we pay for the more expensive plan. That's a choice we make as informed consumers.

Problems will arise if people don't understand what they are getting into. There's no such thing as a free lunch.

If you buy the cheapest plan, it may not include the doctor you want. If choice is your No. 1 goal, then you will probably have to pay for it. What makes this a problem for Obamacare, though, is that some health exchanges aren't offering a choice. For instance, in New Hampshire, only one insurance company is offering exchange plans, and it has a rather limited network.

If you were previously uninsured, then the most straightforward argument is that the plan you're getting, probably with subsidies to make it cheaper, is better than nothing. But some people, who might have had individually issued policies before Obamacare with larger networks, will not be happy with their new plans. They may be cheaper, but they may have preferred to pay more for choice, and now they won't be able to.

No policy is perfect. On the whole, I believe far more people will benefit from Obamacare than will be hurt by it. Any change will inevitably make someone unhappy. This is one of those situations.

We shouldn't ignore this deficiency. We should fix it. One way might be to have a public option, run by the government, which might have a larger network. Medicare has perhaps the largest national network in the country, as more doctors accept it than just about any other form of insurance.

So it's totally possible to offer more choice. But that will require politicians to work together to amend the law to make it better.

It will be instructive to watch how people react to news like this. If they are truly concerned about fixing this problem, then they will seek solutions to do so. If they use this issue only to demagogue against the entire law, though, it's likely that they care more about politics than policy.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Aaron Carroll.

ADVERTISEMENT
Part of complete coverage on
updated 9:29 AM EDT, Mon October 20, 2014
Cornell Belcher says the story of the "tea party wave" in 2010 was bogus; it was an election determined by ebbing Democratic turnout
updated 4:12 PM EDT, Mon October 20, 2014
Les Abend says pilots want protocols, preparation and checklists for all contingencies; at the moment, controlling a deadly disease is out of their comfort zone
updated 11:36 PM EDT, Sun October 19, 2014
David Weinberger says an online controversy that snowballed from a misogynist attack by gamers into a culture war is a preview of the way news is handled in a world of hashtag-fueled scandal
updated 8:23 AM EDT, Mon October 20, 2014
Julian Zelizer says Paul Krugman makes some good points in his defense of President Obama but is premature in calling him one of the most successful presidents.
updated 10:21 PM EDT, Sun October 19, 2014
Conservatives can't bash and slash government and then suddenly act surprised if government isn't there when we need it, writes Sally Kohn
updated 8:28 AM EDT, Mon October 20, 2014
ISIS is looking to take over a good chunk of the Middle East -- if not the entire Muslim world, write Peter Bergen and Emily Schneider.
updated 9:00 AM EDT, Mon October 20, 2014
The world's response to Ebola is its own sort of tragedy, writes John Sutter
updated 4:33 PM EDT, Fri October 17, 2014
Hidden away in Russian orphanages are thousands of children with disabilities who aren't orphans, whose harmful treatment has long been hidden from public view, writes Andrea Mazzarino
updated 1:22 PM EDT, Sat October 18, 2014
When you hear "trick or treat" this year, think "nudge," writes John Bare
updated 12:42 AM EDT, Sat October 18, 2014
The more than 200 kidnapped Nigerian schoolgirls have become pawns in a larger drama, writes Richard Joseph.
updated 9:45 AM EDT, Fri October 17, 2014
Peggy Drexler said Amal Alamuddin was accused of buying into the patriarchy when she changed her name to Clooney. But that was her choice.
updated 4:43 PM EDT, Thu October 16, 2014
Ford Vox says the CDC's Thomas Frieden is a good man with a stellar resume who has shown he lacks the unique talents and vision needed to confront the Ebola crisis
updated 4:58 AM EDT, Sat October 18, 2014
How can such a numerically small force as ISIS take control of vast swathes of Syria and Iraq?
updated 9:42 AM EDT, Fri October 17, 2014
How big a threat do foreign fighters in Syria and Iraq pose to the West? It's a question that has been much on the mind of policymakers and commentators.
updated 8:21 AM EDT, Fri October 17, 2014
More than a quarter-million American women served honorably in the Iraq and Afghanistan wars. Now they are home, we have an obligation to help them transition back to civilian life.
updated 4:27 PM EDT, Thu October 16, 2014
Paul Begala says Rick Scott's deeply weird refusal to begin a debate because rival Charlie Crist had a fan under his podium spells disaster for the Florida governor--delighting Crist
updated 12:07 AM EDT, Thu October 16, 2014
The longer we wait to engage on Ebola, the more limited our options will become, says Marco Rubio.
updated 7:53 AM EDT, Wed October 15, 2014
Democratic candidates who run from President Obama in red states where he is unpopular are making a big mistake, says Donna Brazile
updated 12:29 AM EDT, Thu October 16, 2014
At some 7 billion people, the world can sometimes seem like a crowded place. But if the latest estimates are to be believed, then in less than a century it is going to feel even more so -- about 50% more crowded, says Evan Fraser
updated 12:53 PM EDT, Mon October 20, 2014
Paul Callan says the Ebola situation is pointing up the need for better leadership
updated 6:45 PM EDT, Wed October 15, 2014
Nurses are the unsung heroes of the Ebola outbreak. Yet, there are troubling signs we're failing them, says John Sutter
updated 1:00 PM EDT, Wed October 15, 2014
Dean Obeidallah says it's a mistake to give up a business name you've invested energy in, just because of a new terrorist group
updated 7:01 PM EDT, Wed October 15, 2014
Fear of Ebola is contagious, writes Mel Robbins; but it's time to put the disease in perspective
updated 1:44 PM EDT, Tue October 14, 2014
Oliver Kershaw says that if Big Tobacco is given monopoly of e-cigarette products, public health will suffer.
updated 9:35 AM EDT, Sat October 18, 2014
Stop thinking your job will make you happy.
updated 10:08 PM EDT, Tue October 14, 2014
Ruben Navarrette says it's time to deal with another scandal involving the Secret Service — one that leads directly into the White House.
updated 7:25 AM EDT, Tue October 14, 2014
Americans who choose to fight for militant groups or support them are young and likely to be active in jihadist social media, says Peter Bergen
updated 9:03 AM EDT, Mon October 13, 2014
Stephanie Coontz says 11 years ago only one state allowed same sex marriage. Soon, some 60% of Americans will live where gays can marry. How did attitudes change so quickly?
updated 4:04 PM EDT, Tue October 14, 2014
Legalizing assisted suicide seems acceptable when focusing on individuals. But such laws would put many at risk of immense harm, writes Marilyn Golden.
updated 9:07 AM EDT, Mon October 13, 2014
Julian Zelizer says the issues are huge, but both parties are wrestling with problems that alienate voters
updated 6:50 PM EDT, Mon October 13, 2014
Mel Robbins says the town's school chief was right to cancel the season, but that's just the beginning of what needs to be done
updated 11:43 AM EDT, Sat October 11, 2014
He didn't discover that the world was round, David Perry writes. So what did he do?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT