The element of redistribution of income and services,has been a long missing component in the Obamacare debate. Today’s , National Journal,  has a column by James Oliphant raising the issue of redistribution of income through the redistribution of insurance risk which is the a major reason for the Obamacare “sticker shock.”

Before the ACA, the risk in the individual market was indexed, with insurers able to price policies on the basis of personal circumstance.

Obamacare consolidates risk, grouping those most likely to cost the house money with those who have little chance of receiving a payout. The lines of demarcation between young and old blur, thanks to a compression of what insurers call “age rating”—which used to allow companies to charge older Americans not yet eligible for Medicare on the order of five times more than younger ones—and the widespread use of what is known as “community rating,” which forces insurers to assesses risk in terms of a pool, rather than an individual. “Ideally, you want to be the sickest person in the pool, so everyone is subsidizing you,” says Austin Frakt, a health care economist in Boston. …

In other words before Obamacare, people used to, as the expression goes, pay for what they ate.  Now everything has been thrown into huge pots and the new Obamacare plans has people everybody paying a similar rate no matter how high an insurance payout they are expected to require.

take our poll - story continues below

Did SCOTUS make the right decision on medical mandates for large businesses? (1)

  • Did SCOTUS make the right decision on medical mandates for large businesses?  

  • This field is for validation purposes and should be left unchanged.
Completing this poll grants you access to The Lid updates free of charge. You may opt out at anytime. You also agree to this site's Privacy Policy and Terms of Use.

And there is the more classic means of redistribution: the federal tax revenue used to fund the Medicaid expansion called for by the ACA. That will help fund coverage for an estimated 13 million Americans nationwide, which supporters argue will produce both societal and economic benefits. At present, that’s the largest straight commitment of federal tax dollars, but conservative critics worry that if other ACA funding mechanisms fall short, the government could end up bearing more of the load.

“The whole financing structure for the law is a house of cards,” says Charles Blahous, a fellow at the Mercatus Center at George Mason University and a public trustee of Social Security and Medicare. “Unlike a website, it’s not so easily fixed.”

And to complicate matters, if you want to pay even more and get yourself a
better plan than the three one-size-fits all versions offered in the
exchanges, you have to pay more into the system for the honor.

The underpinnings of Obamacare could crumble in a number of ways: if young people fail to sign up for insurance in the droves needed to make the numbers work (and, given the meager penalty for failing to do so, that remains a definite possibility); or if the so-called Cadillac tax on high-dollar health plans scheduled for 2018 never happens (labor unions, among other interests, hate it); or if Congress, at the behest of the industry, follows through on its threat to eliminate the tax on medical devices; or if the long-promised savings in Medicare fail to come to fruition; or if, down the road, a cash-strapped federal government abandons its Medicaid commitments to states. 

If those financial underpinnings collapse the “haves” will have to fund the plan via higher taxes, and higher insurance rates.

Re-distribution, it’s the essential part of any  progressive program. 
While the conservatives believe “an incoming tide raises all boats” the
progressive philosophy is that everything has to be the same result so things
have to be taken from those who have and given to those who don’t. What
they don’t realize is the final product is a mediocre middle, and a loss
of freedom and incentive to improve one’s lot.