Skip to main content

There are tradeoffs to Obamacare

By Aaron Carroll, Special to CNN
September 25, 2013 -- Updated 1446 GMT (2246 HKT)
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
September 30, 2014 -- Updated 1653 GMT (0053 HKT)
Jeff Yang calls Ello a wakeup call to Facebook and Twitter, and a sign of hope for fast-rising upstarts Pinterest and Snapchat.
September 30, 2014 -- Updated 2248 GMT (0648 HKT)
Paul Waldman says the Secret Service should examine its procedures to make sure there are no threats to the White House--but without losing the openness so valuable to democracy
September 30, 2014 -- Updated 2049 GMT (0449 HKT)
Jesse Williams says the videotape and 911 call that resulted in police gunning down John Crawford at a Walmart reveals the fatal injustice of racial assumptions
September 30, 2014 -- Updated 2303 GMT (0703 HKT)
Mel Robbins says officials should drop the P.C. pose: The beheading in Oklahoma was not workplace violence. Plenty of evidence shows Alton Nolen was an admirer of ISIS.
September 30, 2014 -- Updated 1911 GMT (0311 HKT)
The Occupy Central movement has already achieved much by bringing greater attention to Hong Kong's struggle for democracy, William Piekos says..
September 30, 2014 -- Updated 1911 GMT (0311 HKT)
The Occupy Central movement has already achieved much by bringing greater attention to Hong Kong's struggle for democracy, writes William Piekos.
September 30, 2014 -- Updated 1413 GMT (2213 HKT)
As Prime Minister Narendra Modi visits America, Madeleine Albright says a world roiled by conflict needs these two great democracies to commit to moving their partnership forward
September 30, 2014 -- Updated 1404 GMT (2204 HKT)
John Sutter: Lake Providence, Louisiana, is the parish seat of the "most unequal place in America." And until somewhat recently, the poor side of town was invisible on Google Street View.
September 29, 2014 -- Updated 1311 GMT (2111 HKT)
Julian Zelizer says in the run up to the 2016 election the party faces divisions on its approach to the U.S.'s place in the world
September 29, 2014 -- Updated 1419 GMT (2219 HKT)
Ruben Navarrette says Common Core supporters can't devise a new set of standards and then fail to effectively sell it.
September 30, 2014 -- Updated 1329 GMT (2129 HKT)
Earlier this month, Kenyans commemorated the heinous attack on the Westgate Mall in Nairobi.
September 30, 2014 -- Updated 1859 GMT (0259 HKT)
David Wheeler says Colorado students are right to protest curriculum changes that downplays civil disobedience.
September 27, 2014 -- Updated 0158 GMT (0958 HKT)
Sally Kohn says when people click on hacked celebrity photos or ISIS videos, they are encouraging the bad guys.
September 26, 2014 -- Updated 1155 GMT (1955 HKT)
Loren Bunche says she walked by a homeless man every day and felt bad about it -- until one day she paused to get to know him
September 30, 2014 -- Updated 1332 GMT (2132 HKT)
ISIS grabs headlines on social media, but hateful speech is no match for moderate voices, says Nadia Oweidat.
September 29, 2014 -- Updated 1233 GMT (2033 HKT)
A new report counts jihadists fighting globally. The verdict? The threat isn't that big, says Peter Bergen.
September 23, 2014 -- Updated 2137 GMT (0537 HKT)
Ebola could become the biggest humanitarian disaster in a generation, writes former British Prime Minister Tony Blair
September 26, 2014 -- Updated 1658 GMT (0058 HKT)
ISIS has shocked the world. But will releasing videos of executions backfire? Four experts give their take.
September 26, 2014 -- Updated 1439 GMT (2239 HKT)
Eric Holder kicked off his stormy tenure as attorney general with a challenge to the public that set tone for six turbulent years as top law-enforcement officer.
September 26, 2014 -- Updated 1309 GMT (2109 HKT)
LZ Granderson says Obama was elected as a war-ending change agent, not a leader who would leave behind for his successor new engagement in Iraq and Syria. Is he as disappointed as the rest of us?
September 24, 2014 -- Updated 0910 GMT (1710 HKT)
Gayle Lemmon says the question now is how to translate all the high-profile feminizing into real gains for women
ADVERTISEMENT