What People Don’t Realize About the Affordable Care Act

This was published as a Wall Street Journal Think Tank column on May 2, 2014.

The Affordable Care Act enrollment numbers released this week illustrate how much more complex the health-care law is than the political debate about it. Many in politics view the ACA through a left or right perspective that sees it only as good or bad. But consider that the law is engineered for variation; it is the exact opposite of a Starbucks or McDonald’s, where you get the same product no matter where you live or what your income is.

For example:

The numbers showed that Vermont enrolled 85.2% of its potential marketplace population while Iowa and South Dakota enrolled just 11.1%. Among the states with the largest uninsured populations, California enrolled 42.7% of its eligible marketplace population, Florida 38.7% and Texas just 23.3%.

A little-known fact about the ACA is that there are 501 rating areas for premiums. Premium increases will vary widely across areas for reasons including the level of competition between insurance companies and how accurately insurers projected the mix of healthy and sick people in their risk pools,

Perhaps the biggest area of variation is in Medicaid. Twenty-four states are sitting out the law’s Medicaid expansion, leaving 4.8 million low-income people without coverage because they earn too much to qualify for Medicaid but not enough to qualify for tax credits to help buy policies on the new exchanges. Some red states will negotiate deals to come on board soon, but others are likely to wait until after the Obama administration ends.

All this variation could be a positive thing if we had a Congress that could watch what works best and make changes to improve the law. Today’s polarized Congress cannot do that. In contrast, borrowing the best ideas from others is a virtue in state government. The states will be watching each other closely, and they can and do learn.