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Obamacare Works and I Told You So: Opinion

To someone who has spent years covering e-business as I have, it was clear that Healthcare.gov's problems (and virtues) had more than a little in common with highly successful Internet startups that came back from their own disastrous mistakes. The key to being able to bounce back from something like Netflix's (NFLX) 2011 Qwikster debacle or Priceline's (PCLN) foray into the grocery business is to have a clear value proposition and a winning comparative advantage. Both did. It was obvious, even last October, that this was the case for Healthcare.gov, too.

The value proposition was that Healthcare.gov and the ACA generally offered affordable insurance for largely uninsured people, especially once subsidies were factored into the price. The plans on the site, for the most part, are much cheaper than what companies offer their employees, according to Kaiser Family Foundation data.

It's true that this is largely because the average Healthcare.gov policy covers less than group insurance. The cheapest "Obamacare" plans have much higher deductibles than a good corporate plan. But this insurance was never developed for people who have access to a corporate, group plan. It was designed to cover less, and cost less, so people could afford it.

The call that Healthcare.gov would be a winner, then, was a Wall Street pundit's call about a stock -- exactly like the many others I've made in print. The health care market is big, it's underserved with 16% of America uninsured. There's not much competition at the end of the market Obamacare aimed to revolutionize (does your insurance company cut your price when your income falls?) and the online marketplace the government built had the right selection of products and subsidies to get more people covered.

That was evident on Oct. 1 as everyone was going crazy about the site not working. All you had to do was look at what was happening -- including, as my piece pointed out, the rising price of health-insurance stocks that day. The market thought it was going to work, that the insurers would sell millions of policies through Healthcare.gov, and so did I.

Now we can see the proof in the pudding. Thanks to a late surge, 7.1 million people signed up for coverage. According to Charles Gaba at ACASignups.net, another 2.6 million to 3.1 million adults under age 26 are now covered under their parents' plans, a feature enabled by the ACA, and another 4.7 million to 6.5 million are now covered under the expansion of Medicaid. Gaba's estimated total: 16.8 million.

Of those, the Los Angeles Times figures at least 9.5 million didn't have insurance before. That's very conservative (and not in the political sense): The numbers assume two-thirds of people buying on the exchanges had insurance already, even though government reports say 83% of buyers through February were eligible for subsidies. The Times figures also assumed that only six million people bought policies online, which was the publicly disclosed number when they wrote. Rand Corp. surveys suggest the number of uninsured has fallen 20% in the last six months, the Times reported.

Some failure.

I got just as much mail in 2002 saying I must be crazy when I made a buy-them-now call on Web stocks a month before Nasdaq's bottom as I did about Healthcare.gov, but both calls demanded exactly the same skills. And yes, they turned out the same way, as I told you they would. All you had to do was ignore noise and follow where the evidence led.

Exactly what Washington, let alone the blogosphere, is not built to do these days.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Tim Mullaney was national economics correspondent for USA Today from 2011 to 2014 and e-business editor of BusinessWeek during the Web boom and bust. He writes on technology, economics and health care. Contact him at tim.mullaney@outlook.com.

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