Obamacare Works and I Told You So: Opinion

NEW YORK (TheStreet) -- Back in October I predicted the glitches with the Obama administration's Healthcare.gov Web site would get fixed and people would flock to affordable insurance.

The right called me a Commie. Heh, heh, heh

The White House said Monday that seven million people had signed up for health insurance through the site, as part of the Affordable Care Act. Seven million people is a lot. By the end of this week, when it becomes more clear seven million people bought private health insurance through the site and maybe 17 million have acquired coverage through all parts of the law put together, you will hear that this is a failure, that 17 million people is not a lot, that it is all media hype.

It won't be true.

If 17 million people lived in a state, its population would be the fifth-largest in America, bigger than Illinois, or about the total of 14 states plus Washington, D.C.

There's a point in there about health care, but a more important point about how political discussion is distorted by partisanship to the point where ACA opponents in particular simply couldn't believe anyone on the other side was even looking at facts.

I've been there. Let me tell you what it's like.

I was on the receiving end of the anti-ACA hype machine for a spell last October, when my mostly positive review of Healthcare.gov was published in USA Today. I said the technology problems that dominated the site's launch would be fixed in two months (they were) and once that happened "they will sell tons of insurance" because "the fundamentals are well-priced insurance, clearly explained. And they're in place.'' (They did).

I was Comrade Baskin-Robbins that week -- at least 31 flavors of lefty. Blogger Tom Blumer of Pajamas Media called me one of "Obamacare's Useful Idiots'' -- flattering himself that he would be the only one who understood the reference to American supporters of Lenin and Stalin.

Blumer and I struck up a more-or-less civil email correspondence. The point he stubbornly, repeatedly refused to grasp was my point about Healthcare.gov had nothing to do with health care policy, let alone politics. That was his game, and it didn't occur to him that I was playing a different one -- not even when I explained it.

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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