Exchanges Will Raise U.S. Healthcare Costs

Ignore the inevitable startup glitches. The new health-insurance exchanges will work just fine -- in the sense that all government health-care programs work: Many people will ultimately become dependent on them for coverage. That won’t mean the exchanges have fulfilled their promise, however.

Forget the superficial comparisons to a commodity exchange, an online retailer or even a bulletin board. The health exchanges won’t resemble any other marketplace. Over time, rather than encourage insurance providers to offer ever more attractive and affordable policies, the exchanges are poised to push up the cost not only of insurance but also of health care itself. That means, if the history of U.S. health-care policy is any guide, the exchanges’ very “success” will have the effect of limiting access to care for the 30 million people who are estimated to remain uninsured.

Why are things set to go so badly? Because the architects of the health-care exchanges have relied on three crucial assumptions, all of which are probably wrong.

Read the full story here: http://bloom.bg/1fbd5zC

Source: Bloomberg