Healthcare is Jars of Jellybeans

Insurance functions on risk pools. Think of this as the old jar of jellybeans, where you guess how many of each type are in there. In this case, each person pays to put their jellybean in a jar. There are all kinds of jellybeans, and insurers pay the sum of what’s in each jar, using the money people paid to add their own jellybeans. You want a nice mix of lots of low-cost jellybeans and fewer expensive ones, so that your total doesn’t cost too much.

The individual mandate required people with low-cost beans to add them to the jars. But the Republicans want to do away with that provision, because they believe people should be free not to add their jellybeans if they don’t want to. Fine. But without the mandate, there has to be some other way to balance the mix of jellybeans, if the system is going to work. The Republicans haven’t offered a good solution there.

The main pre-ACA way to deal with the known expensive jellybeans was to set aside jars just for them. The government would subsidize that jar, trying to keep the main jar cheaper. But the government would underfund the high-risk pools, meaning not everybody could put their beans in the jar.

The ACA tried to move the pre-existing jellybeans into the main jar by balancing them with young, healthy jellybeans. Again, the jellybean jar is the main thing to think about when you think about insurance, but the Republicans seem to not know about it. Their plans do not reflect an understanding of this jar and jellybean system.

Under Medicaid, poor peoples’ jellybeans are put in the Medicaid jar, which is cost-shared between states and the federal government. As most poor people are still healthy, and only a small amount are expensive, it works out pretty well even though it’s all paid through government spending.

The ACA expanded that jar in most states, with the federal government paying the overwhelming difference, but some states decided to keep the old jar, meaning there is a gap between jars, with those peoples’ beans just sitting on the counter, not getting covered.

Healthcare is not as complicated as the president claims. It’s only complicated when you deny the essential model of healthcare, when you pretend it’s not jars of jellybeans. When you recognize it is, and you are honest and willing to do what’s needed to make the system work, it becomes a hell of a lot simpler. The Republican reluctance here is all about explicitly not wanting to fix the ACA or do anything that actually works. That’s sad. Maybe they should get them some jars and jellybeans and let the Democrats show them how it works.