The government has many mechanisms through which it distributes subsidies, and while I'm sure the centralized exchange is going to be one of the most efficient and convenient, I'm not nearly so certain that the difference will be larger than the effects it has on the market.
Let me be concrete. According to [1] (which gets its numbers from the CBO), individual plans have 29% administrative overhead as opposed to 12% for employer plans. If the exchanges successfully emulate employer plans, they save 17%*$300b = $51b per year in health care costs. Unless the exchange program is 10,000% more efficient than its alternatives (tax subsidy, payments to companies, etc) then the effects I listed dominate.
In any case, the exchanges were designed with the explicit intent of making the individual insurance market more efficient, not merely making subsidy disbursement more efficient.
Comments
The government has many mechanisms through which it distributes subsidies, and while I'm sure the centralized exchange is going to be one of the most efficient and convenient, I'm not nearly so certain that the difference will be larger than the effects it has on the market.
Let me be concrete. According to [1] (which gets its numbers from the CBO), individual plans have 29% administrative overhead as opposed to 12% for employer plans. If the exchanges successfully emulate employer plans, they save 17%*$300b = $51b per year in health care costs. Unless the exchange program is 10,000% more efficient than its alternatives (tax subsidy, payments to companies, etc) then the effects I listed dominate.
In any case, the exchanges were designed with the explicit intent of making the individual insurance market more efficient, not merely making subsidy disbursement more efficient.
http://www.americanprogressaction.org/issues/healthcare/repo...