David Leonhardt Claims that Implementation of the Affordable Care Act Is Going Well

David Leonhardt says that the signs of market disruptions are exactly what we should hope to see if things are going well:

Economic Scene - Health Care Law’s Uneven Path to Better Insurance: Consider what it would be like to have a health insurance plan that capped annual benefits at $2,000. For any medical care costing more than that, you would have to pay out of pocket. Examples of care that costs more than $2,000... any cancer treatment, any heart surgery, a year’s worth of diabetes treatment... broken bones..... So does this insurance plan sound like part of the solution for the country’s health care system — or part of the problem?

A $2,000 plan happens to be one of the main plans that McDonald’s offers its employees. It became big news last week, when The Wall Street Journal reported that the company was worried the plan would run afoul of a provision in the new health care law. In response to the provision, McDonald’s threatened to drop the coverage altogether, until the Obama administration signaled it would grant some exemptions. This episode was only the latest disruption that the health law seems to be causing....

[W]hen you dig a little deeper, you often discover the same lesson that the McDonald’s case provides: the real problem was the status quo.... In choosing their health reform plan, President Obama and the Democrats eschewed radical changes, for better or worse, and instead tried to minimize the disruptions to the current system.... McDonald’s offers its hourly workers two different health care plans, which are known as “mini-med” plans. In one, workers can pay about $730 a year for benefits of up to $2,000. In the other, they can pay about $1,660 a year for benefits of up to $10,000.... Senator Charles Grassley, Republican of Iowa, has previously criticized AARP for marketing similarly limited plans to its members. “It’s not better than nothing,” Mr. Grassley argued, “to encourage people to buy something described as ‘health security’ when there’s no basic protection against high medical costs.” Dr. Aaron Carroll, an Indiana University pediatrics professor who studies health policy, says of mini-med plans: “They’re great if you’re healthy, because you feel like you’re covered. But if you ever need them, they’re so skimpy, they provide very little.”...

The plans’ skimpiness is the main reason they ran into legal jeopardy. Under the new law, most plans must spend at least 85 percent of their revenue on medical care, rather than administrative overhead. The McDonald’s plans aren’t generous enough to clear the hurdle....

The recent disruptions in our health insurance market are partly a result of the fact that the stool’s three legs were not built on the same timetable.... [I]nsurance regulations, like the one on overhead costs, are starting to take effect. But the... exchanges won’t be up and running until 2014.... In 2014, however, the choice for McDonald’s workers will no longer be between a bad policy and no policy. Through the exchanges, they will be able to buy a real health insurance plan — one that covers cancer, heart attacks, surgeries, M.R.I.’s and hospital stays. Dr. Carroll notes that many families will end up paying less than they are now paying out of pocket and will get more access to care, too.

For insurance companies, these changes won’t be quite so positive. They will no longer be able to sell plans that devote 30 percent of revenue to salaries for their workers....

The health care overhaul that passed Congress is far from ideal.... But it does represent progress. The fact that it is beginning to disrupt the status quo — that some insurance policies will eventually be eliminated and some inefficient insurers will have to leave the market altogether — is all the proof we need.