On the Third Hand: Interstellar space

On the other hand, one reason insurers’, regulators’, and consumers’, lack of timely access to information about how PPACA World really works matters so much is that the health insurance rate-setting process is so rigid. Insurers generally have to set prices for the following calendar year (for example: in 2016) by May the previous year. In most states, regulators try to lock in the rates in the mid-summer.

See also: Regulators wrestle with PPACA 3R’s data lag

The only defense mechanisms insurers have to cope with the effects of setting out what turn out to be unrealistically low prices are to stop selling new coverage and to shut down.

In theory, the drafters of PPACA set up an “exchange,” or an auction system that helps buyers and sellers get the demand curve for coverage, to cross the supply curve.

In reality, the only time the PPACA World system actually lets insurers have any economic freedom is when the insurers are designing and pricing their coverage, about seven months before the calendar year and the plan year start. This structure seems especially prone to killing off the insurers in the early years that the PPACA system is in effect, before anyone knows how the system really works. But it seems likely to reduce system stability in future years, too.

The simplest solution might simply be to let health insurers adjust coverage prices every quarter, or every month, to reduce the brittleness of the current system.

On the third hand, consumers are broke and can’t easily handle big, frequent changes in premium prices.

To deal with that reality, some combination of the exchange, insurers, reinsurers and the government could step in and create a true health risk exchange system alongside the dog-and-pony show at the consumer-facing public exchange system.

In the real health risk exchange system, grownups with money could respond to changes in the health care system in real time, or near real-time, rather than pretending that having health insurers use detailed data from 2013, and a dash of 2014 data, to set 2016 premiums, in a rapidly, dramatically changing market, is a great way to proceed.