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Is Obamacare Really Dead?
23 21 19 18 17 15 14 13 12 CO-OPs offering plans in 25 22 20 19 18 17 16 15 14 states
There’s currently a lot of talk about Obamacare heading into a “death spiral,” which most of Ricochet’s readership predicted before Barack, Nancy and Harry whipped, bribed, and bamboozled a Democrat-led Congress to drag ACA across the reconciled finish line.
National Review’s free market proponent Kevin Williamson wrote a great article “Obamacare is Dead” which is being joyfully retweeted among the conservative Twitterverse.
The fact is that Obamacare has fallen apart without Republicans’ dismantling it. Almost all of its basic promises have failed, it is an economic shambles, and it is a political mess: Unsurprisingly, people still don’t like it. Less than a third of Americans support the individual mandate, three-fourths oppose Obamacare’s tax on high-end health-care programs, and more voters oppose the law categorically than support it. A quarter of voters say the law has hurt them personally.
I am personally in that quarter of voters and documented it in my very first post here on Ricochet.
Williamson also points to the CO-OP failures which are the raison d’être of the current news about Obamacare’s demise.
Many of us — myself included — assumed that the federal government under President Obama would simply write these co-ops huge checks to keep them afloat. We were half right: The government is writing them huge checks, but they are failing anyway, so fundamental is their economic unsustainability.
What President Obama and the ACA proponents didn’t predict was the 2014 cRomnibus spending bill requiring the CO-OPs to be “budget neutral.” This was a major deathblow to the CO-OPs and shows how Congress can effectively use the power of the purse (reminder to Paul Ryan).
Now there’s news that, depending on who you believe, Obamacare (sorry Nancy, I will always call it Obamacare, not the ACA … he owns it) premiums are about to increase from 7.5 percent to 20.3 percent.
The great thing about Twitter is getting instant responses from people when you have a question. I asked Louise Norris from HealthInsurance.org and The Colorado Health Insurance Insider (who represents herself as “Focused on healthcare reform and Medicaid expansion”) about the CMS 7.5 percent estimated increase in Obamacare premiums, and why the Daily Caller stated it was really a 20.3 percent increase in premiums (because the stats used were primarily Silver Plans, not the rest of the metals).
From Monday’s Daily Caller:
Obamacare premium costs will soar 20.3 percent on average in 2016 instead of the 7.5 percent increase claimed by federal officials, according to an analysis by The Daily Caller News Foundation.
The discrepancy is because the government excluded price data for three of the four Obamacare health insurance plans when the officials issued their recent forecast claiming enrollees would face only a 7.5 percent average rate increase in 2016.
Norris pointed me to Charles Gaba‘s article countering Daily Caller. But when you read the article it shows not a 7.5 percent increase in premiums but a 12-13 percent increase. The muddy justification was that the DC article looked at the full ACA-compliant individual market, including off-exchanges. In other words, not the laser-focused, benchmark specific numbers the ACA proponents want you to look at, but all the numbers. They only wanted to include 25 percent of the plans. Selective accounting or fuzzy math, this is the way reporting is now done in the Beltway. Either way, premiums are skyrocketing.
So how does this effect the CO-OPs and just what is a CO-OP anyway? From Louise Norris’ own HealthInsurance.org:
Consumer Operated and Oriented Plans (CO-OPs) were created under a provision of the Affordable Care Act. CO-OP plans were proposed by Senator Kent Conrad (D-ND) when the original public plan option was jettisoned during the health care reform debate. Lawmakers added the CO-OP provision to the Affordable Care Act to placate Democrats who had pushed for a government-run, Medicare-for-all type of health insurance program.
At the time, progressives who preferred a public option derided CO-OPs as a poor alternative because they can’t utilize the efficiencies of scale that would come with Medicare For All, nor do they have the market clout that a single payer system would have when negotiating reimbursement rates with providers.
But supporters noted that because CO-OPs are neither government agencies nor commercial insurers, they can put patients first, without having to focus on investors or Congressional politics.
Instead of paying shareholders, CO-OP profits are reinvested in the plan to lower premiums or improve benefits (in 2014, only one CO-OP, Maine Community Health Options, had revenue that exceeded claims and administrative expenses – but the reinvestment of profits is the plan for all CO-OPs, once they become profitable). And customers’ health insurance needs and concerns become a top priority because the CO-OP’s customers/members elect their own board of directors. And a majority of these directors must themselves be members of the CO-OP.
CO-OPs are private, nonprofit, state-licensed health insurance carriers. Their plans can be sold both inside and outside the health insurance exchanges, depending on the state, and can offer individual, small group, and large group plans. But they’re are limited to having no more than a third of their policies in the large group market (a more lucrative market than individual or small group).
Lawmakers had originally planned to provide $10 billion in grants to get the CO-OPs up and running in every state. But insurance industry lobbyists and fiscal conservatives in Congress succeeded in reducing the total to $6 billion, and turning it into loans – with relatively short repayment schedules – instead of grants (and CO-OPs are not permitted to use federal loan money for marketing purposes). Then, during budget negotiations in 2011, those loans were cut by another $2.2 billion. And in 2012, during the fiscal cliff negotiations, CO-OP funding was reduced even further – and applications from 40 prospective CO-OPs were rejected.
Ultimately, the Centers for Medicare and Medicaid (CMS) awarded about $2.4 billion in loans to 23 CO-OPs across the country (there were 24 CO-OPs, but Vermont Health CO-OP never became operational. CMS retracted their loan in September 2013 – before the exchanges opened for the first open enrollment – because there were doubts that the program could be viable with Vermont’s impending switch to single-payer healthcare in 2017; ironically,Vermont pulled the plug on their single payer vision in late 2014).
The Obamacare cheerleaders (MSM) are taking note, and although they are putting the onus on the Republicans, they have no answer for the failure of the largest entitlement program in generations.
Co-op customers will be able to shop for insurance sold by other carriers in the three-month open enrollment period that began Sunday and continues through Jan. 31.
Daniel R. Levinson, the inspector general at the Department of Health and Human Services, said in July that most of the co-ops were losing money and falling short of their enrollment goals. But the administration expressed confidence in the program at that time, saying the co-ops “may experience short-term ups and downs,” like start-ups in any industry.
In a separate initiative, the administration said on Tuesday that it would hold a forum on the high prices of some prescription drugs.
Sylvia Mathews Burwell, the secretary of health and human services, said the conference, scheduled for Nov. 20, would seek ways to speed the discovery of innovative drug treatments while making them more affordable.
Squirrel alert! Don’t worry about the collapse of our only first-term achievement, let’s talk about high prescription prices, which will ultimately need another government program.
So, the CO-OPs are closing. Premiums are going through the roof. Higher deductibles are requiring the insured to learn the art of negotiation for cash prices, and this is before the hammer drops on the Employer market.
Is Obamacare dead? Not quite yet, but doctors are standing by with the defibrillator. Let’s hope they still take insurance.
Published in General
Genius!
If you keep that, it’s not insurance. I think it’s better to just do direct subsidies in those cases. I don’t know much about it, but my understanding is that WI had a fairly new program going that was getting good results for a reasonable cost. Tax dollars are used to create a pool that is used to pay for care, rather than insurance. If you’re already sick you don’t need insurance, you need help paying your bill.
I’m not arguing the lesser of two evils! I agree with you both and as I have previously posted, I live in a state with high medicare costs and as a relatively youthful and healthy individual I am paying far too much money for catastrophic. Obamacare made a bad situation even worse by disallowing my deductible.
When can I buy insurance from Nebraska or Colorado?
That’s kind of what I’m thinking. Let insurance be insurance. I don’t think we should just ignore the problem of pre-existing conditions, but we’re not going to be able to demonstrate what the market can do if we don’t let the market do what it can do.
Do you have an actual, concrete example of where this is a problem? Because if you don’t like monopoly, you haven’t seen anything until you’ve seen what happens when you don’t let each state do its own regulation. A few winners will take all. We removed barriers to banks doing business across state lines, then got banks that were too big to fail, and then the disaster of 2008 and the nationalization of our banking system. Why would we want to undo ObamaCare and then make it happen all over again?
Nuke it from orbit. It’s the only way to be sure.
Already did in #29. The link was to a joint study from Yale, MIT and Brookings. State Health Insurance Regulations and the Price of High-Deductible Policies
It’s rather long and wonky but here is the salient point.
I don’t know the economics of high risk pools, but does that mean I still can’t have insurance if I was previously ill because either the insurance company won’t take me or charge me too much? So, I can not prevent getting sick again with regular check ups and testing because the high risk pools only help when I’m already ill?
Is anyone else worried that the death of Obamacare will mean the rise of single payer?
Or. . .we could keep the individual mandate. I wrote a post on this a few years back: we can either keep the individual mandate, or we can switch to single-payer healthcare. Those are the two political equilibrium states.
Conservatives lost this batter when we acknowledged the legitimacy of mandatory ER care and the constitutionality of single payer. Richard Epstein wrote articles on how single-payer is more constitutional than ObamaCare’s individual mandate; what was he thinking? The mandate, unpopular it may be, is the only way out for us.
I will study the article. I have no doubt that community rating and . guarantee issue raise prices. But I want to see why this problem doesn’t correct itself. (By the way, you’re proposing to (re)enact guarantee issue on a national scale, aren’t you? Exactly how would that be better than if some states do it and some states don’t?)
Don’t forget AARP – their fingerprints were all over it
You say “once you have lost it,” but why was it lost? I think we need to focus on insurance portability, you shouldn’t “lose” your insurance just because you change jobs or your employer decides to switch carriers. Probably the most effective way to do this is to end the payroll tax deduction rules, and swap it for some sort of personal deduction instead.
Once that’s fixed the only reason someone would “lose” their insurance if they decide to stop paying for it. If then get sick, they shouldn’t be able to suddenly renew their policy at the same rate as someone else who did the responsible thing and paid for it all along.
We also run our own business, and we have six children. Try insuring eight people in New York! Our monthly premiums are truly disgusting. I stopped calculating how much they’d gone up when I realized it was truly making me very tense.
I also have a chronic condition from tick-borne illness. And almost none of my medical services are covered by insurance because there is No Such Thing as chronic illness from tick bites and if there were such a thing, there is No Treatment.
It is madness.
And it’s the least “insurancy” thing in the whole bill. As Kevin points out, at that point, it’s not insurance, it’s cost-sharing. I agree with Kevin that this has to be done, but don’t call it insurance.
Sorry, Judge. I posted this before I read your comment.
I am a strong supporter of the 10th. Does selling insurance across state lines come under consideration of interstate commerce?
My plan is (still) grandfathered. For my family (7 kids), the grandfathered plan is $1,216 per month.
The Obamacare alternative has a much higher max out of pocket ($9k instead of $4,500 max per year). Even though Obamacare is “free” for all kids after 3, the Obamacare equivalent $1,504 per month today.
$300 a month… and it is surely becoming reality as the plans diverge over time. For this year, the grandfathered plan is still OK.
Just adding (or piling on), a close relative of mine who works for the second-largest insurer in the state asked HR about some job opportunities which were rumored to be coming. Well, said HR rep, not sure those jobs will be approved, revenues for the company are tight ‘because of the ACA – you see, we were supposed to be getting money from the government for all this, and the government is reneging on the deal.’
That’s good and simple. Difficult too. But this is just what we supposed purists want: a clear declaration of our goals – I know getting there will involve half loaves and compromises and even failures. Just make the darn case.
Or, you can go the Cook County Hospital route of direct public provision of medical care. As Cook County proves, it hardly crowds out private options; this option isn’t anyone’s first choice but it’s there for those who need it. I’m sure other localities can do that model much better than bloated and corrupt Cook County. The key, I think, is that it has to be local so that it can be constrained by local budgets and trade off preferences.
Just provide an “opt out” for anyone who wants it – any person can sign away their regulatory and legal rights and remedies, and freely contract for their medical goods and services.
That will be much easier to sell (it is merely Freedom, after all), and still will bring Obamare crashing down.
I like this model. My mother has a Medicare Advantage Plan through one of the local hospital groups. They get her Medicare money and about $100/month and that covers everything. Since they provide all the care there is no billing involved. I suspect they are doing some kind of insurance or reinsurance on the back end, but she doesn’t have to deal with it. If she travels, they have arrangements so that she is covered anywhere.
This puts the insurance with insurance companies and the health care with health care providers. Our current system is more like buying health care from insurance companies, who don’t actually sell health care.
I don’t know why they can’t offer the same kinds of plans to everyone.
Good question. But I suspect the proponents of “selling insurance across state lines” are really after something a little different.
Yeah, as much as medical providers complain about insurance payers, how many of them are lining up to assume the collections risk by going all private pay?
The key here is finding ways to genuinely reduce costs so that patients paying up front becomes a more reasonable option for patients and providers alike. David’s Healthcare Contract With America is probably a great start. So is regulatory reform which might allow cheaper options for routine and non-major care.
Which is why I support HSA’s from date of birth. BTW, people lose insurance for many reasons, including company’s changing carriers, loss of job, insurance pulls out of state or changes plans. Portability is a good idea, but I stand by my statement about pre-existing conditions. Risk pools and other safety net efforts are still not full insurance.
Yes! Been discussed already in the thread started by Brent.
Leaving us with Carly in this role? :)
Good article here.
May I ask what metal plan this is?
But there’s a reason why it’s “hard and expensive” to get insurance when you already have “cancer or any other disease,” right? Basically any insurance company that sells you a policy at their standard rate is going to lose money, perhaps a lot of money, paying for all your treatments.
Do you have a solution to that problem?