The Obamacare Deadline Arrives

Today is March 31. It’s the “Obamacare” deadline that we’ve been hearing about for months, the end of the open enrollment period on the health care exchanges — although the federal government has extended the deadline for a week, to allow people who claim to be in the midst of applying to complete the process.

How is the process going? We know for sure that a lot of money and effort has been spent in encouraging people to apply by the deadline. The federal government has spent millions on TV ads and social media banners, alerting people to the deadline and encouraging people to “get covered.” President Obama himself has led the charge. Over the past few weeks, you couldn’t go to a website or social media outlet without seeing an ad. It’s been, by far, the largest, most visible, and probably most expensive government-sponsored ad campaign in my lifetime. It’s blown the “click it or ticket” and anti-drunk driving campaigns out of the water.

Has the ad campaign worked? According to information provided by the government, enrollments surged as the deadline neared. By mid-March, the government reported that 5 million had enrolled, then 6 million a few days ago. Some people hold out hope that enrollments might hit 7 million. The 7 million figure has some significance, because the Congressional Budget Office initially forecast that 7 million enrollments were needed during the open enrollment period, although the CBO later revised that forecast to 6 million.

It’s not entirely clear what these numbers represent. There are supposed to be 48 million residents in the United States who do not have health insurance; 7 million is only a small fraction of the uninsured whole. What do we do about the remaining millions of uninsured people? Moreover, it’s not clear how many of the people who have enrolled through the exchanges were formerly uninsured, either. Many of the users of the health exchange websites apparently were people who were insured but whose policies were terminated because they lacked mandatory provisions required by the Affordable Care Act. There are also valid questions about how many of the enrollees have actually paid premiums and therefore have coverage.

There will be a lot of information coming our way over the next few days and weeks about Obamacare. The Affordable Care Act is such a hot-button issue — and the impending elections in November will keep it so — that supporters and opponents of the law are sure to massage and select the data to favor their positions. The average voter would do well to apply skepticism to the messaging from both sides of the Obamacare debate.

If you’re someone who bought a new policy through healthcare.gov, the ultimate question about your fellow enrollees is: who are these people, and how sick are they? Insurance fundamentally involves a pooling of risk, and the cost of health insurance is directly tied to who else is in your pool. If you’re in a group with lots of young, healthy people who don’t need much health care, your premiums will be lower than if you’re in a group with a preponderance of sick people who regularly need expensive medical attention. We won’t know the true actuarial makeup of the new plans until the people who are covered begin to make claims, the claims get processed and paid, and the insurance companies look at the results and decide whether the pricing of the plans needs to be adjusted — and if so by how much. If health care costs increase dramatically, few people are going to consider Obamacare a success no matter how many people have enrolled.

It will be nice to see some new ads once the March 31 deadline passes, but everyone needs to take a deep breath. This initial deadline is just one step in a very long process, and we won’t know the outcome until we are much farther down the road.

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The Network Issue

Another area in which the Affordable Care Act will have an impact on health care in America is beginning to get some attention.  It has to do with the “provider networks” — that is, the collection of doctors, hospitals, and other health care facilities and personnel being offered by some of the new insurance plans.

The Affordable Care Act posed some difficult challenges for insurers.  Under the statute, they were required to include a number of new, mandatory forms of coverage in their health care plans.  That requirement, obviously, limited the ability of insurers to control the costs of particular plans by tailoring the kinds of care covered by those plans.  But the insurers still need to figure out a way to control costs, because their plans need to be competitively priced.

There aren’t a lot of remaining cost-control options. One is to tinker with things like co-payments and deductibles and increase the non-premium payments that the insureds must make when they use health care.  Another is to limit the networks to particular health care providers who, due to location or contractual agreement or some other consideration, are offering health care at lower prices than their competitors.

That’s the gist of an article in the Wall Street Journal by a cancer patient whose existing policy has been canceled and who can’t find a substitute policy that includes all of the providers that have given her the unique combination of care that has allowed her to beat the odds and survive.  It’s an indication of the kind of long-term effects that will play out over time, as the Affordable Care Act reshapes the health care market.  In the individual market, at least, Americans who are used to going to whichever doctor and hospital they choose may need to change their habits — and they probably won’t be very happy about it.

The Perils Of Overpromising

In a memorable episode of the classic TV sitcom 3rd Rock from the Sun, Sally the alien and Officer Don are discussing becoming intimate for the first time.  The straightforward Sally asks:  “Well, Don, are you ready to rock my world?’  And the nervous Officer Don gulps and responds:  “Well, perhaps jostle it a little bit.”

Officer Don clearly understood the perils of overpromising.  It’s a lesson that President Obama and his administration are learning the hard way these days.

Hundreds of thousands of Americans have been receiving cancellation notices from health insurers that are discontinuing existing coverage because it doesn’t satisfy all of the requirements of the Affordable Care Act, or “Obamacare.”   It’s not clear how many people ultimately will receive cancellation notices, but experts predict that a significant percentage of those who currently buy individual coverage — between 7 and 12 million people — will be affected.  Under the Act’s “individual mandate,” all of those people will need to find new insurance that complies with the requirements of the Act, either through the dysfunctional Healthcare.gov website or some other process.  News sites are filled with stories about people who have found that they will need to pay much more each month for coverage, often with higher deductibles.

These people are upset because they remember President Obama’s repeated promise that, under the Affordable Care Act, if you like your insurance, you can keep it.  But the statute and its regulations were written to prevent that pledge from being honored, by requiring that all insurance plans include certain forms of coverage, such as maternity care, mental health benefits, and prescription drug benefits, that were not offered by many stripped down, inexpensive plans.  The inevitable result was that those plans would end and the new options, all of which include the mandatory coverage, would be more expensive for many people.  Of course, when you hit people who are trying to live within their means with monthly insurance costs that are significantly higher than what they had budgeted, you’re bound to make those people angry and bitter.

It’s a predicament that the humble Officer Don would have avoided.  Of course, few politicians seem to truly appreciate the perils of overpromising.

Taking The “Affordable” Out Of The Affordable Care Act

This week, enterprising journalists discovered that the Obama Administration has delayed another key provision of the Affordable Care Act.

In this instance, the delay affects one of the core selling points of the Act — the provision that capped the total amount of out-of-pocket expenses, in the form of deductibles and co-payments and other contributions by the insured toward health care.  It was supposed to take effect in 2014, but the newly discovered ruling gives insurers a one-year extension.

The delay wasn’t exactly announced in a way that befits an Administration that President Obama recently described as “the most transparent Administration in history.”   The New York Times article linked above describes the relevant ruling as follows:  “The grace period has been outlined on the Labor Department’s Web site since February, but was obscured in a maze of legal and bureaucratic language that went largely unnoticed. When asked in recent days about the language — which appeared as an answer to one of 137 “frequently asked questions about Affordable Care Act implementation” — department officials confirmed the policy.”  I guess “transparency” means burying the bad news in an avalanche of regulatory drivel and minutiae, rather than being honest about the many delays and snags that have affected legislation that was passed three years ago amidst confident predictions about its implementation, enforceability, and impact.

And speaking of impact, Forbes has a very interesting article about the impact of the Affordable Care Act on, well, getting affordable care.  It discusses the inevitable effect of caps on out-of-pocket expenses like co-payments and deductibles.  Because they don’t have anything to do with the cost of health care, that just means more of the cost will be paid through premiums imposed on everyone, rather than through contributions by the users (and, often, overusers) of health care.  The article notes that some colleges that used to offer cheap plans to their healthy students have had to drastically increase the premiums and other schools have stopped offering health care plans altogether.

Of course, the whole notion of burden-sharing underlying the Act means that some people will pay more — the question is, how many people, and how much more?  What we’ve seen of the Affordable Care Act so far doesn’t instill great confidence that we know the answers to those two important questions.

Do The Affordable Care Act Delays Mean Anything?

In recent months the Obama Administration has announced the postponement of a number of provisions of the Affordable Care Act.

In April, full implementation of the Small Business Health Option Program was delayed.  On July 2, the Administration stated that the employer penalty provisions of the Act would not be applied until 2015.  And, only a few days ago, the Department of Health and Human Services gave notice that still other provisions — in this case, dealing with health insurance verification and income reporting requirements for state health insurance exchanges — will be delayed.  The latter delay means that, in 2014, state exchanges will be allowed to accept an “attestation” of projected household income to determine whether the individual seeking insurance is eligible for certain tax credits and cost sharing reductions.

Do these delays mean anything?  Are they simply what we should expect when any brand-new federal program takes effect?  Or, do they signify something deeper and more significant?

In announcing these postponements, the Administration cited considerations like “complexities” and “operational barriers.”  That may simply be CYA bureaucratic jargon devised by a regulator who dropped the ball.  Or, it may mean that the health care and health insurance markets in our country are a lot more complicated than proponents of the Affordable Care Act thought.

I’ve always been skeptical of the bold promises made by the President and congressional advocates of the Affordable Care Act, so take this with a grain of salt — but it seems to me if straightforward things like income verification and employer insurance verification haven’t been resolved in the years since the statute was enacted, much more complicated provisions of the Act might be in even greater jeopardy.  I know that the Administration and regulators are confidently telling us that the system will work fine once it takes effect . . . but then these same people assured us that the provisions that have now been delayed would be readily achievable.  Why do we think the “complexities” and “operational barriers” that are supposedly preventing some requirements from taking effect will be resolved in a year’s time?

As I mentioned, I was not an advocate of the Affordable Care Act, but it is the law of the land and therefore I hope it works.  With health care and health insurance being such huge elements of our economy, heaven help us if it doesn’t.

Close to Home

Bob and I have probably blogged the heck out of the health insurance issue, but here’s a story that hits close to home.

The other night at dinner I sat next to my nephew who happens to run his own pizza shop here in Columbus. He doesn’t have the luxury of working for a big corporation with a group insurance plan or a mid-size business that might offer their employees health insurance. He has four employees who are young like he is and don’t want coverage cause they are all healthy, but he has to carry his own insurance, because he is not quite twenty five and has a pre-existing condition called crohn’s disease.

Currently he pays $350 per month, that’s $4,200 a year for medical coverage that is not all that great and they keep raising his premiums. So he is trying to do what any smart businessman would do, try to find better coverage at a lower cost to reduce his out of pocket expenses.

Unfortunately he is not having much luck because when he puts down crohn’s on his health questionnaire  so far each and every insurance carrier will offer him medical coverage with an attached exclusion that no claims related to his crohn’s disease will be covered even though he is taking medication to control his condition. I could tell he was visibly frustrated by this.

He asked me if I knew what the age was for dependents to be covered under their parents plan with the passage of the Health Care Reform Act and I told him it was twenty six so he has asked his mother if she would call and add him to their policy.

There will be no cost to his parents because their two daughters are currently covered and they have family coverage through his dad’s employer. By doing this he said it will give him more time to try to find better coverage as opposed to paying the high premiums for his current plan not to mention saving the premiums he would have to pay for the next year or so.

I’ve read Bob’s blog about the government statistics being unrealistic, however having been a medical underwriter for many years for a large insurance company here in Columbus I don’t agree with Bob’s conclusions. Most people are probably not aware that height and weight are a major reason why people can’t get health insurance and it has been mentioned recently that by 2015 three out of four Americans will be over weight.

Another condition which makes it hard for a very large number of individuals to get medical coverage is high blood pressure. It’s estimated that 65 million Americans have high blood pressure and from my experience most are not even aware they have this condition.

Of course being America everyone is entitled to there opinion and Bob to his, but I saw an article on the internet the other day that census bureau statistics through 2009 showed 50.7 million Americans with no health insurance coverage and in my mind there is just something terribly wrong with that.

Phony Figures

Today Kathleen Sebelius, the Secretary of the Department of Health and Human Services, released a report that concludes that up to half of all Americans below age 65 — 129 million in all — have some kind of “pre-existing condition” that might otherwise cause them to be denied health insurance coverage.  The report, which was released on the day the House of Representatives began debate on a bill to repeal the “health care reform” legislation, notes that under that legislation those individuals with “pre-existing conditions” cannot otherwise be denied coverage, or be charged significantly higher premiums.

HHS Secretary Kathleen Sebelius

As is the case so often these days, this report seems to be motivated almost entirely by political concerns — in this case, trying to make a case for retaining the “health care reform” legislation.  Consider the study itself.  It concludes that “50 to 129 million (19 to 50 percent of) non-elderly Americans have some type of pre-existing health condition.”  Can’t we expect a bit more precision from our governmental studies than a margin for error of 79 million Americans?  No doubt the political manueverers at HHS realized that the news media would report the higher number — which is exactly what has happened.  The headline on the ABC News website report on the study, for example, is:  “Half of Americans Have Pre-Existing Health Conditions”.

And consider, too, the fact that the report itself notes that “as many as 82 million Americans with employer-based coverage have a pre-existing condition.”  In other words, those conditions — if they exist at all — have not stopped those 82 million Americans from getting and keeping insurance through their employers.  If the insurance companies were really as evil as Secretary Sebelius and the supporters of “health care reform” legislation argue, how could that have happened?  Why didn’t the greedy insurance companies immediately eliminate coverage for those 82 million Americans?  The fact that, according to the government, as many as 82 million Americans are maintaining health insurance notwithstanding their purported “pre-existing conditions” refutes one of the basic arguments for having “health care reform” legislation in the first place.

Finally, the report shows, I think, that our federal government really doesn’t have much respect for the common sense of Americans.  Does anyone honestly think that if half of all Americans under 65 really had pre-existing conditions that made it impossible for them to get private health insurance we would see the kind of vigorous opposition to the “health care reform” legislation that has continued, unabated, despite the best efforts of the news media and the federal government to quash it?