Single-Payer Extremists: Obamacare Has Increased Health System Overhead

 

Drs. David Himmelstein and Steffie Woolhander are the Bernie Sanders of health policy. For decades, they have advocated that the U.S. adopt a government monopoly, single payer, health system. They write economically illiterate articles asserting that Medicare is great because it has low administrative costs.

Nevertheless, a stopped clock is right twice a day, and the good doctors’ latest article nails Obamacare for increasing the overhead of U.S. health insurance. Who would have even thought that was possible?

The roughly $6 billion in exchange start-up costs pale in comparison to the ongoing insurance overhead that the ACA has added to our health care system — more than a quarter of a trillion dollars through 2022.

Headwinds for Health Insurers as Obamacare Stumbles

 

Obamacare-protest-AP(A version of this Health Alert was published by Forbes).

You might think this headline is a gag, given how deeply health insurers are dug into Obamacare. Only a month ago, I wrote that health plans’ mastery of Obamacare poses challenge to repeal. Losses in Obamacare’s controversial exchanges are not yet apparent in the publicly listed insurers’ financial statements. However, exchanges comprise of a small (but not trivial) market of about 11 million people. Through 2016, health plans losing money in Obamacare can rely on taxpayers to help them out. After that, they are on their own.

Already, many plans are finding participation painful and increasing Obamacare premiums significantly for 2016. According to Louise Radnofsky of the Wall Street Journal,

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.

All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act. (Louise Radnofsky, “Health Insurers Seek Healthy Rate Boosts,” Wall Street Journal, May 21, 2015)

Health insurers might not think the unravelling of Obamacare will hurt them too much. (Certainly, their investors do not). Nevertheless, these rate hikes increase the political risk of their participating in markets they do find profitable.

Can You Pay Poor People To Quit Smoking?

 

Peter Orszag was President Obama’s first Director of the Office of Management and Budget. Like many high-ramking Democrats, he landed on his feet as Vice Chairman of Citibank. He also writes a very good column for Bloomberg View.

His latest column discusses financial incentives to quit smoking. Unfortunately, it ignores an obvious challenge to the thesis he supports: That poor people can be paid to quit smoking.

Preventive Care Does Not Want To Be “Free”

 

One conceit behind Obamacare is that if the government mandates preventive care be “free”, people will use it. The notion should appeal to free-market types, too: As the price of a service drops, the quantity demanded should increase.

However, it is not that simple in health care. Let’s take another dive into the always heated and controversial discussions about preventive care for women (such as our recent entry about mammography).

New research shows that women under 65 are over screened for osteoporosis, and women aged 65 and over are under screened, although older women get screened for “free”:

Price’s Health Reform Hit From The Right

 

I recently discussed Rep. Tom Price, MD’s Empowering Patients First Act in quite positive terms. Not everyone is on board. My good friend Dean Clancy labels the bill Health Care Cronyism:

Section 401, for example, authorizes new federal “best practice” guidelines written by medical societies, designed to give physicians extra protections from malpractice lawsuits. These guidelines aren’t merely educational, though. They’re established as powerful litigation tools in state courts. If a physician can show he followed them, his accuser must meet a higher burden of proof to establish negligence. That may be a good idea, but it’s unconstitutional. The power to regulate civil justice is reserved to the states under our federal system. There’s neither a legal nor a practical justification for federal medical malpractice reform. States have this. They can reform their tort systems, and many have done so, with success.

Mr. Clancy and I are in complete agreement that Congress has no role meddling in medical malpractice. So, why did I ignore this part of Dr. Price’s bill and leave Mr. Clancy prime real estate in U.S. News & World Report to lay into it?

Most Employers Will Use Private Benefits Exchanges by 2018

 

A new survey from Array Health reports four of five insurance executives anticipate that most employers will use private exchanges to offer benefits by 2018. According to the survey, private exchanges are a win-win situation because they reduce administrative costs.

We like private exchanges because they pave the way for individual health insurance to be the standard. The Array report seems to support this conclusion:

More exciting, perhaps, is the future outlook around business savings as single-insurer private exchanges start to move with consumers – from group settings to individual plans – keeping loyal consumers tied to particular insurance brands through the exchange model.

Obamacare Premiums Spiking in Iowa, Kansas

 

Obamacare Premiums Spiking in Iowa, Kansas

We’ve already learned about Obamacare’s 2016 premiums exploding in New Mexico, Tennessee, Maryland, and Oregon. More are being announced:

The Kansas Insurance Department projected that the state may see hikes as high as 38 percent in some plans. In Iowa, Coventry Health Care wants to raise rates by 18 percent. (Kaiser Health News Morning Briefing, May 27, 2015)

Breast Cancer Screening Update

 

Women joggingYou may recall controversy circa 2009 and 2010, when the Affordable Care Act was passed, about whether women in their 40s would get “free” mammograms every year. In 2009, the US Preventive Services Task Force issued guidelines recommending annual mammograms starting at 50 years, not 40 (as previously recommended).

Needless to say, this upset many people. The American Cancer Society maintained its recommendation that preventive screening start at 40, as did the Mayo Clinic. Politicians took note, and made an exception in Obamacare for mammograms, such that the 2009 USPSTF revision was ignored when it came to Obamacare’s “free” preventive care.

The USPSTF looks ready to re-issue its guideline, which means “free” mammograms for women in their 40s will not be mandated by Obamacare. Avalere Health has published a study estimating that this could “eliminate guaranteed coverage” for 17 million women.

Maybe The Government Should Just Not Ask People If They Are Uninsured?

 

Sir John Cowperthwaite was the Financial Secretary of the British Colony of Hong Kong when it began to boom in the 1960s:

Asked what is the key thing poor countries should do, Cowperthwaite once remarked: “They should abolish the Office of National Statistics.” In Hong Kong, he refused to collect all but the most superficial statistics, believing that statistics were dangerous: they would led the state to to fiddle about remedying perceived ills, simultaneously hindering the ability of the market economy to work. This caused consternation in Whitehall: a delegation of civil servants were sent to Hong Kong to find out why employment statistics were not being collected; Cowperthwaite literally sent them home on the next plane back. (Alex Singleton, The Guardian)

What does this have to do with health insurance? The Wall Street Journal’s Jo Craven McGinty reports on the Census Bureau’s rejigging of its measurement of how many Americans are without health insurance:

New Ventures Make Obamacare Exchanges Less Relevant Than Ever

 

One theme of this blog is that Obamacare exchanges make as little sense for health insurance as a DMV-operated exchange for car insurance, or a HUD-operated exchange for homeowner’s insurance. Just shut them down.

We’re not the only ones who noticed:

Looking to provide health insurance to the 53 million Americans who don’t get benefits from their employers, Stride Health has raised $13 million in new funding.

Venrock led the Series A round, with participation from Fidelity Biosciences and previous investor NEA, which brings Stride’s total venture funding to $17.5 million.

For the freelancers and independent contractors who make up one third of the U.S. labor force, Stride offers a hassle-free alternative to Healthcare.gov.

After you enter your own data, including age, gender, location, and illness history, Stride’s forecasting model evaluates how much care you’ll use throughout the year, prices it on every health plan, and couples it with the coverage price to show you the total cost of each plan. (Christine Magee, TechCrunch)

Private investors are putting their own capital at risk to launch a business to compete against a government monopoly. That shows how useless Obamacare’s exchanges are.