Category: New Health Care Law

This Photo is Worth a Thousand Words Explaining Obamacare’s Perverse Incentives

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One theme of NCPA’s Health Policy Blog is that health insurers in Obamacare’s exchange plans have perverse incentives to attract healthy patients and deter sick ones from enrolling. This is because the law forbids insurers from charging premiums that reflect applicants’ likelihood of incurring high medical costs. Although there are risk-mitigation mechanisms to overcome this, they do not appear to be adequate.

If this photo does not tell us that insurers want healthy people to apply, I don’t know what will.

How Obamacare Hurts Its Beneficiaries: Two Vignettes

This week, the mainstream media ran two stories about two Obamacare “beneficiaries” who were actually victims.

First, a woman whose husband is already extremely sick, and was subject to the risk of being unable to buy health insurance in the individual market if he lost his employer-based benefits. That was a legitimate problem before Obamacare. NCPA’s proposed solution is health-status insurance, or “insurance against becoming uninsurable”, a type of re-insurance. Obamacare’s solution is a federally regulated health-insurance bureaucracy:

The transition to Obamacare ― at least for a 59-year-old man and a 56-year-old woman in south Orange County ― wouldn’t be quite that bad. But it would be, in three big ways, far rougher and more frustrating than I’d ever dreamed.

  1. Obamacare brought us new health insurance options, but cost us our more affordable plans.
  2. We learned patients, but we couldn’t keep our doctors.
  3. The Affordable Care Act saved us money this year, but it didn’t alleviate our concerns about obtaining affordable medical care.

“Inexcusable”: Administration Over-Counted Obamacare Sign-Ups by 380,000

The media seems to think that Obamacare’s second open enrollment is going just swimmingly. (How could it be going worse than last year’s?)

Unfortunately, the Administration still isn’t counting last year’s sign-ups accurately. Jonathan Cohn of The New Republic has called the Administration’s over-counting of Obamacare sign-Ups “inexcusable“. And that’s from one of Obamacare’s biggest fans.

What happened is that the Administration counted 400,000 dental-only plans as Obamacare plans. On November 10, the Administration announced that 7.1 million people signed up for Obamacare as of the end of October, but that included the dental plans. The correct figure is only 6.7 million. And this figure was not disclosed by the Administration, but dug out by Republican Congressional staffers.

Administration Continues to Stonewall on Obamacare Exchange Enrollment

Back in May, the U.S. Department of Health and Humans Services (HHS) suddenly stopped issuing monthly reports on enrollment in Obamacare’s exchanges. These reports had been used by the Administration to ramp up the cheer-leading to Obamacare’s “successful” recruiting of 8.1 million people by the end of the first open enrollment on March 31 (or, actually, sometime in mid-April due to omnipresent technical glitches).

In a report subsequently issued for another purpose, HHS (perhaps unwittingly) disclosed that only 2.3 million people were enrolled in private insurance via an Obamacare exchange. The other 8 million of the 10.3 million now considered enrolled are in the category of charity care called Medicaid.

Naturalized Citizens Are Second-Class Citizens under Obamacare

I suppose many will typify this as just another Obamacare glitch, but Obamacare exchanges will treat naturalized citizens as second-class citizens for 2015 open enrollment:

HealthCare.gov’s new EZ application for coverage can’t be used by legal immigrants or naturalized U.S. citizens, prompting concern that many Hispanics and Asians will go right back into long enrollment queues this year.

While immigrants living in the country illegally cannot get coverage, millions who are lawfully present are entitled to the law’s benefits, as well as people who were born overseas and later became U.S. citizens.

Health Spending Grew 18 Percent Faster Than GDP in Twelve Months

According to the Altarum Institute, health spending rose 4.9 percent in the twelve months through August 2014. In the twelve months to July, it rose 5.1 percent, 18 percent more than the 4.3 percent growth in Gross Domestic Product (GDP):

The health spending share of GDP was 17.4% in July. This is up from 16.0% at the start of the recession in December 2007. This increase is partly attributable to slow GDP growth rather than high health spending growth, as the July 2014 health spending share of potential GDP (PGDP) was 16.7%.

Adverse Selection Got Worse as Obamacare’s Open Enrollment Progressed

New data from Express Scripts, a leading pharmacy-benefits manager (PBM) indicates that adverse selection in Obamacare exchanges actually got worse as open enrollment reached its hard finish in mid-April. As a PBM, Express Scripts has the best data on beneficiaries’ medical costs. Pharmacy claims are adjudicated immediately, whereas other claims can take weeks or months to adjudicate. We previously discussed Express Scripts’ study of pharmacy claims for the exchanges’ early sign-ups. These beneficiaries had specialty pharma claims 47 percent higher than the commercially insured population, which led to the conclusion that they were much, much sicker than expected.

The new release covers data for everyone who has signed up for coverage in Obamacare’s exchanges. There has been a lot of happy talk in the media that the huge sales and marketing surge in March (funded by taxpayers) likely led more healthy people to sign up at the end of open enrollment. In the most general sense, this is what happened, according to the new data. The later sign-ups were younger and in better shape when we consider only the more common conditions that are increasingly affecting our society, as shown in the graph:

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Obamacare’s War on Women Reduces Employment by 4 Million Full-Time Equivalent Workers

effCasey Mulligan of the University of Chicago has just released a study examining Obamacare’s impact on employment:

  • The ACA’s employment taxes create strong incentives to work less. The health subsidies’ structure will put millions in a position in which working part time (29 hours or fewer, as defined by the ACA) will yield more disposable income than working their normal full-time schedule.
  • The reduction in weekly employment due to these ACA disincentives is estimated to be about 3 percent, or about 4 million fewer full-time-equivalent workers. This is the aggregate result of the law’s employment disincentives, and is nearly double the impact most recently estimated by the Congressional Budget Office.
  • Nearly half of American workers will be affected by at least one of the ACA’s employment taxes — and this does not account for the indirect effect on others as the labor market adjusts.
  • The ACA will push more women than men into part-time work. Because a greater percentage of women work just above 30 hours per week, it is women who will be more likely to drop to part-time work as defined by the ACA.

Obamacare Veteran Sues Obamacare to Disclose Premiums

Here’s one from the “you can’t make this up” files:

The Department of Health and Human Services is in the spotlight for claims it is violating the Affordable Care Act.

The lawsuit was filed by Mehri & Skalet attorney Jay Angoff, who used to oversee ACA implementation for HHS. Filed on behalf of a Missouri consumer advocacy group, the suit claims the federal agency is not following through on its obligation to make rate filings for 2015 publicly available in time for the public to comment on them.

Get it? Mr Angoff “used to oversee ACA implementation for HHS.” He used to run Obamacare. Now, he’s running against it. Here’s why:

There is a tension in the Obamacare coalition. Open enrollment begins on November 15, a week and a half after the election. The current story on premiums for benchmark Obamacare plans in 2015 is that they will go down by just under one percent. This comes from a Kaiser Family Foundation survey of cities in only fifteen states.

Notwithstanding serious criticism of this claim, the media have swallowed and recycled it. For obvious political reasons, it is necessary for the Administration that no further announcements of premiums for the rest of the states disturb this comfortable narrative.

On the other hand, lawyers like Mr. Angoff are eager to see rate hikes in the double digits. Obamacare has funded states to empower their insurance commissioners to roll back premiums on political grounds. Lawyers like Mr. Angoff look forward to a tidy business representing exploited consumers in such states.

I agree that all Obamacare premiums for 2015 should be announced before the November 4 election, so that voters have the freshest information about Obamacare’s consequences. Whether Mr. Angoff’s lawsuit will have an effect in so short a time, we will have wait and see.

Obamacare Not Yet One Year Old, Providers Preparing to Lobby for More Money

Now that Obamacare is rounding out its first year, and seems to be secure for the time being, providers who advocated for it are starting to change their lobbying tune. When Obamacare was less secure, the story was that it would improve the situation dramatically — for everyone.

Unfortunately, providers are already starting to complain that it’s not enough; they need more money.

Exhibit A: Connecticut hospitals. For the first time that I have seen, a hospital association has reported that Obamacare did not reduce uncompensated-care costs. The Connecticut Hospital Association claims that uncompensated care increased slightly from 2013: