Category: New Health Care Law

New Evidence That Obamacare Is Working?

Obamacare supporters are excited by a research article suggesting Obamacare is working to increase access to care. In an article published in JAMA: The Journal of the American Medical Association, researchers followed up respondents to the Gallup-Healthways Well-Being Index (which I’ve discussed previously.)

Yes, in an absolute sense, their access to care improved. According to the Huffington Post’s Jonathan Cohn, this means “Another Argument From Obamacare Critics Is Starting To Crumble.”

Oh dear. Even Citizen Cohn admits “The picture from the raw data is a little muddled” and “like all academic studies, this one will be subject to scrutiny that, over time, could call its findings into question.” Well, I won’t call them into question, just point out what is obvious from the abstract itself: Obamacare is dong a terrible job increasing access to care.

GAO: Small Medical Device Manufactures Not Thriving under Obamacare

The Affordable Care Act imposes a 2.3 percent excise tax on gross sales on the manufacture and importation of medical devices. Devices typically sold by retailers to consumers — including toothbrushes and bandages — are exempt from the tax, whereas devices purchased from wholesalers by health care providers, such as tongue depressors and ultrasound equipment, are taxable. There is broad bipartisan support in Congress for repealing the medical device tax, due to the negative effect an excise tax has on manufacturers.

Will 11 Million Pay Obamacare’s Individual Mandate Penalty?

I recently took issue with lack of clarity in media coverage of a report by the IRS’ Taxpayer Advocate, which claimed 6.6 million paid Obamacare’s individual mandate penalty last year. I figured the total must be significantly higher, because each tax return would cover more than one individual.

In an e-mail to me dated July 21, 2015, Doug Badger, a longtime veteran of Republican administrations and whose Doug’s Briefcase blog is a must-read, pointed out that there can be more than one person in a household applying for Obamacare coverage:

….. a more accurate measure of household size could be obtained by dividing the number of people included in a completed applications by the number of applications.  That yields a factor of around 1.35, as opposed to 2.35.  I admit that is a rough approximation and there may be better ways of calculating the number of people affected by the tax on the uninsured.  In any event, your central point is exactly right: the number of people living in households that paid the tax is much greater than 6.6 million.

Obamacare Exchange Plans Have 34 Percent Fewer Providers than Commercial Plans

Avalere Health has quantified how narrow networks are in Obamacare exchange plans, as shown in the figure below:

Avalere

According to Avalere CEO President Dan Mendelson: “Plans continue to test new benefit designs in the exchange market. Given the new requirements put in place by the ACA, network design is one way plans can drive value-based care and keep premiums low.” Well, that is one way to look at it and I hope Mr. Mendelson is right.

Did 15 Million – Not 6.6 Million – Pay Obamacare’s Mandate Penalty?

The media have reported that 6.6 million “taxpayers” paid the Obamacare penalty (tax) for not obeying the individual mandate to buy federally qualified health insurance in 2014. However, the actual figure must be much larger.

However, the report by the Taxpayer Advocate discusses “returns,” not individual taxpayers. It reports that 2.6 million 2014 returns claimed Obamacare’s premium tax credits, totaling $7.7 billion paid out, and an average pay out of $3,000).

We know from other sources that about 6.14 million individuals claimed tax credits for Obamacare coverage last year (87 percent of 7.06 million individuals). (And that is only if we count people who signed up during open enrollment, which ended in March 2014. Because special enrollment continued throughout the year, most of those who signed up later would also have claimed tax credits.)

Obamacare is Reducing Competition

Novel concepts—whether practice-management companies, home health care or the first for-profit HMO—almost always have come from entrepreneurial firms, often backed by venture capital.

That venture capital has been drying up since ObamaCare was passed. Instead, the biggest wagers in health-care services are being placed by private equity, which is chasing opportunities to roll up parts of the existing infrastructure. For instance, there were 95 hospital mergers in 2014, 98 in 2013, and 95 in 2012. Compare that with 50 mergers in 2005, and 54 in 2006. Cheap debt and ObamaCare’s regulatory framework almost guarantee more consolidation. That will mean less choice for consumers.

(Scott Gottlieb, “How the Affordable Care Act Is Reducing Competition,” Wall Street Journal, July 5, 2015.)

Obamacare 2016 Rate Hikes Still Double Digits

When the first wave of Obamacare’s 2016 double-digit rate hit, defenders insisted that these were outliers. Well, those rate hikes keep coming, especially from insurers with large market share:

Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.

Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

(Robert Pear, “Health Insurance Companies Seek Big Rate Increases for 2016,” New York Times, July 3, 2015)

The ACA’s ‘Tanning Tax’ Harms Women-Owned Business

By Cherylyn Harley LeBon

In the wake of the King v. Burwell Supreme Court decision, Congress must now turn their attention to fixing the most harmful parts of the law. As it turns out, the Affordable Care Act has not been “affordable” for women who own tanning salons — or their customers. The so-called Tanning Tax imposed a 10 percent excise tax on tanning bed services, in addition to state sales taxes and taxes paid by the tanning salon owner.

The Tanning Tax’s impact on the tanning industry has been devastating. Since the tax was implemented in 2009, nearly 10,000 tanning salons have closed, according to the American Suntanning Association. This has resulted in a loss of 81,000 jobs. For instance:

Oregon Health Plans Ordered to Raise Rates!

All that complaining about double-digit Obamacare rate hikes for 2016? Well, at least one Insurance Commissioner thinks they’re not high enough. Plans in Oregon have lost so much money on Obamacare that the state’s Insurance Commissioner fears for their solvency unless they hike premiums more than they have asked for:

The Oregon Insurance Division says it is pushing health insurers to charge higher individual rates in 2016 because they are reporting huge underwriting losses for 2014.

The insurers collected just $703 million in premiums for 2014 and spent $830 million on 2014 claims, officials say.

(Alison Bell, “5 Oregon insurers under orders to raise their rates,” LifeHealthPro, June 19, 2015)

Strict Antitrust Review for Health Insurers, Hospitals

As Obamacare accelerates the transformation of the U.S. health sector into a complex of regulated utilities, providers are concentrating into oligopolies. The Wall Street Journal reports that the U.S. Department of Justice will use “strict review” when considering mergers of health insurers, while the Federal Trade Commission will also review hospital mergers closely:

The prospect of consolidation poses high stakes for the Obama administration, whose signature domestic policy legacy is the 2010 health-care law. Some aspects of the health law were designed to increase insurance-industry competition, including marketplaces for health coverage and the creation of new nonprofit cooperative health plans around the country.

But the law also includes provisions that may have helped inspire consolidation, at least indirectly.

(B. Kendall & A. Wilde Mathews, “DOJ Girds for Strict Review of Any Health-Insurers Mergers,” Wall Street Journal, June 28, 2015)