Category: New Health Care Law

Obamacare Health Plans Shun the Sick More in 2015 than 2014

A consistent theme of this blog is that Obamacare motivates health plans to shun the sick and attract the healthy. We often cite research from Avalere to support our case.

Avalere has done it again, with a study of how Obamacare plans place drugs for the most serious diseases, as HIV, cancer, and multiple sclerosis — on the highest drug formulary cost-sharing tier. Cop-pays of 40 percent are not uncommon. And the situation is worse in 2015 than 2014. The bar chart below shows how many silver plans (the most common Obamacare plans) place all single-source drugs (that is, branded drugs without generic competition) in a therapeutic category on their most expensive tier. For eight of ten of these categories, a larger share of silver plans do so in 2015 than 2014. For example, 51 percent of silver plans put multiple sclerosis (MS) drugs on their most expensive tier. Last year, only 42 percent did.


Is Obamacare Finally Juicing Healthcare Jobs?

Last week’s employment report showed good growth, and jobs in health care were a big part of it (Table 1). Total nonfarm payroll increased by 257, 000, of which 38,000 (15 percent) were jobs in health care. Job growth in healthcare was 0.26 percent, month on month, versus only 0.17 percent for nonfarm, non-health jobs.


Tax Chickens Come Home to Roost

One of the worst aspects of Obamacare has nothing to do with health care directly: It is the harmful effect on the labor market caused by Obamacare’s crazy quilt of subsidies. Because these subsidies phase out with income, they create extremely high effective marginal income tax rates. The Congressional Budget Office estimates that this will lead to 2 million fewer jobs in 2017 than would have existed without Obamacare.

Because the subsidies fluctuate significantly with income, this also creates a practical problem: People applying for Obamacare coverage now have to predict their income for the entire year. If they get it wrong, the IRS will demand repayment of subsidies. Don’t forget that many Obamacare beneficiaries are likely only slightly aware of the value of their subsidies, because the Obamacare exchange websites deliberately try to disguise them, in order to make people believe that their health insurance is less expensive than it was (as opposed to more expensive, but subsidized by other taxpayers.)

Medical Device Excise Tax Kills Jobs, Obamacare Kills Much More

The sweet smell of success for the medical-device industry is wafting over Capitol Hill. News from Senator Orrin Hatch is that the Senate will take up repeal of the medical-device excise tax. This is a tax of 2.3 percent on most medical devices that was passed as part of the Affordable Care Act to fund Obamacare.

AdvaMed, a trade association representing the medical-device industry has just published another survey of its members, which reports that

According to the survey, the tax has led to employment reductions of approximately 18,500 industry workers and will lead to forgone hiring of 20,500 additional employees over the next five years. The total impact of the tax on medical technology industry employment is approximately 39,000 jobs. Additional jobs will be lost in companies providing supplies or services to the industry. Forty-six percent of respondents said they would consider further employment reductions if the tax is not repealed. On the positive side, 71 percent of respondents said they would reinstate forgone hiring if the tax were repealed.

Arkansas: Caving In or Standing Up to Obamacare?

Almost two years ago, our colleague Linda Gorman was cautiously optimistic about Arkansas attempted Medicaid waiver. Instead of just expanding Medicaid, the state would take the federal funds that Obamacare offered, but use them to subsidize the newly eligible to buy commercial insurance on the Obamacare exchange.

Two years later, a new governor wants to do something a little different. The new governor, Asa Hutchinson, appears to have confused a lot of people in a recent speech about Medicaid, the joint state-federal welfare program for poor people’s health coverage.

According to the Washington Post’s Jason Millman, “Republicans are finally learning they can’t undo Obamacare“, because the governor wants to do something different to Medicaid than what his Democratic predecessor wanted. Politicos’ Sarah Heaton, on the other hand, reports that the new governor wants to “end his state’s Obamacare Medicaid experiment.” Are English-Speakers’ Civil Rights Being Violated?

This blog has not written about the U.S. Department of Health & Human Services weekly enrollment data for a couple of weeks, when we noted that they had “slowed to a trickle“. Well, Obamacare enrollment is booming again, hitting 7.1 million enrolled on January 16.


Obamacare Enrollments Slow to a Trickle

Only 102,000 people enrolled in Obamacare via the federally operated exchange during the week of December 27 – January 2, bringing the total to 6.5 million. This supports my previous expectation that Obamacare enrollment is petering out.


Podcast: Graham Explains the End of Obamacare’s Risk Corridors

One of NCPA’s successes in health policy last year was to influence the Congress to limit Obamacare’s “risk corridors”. This was the part of the 2010 Affordable Care Act that instituted an unlimited taxpayer liability to protect health insurers from losing money in Obamacare’s exchanges for three years.

Sean Parnell of the Heartland Institute interviewed Senior Fellow John R. Graham about the effect of the lame-duck Congress eliminating this unlimited taxpayer liability. You can listen to the 20-minute podcast here.

For a written description of this important win, please see here.

Milliman: “No New Hope” for Obamacare’s Risk Corridors

Actuaries at Milliman have published a new report on the consequences of the CROmnibus preventing health insurers from dipping into taxpayers’ funds to finance Obamacare’s risk corridors. The entire seven pages is well worth reading.

NCPA’s research on the open-ended liability presented to taxpayers by the risk corridors was a factor in the lame-duck Congress’ decision to limit the potential payouts to insurers with unexpected losses to (no greater than) the amount collected from insurers with unexpectedly high profits ― so-called “budget neutrality”.

Although giving their report the title “No New Hope”, Milliman’s actuaries are not entirely pessimistic about insurers’ ability to get taxpayers’ funds out of the risk corridors. Indeed, they note that the CROmnibus comprises only one piece of an increasingly complicated legislative and regulatory trail.


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


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.