Category: New Health Care Law

State of the Union Post Mortem: Obamacare Not as Rosy as He Claimed in His Speech

During his last State of the Union address, President Obama hardly mentioned the Affordable Care Act. He did not mention the 7 million new Medicaid enrollees, many of which cannot find a doctor willing to treat them for Medicaid’s paltry fees. The president did not talk about the 9 million to 11 million Americans with coverage through the state and federal health insurance exchanges.  Nor did he mention enrollment is only about half what the Congressional Budget Office projected would enroll only a few years ago.

Here is what he did say “… the Affordable Care Act is all about… filling the gaps in employer-based care… so when you lose a job, or you go back to school or you strike out and launch that new business you’ll still have coverage.”

This all sounds well and good. But it’s more rhetoric than reality.

Unemployed: The reality is many people losing their job would not qualify for a subsidy because their most recent tax return would likely show income too high to qualify for a subsidy. After losing a job, the unemployed would have to be out of work for a year or more before they would qualify for a subsidy. In other words, they are likely no better off than they would be under COBRA.

Students: Unless they are middle-aged returning students with preexisting conditions, it’s likely a young person returning to school could have bought limited benefit coverage from their university much cheaper prior to Obamacare.

Entrepreneurs: As far as people who want to launch a business, they’d likely be better off without a mandate that forces them to have coverage or pay a fine. They would be better off with affordable pre-Obamacare coverage than the high-priced, mandated coverage now available. My wife launched her consulting business years ago. Her health coverage is now much more expensive (and her benefits lower) than ever before. If anything, Obamacare is driving would-be entrepreneurs to stay with employers.

Conclusion: The federal and state health insurance exchanges are suffering adverse selection as healthy people shun the costly premiums because the plans meet little of their medical needs. The next Administration will have to reform the ACA with more flexible coverage and allow consumers to exercise cost-control measures in ways that truly make health insurance affordable.

This post has been updated from an earlier version posted January 12 prior to the State of the Union speech.

Congress is Set to Repeal Obamacare: What Should Replace It?

The House is voting today on a reconciliation bill that would repeal much of Obamacare. It’s expected to pass easily – and be vetoed by President Obama.

Before we discuss what should replace Obamacare it would be a valuable exercise to revisit what needs to be repealed.

  • The employer mandate has to go. It’s hurting the very people it was designed to help.
  • The individual mandate has to go. It’s forcing people to buy something they don’t want.
  • Regulations guaranteeing coverage regardless of health status are not sustainable. Premiums are reaching the stratosphere and there is a perverse incentive to game the system.

Representative Tom Price reports a bill with a proposal to replace Obamacare will soon follow. The following are some of the elements that a new Obamacare replacement bill should include.

  • The open-ended tax exclusion should be converted to a fixed sum. This could be adjusted for age, health status or some other factor. But the government should subsidize core needs not marginal spending on Cadillac plans.
  • Community rating should be used only to create beneficial incentives; not to increase cross-subsidies. The right to buy insurance at modified community-rated premiums needs to be conditioned on continuation coverage. A regulation such as guaranteed renewability would not allow people go years without coverage and then expect others to subsidize their decisions.
  • Americans deserve the right to purchase the coverage of their choice; not the coverage Obamacare proponents believe Americans should have. This means affordable coverage with limited benefits, high-deductibles or coverage that rewards them for taking care of their health if that’s what consumers want.
  • Americans should be protected from surprise medical bills (but not necessarily from high medical bills) – ones where patients cannot ascertain prices in advance or verify that doctors providing care are even in their network. Public policy should encourage discussions about prices between doctors and patients — not reward barriers to competition.
  • The federal government should grant states the flexibility to design Medicaid programs that meet states’ needs. The federal government should not match state Medicaid funds. Rather, it should negotiate a block grant and a state contribution; and make states pay for all cost overruns. States should have the authority to design innovative Medicaid benefits, where some beneficiaries pay premiums, experience nontrivial cost-sharing, pay a penalty for inappropriate emergency room use and have work requirements. Moreover, states should have the authority to kick beneficiaries off the Medicaid rolls who break eligibility rules.

These are just a few of our ideas. What are your thoughts? Give us your comments and tell me what have we have missed?

Unpopular Individual Mandate Fails to Make People Buy Insurance

doctor-mom-and-sonJust before Christmas, Congress voted to deficit fund Obamacare by imposing moratoria on a number of Obamacare taxes that are unpopular with interest groups. Left in place was the unpopular individual mandate to buy health insurance, which has no organized interest to lobby against it. Nevertheless, it is the most unpopular part of Obamacare.

The New York Times reports that a number of relatively high-income earners are choosing to remain uninsured, or even drop Obamacare coverage, and pay the fine instead:

Congress Set To Deficit Fund Obamacare Almost $40 Billion

iStock_000007047153XSmallI had always feared that Congress’ alternative to Obamacare was deficit funded Obamacare, and it looks like that is coming to pass. This is being done through the so-called “taxibus”, a legislative package that combines popular “tax extenders” (items like research and development tax credits that are legally temporary but practically permanent) with funding the federal government through September 2016.

The bill proposes a couple of years delay in three Obamacare taxes: The medical-device excise tax, he health insurance fee, and the excise tax on high-cost employer benefit plans. All three taxes are bad. However, the bill just delays them without cutting any Obamacare spending.

How Obamacare Crushes Working Class Job Opportunities

Family and Their HouseThe Congressional Budget Office recently confirmed its estimate that Obamacare will shrink the workforce by 2 million full-time equivalent (FTE) jobs in 2025. When the CBO first published its (initially somewhat larger) estimate, in February 2014, it felt compelled to wriggle around the headline, claiming that it did not really mean what it said.

It is strictly true that some of this job loss will be “voluntary,” in that Obamacare’s subsidies will cause them to seek less work than otherwise. Those individuals will probably feel better off than if they had been laid off or fired. However, cutting back working hours because government subsidies encourage it is not quite the same as cutting back because you have changed your priorities – either economically or morally.

The new analysis allows us to see where the burden on employment lies – mostly on those eligible for tax credits in Obamacare’s exchanges. These are people who earn between 100 percent (or 138 percent, depending on the state) and 400 percent of the Federal Poverty Leve. For a family of four this ranges from $24,250 to $97,000 in 2016.

That Free Wellness Visit Can Cost You a Fortune!

Preventive care is supposedly free under Obamacare. However, a recent article in U.S. News & World Report discussed the confusion that often occurs when people see their doctor for their annual “free” wellness visit. The problem: it is easy to inadvertently cross the line into non-free medical services that cause the wellness visit to be coded as something rather costly.

Patricia Jones thought she was getting the much-talked-about free physical under Obamacare when she went to see a doctor in May. But, she says, a few small things that happened during her checkup ended up making the visit cost more than $450.

Indeed, asking the wrong question during a wellness visit can sometimes result in the physician using a different billing code other than the “free” codes for preventive medical services.

In the process of answering questions from her doctor, Ms. Jones and her doctor turned a wellness visit into a diagnostic visit. Diagnostic visits are not covered under preventive care. Moreover, many people have high-deductible plans. A question or two, or agreeing to tests that are not medically necessary, can easily make that free wellness visit into a diagnostic visit that must be entirely paid for out of pocket.

Stop for a minute and think about the implications. A wellness visit that does little more than take your blood pressure and ask how you’re feeling is essentially worthless if your doctor is not allowed to act on anything he or she finds.

Broad Coalition Calls For Congress Not To Hand Health Insurers’ Losses To Taxpayers

JRGrahamUnitedHealth Group’s proposal (threat? promise?) to withdraw from Obamacare’s health insurance exchanges, and the failure of Obamacare’s COOPs are both events which NCPA has been predicting for a long time (see here and here).

Two years ago, we identified Obamacare’s “risk corridors” as a vehicle through which the Administration would expose taxpayers to unlimited liability for insurers’ losses in Obamacare. Due to our research and testimony, Congress prevented this exposure last December.

What with the exchanges unravelling so quickly, we are not surprised to learn that lobbyists are pressuring Congress to restore unlimited liability. We joined a broad-based coalition to write a letter to Congress urging the current policy be maintained.

Obamacare must be completely renegotiated from root to branch. Just handing taxpayers’ money to insurers for losses they incur will not solve the problem.

Read the entire letter here.

Work & Employment Down, Sleep & Socializing Up: Obamacare’s “Slacker Mandate”

sleeping-womanWhat with Obamacare’s health insurance exchanges unraveling pretty quickly, Americans might be excused for having forgotten one of Obamacare’s first intrusions: The “slacker mandate.” This was the provision that requires employer-based health plans to cover “children” on their parents’ plans until they are 26.

It took effect in 2010. The results are in, according to a new study published by the National Bureau of Economic Research:

If, as suggested by prior work, the provision reduced the amount of time young adults work, the question arises, what have these adults done with the extra time?

The extra time has gone into socializing, and to a lesser extent, into education and job search. Availability of insurance and change in work time appear to have increased young adults’ subjective well-being, enabling them to spend time on activities they view as more meaningful than those they did before insurance became available.

(Gregory Dolman & Dhaval Dave, “It’s About Time: Effects of the Affordable Care Act Coverage Mandate on Time Use,” NBER Working Paper No. 21725, November 2015.)

Large Insurer May Exit Exchange: The Exchange System is Collapsing Under its Own Weight

I reported earlier this week that the Obamacare Marketplace is slowly failing. Three days later the largest health insurer in America, UnitedHealth Group, announced it expects to lose $500 million on exchange plans next year and may exit the market in 2017.

Why Does Obamacare Over Invest in Spanish Customer Service?

The Center for Medicare & Medicaid Services (CMS) has started to publish its weekly reports on Obamacare enrollment via the federally facilitated exchanges.

A little over half a million people have selected a plan for the third open season. What is interesting is the exchanges’ overinvestment in Spanish capabilities. We first noted this last January.

The Snapshot reports that the average wait on the phone for a Spanish-speaking customer-service representative is 11 seconds, versus four minutes and 38 seconds for an English speaker. That’s 25 times longer. 52,023 of the 741,112 calls (seven percent) were in Spanish.