Obamacare’s Cost per Beneficiary Explodes with Shrinking Enrollment

 

CBOThe Congressional Budget Office’s latest budget estimate shows Obamacare’s costs per beneficiary have exploded, as enrollment in Obamacare’s broken exchanges collapses. January’s update estimates 2016 exchange enrollment at 13 million people (p. 69).  Although the Administration had previously downgraded its estimate of Obamacare enrollment, this is the first significant change by the non-partisan CBO.

What is really shocking is the January update still estimates tax credits, which subsidize insurers participating in exchanges, will cost taxpayers $56 billion this year (p. 182). That amounts to about $4,308 per enrollee (although not all are subsidized). Back in March 2010, CBO estimated that 21 million people would be covered in exchanges in 2016, for a total cost of $59 billion in tax credits (pp. 20-23). That would amount to about $2,810 per enrollee.

Colonel “Bernie” Sanders Half-Baked Recipe for Health Care

 

Presidential candidate, Bernie Sanders rolled out his proposal for a single-payer Medicare-for-All health system, similar to what’s found in Canada and Britain. Sanders’ proposal is a fairytale of wishful thinking and Robin Hood schemes. Whereas Colonel Sanders is famous for a secret recipe with 14 herbs and spices, Senator Sanders indigestible concoction has only one secret ingredient – tax dollars to fund socialized Medicine.

Private Sector Vigilance, Not Government Regulation, Protects Patients

 

18kqd35hi04oqjpgLast April, I cheered Arizona for passing a law allowing patients to order blood tests without a doctor’s prescription. The company that lobbied for the change, Theranos, was also interesting because it posted its prices at venues where patients could get blood drawn. It had a widely promoted partnership with Walgreens, which has a strategy of using new technologies to deliver more value-added services in the retail environment.

Since then, Theranos has gotten into trouble for being opaque about how it actually conducts its tests when the samples get back to its labs. This has led to turmoil in the business media and among investors which are interested in backing entrepreneurs with new approaches to lab testing.

Obamacare Joins Pile of Unfunded Liabilities

 

index1(A version of this Health Alert was published by the Orange County Register.)

The congressional vote last month to fund the government through next September, while extending some special-interest tax breaks and introducing some new ones, was the first time a majority of Republicans voted in favor of Obamacare. It looks like Congress’ alternative to Obamacare is deficit-financed Obamacare.

While failing to cut one penny of Obamacare spending, the so-called “taxibus” (tax extenders plus omnibus spending) cut almost $40 billion in Obamacare tax revenue by “temporarily” delaying three taxes for a year or two: the medical device excise tax, the health insurance fee and the excise tax on high-cost employer benefit plans.

Make no mistake: all three taxes are harmful and should be eliminated. However, just kicking them down the road without making any effort to cut Obamacare spending does nothing to repeal the Affordable Care Act.

CPI: Prescription Prices Finally Drop Amid General Deflation

 

BLSMedical prices grew 0.1 percent, versus a decrease of 0.1 percent for all other items, in December’s Consumer Price Index. Prices for prescription drugs actually decreased 0.3 percent, even better than the small price increase in the Producer Price Index (PPI).

Prices for physicians’ services were flat, however, whereas they had jumped in the PPI. Because CPI measures prices as observed by consumers and PPI prices as observed by producers, this suggests that prices paid to physicians by non-consumers (i.e., third parties) have increased more than prices paid by consumers. This supports the principle that when consumers face prices directly, prices go up less than when intermediated by third parties.

Overall, medical care inflation was tame in December. Longer term, it still significantly outpaced the CPI other than medical care, by two percent over the year (Table I).

Trouble Paying Medical Bills: Uninsured Do Better Than Obamacare Insured

 

iStock_000007047153XSmall(A version of this Health Alert was published by Forbes.)

The Centers for Disease Control and Prevention’s National Center for Health Statistics conducts thorough research on health insurance coverage. Recently published early results of the latest National Health Interview Survey have been misrepresented in the media to show that Obamacare is reducing the number of uninsured Americans, and that the number of people having trouble paying for health care has dropped as a result.

Actually, this is not the case. The data show some factor other than Obamacare has caused the survey’s respondents to state that they are having less trouble paying medical bills than in previous years. We know this because those who remained uninsured improved their ability to pay medical bills more than those who got coverage through Obamacare.

Only 45 million Americans under 65 years old reported they were in families with problems paying medical bills in 2015. In 2011, the number was 57 million. That drop of 12 million corresponds with a significant increase in health insurance coverage. The number without insurance dropped by 18 million, from 46 million to 28 million, while the population increased by about three million.

So, it looks like two thirds of the 18 million people insured after Obamacare took hold have no more worries about medical bills. Hooray for Obamacare, right? Not at all. In fact, it is those who remained uninsured who account for the biggest share of the decrease in the number of Americans with troubles paying medical bills.

Reciprocal Regulatory Approval To Reduce Drug Prices

 

prescription-drug-shortageSenators Ted Cruz (R-TX) and Mike Lee (R-UT) recently introduced the RESULT Act, which would allow drugs and medical devices approved in certain other countries to be allowed in the U.S. as well. The countries included are European Union members, Israel, Canada, Japan, and Australia.

The benefits of this act would be significant. Professor Daniel Klein of the Mercatus Institute at George Mason University and Professor William L. Davis of the University of Tennessee at Martin have surveyed economists on this policy, and a majority agree it would improve patients’ access to safe and effective drugs.

Unaffordable Care Act: Obamacare Deadbeats Make a Bad Program Worse

 

The Affordable Care Act (ACA) was intended to solve a problem — affordable coverage for people with preexisting conditions — using an age-old strategy referred to as OPM (other peoples’ money). For instance, ACA regulations require insurers to accept all applicants — including unprofitable ones — at rates not adjusted for their health risk. Premiums can vary somewhat based on age, but not health status. By design, Obamacare is a bad deal for most people, who are charged much more than their expected costs. In theory his allows people with health problems to pay less than they otherwise would. The problem is these schemes never work. Moreover, there are perverse incentives for individuals to cheat — and wait to enroll until they are in need expensive services.

Clinton Attacks Sanders on Medicaid-for-All Despite Strong Democratic Support

 

Presidential candidate Hillary Clinton is attacking Senator Bernie Sanders because he backs Medicaid-for-All (i.e. a single-payer health care system), calling it a ‘risky deal.’ Clinton also dispatched daughter Chelsea to attack Sanders claiming he would take health care away from millions.

Clinton’s stance on a national health care is somewhat odd given that 81% of Democrats favor a single-payer health care system. Moreover, President Truman first proposed national health care in 1945 and it was a campaign issue of his in 1948.

What’s the reason for Hillary’s change of heart? That’s hard to say. But Clinton made nearly $3 million off speeches to the industry from 2013 to 2015. Maybe losing a steady source of campaign funds and speaking fees is risky.

PPI: Physician Prices Jump Amidst Deflation

 

BLSThe stock market took a hit this morning, as the Producer Price Index turned back to deflation, dropping 0.2 percent in December and 0.1 percent in 2015 (Table I). Health prices are still growing faster than other prices. This is especially true for pharmaceuticals, for which prices increased 8.2 percent last year, versus a 3.7 percent decline in prices for final demand goods. Although political attacks on pharmaceutical prices are misguided, it is likely they will continue as long as this situation persists.

With respect to services, health price inflation is not as extreme. However, the jump of 1.3 percent for physician prices in December is remarkable.