Obamacare: Where We Stand, March 31st Edition

Health Overhaul Uninsured

The March 31st deadline for enrolling in Obamacare has come and gone. How fast time flies.

It was only late last year that the March 31st hard deadline was created. Oh, you don’t recall? The March 31 deadline for signing up was created in the end of October. Initially, you needed to have active insurance by March 31st, not just successful ‘enrollment’.  Under the law, to successfully meet the rules of the individual mandate, you needed to enroll by March 1st, in order to have active insurance by the deadline of March 31st.  And furthermore, this new deadline had been held as the final date; until, of course, the Administration allowed another waiver for anyone ‘enrolled’ to complete the enrollment process well into the month of April.

In any case, this is now, technically, the day by which most have pointed to as the first real target date by which the government should be making solid progress in insuring the uninsured, and providing an adequate pool of payers into the insurance exchanges.

What we know, and maybe more importantly, what we don’t know, is critical to understanding the debate that will revolve around health care for the next few months.

So what do we know, for certain?

We know that around 7 million enrollments have gone through the exchanges by the end of March. That is admittedly a relative success in and of itself for the administration, which had such a disastrous start to the enrollment period. In my piece in the end of December, I did believe they would get the exchanges fixed, but I still thought they would be hard pressed to reach the 7 million mark.

The problem now becomes what the definition of enrollments are.  Enrollments are NOT people who have actually successfully been insured.  They ARE people who have successfully chosen an insurance policy on the exchange, and placed it in their ‘shopping cart’ on the website.

I am sure many can already see the problems with this.  First, the system has no way of telling if you are a repeat customer.  I for one have two accounts that have insurance policies in my cart, neither which I ever plan to purchase.  I was simply testing the exchange website.  Am I being counted?  I am unsure, but I do know I am receiving emails regularly to remind me to complete my purchase.

Second, until you complete the payment process, you are not insured.  HHS has clearly stated this on many occasions. Health experts such as Bob Laszweski have stated that in his discussions with insurers, he puts the ‘unpaid policy’ number at somewhere in the range of 15-20%.  My own personal discussions with insurers backs this up; and on March 30th, HHS Sec. Kathleen Sebelius stated the rate was around 10-20%.  So there is general agreement on this issue.

The rate of people insured really is the crux of the issue for the overall cause of health care reform.  The other metrics are far less important in the long run.  Several surveys, including the Gallup survey, have shown a short-term decreases in the rate of uninsured, but it is uncertain whether this is statistical noise or a true permanent trend. A new RAND corporation survey that was leaked to the LA Times has also shown a trend in decreasing the uninsured.

My own opinion is that the rate of uninsured must be dropping.  The real question is, by how much, and by what method?

Let us remember that initially, the CBO predicted that the vast majority of those purchasing health care insurance on the Obamacare exchanges would be uninsured persons, looking for access to the health insurance.  If this had been the case, then we should see a dramatic decrease in the number of uninsured.

However, it is difficult to believe this is the case. The same RAND study referred to above also shows that only about 1/3 of those on the exchanges were previously uninsured. Jonathan Cohn of the New Republic uses specific state numbers, like the enrollments in Kentucky and New York, to show that the number of uninsured is outpacing CBO predictions.  However, that doesn’t seem to be the case nationwide; I am willing to stipulate there are probably a few states that are doing well, but overall, it appears they will miss their target.   Philip Klein of the Washington Examiner points out the counter case, that is that it appears the exchanges are underperforming when it comes to insuring the previously uninsured.

Even using Cohn’s arguments, even he accepts it is highly unlikely that even a simple majority of those on the exchanges nationwide were uninsured previously.  Thus, the majority of those purchasing on the exchanges were persons who were buying insurance already, but simply were looking for government subsidies so they could get a better deal.

What does this mean in the grand scheme?  It means that the decrease in the rate of uninsured will be less than expected by many.  That doesn’t mean the rate will not decrease; Medicaid enrollments alone should decrease the rate of uninsured by a couple of millon, at least. It just means those actually purchasing insurance on the exchanges, by and large, were not the uninsured at all.

The next issue that will arise is how all of these factors affect premiums for the coming year.  I have talked about the demographics affecting the exchanges; primarily that young people have not signed up at a rate as great as expected initially.  The CBO and HHS had initially predicted that about 39% of those in the exchanges would be composed of those ages 18-35.  The average, across the nation, appears to currently be less than 30%, a number that Kathleen Sebelius now has basically accepted publicly.

This is important because, to subsidize those that are older or in poor health, the insurance pools require more healthy (and generally younger) payors into the system. Without those payors, the general cost of premiums will increase.  Liberals argue that age is a poor metric to calculate whether people are healthy or not.  This is true.  However, do they really believe that the people rushing to buy health insurance are the healthy among us, and not the ill?  There is a selection bias obviously involved here, and it is far more likely that those with poor health are the first to arrive in line for health insurance under Obamacare.

Almost everyone now stipulates that insurance premiums will rise more than the baseline expectations for 2015.  In fact, overall costs are already increasingUSA Today reported that health costs are increasing at the fastest rate in a decade…and that is before these cost pressures arise to affect premiums.

The biggest question left this year regarding Obamacare really is, how much will premiums increase?  If they increase at the same rate as the past 5 years (less than 4% a year on average) that will be a major success for the administration.  However, if they increase at a rate above 6% a year (and there are rumors the rates could increase by double digits), that could be catastrophic for the popularity of the program.

These are the core issues, though many other issues do remain.  Will people continue to be resentful to President Obama and Democrats for lying to them about being able to keep their insurance plans, and being able to keep seeing their same doctor?  Will the changes in their insurance policies make them more or less content?  Will increases in deductibles raise the ire of many Americans, who may or may not have understood those costs when they purchased their health policies?  These and many more questions remain, all of which ultimately will be more significant than the enrollment numbers of March 31st, 2014.

The only advice I can give is, be patient; only time will tell.


This was cross posted at Neoavatara

Democrats To America: We Lied, But You Should Apologize

democratic-party-convention-simpsons - Copy

What a hilarious dynamic you now have in the Democrat Party.

The civil war I described earlier is between two, diametrically opposed views.  One is the Obama Progressive Idealistic wing: they will push Obamacare, no matter what.  If there is absolute, positive evidence that the program doesn’t work, it wouldn’t alter their belief that their plan must be enacted fully.  Reality matters little to this wing of the party; they simply are fanatical idealogues.

The other cohort is the Pragmatic ‘Do and Say Anything to win elections’ wing of the party.  This was most famously led by Bill Clinton, but now numerous Democrats that are (SURPRISE!) up for re-election next year have joined as well. Mary Landrieu, Kay Hagan, Mark Begich, and moderates such as Joe Manchin belong in this group.  They believe they must placate the angry American electorate first and foremost. What is ironic is this group doesn’t care about the success or failure of the ACA either; they simply want to do enough to get 50.1% of the vote next year.

And in the middle is the rest of America.

Americans feel betrayed.  They never truly supported the Affordable Care Act, but a majority of them trusted Barack Obama enough that they gave him the benefit of the doubt; that, more than anything explains Obama’s re-election.  The benefit of the doubt on the economy, on foreign affairs, and yes…on Obamacare.

That trust is now broken.

Look no further than the recent polling from numerous agencies.  Trust in Obama has collapsed entirely.  On most issues, Republicans are more trusted; remember, this was the party who a few weeks ago was less liked than many venereal diseases.  Obama is doing worse than that.

And what has Obama and Democrats done to respond to Americans discovering they have been lied to?  Basically, they blamed…everyone but themselves.  The list is long.

It was Republicans fault for not working with Democrats; even though the GOP correctly and appropriately predicted the problems that have now occurred.

It was the fault of the media, for not spinning more.

It was the fault of contractors, who failed to do their job, as if government oversight wasn’t the administration’s responsibility.

My favorite? It was the fault of average Americans. Why?  Because they were foolish or stupid to believe the lie in the first place.

If you think I am exaggerating, simply go read some of the ‘elite’ liberal columnists out there. This last excuse actually has become common place among the liberal intelligentsia.

The quandary that liberals are in leaves them between a rock and hard place.  Either they can follow their fanatical ideology, and fight for the Affordable Care Act, even though more and more evidence is coming to light that the plan cannot achieve the major goals set for by Obama himself.  The alternative is to pass something like Landrieu’s Senate plan, allowing people to keep their current health plans; that would blast a hole in the central tenet of Obamacare, which is to redistribute health care dollars from the healthy to the sick.

I actually agree with many liberals:  no amount of running away from Obamacare is going to save Democrats this time. They own this, in totality.  Ultimately, the only thing that would save them would be a competent rollout of the remainder of the system, which at this point seems highly unlikely.

Which means, when the 2014 election rolls around, we can truly see who deserves to be delivering, and receiving, apologies.

Healthcare Costs: Pay Me Three Times

In the webcomic “Schlock Mercenary”, the spacefaring soldier-of-fortune Kaff Tagon is often seen in a state of sheer bliss by the opportunity to get paid twice for the same job, and getting paid three times sends him into paroxysms of joy. And well it should, because he’s getting paid multiple times for the same work by different people — and it all adds up. So why wouldn’t other mercenaries wish to do the same?  But we don’t have mercenaries, you say, but you would be mistaken — we do. We call them healthcare providers.

The whole issue of providing health care services, from the simple doctor’s office visit to catastrophic hospitalization, has been a study in getting paid more than once for the same job, and any effort to reduce this to a simple, single payment from patient to doctor has been actively opposed. Not by patients, and not even by doctors, but by institutions that surround both and game the medical finance business to line their pockets. It isn’t hospitals that get paid to save your life — that is a difference in degree, not in kind, as the doctors deserve to get paid for their work, and someone needs to pay for the use of the facilities. But a simple patient to provider financial trail is rarely seen.

The excuse is that the costs are so astronomical, no individual could ever pay it without going broke. And nowadays, yes, that’s true.  I spent most of a week in the hospital this summer, just getting a kidney stone under control, and the total bottom-line cost claimed by all of the providers was something on the order of $50,000. But that number is the end-result of a long inflationary spiral, created by the mercenary application of two key concepts: It’s not their money, and charge everything the market will bear.

Let’s be clear, there’s a tendency to see the patient as the market, and once that was actually the case, but in the past 60 years or so, that has changed.  The patient is only the instigator, not the market, because the patient doesn’t PAY the entire amount charged.  In some cases, the patient pays nothing or only a small portion at point of service, and a “premium” over time. Even this premium doesn’t begin to scratch the surface of the on-paper cost of most healthcare nowadays. Enter the healthcare facility, the insurance company and at least one government agency as new players, beyond the patient and his or her doctor.

...watch the Queen, watch the pretty lady...
…watch the Queen, watch the pretty lady…

“Reimbursement” is the name of the game, and it has nothing to do with charging the patient for services rendered. It’s about keeping the Queen moving, distracting the mark, palming the money card, bending a corner, or otherwise convincing a mark to play, thinking he can win. In reality, the only ones who win are the dealer and his shills — in a proper game of three-card monte, the mark never wins.

The original system was simple. You get sick, you go to the doctor. The doctor treats you, you pay him cash (or chickens) and you go home. The doctor pays his expenses, and any profit left over is his own pay. The cost was relatively low because it was only one stage, and only one person had to make any profit. (Yes, there are nurses and office staff, they come under the heading of “expenses”, as they aren’t providing the patient with services, they’re providing the doctor with services.)

Around the turn of the 20th century, there was a relatively common health care support system called “Lodge Practice”. This was a cost-sharing system similar to insurance, created by “Fraternal” or “Friendly” organizations such as the Knights of Columbus or the Masons. The lodge member would pay a small fee each month into a common pool. The lodge would contract with a doctor to provide services to its members for a set amount.  Doctors would compete with one another to get the lodge contracts, keeping the price low. Good doctors were in demand, poor doctors didn’t get their contracts renewed — the patients drove the system. In the heyday of lodge practice, when a doctor would generally cost a person one or two dollars a visit, the lodge member would only pay, on average, one or two dollars A YEAR. Lodge practice was actually cheaper than the same care without it, but doctors still got paid a reasonable amount.

Of course, some didn’t like this practice because they felt it made the cost of health care TOO LOW, and they objected to patient riff-raff judging the quality of physicians — so they demanded that Government Do Something. Between the government and the fraternal organizations themselves getting greedy, lodge practice was first made uneconomic, then legislated as illegal. The result was much higher costs due to a lack of competition.

The real Find-the-Queen game begins during World War II, when salaries were frozen. Because giving your employees health insurance was not considered wages, but instead was a separate thing, a “benefit”, it was not subject to the freeze. This was used to reward an employee rather than giving a raise, or used to entice a good candidate to come work for you, or continue to work for you, when it was not legal to simply offer them more money. This is the financial equivalent of sucking the mark into the game — he is convinced that he can win by the dealer and his shills.

Now we have an entirely new game — you pay the insurance company your “premium”, basically a fee to be allowed to play, and you place your wager, usually called a “co-payment”.  Insurance is, when you get down to it, gambling on your health. That’s what actuaries do, they calculate the odds of you getting sick and costing them money. They charge you a playing fee based on how likely or not you are to make a claim — the house percentage, which the house ALWAYS wins. They bank on you sitting around, ogling the cigarette girls, buying overpriced, watered drinks, and eating the hors d’oeuvres. They don’t have to pay anything out for that, in fact, those drinks pay for the munchies and the time and energy to serve you. (An $8.00 mixed drink goes a long way.)

Here’s where the gaming of the system starts. You go to the doctor, you pay your co-payment, see the doctor, go home. The doctor, who used to simply pocket that money and go home himself, files a claim against your insurance for between $150 and $225.  He doesn’t expect to get that much, of course, he knows he’ll only get a percentage, but he figured out what he needs to charge in order to get what he really wants, so he’s happy. Then the insurance company files with a government agency for their OWN reimbursement, again gaming the amount to get what they want. By the time everyone has gotten done filing claims and requesting reimbursement, the cost of that simple doctor’s visit is up around $200. The patient, however, doesn’t pay $200 — he pays what he would have paid originally, without the whole Three-Card Monte mob…and a premium on top.  This entire process takes a $25.00 office visit and inflates it into $200.00 worth of cash shuffling from one account to another. This is not the patient’s money, it’s Someone Else’s Money. The price is inflated as high as the providers can manage, based on What The Market Will Bear. Since the market is not the patient, but insurance companies and government agencies, it will bear quite a lot.  The insurance companies increase their premiums, diddle the copays, and the government agencies levy higher taxes, taking in MORE of Someone Else’s Money, and the process continues.  But still…the patient only got the same service he would have gotten had he paid cash.

Catastrophic cases are not a exception to this process — I paid, out of pocket, about $2,000 for that bout of kidney stones.  This is pretty much what I would have paid, cash, back when insurance companies and government agencies were not involved. I didn’t save a single cent, and paid them for the opportunity to get fleeced. I don’t even escape if I have Medicare, since I paid a “premium” for nearly 40 years for the opportunity to play the game now that I’m disabled. I also pay about $80 a month for a prescription drug plan, to pay between $5 and $75 for each prescription — what the drugs would have cost without the inflation afforded by Someone Else’s Money.

Oh, but the game gets better!  A Three-Card Monte dealer makes the most if he has his own box to set up for his marks, one easily whisked off should the police be seen. He makes less money if he has to split it with someone who will let him use their property, so he’s better served if he has his own place. Now we see a trend building, where healthcare providers (hospitals) are buying insurance companies and issuing their own insurance, or vice-versa, insurance companies buying hospitals and medical practices. Why would they do this?  Easy! To cut down on how many people they have to split the take with!

When the insurance company owns the hospital, it’s like that old Steve Martin routine about “Fred’s Bank”.  Fred has a bank. Actually, it’s just a white suit…you give him a deposit of $50, he puts it in the right-hand pocket.  “You gotta remember that,” Fred says.  The case of insurance owning the hospital takes the white suit one step further. The hospital makes a claim on the insurance…”Fred” takes the $50 and moves it to the left-hand pocket.  All they are doing is paying themselves…with Someone Else’s Money.  They even convince the mark that he’s getting a much better deal, saying they’ve “reduced costs”. They have — they no longer have to split the take as much.  But the patient STILL is only getting the care he would have gotten, had he paid cash.

But where’s the proof? How do I know that it’s just a big, convoluted, paper-chase game of Three-Card Monte?  Because a form of lodge practice is becoming popular again. MedLion is the fastest-growing medical services provider in the country.  They charge a small monthly fee, then your doctor visits are just $10.00.  It seems like insurance, but it isn’t. It’s a simple service fee, to pay them for their efforts to find and enlist physicians.  It’s just like lodge practice — doctors compete to be in MedLion, and the cost goes down.  The fee is fixed, the doctor’s visit is paid in cash, everyone is happy with what they got, and all of the overhead — paying all the shills in the con artist’s mob — has gone away.

Respectfully Submitted.

Sources (Links repaired!):