Archive for the 'Healthcare' Category

How Many People Actually Gained Insurance Through the Obamacare Exchanges?

While there was much talk recently about how many people had paid their first premiums in an Obamacare plan, a bigger question about the exchanges remains: how many people gained insurance (i.e., didn’t already have insurance)? Insuring the uninsured is perhaps the ACA’s main goal (even if that goal is flawed and even though we should judge its value), so the impact that the exchanges have had on insuring the previously uninsured is important to evaluate.

There have been varying estimates of this number. Bob Laszewski has suggested that the number was about 50% uninsured to 50% previously insured, meaning that only about 4 of the 8 million ACA exchange enrollees already had insurance before Obamacare.  That’s arguably not a very good return on investment if we are causing one person to lose their previous insurance for every person who gains coverage (and how many of those who gained coverage wanted it but couldn’t get it before versus how many bought it because they were compelled to by the ACA’s tax?).

A new McKinsey survey paints a similar picture. In this survey, only 26% of the ACA enrollees were previously uninsured, but this survey includes enrollments both inside and outside of the ACA exchanges. This means that only about 1.7 million people gained insurance on the exchange, and  865,000 people gained coverage off the exchange, while about 6 million people were apparently forced into the exchange despite having a previous plan. I doubt anyone would argue that to be a good return on investment for Obamacare. Adding the percentage of enrollees who have paid their first premiums, the McKinsey survey says only 22% of the enrollees were previously uninsured and have paid. That’s really bad.

In addition, a recent Health Affairs summary of the Obamacare insurance marketplace showed that only 25% of exchange shoppers who weren’t eligible for subsidies actually enrolled in a plan (1.2 million people). This contrasted with 77% of those who did qualify for subsidies selecting a plan. This means that the exchanges are successful enrolling people who are being subsidized, but not successful enrolling those who don’t receive subsidies. Put another way, Obamacare is succeeding at increasing the government’s role in the private insurance market, but apparently not a good job at facilitating the market without propping it up via government subsidies.

The government’s role has also increased outside of the exchanges. The McKinsey survey shows about 3 million additional people gaining coverage through the ACA’s Medicaid expansion. One can debate how valuable that coverage is for its cost, and we’ve recently seen two different state studies that call that value into question (one in Oregon suggested that the value was quite poor). It’s also indisputable that we didn’t need the rest of Obamacare in order to have the Medicaid expansion, so we could have insured those 3 million with a lot less hassle.

It’s going to take more time to sort out these numbers and to work out back-end technology issues on the exchanges. It’s also going to take time for the exchanges to sort out their risk pools. In the meantime, however, it’s not a good sign that insurers are lobbying for the risk corridors to not be constrained by budget neutrality. This suggests that significant premium increases are coming (Laszewski suggested they may be mostly at 9.9% to avoid the regulatory review that would be triggered by a 10% increase). How the risk pools look is still being determined, and those pools will impact the price, which will help us judge the value and will impact how many people sign up for these Obamacare plans in coming years.

Right now the jury is still out, but some numbers suggest the exchanges are not functioning well in terms of enrolling the previously uninsured and in keeping premiums down. Those aren’t good signs for the value of these plans and for the success of the ACA.


UPDATE: I’ve updated the summary of the McKinsey study, which considered enrollments both on and off the exchange. Laszewski notes that the study is consistent with his numbers because it considers off-exchange enrollments, so I’ve corrected the part that suggested that the study shows a worse enrollment of previously insured people than Laszewski previously estimated.

UPDATE: A reader comment below suggests that it was expected that ACA enrollees would mostly be subsidized. That’s true, but irrelevant. Just because that was predicted doesn’t change the reality that the exchanges apparently aren’t bringing prices down enough to make insurance more affordable/attractive without the government having to subsidize both the insurers and the customers. Take Laszewski’s word for it:

Obamacare’s two biggest problems come down to this: Not enough people are signing up for it to be sustainable in the long-term because the products it offers are unattractive.

Laszewski also notes that only about 1/3 of subsidy-eligible customers signed up for an ACA plan. That means that while those who signed up may have largely been subsidized, a large majority of those who were eligible for subsidies didn’t sign up. Thus, Laszewski concludes that the plans aren’t attractive enough, which is the point I was making with these numbers.

UPDATE (mid-June): Laszewski looks at the newest Kaiser numbers showing, among some mixed results, general satisfaction among those who enrolled…and concludes that this means very little. Why? Because the survey was only of the people who enrolled, who constitute less than half of the people who shopped for a plan. So he’s emphasizing his earlier point that I highlighted, which is that these ACA plans weren’t attractive enough to enroll most of the people who looked at them and only enrolled 1/3 of people actually eligible for subsidies.

Laszewski notes that most of the enrollees are of the lowest income, meaning higher subsidies are required. Meanwhile, middle income people aren’t finding the plans affordable and attractive enough to enroll.

Will Obama’s Presidency Be a Failure?

There are still a few years remaining for President Obama’s tenure, but there are also plenty of results to judge so far. Pete Wehner wrote a piece this week calling out what he concludes to be a record of massive failure for this President, and then followed it up today with yet two more failures noted by the NYT: a trade deal and a breakdown in the Middle East peace negotiations.

Certainly the President’s foreign policy has little going for it to combat the charge of failure, and simply not being George W. Bush isn’t a successful foreign policy resume. Obama supporters may cite the finding and killing of bin Laden, but that’s hardly enough to constitute a foreign policy resume. Failing to secure another agreement in Iraq, failing to achieve sufficient gains in Afghanistan even after a surge, failure to secure our interests in places like Libya, Egypt, and Iran, failure to stop Assad’s violence in Syria, and now Putin’s actions in Ukraine suggest that the Obama record on foreign policy is going to be hard to save.

On domestic policy, the President’s economic record has been arguably abysmal. Unemployment was over 8% for most of his presidency and has dropped below that level largely due to the labor force participation dropping to levels we haven’t seen in thirty years (UPDATE: about two million upper and middle wage jobs have been replaced by lower wage jobs). Long-term unemployment is high, and food stamp dependence is at record levels. Growth has been low and stagnant. Entitlements are spiraling towards insolvency without much effort to save them, plus Obamacare has exacerbated that problem. The housing market still hasn’t fully rebounded, student loan debt is becoming an even larger problem, and financial reform has arguably created more regulatory burdens than it has curtailed bad financial risks.

Obama supporters might say that passing Obamacare was a huge success, although with numbers and systematic errors likely requiring a few more years to sort out, it’s hard to claim that as a victory outside of the context of simply passing major legislation to increase the government’s role in private healthcare. Obama supporters may also cite progress on issues like DOMA and Don’t Ask Don’t Tell, but reasonable people can debate whether such changes make a domestic policy resume with such a poor economic record a success. It’s also difficult to argue that the economy would have been much worse if not for President Obama’s policies, regardless of whether or not that may be true.

Also consider the abuse at the IRS, the controversy at the NSA over surveilling journalists, the apparent Benghazi cover up, and the Fast and Furious gun-running scheme, and the resume is dragged down even more.

So Wehner has a point. The President’s lofty self-set expectations are looking pretty different from the actual results right now. The President’s charge was “forward,” but is that really where we’re moving?

Yes, Obamacare and Minimum Wage Increases Have Some Negative Impact

When a politician says that their proposed big policy change will be nothing but positive, it’s very likely he/she isn’t telling you the entire story. Almost no major policy changes are purely positive and without negative consequences. That’s okay; we can and should debate whether positive effects outweigh negative ones in any policy proposal. But some people, including the President, have chosen to dismiss negative effects and misleadingly suggest that their proposals are good for everyone (e.g., “If you like your plan you can keep it.”).

Still others, like Paul Krugman, choose to ignore negative effects even as they actually occur (and this is far from the only such example). Krugman, who has apparently put his foot into his mouth with his latest column, suggests that Obamacare opponents are just scaring people. Krugman asserts (astonishingly) that Obamacare opponents are struggling to come up with actual examples showing harm caused by Obamacare, even though every day one can find a major news source reporting such an example. Some elected Democrats who support Obamacare are also trying, uselessly, to pretend no actual Obamacare harms exist.
Maybe some people don’t want to make the cost-benefit argument, but it’s not credible to argue that there are no costs to Obamacare. Nor can one deny that there are costs to raising the minimum wage. As Robert Samuelson explains, there are real harms that will be caused by Obamacare and by raising the minimum wage, and maybe smaller benefits to doing so (Douglas Holtz-Eakin and Keith Hennessey also explain negative impact, in addition to the Congressional Budget Office). We should at least have that discussion rather than being so dishonest in order to get what we want and even later denying the consequences of getting it.

Republicans Offer Serious New Healthcare Proposals

Finally, we can move on from repeal vs. fix and “Obamacare is the law of the land” to constructive healthcare policy debate. A few Senate Republicans have offered some serious healthcare policy proposals that would effectively replace or “fix” Obamacare. The PATIENT Care Act is not yet on paper in the form of a bill (at least I haven’t seen it available in such form yet), but is a reasonable proposal that should at least advance the conversation of how to replace Obamacare.

This proposal is a solid attempt to improve our healthcare system and undermine the main criticisms offered by Obamacare supporters to Obamacare opponents. Fix Obamacare instead of repealing it? This proposal includes repealing the ACA, but it effectively replaces it. It doesn’t “go back to where we used to be.” Deny young adults their parents coverage? This plan would keep the popular feature of Obamacare that allows young adults to stay on their parents’ plans. Deny coverage to people with preexisting conditions? This plan would do something similar to help people gain coverage while potentially not causing the same price increases that Obamacare does.

Here’s a quick summary of the plan:

  • Preserve lifetime bans on insurance plan payouts
  • Preserve ability of young adults to stay on parents’ plans until age 27
  • Adjust age-rating bands to 5:1 to reduce Obamacare’s price increases on less expensive customers
  • Repeal the mandate to buy insurance
  • Replace guaranteed issue with continuous coverage and federal assistance to states for high-risk pools (more on this below)
  • Incentivize medical malpractice reform at the state level
  • Cap employer tax exclusion for employee insurance payments at 65% of the average plan’s cost (and grow the cap at a rate tied to CPI)
  • Offer tax credits to the uninsured up to 300% of the poverty line, with larger subsidies as people are older and less wealthy (more on this below)
  • Grant federal money to states for Medicaid on a per-capita basis

There are two areas of this plan that I’ve already seen Obamacare supporters criticize. The first is that Obamacare offers more subsidies to the uninsured. That is true, but the point of this plan would be to reduce the number of people needing subsidies and the amount of subsidies required by reducing the cost of insurance plans under Obamacare.

The second complaint so far is the repeal of guaranteed issue. This is a sticky issue because while guaranteed issue is arguably poor policy, it is very popular politically. But this proposal doesn’t simply ignore people with preexisting conditions or throw them into high-risk pools; it would prohibit insurers from dropping coverage from anyone who had it,  would offer subsidies to some of the uninsured, and would work to improve high-risk pools at the state level.

One of the big questions, I think, will concern the number of people in the middle class who don’t qualify for subsidies. With the employer tax break capped at 65%, how much of the uncapped money would still be paid into an employee plan or paid to the employee in wages, and how would that compare to any price changes a customer might see in his/her plan? We don’t want a lot of people to get stuck with a higher bill as we’re seeing in Obamacare, and we want to make sure high-risk customers have some good options that will help them access healthcare rather than simply having a plan that insurers are forced to provide.

This plan is a good start. It should advance our healthcare policy debate from keeping Obamacare to how to replace it.

ObamaCare Chronicles: Canceled Insurance, Democrat Panic, and Obama Conceding Failure of the Exchanges

That didn’t take long.

Merely a month after the Obamacare exchanges launched, President Obama effectively conceded their failure and probable demise. All of the warnings from people like me who read and understood the bill are no longer theoretical, but are being vindicated now that major parts of the law have become reality.

Make no mistake about it: President Obama would not have announced that insurance plans canceled due to Obamacare’s requirements could be reissued unless he believed that the exchanges were unlikely to work and achieve sustainable enrollment numbers. Whether the exchanges can be operational soon enough for this enrollment period is still uncertain, but early numbers suggest that not enough young and healthy customers will sign up, especially in light of a terrible rollout and the sticker and access shock people are seeing from the offered Obamacare plans.

There are other serious questions to consider than the enrollment numbers. First, is President Obama actually going to have the HHS and IRS enforce Obamacare by allowing canceled and non-compliant insurance plans? Second, does the text of the statute even allow President Obama to do this without Congressional authorization?

Will insurance companies even be able to reisusse those plans at this point (some state insurance commissioners are saying no, and some states have notification requirements that can’t be met this late in the year)? How much would an allowance of non-compliant insurance plans undermine the new plans with higher-risk customers? Would a person with a non-compliant plan still be taxed by Obamacare? President Obama made an attempt to shift blame to insurance companies that can’t or won’t reissue canceled plans, but he created a mess of uncertainty by unilaterally contradicting his own law. He sees a disaster and is now in blame mode.

There are plenty of reasons for Democrats to panic about Obamacare. The law is crumbling, and quickly. If the insurance exchanges fail, then they will be added to a pile that includes long-term care (CLASS Act), the 1099 tax requirement, and the employer mandate. What would be left of Obamacare other than Medicare cuts and Medicaid expansion, and would the remainder of the law be something to celebrate?

I don’t think many people would say yes, but then again, I’ve predicted and warned about this failure from the beginning.

UPDATE: Yuval Levin appears to agree with my assessment of why the Obama administration has taken this course of action, and how the action seems to spell doom for the exchanges.

Obamacare Chronicles: Exchange Rollout and Hidden Prices

While the shutdown debacle may have overshadowed the official launch of the Affordable Care Act’s insurance exchanges (a major component of the law), one could not have missed how disastrous the rollout was without having buried his or her head in the sand.

The commencement of the insurance exchanges — online marketplaces designed to let individuals shop for insurance plans — went so poorly that ACA supporters even had to admit how troubling the start was. Ezra Klein, an ardent ACA advocate, interviewed insurance expert Bob Laszewski to discuss the problems with the exchanges. Laszewski, who has since written that he has not seen any improvement to the exchange websites and has not seen significant enrollment increases, suggests that part of the problem with the rollout was the political motivation of the Obama administration.
Laszewski specifically infers that the Obama administration unintentionally hampered the functioning of the websites as a result of being afraid of showing the prices of insurance plans up front. What the websites require a user to do is to create an account first, then see what the insurance options are. This politically-motivated design resulted in a lot of people having problems getting into the system, and those who did seem to have enrolled in a plan at very low rates (perhaps less than 1% of website visitors actually signed up for a plan).
It is not unreasonable or surprising that this kind of website design to delay showing insurance prices would be intentional, as Laszewski suggests. Studies like this one show that prices in most states for large ranges of individuals will see significant price increases under the ACA insurance plans, so it’s plausible that the administration was sensitive to the likely reaction of consumers seeing high prices before they went into the process of signing up (and the websites are having major privacy issues).
While this disastrous exchange rollout does not necessarily spell doom for the exchanges, let alone the ACA at large, it is a legitimate cause for concern. After all, there is an approaching deadline to purchase qualified insurance in order to avoid paying the ACA’s tax for not having such insurance. That tax starts in 2014, which is right around the corner. If the exchanges are not running properly and soon, they might not achieve the type of enrollment that they need to support them, which could not only look bad for the ACA, but could actually harm the insurance market while leaving a lot of people unwillingly stuck without insurance and paying a tax for it.
The timeline presents interesting hypothetical questions that could soon become applicable ones. If the exchanges are not ready soon, should the individual mandate be delayed? Should insurance regulations that could harm insurers and the market be delayed? What would a delay mean to the ACA and to the insurance market? Could harmed insurers sue the government over a failure to implement the exchanges? These questions soon might not be so hypothetical.
It’s possible that the exchanges are simply off to a rough start and will be fixed in time to prevent further complications, and that enrollment numbers will sufficiently increase as fixes are made and more people learn about the exchanges. But early indications suggest the problems might not be easy to fix quickly, and all these problems might deter a lot of people from using the exchanges.
So there are some very real issues that may force the hands of the President and the Senate Democrat majority as the major deadlines approach at the end of this year and early next year. It’s not implausible that the President and many in his own party, after refusing to delay the insurance mandate in the shutdown debacle, would want to do so if the exchanges are not running smoothly in another month or two.
The law may be here to stay, for now, but that does not mean it will work or that it should not be changed as its problems become more glaring and harmful.

ObamaCare Chronicles: Losing Family Insurance Coverage, but Sparing Congress

Is there a better example of the ruling class versus everyone else environment that we’re living in than the IRS employees union wanting to avoid Obamacare? The IRS is set to gain a lot of jobs and authority to enforce the new healthcare law, yet it doesn’t want to be subject to it. Does anyone feel bad for the IRS? Didn’t think so.

Perhaps the IRS can get a pass like Congress and Congressional staff members received from the administration. So not only did the people who created and voted for the healthcare law get a waiver from its requirements, but a major agency tasked with enforcing the law wants one. What about non-government employees? Too bad. Also, too bad for families of those not on the government insider list.

The AP is reporting that many small businesses will drop dependent coverage for employees’ families due to the increased insurance cost caused by Obamacare. No, you don’t necessarily get to keep your coverage if you like it, and even if you do, it’ll cost more and may not cover your family.

Obamacare is apparently not for the people in charge of it, but for the rest of the country that can’t get a special government deal. This is the world in which we now live. The President and Democrat majority in the Senate were reelected, so that’s how it’s going to be.



Get every new post delivered to your Inbox.