The ACA– As Much As We Could Have Hoped For, Despite Sensible Old Men

The Administration has snatched victory from the jaws of defeat and enrolled 7 million people (give or take a million who may not have paid their premiums) into health plans under the ACA, and more into Medicaid. The Affordable Care Act (ACA) isn’t as big a change as some of us would have liked, But in this moment of modest celebration let’s remember what some of the sensible old men said all along.

Sensible old men said reform couldn’t pass without bring in the Republicans. Sen. Baucus tried hard to do that, and it’s beyond clear that no Republican would have ever supported it–even a moderate like Snowe who was quitting. It passed anyway.

They said that we’d see massive rate shock. Instead plans tightened networks and rates were in general lower than they had been before.

They said that the web site debacle meant no-one would sign up and we’d go into an insurance death spiral. The web site launch was a cock up, but Medicaid expansion (where allowed) has more or less been OK, and the exchange web site(s) now more or less work(s)–outside Oregon & Maryland. By the way this backs my argument for having one Federal exchange, which you may remember was in the House bill before we ended up being forced to take the Senate version due to Ted Kennedy’s death.

One wise old man (Robert Laszewski) was still saying that the exchanges would be financial disaster for insurers the very week Wellpoint raised earnings expectations because they had more enrollees than expected.

Let’s also remember that because of the politics of the nation, the ACA is a ridiculous hodge-podge of a law requiring–you’ll recall:

a) an opt-in to what’s basically a social insurance program (hey, let’s opt-in to fire protection while we’re at it!)

b) arbitrary tax (and now subsidy) distinctions between those who get insurance via an employer and those who don’t, and

c) arbitrary access to insurance (well, Medicaid) for the poor depending on their income and which side of a randomly drawn line they live.

If this was a sensible country no one would have designed either the system we had before or the ACA–which is itself very trivial reform–as the solution to fix it. But if this was a sensible country the Senate would have been abolished by 1935 (or sooner).

But given the hand they have, I’m not convinced the Administration and those rolling out the bill have done that bad a job. Don’t forget  that the previous Administration’s crowning achievement (also coming from sensible old men) was the restoration of peace & democracy in Iraq. The ACA’s doing way better than that!

And the sensible old man’s alternative of waiting for a grand coalition would have meant that we did nothing. And frankly anything’s better than that.


66 replies »

  1. Yes, John we have come to the point where one has to look at the facts and the principles involved instead of picking a program out of thin air that even those that passed it never read it. So you are right I believe the ACA is a terrible piece of legislation and apparently that is being born out while we speak. Both the left and the right have significant concerns with the ACA that very much need to be addressed.

    I can’t answer your statement “health care is best left in the hands of the free market ” because I don’t know what you mean by “in the hands of the free market”. You might think the free market totally excludes government. It doesn’t for free markets cannot exist without government. You might think free market health care would leave people dying in the street. That is not so either.

    Even Hayek (an icon of Austrian free market economics) recognized that government could involve itself in the free market, but he felt it should do so with the least possible interference with the market place. By the way when
    HMO’s were actively involved in denying care and killing people was it Congress that stopped them from doing so or the free market place? The free market, not Congress. The HMO’s were sued and lost. The court is part of the concept of a free market so the dollars lost by the HMO’s made it financially impossible for them to pursue certain types of denial. What about the people component of the free market. The people component took note of what happened and started purchasing insurance that was not HMO based.

    “To me it is managed competition ” What is managed competition? Nothing more than a set of rules placed upon the insurers. That is done both in the market place and by government. Most people whether on the right or left accept a degree of government regulation, but when government becomes a player choosing winners and losers that creates tremendous problems. The bureaucrat in government is the same type of human as one that works in the private market, but the bureaucrat has some protections amongst them sovereign immunity. Thus I wouldn’t trust the bureaucrat of government anymore than I would trust the one in private business. In fact maybe I would trust the private business more because they don’t have sovereign immunity and thus the potential of great financial loss and they are protected somewhat better from jail than those in private enterprise. Just look at the criminal activity that occurs amongst our politicians on both sides. You could never get away with some of that cr-p.

    The real bad guy if one has to pick one is third party payer. That is caused by our tax system and is a major cause in our high healthcare costs because the one receiving the care is different than the one choosing the insurance and paying for the care. I am quite familiar with Enthoven and don’t subscribe to a belief because the words came from a political party. Both parties are at fault for the healthcare dilemma.

    “My hope is that now that we have meaningful insurance reform”

    Yes!!! That is exactly what we need. Unfortunately the ACA didn’t meet that standard.

    “As for having colonoscopies in the hospital versus a surgical center, I really don’t care.”

    You must have some concern if the costs you are worried about are twice as much in a hospital as they are in surgical clinics. The bill you seem to support wants to double down on the costs and drastically reduce these outpatient clinics that can drastically cut costs. Cutting costs mean premiums go down and lower income groups become better served.

    As a final note don’t forget that the so called free market place doesn’t mean that the poor can’t get subsidies so that they can be the same recipients of healthcare as those more affluent.

  2. Excellent points, Dr. Palmer. And no arguments from me.

    “Managed competition” for me refers to insurance, not health care. Very little in ACA affects health care costs directly but the mechanisms for billing and reimbursements have been messed with in a big way, with IPAB replacing MedPac with serious new controls. My understanding is that pre-ACA Congress had such leverage over CMS policy-making that individual members could basically tell CMS how to do its job. The legislation gave IPAB (remember the famous “death panel”?) control over CMS policy-making that changed the dynamic from Congressional default from opt-out to opt-in. Under new rules if Congress want to make changes to CMS they must act legislatively as a body, limiting the power of individual members to tweak policy in earmark fashion. I’m no expert, for sure. I’m just an old guy trying to find out what’s going on by surfing the Web. But I think this current WSJ link has something to do with that.

    Thanks to payroll taxes on every earned dollar, Medicare and Social security are the biggest providers of health care and related benefits in America. One would think that they would be getting the best of pricing from drug and health care providers but one would be wrong. The VA and Medicaid get medicines at lower costs, but Medicare is expected to pay full freight. (Hence the five-dollar aspirins and other padding on hospital bills. But market competition seems to be more or less working with Part D — finally.) Most consumers have no idea how big the disparity is between true “government health care” and what they pay if they are not covered by the VA, tri-care or the active duty medical service corps. And there has been and continues to be a deafening silence from those quarters as the rest of the country tears itself apart over ACA. I have several friends with VA benefits who are quite satisfied with their care, and they get the medications they need for practically nothing compared with the amounts paid out by Medicare beneficiaries on their merry way to the famous donut hole. Dr. Palmer this is a glaring disparity that should never have been allowed to happen.

    Two unrelated topics are being conflated in this discussion — health care and insurance. It is important to separate the two for purposes of discussion. I need not tell you, a doctor, that insurance does not provide health care. That is the responsibility of health care providers. Insurance is the mechanism used to help *pay* for health care.
    => Health care providers manage actual health care and health care risks.
    => Insurance providers manage health care costs and *cost* risks.
    The two are not the same. Nor should they be.

    But thanks to group insurance and taxes most people getting health care benefits (such as they are) have no idea how much they really cost — until it’s too late, which is why so many bankruptcies are pushed over the edge by medical bills. Some argue that is not the case, but none can argue that medical bills play an insignificant part.

    But the insurance people must be doing a pretty good job of managing health care, no? Why else would a third of all Medicare beneficiaries be kidnapped from original Medicare by Medicare Advantage? Stuff like that makes me think there is still plenty of room for competition, at least in that theater of operations.

    One of my pet peeves is that most of the medical and policy professionals I hear complaining about ACA make no distinction between professional compensation and corporate profits. They are not the same. I am a firm believer in making sure that medical professionals, from CNAs and LPNs all the way up to surgical specialists, lab researchers and others at the top of the profession are fairly compensated for their work and expertise. And yes, boats, swimming pools, club memberships and beach houses are okay with me.

    But that does not mean that corporate profits are in the same class. Those of us are stigmatized who have the idea that health care is a right, not a privilege reserved only for those with the ability to pay or the good fortune to be in a class for whom payment is subsidized. I wish I had all the answers to your questions but I don’t. All I know is that there is a great disparity between the best of American health care and none at all — which is what too many people still face. The Affordable Care Act is the most recent of many attempts to rectify that disparity.

    Women are more expensive than men. And sick people are more expensive than healthy ones. But being sick or being female does not mean anyone should not receive the same care as everybody else. That’s part of the challenge.

    On the other hand, 100% of everybody is gonna die. And the medical expenses of the last few months of life are driving up the costs of everybody more than the preceding lifetimes of care. That’s also part of the challenge.

    i wish I had a better answers than that.

  3. @Ballard
    You wrote: “To me it is “managed” competition which was the best outcome politically possible after years of failed efforts on the part of both parties to do something — anything — to put the brakes on the runaway costs of health care.”

    I can’t imagine who is competing with whom and what they are competing about/with/for/on. Certainly the Medicaid expansion component has little competition unless the states are running Medicaid HMOs and even here everyone is using procedure price lists generated by Medicare. Has anyone ever heard of Medicaid competing with anyone before?..maybe the cloud?

    In the exchanges, because the plans are community rated and the benefits regulated by CMS, aren’t they bound to be priced roughly all the same as regards premiums?
    All they can use to charge more-or-less is the age of the patient and the use of tobacco (and there is a location cost adjustment I believe). Even gender is out. So, I guess they could compete on the skill with which they administer their plan or select their physician panel. Or, how they can adverse select under the table.

    For the insurers….how can they compete? Well they are protected by those risk corridors for a few years and by reinsurance and some attempt at sickness disparity risk ratings. CMS is trying feverishly to not allow insurers to bolt. They want them to be happy for awhile.

    So, who else could be competing? Administrators? I hope. Nurses in non-union situations? Hmmm? Pharma? The government has allowed pharma to win every contest so far. No chance. Too much political power in pharma.

    So, who do you think is competing? and how?
    Or, if you would rather, what ingenious other methods of price and cost control are contained in the PPACA? Wan’t this numero uno as a goal?

  4. I can only speak for myself, but I had my only colonoscopy a few years ago and I don’t aim to have another unless I have specific symptoms and a very persuasive doctor talks me into it. Even then I will argue for a sigmoidoscopy or (last resort) a colonoscopy without anesthesia. As far as I’m concerned too many screening and tests are nothing more than trolling for business.

    I had less than two minutes for conversation with the doctor doing my procedure before the anesthesiologist went to work, and I asked what were my odds of having a problem at my age (65 — my first Medicare physical) if I didn’t have a colonoscopy. He admitted that he really didn’t know. Very underwhelming, I thought. I came close to telling them to pack up the equipment and move on to the next case.

    About those deaths per year — the answer is 100%. We all have that final appointment with the angel of death and need to be speaking of “lives extended” but not “lives saved.” I’m glad you said life expectancy and not life span. Thanks to medical advances life expectancy is improving, but as far as we know, except for a few outliers, the human life span has not changed since the start of the species.

    (And while we’re at it, my PCP asked me if I wanted another PSA test and I told him no. As in the case of colonoscopy, we can wait for symptoms of a problem. He admitted he had stopped having it, too.)

  5. Note to John B and Allan:

    Let me play the Robin Hanson role here.

    What if no one in America got a preventive colonoscopy?

    How many extra deaths would we have? 10,000 a year? I have no idea.

    But we all seem to be in thrall to what Arnold Kling called premium medicine, which refers to spending massive amounts of money to get very small increases in life expectancy.

  6. @allan, The time has come for you and I to agree to disagree. We no longer speak the same language and it’s doubtful that either of us will change his opinion about ACA. If I understand your point correctly you see PPACA as a terrible mistake and that health care is best left in the hands of the free market where it will yield the best outcomes for the most reasonable prices.

    I too have serious reservations about PPACA but for very different reasons. To me it is managed competition which was the best outcome politically possible after years of failed efforts on the part of both parties to do something — anything — to put the brakes on the runaway costs of health care. (Among other outcomes I would like to see employment and health care uncoupled but that is about as politically distant as single-payer or Medicare for all,)

    Alain Enthoven, father of the managed competition model, has since come out in favor of Paul Ryan’s voucher system, which might in fact become the next permutation of how America does health care.

    My hope is that now that we have meaningful insurance reform and all fifty states have been forcefully jolted out of neglecting the problem, a national move is under way to have everybody trying to read on the same page.

    As for having colonoscopies in the hospital versus a surgical center, I really don’t care. I’ve already pointed out the gap that divides the affluent parts of the country from the vast numbers delicately referred to as “underserved.” People with money and good insurance have been getting plenty of care, and those with limited means (not to mention those dropped or refused because they are documented cases most in need), many of whom consider health insurance to be a luxury, will continue to be underserved for some time to come, even with this new legislation.

  7. @John: ” I would rather hospital costs go down than surgical centers proliferate ”

    Why? Ever have a colonoscopy in the hospital? most of the times one waits and is subject to every illness that walks through the hospital. For that Medicare pays twice as much as it does to an outpatient center where convenience and cleanliness are just two of the advantages.

    We should keep people out of hospitals as much as possible. Ever notice that is where a lot of people die?

    What is a hospital? One can look at it as a giant mall where all the specialty shops reside, but do you really want that small grocery store located in an expensive mall miles away just to buy a quart of milk? Do you need a milk ACA that increases costs and denies you the choice of the type of milk you wish to drink or even the ability not to drink milk should you not need it?

    Let’s assume you got your wish of a real non-profit hospital system to treat those things that really need a hospital. Would you want all the rest of health care to reside in that hospital at increased cost, increased inconvenience and increased risk of infection?

  8. @Ballard
    I think Allan has it right, John.

    You don’t have to worry about surgicenters sprouting up like daisies beyond need.

    Prices in a free market tell producers what and how much to produce and they tell buyers what and how much to buy.

    It’s like magic.

  9. @allan, I understand your point, but I would rather hospital costs go down than surgical centers proliferate like fast food outlets. After all, how many surgical centers per square mile does any community need.?

    The footprint of most health care systems in America is often as big as an industrial park. There are so many clinics, labs, private practices, specialty centers, agencies, imaging centers, retail outlets selling durable equipment and disposables, pharmacies, the list is endless…

    And that doesn’t take in to account the ancillary non-medical businesses from window-cleaning, landscaping and waste removal to uniform sales, food service outlets and parking garages. It takes your breath away to think of it. And every dollar supporting this is in one way or another the cost of health care in America. Every dime feeding this monster begins with a charge for someone’s medical bill.

    Healthcare systems should not be much bigger than a good-sized hospital. And they should be scattered far and wide, like grocery stores, in proximity to the places where health care is needed — NOT in the most affluent parts of the metroplexes where they are now concentrated. A more robust system of community health centers will be part of that picture. And that, too, is part of the vision of ACA.

    Complaining about stimulus spending is a smoke screen to distract from embedded toxic systems already in place. Ike’s military-industrial complex has not only grown, but has been amended by similar toxic tax-money-to-privatization schemes involving prisons, education, medical care and prescription drugs. This kind of argument is really tiresome.

    I decided some time ago that the typical business model for health care is a “non-profit” hospital with a big campus and surrounding ancillary delivery consisting of a raft of FOR-profit businesses — with the hospital serving for practical purposes as a big magnet and money-laundering center for all the rest. The whole package is tied neatly together by a high-profile local “community service” image, perfect for tax deductions with a dual purpose — image enhancement for donors and tax savings thanks to deductions.

    And underscoring the complexity of the whole system are executive compensation packages so extravagant that there is no discernible difference between for-profit and non-profit arrangements.

    I’m sorry. I spent my entire career in the private sector scratching for profits often as small as a nickle on the dollar. I am well aware of the power and pitfalls of the marketplace. And when I went to work in a non-profit healthcare system I was aghast at the amount of resources, both financial and human, that were at the disposal of the system. The place was awash with money, so much that I not only had the benefit of a 403(b) with generous matching, but an old-fashioned pension as well, vested after five years! In-house laundry, food service, housekeeping and landscaping were all top of the line. And every bit of these resources have but one source of revenue: somebody’s medical bills.

    We have created a monster. And PPACA, messy and patched together though it is, is the only meaningful attempt to tame that monster in our lifetime. A lot of good stuff got torpedoed (the public option, for example — and getting designer drug ads off the air, which never got mentioned) but something is better than nothing. I have hopes that IPAB will be more effective than MedPac was. (And can you believe that thanks to politics, I think MedPac is still around? Reagan said something to the effect that government programs were as close to immortality as man has come.)

  10. Thanks, John, for the WP article.

    “What happens if the government gets those prices wrong?”

    An interesting psychosis of government’s claim that healthcare prices are too high. Colonoscopy costs twice as much in a hospital as it does in a surgicenter, but government is trying to close down surgicenters.

    Tom Scully: “Medicare is a wonderful program, but behaviorally, because of the price-fixing, it’s a mess,”

    We need the market place. (Government setting prices and conditions of the healthcare contract doesn’t work.)

    All the things mentioned in the WP article have been known for decades. Some bloggers even on this site still haven’t got the news.

  11. @alan, you will appreciate this:


    A new and untested approach known as the Independent Payment Advisory Board became law under the health-care law, creating a government panel to review Medicare costs. But one of the essential problems is that Medicare pricing so often becomes subject to political pressure.

    “Go through every single payment system in Medicare and each one is highly political,” Scully said. “I can tell you a war story about every one of them.”

    “When you are creating winners and losers, the losers will cry pretty loudly,” said Stephen Zuckerman, a health economist at the Urban Institute.

    Since we have the best Congress that money can buy — literally — I have guarded hope that “costs” will be brought under control. But it’s a hope bordering on fantasy. Looking at the political realities I’m not optimistic.

  12. @John B. “First, Medicare does not control either prices or costs”

    Sure it does. It states how much you can sell your head of lettuce for and under what conditions you are permitted to sell it. It also can bundle the lettuce with a bit of tomato without permitting a change in price. Even your ability to open a new store or expanding is controlled by Medicare. Under the system one can’t even create a contract that leaves Medicare out and thus saves Medicare money by declining Medicare payments for a specific service.Thus if your client wants lettuce of an exact size and is willing to pay extra for it the client cannot pay for it directly and must use Medicare’s rate system.

    I agree with you about price transparency.

    “Second, there is a careless confusion of the difference between prices and costs.”

    Yes, and that was created by Medicare and the third party payer system.

  13. Dr. Palmer, your comment sent me to find out what the heck “monopsony” meant. The Wikipedia article blew me away, but I think I get the gist of it. You’re right, of course, about the Part D competition part (though I don’t see much impact on ED and other designer drugs that can still afford to buy the most expensive air time on TV) and when the Wikipedia article mentioned the military industrial complex I had an aha moment.


    You’re correct that our government will not use monopsony fo reasons beyond this discussion. As long as corporations are people and money is speech, the notion of healthcare as a right doesn’t rise even to the level of an intellectual construct.

  14. @allan, as a retired food service manager I’m well aware of the importance of getting paid for your work. (That’s why I tell anyone who will listen that nobody goes into the food business on purpose. It’s great if your family owns the operation, it has unparalleled job security, and it ain’t rocket science. But once you’re in and have a family, you’re trapped.)

    But allow me to make two points.

    First, Medicare does not control either prices or costs. The role of Medicare is to steward our tax dollars and determine how much of what providers charge will be reimbursed, which is quite different from putting charges on a bill. In fact, from what I gather Medicare “rates” are a published list, very much like a restaurant menu or price list at any retail store. Rates listed publicly contrasts sharply from most medical billing systems which are typically never seen by patients or their families until after what is often a blizzard of ancillary charges are tallied — and after the procedure-test-aftercare-scrips-equipment-etc are all added together. Thanks to the world’s most opaque pricing system, going to the doctor is like signing a blank check. I would be shocked if medical providers suddenly became as transparent about prices as Medicare.

    Second, there is a careless confusion of the difference between prices and costs. The two are not the same, as you point out. But medical bills, unlike most bills in the rest of the economy, are a spray of charges that often have little to do with actual costs. Evn lawyers, famously among the most expensive of all service providers, furnish detailed charges which allow clients to “shop the market” before selecting legal services. I need not tell you how alien that idea is to the world of medical care.

    Finally, I’d like to point out the main difference between medical providers and insurance providers. Both are in risk management, but they manage very different risks. Medical providers manage health risks, and insurance providers manage financial risks. The two intersect when money gets involved, so everybody with a dog in the fight tends to conflate the two missions. That’s why both providers and insurers tend to locate where there is plenty of wealth to go around, avoiding places where the pickings are small — rural, inner city, or regions where poverty is widespread — ironically the very places most in need of both medical care and insurance.

    As long as health care is treated as a market commodity instead of a right, I have little hope that our system will improve. Decades of experience with the working poor have left me at odds with both insurers and providers. But thanks for reading and I hope you understand.

  15. John B, the profit motive isn’t the best, but I’ll bet that at the end of the workweek you demanded your check.

    In essence Medicare does control the prices charged, but it doesn’t control over all costs that continuously rise.

    HMO’s and PPO’s are very different with hybrids in the middle. The ACO is just a bigger and more powerful HMO with all the lousy incentives attached.

  16. “Not in states that did not establish state exchanges. The Act plainly and repeatedly allows subsidies only in state established exchanges. To argue elsewise is to embrace lawlessness. But then again…”

    Here is a link explaining the gap in coverage that occurs in states that did not expand Medicaid,

    The only way there can be a “gap” is that some who purchase insurance via an exchange (which ALL STATES DO HAVE, even those that have not expanded Medicaid) is that the amount of the subsidy (which IS AVAILABLE, even in states that did not expand Medicaid — study Figure #3) which IS available, creates a shortfall. The amount of that subsidy is insufficient to cover that GAP.


  17. “As usual, misinformation is easier to understand than the facts.
    Facts often require more thinking and inquiry.”

    Mr. John Ballard, please consider learning something beyond stage one thinking.

    “Tax subsidies are available for a defined income group beginning with 138% of FPL (federal poverty level).”

    Not in states that did not establish state exchanges. The Act plainly and repeatedly allows subsidies only in state established exchanges. To argue elsewise is to embrace lawlessness. But then again…
    “As usual, misinformation is easier to understand than the facts.
    Facts often require more thinking and inquiry.”

  18. The further down in the actuarial value of a plan– now they are considering a copper plan with an AV of 50%–the less sense it makes to control the precise benefits of a plan. Eg how can the government tell an exchange customer that his plan must cover X and Y when that customer is paying out of pocket for 50% of the covered services. Extrapolate further to a hypothetical lead plan with an AV of 40%. I guess this would be tantamount to self insurance as the buyer would be paying for 60 % of services himself OOP. In this situation one can see how ridiculous it becomes to tell the customer what services his 60% of the dough can pay for.

    My point is that we should allow the insurers to sell whatever they want in the exchanges and continue to subsidize by means testing AND medical need. This would induce much more competition between the plans. The insurers now have very little to compete with and for–as virtually all the plans are the same. If we can induce some more competition– and get the surreal prices down– we might get the folks a little more excited about buying into the program. Part D Medicare was able to get quite a bit of pharma competition going.

    By whatever they want to sell I mean selling plans with widely different benefits
    and AVs and even allowing underwriting. But they would continue to have to sell a plan to anyone who asks. After all, buyers would be subsidized according to medical need as well as income so there should be no more hardship this way.

    High fictional prices have become the evil monster in our system. We must get these under control. Only competition or monopsony can control them and our government will not use monopsony fo reasons beyond this discussion.

  19. Oh, how well I know. The profit motive has impacted the Hippocratic Oath more than the discovery of germs.

    Medicare was forbidden to control prices for the same reason that AMA initially hated the notion of Blue Cross — doctors were scared that somebody would enact “price controls” as they had during wartime. The separation of “hospital” and “medical” expenses (a nutty distinction if ever there was one) was the difference between the original Blue Cross and Blue Shield insurances. It is no accident that Medicare somehow enshrines that artificial taxonomy with Parts A and B — a distinction without a difference that we have come to regard as “normal.”

    I’m well aware that MA is just another swipe at the old HMO/PPO configuration. Hopefully the ACO/Frankenstein model will be an improvement, but the jury will be out for a few more years. Coming up on seventy, I’m in the home stretch, but I’m hopeful that my children and theirs will have more medical care security than my parents and I have had. It’s a bitch playing the system we have.


  20. John B: “It’s like looking at a blueprint or electrical schematic — I know it works and thank God someone else is in charge of the details.”

    Electrical schematics are based upon science so if the schematic is properly prepared it should work as expected. That is not true for what government does in the health care sector. The health care sector is not based upon science rather political expediency. That is why the Medicare program cannot control costs or rid the system of marginal care which probably wastes at least a third of the costs.

    If the MA is HMO based then it makes its profit from the extra money Medicare provides, the narrow panels and restricted medical options and any extra premium they might charge. The narrow panels are important for one of the best studies on the subject done by Ware et. al. stated that the poor, sick and elderly did better in FFS than HMO. (When HMO’s were at their height you might have observed all the suits they were losing due to lack of quality.)

  21. I never doubted it! “The capitalists will sell us the rope with which will hang them.” I was in the peanut gallery when Wal-Mart, which was attacked by unions and defended by free-market think tanks, defunded the latter in favor of the former’s allies.

  22. LOL. It’s OK.

    After my friend Michael Grimm won “America’s Got Talent” all of a sudden shots I’d taken of him at gigs in Vegas and posted on my blogs and Facebook started showing up “autographed” on eBay for sale for about $100 each. Completely phony, of course, no byline.


    My friends were aghast that I didn’t go off on copyright jihad against these fraudsters. ‘Like, whatever, dudes, I got better things to do with my time…”

  23. Bobby–I had no idea where that came from and actually was pretty grumpy that it was put up by a THCB editor, as Health 2.0 linked to this piece on our newsletter and the putting up of the photo somehow broke the link. Plus I still don’t look like Brad Pitt. But thanks anyway, royalty check is surely in the mail…

  24. To be precise and clarify ANY possibly misconception, THCB’s sponsorship model is somewhat like that of NPR or the New York Times’. Wellpoint is a general underwriter, and in their particular case is also covering some expenses for coverage of a couple of conferences connected to medical residency programs (I don’t know why but they are interested!). They have zero control over what I or anyone else writes or prints and I’ve been plenty critical of them (and many others) just as the NY Times op-Ed piece often is critical of views of those who advertise on its pages.

    Of course Noam Chomsksy and John Graham may agree together and disagree with me on this particular point, and I will delight in calling John a “Chomskyite” from now on

  25. Thanks. I think I get the gist of it without trying to do actuarial crib study. It’s like looking at a blueprint or electrical schematic — I know it works and thank God someone else is in charge of the details. (I feel the same way about computer programming and plumbing.)

    This year I took the leap to MA because the local alternative is a strong alliance of two outstanding systems. If I ever decide to return to original Medicare (read “private costs keep going out the roof”) I’m concerned about the return price for supplemental plans.

    If you never leave Medicare supplemental plans are standard, but getting in later can cost more if you become an expensive patient — at least that’s the way it was before ACA. I don’t know if those “pre-existing conditions” apply to Medicare supplemental plans. That, in short, is the basis of my curiosity.

    I know there must be a formula determining how much CMS plays MA providers for kidnapping Medicare beneficiaries, but like the details of waterboarding, that seems to be a carefully guarded secret. It must be pretty good since so many companies are getting into the game. Something like a third of all Medicare beneficiaries have made the change, very likely for the same reason I have — zero premium! That’s a helluva draw, but the money has to be coming from some place.

    This looks like low-hanging fruit for some enterprising young muckraking journalist. (Yo, Maggie, you getting this?)

  26. John, check out a writer named John Graham who describes the reinsurance and risk adjustment programs in a series of posts on the John Goodman Policy Blog.

    Every European country that uses multiple insurers to provide universal coverage makes use of reinsurance. Heck, Medicare Advantage in the USA (a Republican program if ever there was one) uses risk adjustment.

    The basic reason is that if health insurers are not allowed to underwrite, which most of us find a good thing, then individual companies can get swamped by claims and will leave the market — sometimes in droves.

  27. This is probably what I was thinking about. It applies to group insurance plans, not individual plans.


    This is from a helpful pdf from United Health Care:

    The Reinsurance Fee generally applies to major medical coverage, including grandfathered plans.
    The following types of coverage are specifically excluded from the fee:
    * Accident-only coverage
    * Children’s Health Insurance Program (CHIP)
    * Employee Assistance Programs (EAP) or wellness programs that do not provide major medical benefits
    * Expatriate-only plans
    * Flexible Savings Accounts within the meaning of Section 125 of the Code
    * Health Reimbursement Arrangements that are integrated with major medical coverage
    * Health Savings Accounts
    * Indemnity reinsurance policy
    * Medicaid
    * Medicare
    * Medicare Advantage plans
    * Medicare supplement coverage that meets the requirements of Section 1882(g)(1)
    * Part D prescription drug benefits
    * Prescription drug benefit plans
    * Retiree-only plans that pay secondary to Medicare
    * Stop loss
    * Plans covering tribal members and dependents (not employment-based plans)
    * Specified diseases or hospital indemnity coverage
    * Stand-alone vision and dental (as long as they are excepted benefits under HIPAA)

  28. @Bob Hertz, I read somewhere about some kind of three-year safety net for the insurance industry to make the transition without getting whiplash. The term “reinsurance” was mentioned — which I took to mean something like a hedge for insurance, or insurance for high risks shifted from on company to another,
    Does any of that make any sense? Do you (or anyone) know anything about any of that? I’m just an old layman who has been trying to keep up (and not go crazy reading a welter of stupid comments).

  29. Every state has an exchange.
    States that opted not to create an exchange have a federally-organized exchange in accordance with the law.
    Tax subsidies are available for a defined income group beginning with 138% of FPL (federal poverty level).
    The Medicaid expansion was to cover everybody, but those states that opted not to expand Medicare created an uncovered class — earning too much to qualify for Medicaid but not earning enough to merit a subsidy.


    As usual, misinformation is easier to understand than the facts.
    Facts often require more thinking and inquiry.

    Another widespread bit of misinformation has to do with the way “full-time” employees are counted. It is NOT the number of actual full-time employees, but the number of hours on the payroll divided by 40. Any company blaming ACA for reducing employees to 30 hours a week is misleading their employees. (My guess is that some companies are also fooling themselves, so it may be a simple error, not intentional)

    Three employees at 30 hours each = 90 hours, which is counted as “2 full-time” employees. It’s called FTE (Full-time Equivalent) in the industry and it a commonplace metric for planning schedules.

  30. Just to be somewhat contrary , why did insurers have to be included in the ACA?

    Say that we expanded Medicaid to 140% of poverty, and gradually dropped the eligibitly age of Medicare by 2-3 years per annum.

    Persons who were denied coverage for health reasons could have joined a federal high risk pool.

    I fully grant that this would not have been perfect. Those who believe that health insurance should make us healthier (by covering preventive care)
    would not have liked my plan.

    Still, private insurers would have minor roles and need not have been placated, then manipulated, then subsidized, and then rescued as has been the case with the ACA.

  31. “Still and all, it would have been legally possible to expand the ACA subsidies to more poor people after the Roberts decision.”

    Not in states that did not establish exchanges, where legally, there are no subsidies.

  32. Yes, it does stick in my craw because the MLR has nothing to do with paying for high-quality health care. But not as much as the fact that ACA will increase, not decrease, costs.

  33. Gimme some of that Koolade, Mr. Graham. Silly me, I thought the idea of reform was curbing out of control rate of healthcare costs when it’s really about the profitability of insurance companies. That MLR feature must really stick in your craw.

  34. You know by now Matthew that I’m a single-pay supporter.

    I’d hate to think what my fire department would charge if it were private with investors – and mandated by the AFRA, “Affordable Fire Rescue Act”.

  35. I love the fact that THCB is sponsored by WellPoint, as Mr. Holt wrings his hands about the political reality that the insurers had to be in the ACA tent.

  36. None of the problems with private health insurance you illustrate in your case will get better. They will get worse, post-ACA, because insurers have more incentives to hassle the expensively sick.

  37. But the fire department does not insure our house and belongings. That’s what private insurance does. Even I don’t ignore the need for a public-health department.

  38. I think Mr. Holt must be using Paul Krugman as his source. He is blissfully unaware of the research comparing pre-ACA and post-ACA premiums, especially when deductibles are considered. Nor of the fact that the exchange plans are designed to attract the healthy and repel the sick. And that it cost about $40,000 to $60,000 to enroll each of these people.

  39. One cannot blame the state by state inconsistency of Medicaid on Obama.
    Congress blithely assumed that all states would go along with the expansion.
    The resistance of Southern and Western states (inspired by hatred of taxes, fear of more welfare in general, and dog-whistle racism) was not to be denied.

    Medicaid has always been like that. The state of Arizona did not even join the original Medicaid for 21 years.

    Still and all, it would have been legally possible to expand the ACA subsidies to more poor people after the Roberts decision. It would have been legally possible to expand subsidies to people making over $42,000 as an individual or $62,000 as a couple — another group that has been hurt by the new law.

    However, the Congress that we have had since 2010 (especially the House) would never have passed such corrective legislation. Horror of horrors, that might have saved the law!

    Note to William Palmer MD:

    There should be public anger on the part of those who were abandoned by the stingy states on Medicaid. Sadly, this is not an organized group who make up anyone’s voting bloc. It is not a group that writes angry letters or eloquent articles on blogs…..this group is too beaten down by daily life and trying to survive.

    There is a long list of politicians who have been elected with large majorities even though their states have high percentages uninsured.
    That is of course because their actual voters are very well insured, thank you, from Medicare and corporations.

    Bob Hertz, The Health Care Crusade

  40. Right. I think we’re both on the same side of the argument. I’m an ACA supporter, legislative sausage that it is, and dismayed to be living in a state that opted not to expand Medicaid. Whatever is gonna happen I will be able to watch up close and personal. If you could see the TV ads that are running you would think we’re still in 2011! Sam Nunn’s daughter Michelle is running for Saxby Chambliss’ seat in the Senate and the attack ads are crafted to link her to the hated Barack Obama and “Obamacare.” The politics here are down and dirty, but I’m keeping my fingers crossed for her success.

  41. @Ballard
    As I understand it most Medicaid programs of yore were primarily for single poor women with children and nursing homes. If you reside in such a state and you hide your income, you will still be uncovered. Yet, your friend, who makes a little over the poverty limit, will be happily covered with high subsidies. Not good. Happily insured vs dogmeat uninsured.

  42. Perhaps. But if I were among those falling through the cracks I would be resourceful enough to either let my income drop to the Medicaid level or find ways to keep it hidden under the table. Either way, those states have deliberately opted for a work disincentive. (And complain when so many people, uninsured of course, use the ED for non-emergency care.)

  43. There will be political hell to pay when poor folks in states where Medicaid was not expanded –and who accordingly cannot get coverage–are chatting with their slightly richer peers who have found subsidized coverage in their community exchange–because they are making 138% of the FPL. They will feel like Alice in Wonderland, but with anger.

  44. “We are all in this for the long run, we may just need to more anesthesia.”

    We should just legalize marijuana and spend the next decade in a haze.

  45. MH, you are not mandated to pay for fire insurance and no one is mandated to pay for your home being rebuilt after it burns down.

    Mr Obama has had his shares of cost, in those two countries, Libya and elsewhere along with his and his families travel costs whichever is more expensive but the costs you are concerned about are known as defense. Obama and Mr. Bush might have both spent money recklessly but defense of the nation is their primary job.

    If you buy insurance on the free market you choose what you want. If they don’t offer you the exact policy you wish, tough luck and buy the best one for yourself. If not get a policy from Lloyds of London. That is your business and no one else’s.

  46. But gentlemen, we’ve “saved” private health insurance companies!

    I’d thought I’d been in techno hell when enrolling in the ACA until I spent 2 hours today helping a friend untangle her current medical bills, EOBs, and reconciling her detailed bills from two hospital stays from last Oct/Nov. Handling the denied CT professional charges, alone took 20 minutes of navigating health care billing technology, online and on the phone, to simply connect with a real live human being who understood almost immediately what the error was. Now lets see if it does indeed get corrected.

    So status quo can’t remain our option. I think of this next decade as the last stage of labor when you scream about what you intend to do if this is ever over. The new baby is worth it.

    Then comes the terrible toddler years. We are all in this for the long run, we may just need to more anesthesia. We just shouldn’t have promised more than could practically be delivered. I still want an apology for misinformation purposely stated by people who ought to have known better and performed better. They should have honestly stated this is going to be really painful but it will be worth it. Not tell me it’s all in my mind. Americans a big boys and girls they get it and they can handler honesty.

  47. Years ago I had a homeowner’s policy with an interesting feature (now gone — this was in the Seventies) called a “disappearing deducible.” The deductible was five thousand dollars, but individual claims paid 105% of the amount. This meant that a relatively “small” loss of, say, six thousand dollars would yield $1050.00, not $1,000.00. If the house got destroyed by some catastrophe, however, the deductible vanished at $100,000.00 — a welcome savings when the policy-holder would be hit with additional uncovered expenses as well.

    Too bad medical insurance can’t offer such an arrangement. Why? Because the amount of medical bills is based more on what the market will bear than the assessment of actual costs. Charges are based on “Throw a bunch of shit on the wall and see what sticks.”

  48. “I have never had a major fire at my house. So why am I paying for fire service?”

    Matthew, you’re not paying $600 per month for fire insurance with a $6000 deductible – if you were would you question the need against the return? Would you want something done to make it affordable?

  49. Likely, it will be these doctors that give us the most accurate figures on “enrollees” that don’t pay since it will be those doctors that will be providing and funding at least 2/3 of these non-paying enrollees’ health care due to the 90 day grace period. Carrier is on the hook for first 30 days, but provider is on the hook for next 60 days (at a minimum). And, limiting that liability to 60 days relies on the providers getting timely information from the carriers about who hasn’t paid from reports from a system of tracking payments that has been built yet. What are the chances obama will decide unilaterally to delay the requirement that the nonpayment details of the millions of imaginary enrollees be sent to the providers that are on the hook for the costs of care? I apologize if I offend any provider that got into the profession to take on this liability at the direction of an unlawful and dishonest administration.

  50. ” My favorite is that in the letter I got from my insurance company they said my rates would double, but didn’t give me any idea of what new benefits I’d get for the added costs.”

    Why you’re getting “free” PAP tests, colonoscopy, birth control pills, mammography, vaccines, etc. There’s also added costs because you can’t be denied for pre-existing conditions, or have caps on your insurance.
    Laudable additions to insurance, but the costs have to come from somewhere. Maybe the writers of the ACA figured by the time everyone signed up, the costs should be evened out. Otherwise how could anyone have more affordable premiums?

    ” Sooner or later the conversation must shift from insurance rates to the real issue which is the costs of medical care in America.”
    Oh, but the ACOs are supposed to take care of that, right?

  51. I agree with everyone & John Lynn especially.

    I have never had a major fire at my house. So why am I paying for fire service? Likewise I have never needed emergency heart surgery, so why does my health insurance cover it and why do trauma centers. So really we should charge people who have had fires or may have fires much more. And same with people who need emergency heart surgery.

    I also want my money back for all my contributions to the invasions of Iraq & Afghanistan. I voted against them and didn’t want to get involved. Where’s my rebate check for that Mr Bush?

  52. Your negative feelings are pretty widespread. And since the majority of Americans were already insured, those feelings reflect that majority. My guess is that many of those previously uninsured feel the same way, never having faced the harsh reality of healthcare costs. Sooner or later the conversation must shift from insurance rates to the real issue which is the costs of medical care in America.

    Insurance rules and rates are nothing more than mechanisms for spreading but not lowering those costs. Those that have been booted out or overcharged for being too sick (read “expensive”) or having a “pre-existing condition” (read female) are gonna make shared costs go up, up, up. It’s gonna get worse before it gets better.

  53. From an entirely selfish point of view. I see no value in the ACA, it only increases my healthcare costs. Expanding my perspective to my circle of acquaintances, I have heard no one speak positively of it. Looking at the physicians I encounter, the same: nothing positive tone heard. Looking at it from a policy objective: seems a failure.

  54. “plans tightened networks and rates were in general lower than they had been before.”
    I think my insurance close to doubled. I’m not sure where you’re getting the info that the rates were generally lower. My favorite is that in the letter I got from my insurance company they said my rates would double, but didn’t give me any idea of what new benefits I’d get for the added costs.

    I’m also not sure if the 7 million is a meaningful number or not. First, is that number right? Second, should that number have been 14 million to make the program work or did we just get the 7 million that are the most expensive?

    I’ll hold out my final judgement on the impact of ACA, but for me in the short term it sucks.

  55. Interesting, indeed.

    The recent proliferation of “signing statements” raises other constitutional issues with much the same weight. Often they are de facto admissions that parts of some legislation are not gonna get much executive attention — an alternative to the line item veto which was struck down as unconstitutional.

    ACA is famously the most unwieldy piece of legislation in recent years (with a timeline running to 2018, incidentally) and it’s not realistic that it be a perfect road-map. I think of those delays as taps on the brakes of a truck moving a house.

    They are less unsettling if you pretend they are signing statements in progress instead of a constitutional crisis.

  56. The number 7 million was released as a bit of puffery.
    1)Did they release the number that didn’t pay which is an indicator of how many will not be insured?
    What is this “give or take a million” There is no give side to the equation. The 7 million is a maximum to date.
    2)Did they release the number (probably 2/3) that previously had insurance (in many cases better) so that the number of uninsured changes very little?
    3)Yes, it is easy to place people on Medicaid that is free even if they had real insurance before that they lost.
    4)Are they insuring the young that they admitted was critical to the program? To date no. How do we know? They only release numbers for puffery sake and then use statements like “give or take a million” so that one might wrongfully assume that there is more on the ‘giving’ side when there is no ‘giving side’.

    “plans tightened networks and rates were in general lower than they had been before.”

    Most rates are higher and tightening the network probably leaves out the most experienced cancer centers and many other renowned centers of care to save money while creating deductibles that are unaffordable to the middle class.

    “the exchange web site(s) now more or less work(s)–” I like your sense of humor. I guess one’s life can be saved “more or less” as well. “the restoration of peace & democracy in Iraq. The ACA’s doing way better than that!” The ACA is doing better than what the author believes is a failure. In other words the ACA still exists on paper though it really hasn’t been enacted with all the changes made to the mandates and other items. Thanks for the laugh.

    I applaud your fine efforts in trying to promote the ACA, a dismal failure, in a good light. Very few people have the ability to do so.

  57. I agree, Matthew. Rough as it was, the administration did the best it could and the results were not all that bad. The jury is still out, and will be for a few years, but something is better than nothing — and nothing is what would have happened without ACA.

    With single-payer never having a seat at the table many of us were pessimistic from the start. When the public option was eliminated that was the dying breath of any meaningful move in that direction.

    But a few non-profit co-ops are up and running, something I didn’t know much about until yesterday. They have potential to bring about constructive changes in how the system works.

    I’m watching locally the coalescing of big systems into more “in-house” provision of care, keeping my fingers crossed even as names like “Mayo” get mentioned in the Atlanta market. And this year I took a leap to a local MA system, hoping that if I ever need to return to original Medicare the price of a supplemental policy will not be UNaffordable if the *Affordable* Care Act gets eviscerated.

    I’m amused watching the transformation of politics. Calls to kill the ACA horse have been replaced by riding similar horses into the race.

  58. … In reality, most of these plans are the worst of all worlds – an amalgam of an old HMO with a High Deductible Plan. There’s little anyone can do about this situation right now, unfortunately. If you do run into a problem, please don’t take it out on the doctor. Most of the doctors I know have been pleading with the states to do something as the end of enrollment approached. During the Second World War, the motto in Britain was “Keep Calm And Carry On.” Both doctors and patients will need to do that. However, that doesn’t mean you shouldn’t complain. You should. For sure, it really is the squeaky wheel that gets the grease.

    One last suggestion – other resources you should consider are your County and State Medical Societies. They have dedicate staff who are well-acquainted with the situation and are well-positioned to get you advice and also, to pursue your issues as they meld with their doctors’ issues.

    “Fasten your seatbelts, it’s going to be a bumpy night.” Bette Davis