In a development that Washington insiders had been quietly predicting for months, Kathleen Sebelius announced Thursday that she is resigning as HHS Secretary. Critics were quick to point to the disastrous launch of Healthcare.gov and the glitch-filled rollout of the administration’s signature health law.
President Obama is expected to nominate OMB Director Sylvia Mathews Burwell to replace Sebelius Friday morning. The Washington Post notes that Mathews-Burwell is well regarded for her “strong management skills” and cites her experience in global health after ten years with the Bill and Melinda Gates Foundation.
Politico reports that while publicly praising Sebelius for having overseen a late surge in enrollments that brought signups up to the 7.5 million mark by the time she announced her departure today, many Democrats are said to be privately “furious” about how badly the Obamacare rollout went and are worried that debacle could cost them control of the Senate in November.
If you’re curious about Burwell’s resume – after all – we’re talking about the woman who will (probably) be the official face of Obamacare until at least 2017 – WonkBlog did some digging back at the time of the hearings for the OMB job.
The Obama administration blew the doors off Obamacare’s enrollment expectations this week and scored big political points.
But in doing so, they may have set Obamacare’s expectations going forward at a level that can only undermine their credibility and that of the new health law.
What happens when the real number––the number of people who actually completed their enrollment––comes in far below the seven million?
What happens when the hard data shows that most of these seven million were people who had coverage before?
What happens when it becomes clear that the Obamacare insurance exchanges are making hardly a dent in the number of those uninsured?
Yesterday, the Los Angeles Times reported that the non-profit Rand Corporation estimated that two-thirds of the first six million people to enroll in Obamacare were previously insured––only two million were previously uninsured.
If all of the one million people who signed up in the last week were previously uninsured, that would mean that only three million previously uninsured people have purchased coverage in the government-run exchanges.
Rand also estimated that about nine million people have enrolled directly with the insurance companies, bypassing the government-run exchanges. But Rand also reported that the vast majority of those were previously insured.
If 20% do not pay, as has been the case since Obamacare launched, then the real Obamacare exchange enrollment number is about 5.7 million.
To properly price the exchange health insurance business going forward the carriers have to sharply increase the rates.
A senior executive for Wellpoint, which sells plans in 14 Obamacare exchanges, is quoted in a Reuters article telling Wall Street analysts there will be big rate increases in 2015, “Looking at the rate increases on a year-over-year basis on our exchanges, and it will vary by carrier, but all of them will probably be double digits.”
If the health plans do issue double digit rate increases for 2015, Obamacare is finished.
There are a ton of things that need to be fixed in Obamacare. But, I will suggest there is one thing that could save it.
The health insurance companies have to submit their new health insurance plans and rates between May 27 and June 27 for the 2015 Obamacare open-enrollment period beginning on November 15th. Any major modifications to the current Obamacare regulations need to be issued in the next month to give the carriers time to adjust and develop new products.
If the administration goes into the next open enrollment with the same unattractive plan offerings costing a lot more than they do today, they will not be able to reboot Obamacare.
But dramatically increasing the rates will only assure even fewer healthy people will sign up for 2015 and some of those who signed up for 2014 will back out over the higher rates. This is what a “death spiral” looks like.
Late last week, House Republican leaders declared their intention to bring H.R. 4015, the bipartisan, bicameral SGR repeal measure, to the floor for a vote.
Good news, you’d think, for doctors and the broader healthcare system, that we might finally be rid of the SGR’s broken machinations and perverse cycle of congressional intervention.
But House leaders added a footnote: the measure would be paid for by delaying the individual mandate, which CBO opined last week would save money through reduced enrollment in Exchanges and Medicaid. To cover the approximate $150 billion cost of the SGR measure, the mandate would probably need to be delayed by at least 10 years.
While sparing us a rehash of the individual mandate debate here, suffice it to say that the Obama Administration, the authors of the Affordable Care Act, and most healthcare insurers and providers consider it to be a linchpin of the health reform regime.
Without it, most agree, the consumer protections established by the ACA would precipitate spiraling premiums that would quickly destroy the market.
In other words, the House measure is DOA in the Democrat-controlled Senate and White House, which House leaders know all too well. In a move whose political deftness is hard to quibble with, they are coupling two very popular measures into a single package that they know the vast majority of Democrats can’t support.
Good politics? Probably. Good for enactment of SGR repeal? More like the opposite.
But don’t blame House leaders for the demise of SGR repeal. This move is a symptom, not a cause, of its end. As previously reported, the well-intentioned negotiators were having difficulty finding common ground on the so-called extenders package that would be included, and were miles apart on the offsets that would be used to fund it.
That is what we have been told the Obama administration will claim today as they begin the job of reselling Obamacare.
Is Obamacare even partly responsible for the slowdown in health care costs?
That is silly.
First, Obamacare is not a health care reform law; it is a health insurance reform law. No one on either side of the debate has ever argued anything different.
Does the law have some limited cost containment features in it?
Yes. But these are either pilot projects or are years from being fully implemented.
I have heard the argument that the Medicare cuts that were made to help pay for the program are examples of cost containment efforts that are having a short-term impact on controlling costs. The Democrats need to be careful with this one. I recall their countering Republican “Mediscare” claims by saying the Medicare cuts were not significant.
In a letter last year accompanying the Medicare Trustee’s report, the Medicare actuary said, “The [Obamacare Medicare cuts] will affect Medicare price levels more gradually, but a strong likelihood exists that, without very substantial transformational changes in health care practices, payment rates would become inadequate in the long range.”
Translated: The Obama Medicare provider cuts are not having a big impact in the short-run but will be unsustainable over the longer-term.
In recent weeks, President Barack Obama has been appropriately raked over the coals for saying, multiple times, “If you like your health care plan, you’ll be able to keep it.” He shouldn’t have said it. The problem is, he shouldn’t have said it for entirely different reasons than most Americans think.
Let’s begin with a basic question: What does it mean to “like” one’s plan? And what is the value of this statement? All of this came to a head at an October 30 Congressional hearing with the Secretary of the Department of Health and Human Services, Kathleen Sebelius.
At the hearing, in a cantankerous challenge to Sebelius’s credibility, Tennessee Rep. Marsha Blackburn highlighted two constituents, Mark and Lucinda, who “like their plans,” but were being told they could not keep them because of the Patient Protection and Affordable Care Act (ACA), so-called “Obamacare.” A long-entrenched individualist rhetoric provided the framework for Blackburn’s point, namely that we should allow Mark and Lucinda to keep their plans in the name of individual freedom, just because they “like” them.
For purposes of argument, let’s assume that what Mark and Lucinda’s insurers are saying—that the cancellations are a result of the ACA—is true. But, as we do this, let’s also keep in mind that just because insurers claim premium hikes and cancellations are because of the ACA doesn’t mean that it’s true. In fact, it seems to be true only rarely and, even then, often as a half-truth.
But, anyway, let’s assume it is true. The question then becomes: why is it true? The problem is that this individual freedom is made possible by the assurances of a social safety net. This brings us back to the existential foundation of the ACA, namely that the choice to not carry health insurance—or to carry poor health insurance that individuals may find out, at some point, doesn’t cover something important—simply dumps those individuals into social institutions such as emergency rooms and local care centers, and does so in an extremely wasteful way. This returns us to the problem we started with and a question of whether or not ACA opponents are concerned with solving the problem of building a sustainable health care system.
In other words, Blackburn’s logic, as inspirational as it might be to some, bathed as it is in the rhetoric of freedom, is not premised on an analysis or understanding of health insurance, but deference to Mark and Lucinda to make their own choices, consequences be damned.
His emails arrive at night and land like scud missiles. He is an Old Testament retired CEO who is appalled at the state of America and as a thirty year healthcare system veteran and dutiful son, I am expected to interpret the complicated tea leaves of the Affordable Care Act ( ACA) and warn him if Armageddon (any form of change) is imminent. He needs three hours notice to hide his coin collection.
Today, his instant messaging is in large case font; He has forwarded an email that was forwarded to him from a friend of a friend of a friend – all retirees convinced that our current President is an operative for a hostile foreign government. I have to give high scores to his email chain author for his/her detail, veracity and creativity. Many of the stories are purportedly authored by retired Generals, Navy Seals, and in one case, a dead President.
I often scroll down these emails to see if I can find its genesis and author – perhaps it is Karl Rove or someone incarcerated for white-collar crime.
The email offers me “the truth about Benghazi” or a grainy photo of the President giving out nuclear codes to Al Qaeda operatives behind a District of Columbia Stop & Shop. I am not always inclined to believe these missives but I love my Dad and his loyal concern for America. At 83, his draconian solutions are not always politically feasible and carry a decent chance of arrest if one actually tried to act on them. However, he has a 140 IQ and understands economics.
Until now, virtually every president who has dabbled with comprehensive health reform has failed spectacularly, often at huge political cost. Think of Harry Truman’s lonely campaign for national health insurance, Jimmy Carter’s devastating conflict with the late Senator Edward Kennedy over universal health care coverage, the first George Bush’s ineffectual (and little-remembered) health insurance proposal, or Bill Clinton’s damaging first-term effort to pass health reform.
Health reform is a presidential nightmare. No sane presidential consigliere would ever recommend his or her boss try it. Our health care system is so complicated and convoluted that any conceivable proposal is bound to make someone worse off. And in health care, worse off can mean real pain and suffering that creates powerful, emotional stories that echo through the news cycle. There is simply no way for presidential health care reformers to avoid grievous political harm, as the experience of President Barack Obama is now demonstrating in spades.
Which raises the question: why bother? It would have been so easy for President Obama, in the midst of the Great Recession of 2008, to kick the health care can down the road, saying that his all-consuming priority was economic revival, and that health reform could wait.
The answer provides critical context for the relentless stream of troubling news—and the cacophony of charges and counter-charges—about the implementation of the Affordable Care Act (ACA) that fill the media each day. The reason to proceed with this painful technical and political process is that there is no alternative. Before the ACA, the current health care system—and especially its private insurance market—was collapsing before our eyes, like a house tipping into a sinkhole.
Recently, the President of the United States, the most powerful person on earth, the man whose finger rests on the nuclear button, struck a bold blow for . . . procurement reform?
“There are a whole range of things that we’re going to need to do once we get [the Affordable Care Act (ACA) rollout] fixed—to talk about federal procurement when it comes to IT and how that’s organized,” the president said on November 4, speaking to a group of donors and supporters.
People are clamoring for heads to roll, and the president is talking about what just could be the geekiest, most obscure topic ever to clog a federal bureaucrat’s inbox. Procurement reform? Has he gone off the deep end?
Well, not really. Among the causes of healthcare.gov’s difficulties, the federal process for purchasing goods and services could rank right up there with toxic politics, lack of funding for ACA implementation, and management goofs. Let me explain why, from personal experience.
From 2009 to 2011, I served as National Coordinator for Health Information Technology. My job was to implement the HITECH ACT, which aims to create a nationwide, interoperable, private, and secure electronic health information system. As national coordinator I had to lead a lot of federal contracts.
Last week President Obama announced that he will try to keep his oft repeated promise to Americans in the individual market that they can keep their plans if they like them … for a year. The media have done an excellent job explaining why President Obama’s temporary patch to the ACA may endanger its existence; in the process the American public has learned more than it ever wanted to about adverse selection, cream skimming, and most importantly crass politics.
Though the full costs of adverse selection will be muted in the first year by risk corridors and reinsurance, it is clear that the failing website, the bad press, and the recently announced delay are placing maximal stress on even those backup provisions of the bill.
Even if the ACA survives this additional insult against the economics that support its very existence, we have witnessed yet another missed opportunity for positive reform to President Obama’s signature legislative achievement. And this time we can’t just blame intransigent tea-party Republicans and their quixotic efforts at repeal; here the buck stops at 1600 Pennsylvania Ave, NW.
While many of the plans that are affected by the President’s temporary patch might actually be plans that don’t qualify as “insurance” (i.e. they have low lifetime caps on expenditures or don’t cover hospital services), numerous others actually offer quite good coverage that just don’t meet the exceptionally high standards of the newly developed minimum essential health benefit (EHB).
In many ways, the first dollar coverage for preventive care and the wide ranging number of services covered by the ACA aren’t truly insurance either. Instead, these features amount to a very generous pre-payment plan for medical services supported by the United States treasury.
These elements of the EHB are too costly and unnecessary. Perhaps even more concerning, they are just the ante. As time goes on, vested interests for everything not included in the EHB will work tirelessly to insure that their favorite benefits are included. If you want evidence of this eventuality, you need look no further than the remarkably long and growing list of benefits mandated by most states.
Keep in mind that as the EHB grows more generous the premiums and subsidies on the exchanges will also grow. And we know who will pay their “fair share” of those increases.