You know we have entered the silly season when a major national debate gets underway over whether people should be given something for free that they could easily pay for out-of-pocket. Take the decision of the Obama administration to force Catholic universities, hospitals and charities to provide health insurance that includes free contraceptives. The reaction was poignant and hyperbolic, but (what can I say?) completely deserved:
What makes this so amazing is that it is déjà vu all over again, as Yogi Berra might say. Do you remember the death knell for HillaryCare? I bet you can’t.
Mammograms and Pap smears. Hard to believe, isn’t it?
[Yes, I know. There were many things that helped derail HillaryCare. The biggest mistake was the White House’s failure to throw everything aside and endorse the Senate Republican health plan, which was about as close to HillaryCare as RomneyCare is to ObamaCare. Hillary would have ended up with about 90% of everything she wanted. More about that, perhaps, in a future Alert.]
One of the provisions in the Patient Protection and Affordable Care Act (a.k.a ACA, a.k.a. Health Reform, a.k.a. Obamacare) is that it limits the profits of health insurance companies. The ACA imposes a minimum medical loss ratio (MLR) on all insurers. The MLR is the amount of money spent on covered person medical care divided by the total revenue received through premiums. There is some debate of what constitutes ‘medical care’ (e.g., do investments in electronic health records count as medical care?), but insurer profits certainly are non-medical.
The ACA requires health insurers in the individual and small group market to spend 80 percent of their premiums (after subtracting taxes and regulatory fees) on medical costs. The corresponding figure for large groups is 85 percent. According to a recent Kaiser tracking poll, 60 percent of the public views the MLR concept favorably, although only 38 percent was aware that the provision is in the ACA. Insurance brokers may be getting squeezed for insurers to meet this amount.
Even though the MLR is a national law, it may not apply in your state. Continue reading…
It’s too bad former Massachusetts Gov. Mitt Romney doesn’t want to talk about his state’s health care reform legislation on the campaign trail. If he did, he’d have a pretty good story to tell.
The reform plan, which President Obama used as a model for the national reform, lifted the number of insured residents in the Bay State from 86.6 percent in 2006 to 94.2 percent in 2010, according to a new study published yesterday by Health Affairs.
An expansion of public programs didn’t account for the gains. The number of people with employer-based coverage rose to 68 percent of the adult population in 2010 from 64.4 percent four years earlier. This is exactly the opposite of what many business groups are claiming will happen after the national reform goes into effect in 2014.
Moreover, out-of-pocket expenses declined for the average beneficiary. The number of people reporting they paid 10 percent of their family income on health care fell from 9.8 percent to 6.1 percent over the four years. Again, early fears that the Massachusetts reform would lead to a major shift in costs to consumers have not panned out.
Last week’s State of the Union speech was notable because the President hardly mentioned the new health care reform law.
Avoiding what is supposed to be the centerpiece domestic accomplishment of President Obama’s first term stuck out like a sore thumb.
He said almost nothing because the Obama team simply doesn’t know what to say.
The fact is the Affordable Care Act (ACA) is generally unpopular, and its best-known provision, the individual mandate, is wildly unpopular.
Two years after passage and, the implementation of the law’s first steps all designed to build support, the public’s opinion of the law is unchanged and not good. The just out January 2012 Kaiser Health Tracking Poll leaves no doubt:
- Only 37% of those surveyed have a favorable view of the law.
- 44% have an unfavorable view of the Affordable Care Act.
- But even some of those who don’t like it don’t like it because it didn’t go far enough—31% of all of those surveyed want to expand the current law while 19% want to keep it in its current form. That’s a total of 50% that want to keep or expand it.
- 22% want it repealed outright and another 18% want it replaced with a Republican alternative—a total of 40%, fewer than want to expand it or keep it as it is.
- On the individual mandate, 67% have an unfavorable view of requiring everyone to buy coverage, while 30% have a favorable view of the requirement.
- While a total of 50% of those surveyed think the law should be kept or expanded, 54% say the Supreme Court should throw the mandate out, while only 17% say they think the mandate should be upheld.
So, let’s summarize. Only 37% have a favorable view of the law and 67% don’t like the mandate. But 50% think the law should be kept as it is or even expanded. No wonder Obama and his political team can’t figure out how to play this.Continue reading…
2013 may be the most significant year in health care policy ever.
But we have to get through 2012 first.
Once the 2012 election results are in there will be the very real opportunity to address a long list of health care issues.
If Republicans win, the top of the list will include “repealing and replacing” the Affordable Care Act. If Obama is reelected, but Republicans capture both houses of Congress, we can still expect a serious effort to change the law. Then there is the granddaddy of all problems, the federal debt. The 2012 elections could well prepare the way for entitlement reform—particularly for Medicare and Medicaid. Even if Obama is reelected, the 2013 agenda will include a serious debate about Republican ideas to change Medicare into a premium support system and block grant Medicaid to the states.
If the election is a draw with neither side able to unilaterally move their agenda—likely in the form of Obama still in the White House but facing a Republican Congress, the pressure to deal with the growing costs of Medicare and Medicaid as well as nagging concerns about the implementation of the Affordable Care Act will create an imperative for action in 2013.
I want to apologize to President Obama. But first, some background.
I found out three weeks ago I have cancer. I’m 49 years old, have been married for almost 20 years and have two kids. My husband has his own small computer business, and I run a small nonprofit in the San Fernando Valley. I am also an artist. Money is tight, and we don’t spend it frivolously. We’re just ordinary, middle-class people, making an honest living, raising great kids and participating in our community, the kids’ schools and church.
We’re good people, and we work hard. But we haven’t been able to afford health insurance for more than two years. And now I have third-stage breast cancer and am facing months of expensive treatment.
To understand how such a thing could happen to a family like ours, I need to take you back nine years to when my husband got laid off from the entertainment company where he’d worked for 10 years. Until then, we had been insured through his work, with a first-rate plan. After he got laid off, we got to keep that health insurance for 18 months through COBRA, by paying $1,300 a month, which was a huge burden on an unemployed father and his family.
By the time the COBRA ran out, my husband had decided to go into business for himself, so we had to purchase our own insurance. That was fine for a while. Every year his business grew. But insurance premiums were steadily rising too. More than once, we switched carriers for a lower rate, only to have them raise rates significantly after a few months.
Issues that affect our lives don’t happen in a vacuum. Everything affects everything else, and there’s no area where that’s truer than health and access to care. So I’m going to take a slight detour from the financial and economic issues I write about most of the time to say a bit about the Affordable Care Act, which marks a historic expansion of access to health care.
Thanks to the law, an estimated 32 million previously uninsured Americans will be able to purchase health insurance in 2014. But right now there are real questions about whether this historic expansion of coverage will reach those Americans who need it most.
My colleagues on The Greenlining Institute‘s health team have been looking into this, and just published their findings in the form of a new report. They focused on the new Health Benefit Exchanges, which will allow consumers to compare the price, quality, and benefits of competing health insurance plans. Maybe most important, Americans will be able to purchase coverage through their state’s Exchange with federal subsidies that will help low and middle-income families cover the cost.
The bottom line is that getting the word out about these new options may be more complicated than it seems, and state Exchanges should get communities involved in the process sooner rather than later.
Current plans call for Web portals to serve as the main route through which consumers will access the Exchanges, but these websites won’t be able to do the job by themselves. States will need to pursue a variety of outreach and enrollment strategies, strategies that must be based on the populations they must reach.
In August, I wrote about how hospital monopolies are the biggest driver of health costs that nobody talks about. These powerful hospital chains know that insurers have no choice but to accept their jacked-up rates, and the cost of health insurance goes up whenever it suits their needs. Now, according to remarks by Federal Trade Commissioner J. Thomas Rosch, it turns out that accountable care organizations—one of Obamacare’s most touted policy gizmos—could make this problem far worse. “The net result” of ACOs, says Rosch, “may therefore be higher costs and lower quality health care—precisely the opposite of its goal.”
Rosch spoke last Thursday before the American Bar Association’s Antitrust Fall Forum, where he lambasted the “unintended consequences” of Obamacare’s headlong rush into the buzzword-filled land of accountable care organizations. ACOs, you will recall, are meant to improve the degree to which various physicians treating the same patient cooperate with one another. In theory, this would lead to better, more integrated care and reduced waste. In reality, ACOs will also stimulate mergers between hospitals and physician groups, worsening the problem of provider consolidation.
ACO’s purported savings shift costs to private insurers
The Congressional Budget Office, much to the dismay of Obamacare’s advocates, didn’t put much stock in ACOs, projecting that the law’s new Medicare ACO initiative would save $5.3 billion over ten years: eight-hundredths of one percent of Medicare’s projected spending over that period. “In other words,” Rosch points out, “the savings to Medicare from the ACO program are no more than a rounding error. Yet even the CBO’s modest cost savings projections are likely overstated.”
A “government takeover of health care” is back. At least it is in the mind of New Jersey governor Chris Christie. In an interview with talk radio show host Dom Giordano, the governor, who supports Mitt Romney’s presidential campaign, dished out strong clues about how Republicans are going to fight the health reform law. The weapon of choice: Frank Luntz’s focus-group tested messages. On the show Christie showed he was in sync with Romney’s defense of the Massachusetts reform law, which Romney’s administration supported and which later became the model for national reform. But to distance himself from the federal law, Romney has said what was good for Massachusetts at the time may not be good for the rest of the country. And Christie has said that what happened in the Bay State “would not be good for New Jersey.”
On the show, Christie urged the president to tell the truth about the reform law. What truth would Christie tell?
I’d say to the president, in Massachusetts, we didn’t propose to raise taxes, as you proposed to raise taxes a trillion dollars to pay for a government takeover of health care…. Ninety-three percent of the people in Massachusetts had private insurance then and have private insurance now. That’s not what’s gonna happen under Obamacare. It’s gonna be a government takeover of health care.
Really, Governor? As Campaign Desk has repeatedly noted, the health reform law does not call for a government takeover of health care. The law simply brings private insurance to people who are uninsured. You know, the kind sold by those giants of the American insurance business—UnitedHealth Group, Blue Cross, Cigna, and Humana—which just posted a large profit gained mostly from selling private Medicare Advantage plans to seniors.
The Administration’s decision to pull the plug on long-term health insurance in the new healthcare law (so-called Community Living Assistance Services and Support or, as it was known by healthcare insiders, CLASS) offers an important lesson.
As written, the law had three incompatible parts.
First, it required beneficiaries to receive at least $50 a day if they had a long-term illness or disability (to pay a caregiver or provide other forms of maintenance). That $50 was an absolute minimum. No flexibility on the downside.
Second, insurance premiums had to fully cover these costs. In budget-speak, the program was to be self-financing. Given the minimum benefit, that meant fairly hefty premiums.
Third, unlike the rest of the healthcare law, enrollment was to be voluntary. But given the fairly hefty premiums, the only people likely to sign up would know they’d need the benefit because they had or were prone to certain long-term illnesses or disabilities. Healthier people probably wouldn’t enroll.
Yet if the healthier didn’t enroll, the program would have to be financed entirely by the relatively unhealthy — which meant premiums would have to be even higher. So high, in fact, that even the relatively unhealthy wouldn’t be able to afford it.
End of story. End of program.