How Do We Salvage This Wreck?
While all the analysts and pundits in the Capitol City are calculating the political consequences of the ObamaCare bomb, out here in the country we see things differently.
We care less about who is up and who is down for the November, 2014 elections than the fact that our friends and neighbors are getting cancellation notices for the insurance coverage they have. On January 1, 2014 they will be uninsured, and there is nowhere for them to go. There are some 16 million of these people with individual coverage across the country. Rather than reducing the number of uninsured, ObamaCare will add 16 million from the individual market alone and who knows how many more from employers dropping coverage.
These folks have been faithfully paying premiums for years. They have taken responsibility for their own situation. They haven’t gotten handouts and are not looking for any. But ObamaCare suddenly requires insurance contracts to cover a whole bunch of things they have no need for, like pediatric dental services or in vitro fertilization. Plus, the requirements for guaranteed issue and community rating have dramatically raised the cost of coverage. Obama has turned the entire country into New Jersey where similar requirements made even catastrophic coverage cost $1,900 a month for a single male.
Some of these folks are not well and have been getting treatment. In fact, come January all of the state high-risk pools will shut down, too, leaving hundreds of thousands of very sick people without coverage. This is a man-made tragedy of Biblical proportions. Never mind Katrina or Sandy or the Asian tsunamis that killed thousands. Here we are talking of millions of people being deprived of health care, and in many cases dying, simply because some people in Washington were too arrogant to listen.
I simply can’t see any way out of this. There will be calls to open up Medicare or Medicaid on an emergency basis. But those programs can’t suddenly pick up some 20 million or more newly uninsured. They don’t have the administrative capacity to do the job. Physicians and hospitals will provide care to the best of their ability, but they can’t absorb such costs for more than a few days. Maybe the exchanges will finally have the kinks worked out, but they were based on a mere 7 million enrollees in the first year, assuming everything worked perfectly. If participating insurers see a flood of very high-risk people in the first month of enrollment, they will need to dramatically raise their already high premium rates.
At best there will be bipartisan calls for a complete rewrite of the ObamaCare legislation. We need to get ready for this contingency. Let’s consider how that might happen.
First, let’s stipulate that ObamaCare moved in the right direction in some important ways –
- The principle of tax subsidies outside of the employer system is now established. This is actually a very good thing and long overdue. For too long the only tax assistance available has been for those lucky people whose employers provide coverage for them. This was an extremely regressive tax policy and it encouraged over-insurance. Obama’s subsidies could be much improved by allowing them to be used for any insurance arrangement.
- Similarly, the concept of the on-line exchange is a good one, provided it is strictly a marketing function rather than another regulatory body. In any case, the old days of company-paid agent commissions are now gone.
- Also, ObamaCare has established the idea of individual ownership and portability. This is also good, but would be much better if combined with voluntary employer contributions to the cost of coverage through HRAs or Section 125 programs.
- Finally, Obama introduced the idea of capping the tax benefit for employer provided coverage. This, too, was long overdue.
We can build on these concepts. But there has to be far more flexibility in benefit design and some form of simplified underwriting is essential. Carriers need to know who they are enrolling so they can set premiums accurately, and as we’ve seen, people with Pre-X place a very high value on their coverage. They are willing to pay more — within bounds. Rating bands have worked well in the states that use them and all plans should be guaranteed renewable.
People on Medicaid should be brought in as well. They may get a 100% voucher, but there is no reason they should be in a separate program. One of the huge problems with Medicaid is the shifting eligibility as people move up and down across the income threshold. That would also mean breaking out LTC services into a separate program — something else that should have been done a long time ago.
For those people who are unable or unwilling to participate even in a subsidized insurance program, we should create a safety net of clinics and subsidized hospitals paid for with the money that would otherwise be spent on insurance subsidies. Mandatory coverage for everyone will simply not work. There will always be a portion of the population that is incapable of navigating any sort of insurance system. These people should not be punished. They should be treated with care.
Many of the other ideas contained within the Affordable Care Act should at least have sunset provisions. One example is the push for Accountable Care Organizations. There is virtually no evidence that this will work, but if the federal government wants to experiment with it in Medicare, that should be their prerogative. But at the end of five years it should be reviewed and expanded if it is working well, but dropped if it is not.
These ideas should generate widespread support, especially coming out of the wreckage that is occurring under the current law. Implementation should not be difficult or time consuming, especially with the enthusiastic support of state governments.
We may not be able to save the people who are uninsured and in need of care in 2014, but we may finally get health reform right for the future.
Tim Kane, of the Hudson Institute, on his Balance blog (http://balanceofeconomics.com/2013/10/30/bold-promises-promises/) sees the damage as extending beyond healthcare and negatively impacting future reform of government programs. He writes:
“Reform is hard, and reformers have learned that making changes to existing law will often create winners and losers. So the modern approach is to “grandfather” the potential losers. Think of it as the “everyone gets a trophy” approach to fiscal policy.
***
Obama made this kind of no-loser commitment, and it was insincere. It was a sales pitch, not a policy description. And it probably will hurt future reform efforts of all kinds….”
Greg,
This is one of the best things I have seen written so far without excessive bashing or political partisanship.
What I would like to have seen instead of a hastily written and passed extensive law is a triage approach to the critically ill health care situation in this country. The first priority would providing care for the very poor uninsured at a basic level. As time goes on you can start to put together some basic ideas to address broadening health coverage, reducing costs, encouraging quality and value, and most of all ensuring access, because I believe there will be a major shortage of physicians to take care of everyone adequately.
Addtionally, there needs to be some discussion of how to lighten the paperwork burden on physicians going forward. The more you have governmental involvement, the more complex and irrelevant paperwork becomes to the essential care of the patient. In essence, the paperwork becomes the patient.
Greg, your suggested remedies are sound as always, but one sentence may have contained an exaggeration.
The many thousands of people who are getting cancellation notices on ‘non-compliant’ individual policies will generally NOT be uninsured on Jan. 1.
This may vary somewhat state by state, but in most circumstances they will be put into a more expensive new plan at the same carrier on Jan 1st unless they take other action.
I do not for a minute support what the ACA has encouraged, or the lies from the Prez on this subject.
What I am seeing is that enrolling the uninsured may become rather popular. And that is what Obama wants to take credit for.
But the real mischief of the ACA may be its goal of standardizing all insurance policies. This is what is causing the cancellations. It reminds me of many city housing codes — i.e. they do remove substandard housing, but some of the people who lived in that substandard housing were not all that unhappy — and may have nowhere else to go.
My wife and I have an individual plan that we like. We were told this week that we CAN keep it–by paying an extra $2,400 a year.
The Blue Cross Blue Shield letter wanly referred to “increased medical costs” as the reason for the roughly 30 percent hike in our premium. Not OUR increased costs, mind you–we’ve had no significant outlays in years. But we gain great personal satisfaction from knowing that, thanks in part to the extra $200 per month that we will pay next year for exactly the same coverage that we have this year, a law student at Georgetown or some other high-priced law school will get “free” contraceptives through Obamacare insurance.
Aside from the constitutional issue of the government’s lack of authority to force insurance and wellness on citizens by means of individual mandate penalties–penalties that are not taxes unless they need to be taxes for Supreme Court purposes, in which case, they ARE taxes–the Government isn’t up to the task. Anything other than a few adjustments along the fringes will have major, and possibly disastrous, unintended consequences. The healthcare treatment and financing sectors are so complex that the best and brightest minds could not hope to devise a way to achieve the goal of universal or near-universal coverage without ruining the system and breaking the bank. And if the best and brightest can’t do it, then certainly no one in government can.
Even your seemingly modest proposal of a network of subsidized clinics and hospitals for the uninsured isn’t feasible. People will continue to show up at hospital ERs when they’r sick or hurt. Present federal law, EMTALA, requires most ERs to provide at least initial screening and treatment. If EMTALA is amended in an effort to funnel those people into special subsidized facilities, they’re still going to stop at the non-subsidized hospitals if those hospitals are more convenient. Besides, there’s no reason to believe that the financial burden of treating the uninsured at emergency rooms would be greater than the cost of establishing clinics and hospitals with their own overhead and other requirements. If the subsidized facilities were intended to provide more than emergency or short-term sickness care for millions of uninsured people, the price would be astronomical. The “charity” hospital here just closed its in-patient facility for that reason.
I heard John Goodman on Mark Levin’s show yesterday. If I’m not mistaken, Dr. Goodman seemed to like the idea of subsidized high-risk pools for people with preexisting-condition issues. Although that concept has problems, too, it seems like a relatively practical way to address one of the major concerns the supposedly spurred Obamacare.
“out here in the country we see things differently.”
Unfortunately, I think that’s starting to change.
Partisan politics takes all.
“We care less about who is up and who is down for the November, 2014 elections”
You have a good point, but I still very much care about this.
“Rather than reducing the number of uninsured, ObamaCare will add 16 million”
Yet another broken promise.
Add it to the list.
“Obama has turned the entire country into New Jersey ”
Please no! Anything but that!
“Never mind Katrina or Sandy or…”
Little strong on the hyperbole there, don’t you think Greg?
Indeed. A thousand definite deaths is certainly worse than a thousand possible deaths, even if it is cruel to calculate.
Mind you, the problem here is that the government caused these deaths, not natural disaster.
Thanks for the post Greg!
Note to Randy:
Thanks for your thoughtful comments.
I have been in the insurance industry for some time.
The insurance companies have never really valued their individual market business. Selling individual policies is less profitable than group insurance, and much less profitable than Medicare Advantage or even Medicaid HMO’s.
Insurance companies have always treated their individual customers quite cavalierly. Large rate increases have been common, closing off blocs of business has been uncommon, loss leader policies with huge 2rd year rate increases have been common.
In a word, insurers are now cancelling individual policies because they want to cancel individual policies.
Those who drafted the ACA were academics and congressional staffers who had zero concept of how treacherous some of the insurers can be.
Greg,
We need to encourage state Board of insurance to continue to require that the navigators have to have background checks.
Over the years I would have never believed that the insurance industry would fold like a taco in relationship to what Obama wants them to do. The insurance industry is going to make more money in the next few years from supplemental policies then they made in the last 20.
It’s also count indictment that they didn’t solve ensuring folks with pre-existing conditions, they could’ve solved that problem but as far as I know they didn’t spend the time trying to solve it in the early 1900s the state of Texas pasted a law that basically if you were an out-of-state insurance company selling insurance in the state of Texas you were required to make investments in Texas. Many of the companies left only to come back and conform with the law but evidently the state board of insurance did a better job back then with my health challenges have been asking physicians what their thoughts are and basically they all say the same thing. It’s a real mess.
I’m not sure how you deal with dishonest folks in the White House, not sure it’s even possible.