THE HCC BLOG

It’s a Bargain

POSTED one day ago BY HEALTH CARE COMPACT

The Los Angeles Times’ David Lauter writes that Obamacare will be cheaper than expected, citing reductions in premiums. “President Obama's healthcare law will cost about 20% less over the next decade than originally projected, the Congressional Budget Office reported Monday, in part because lower-than-expected healthcare inflation has led to smaller premiums.”

One of the biggest sources of saving is non-participation in Medicaid expansion. That brings the estimate down to $1.35 trillion.

The budget office, noting that its estimates of the law's costs have dropped repeatedly, said the smaller price tag was "attributable to many factors." Two of the largest were "the slowdown in the growth of healthcare costs" and the Supreme Court's decision in 2012 to allow states to opt out of expanding the Medicaid program for the poor.

About half the states have so far declined to expand Medicaid to all impoverished adults, as the law allows. Because the federal government pays the cost of that expansion, the states that have declined have held down federal spending.

At first glance this seems at variance with published reports that Obamacare will actually cost $1.9 trillion, as the Daily Mail reports.  It is certainly different from the president’s own estimate, as seen on the White House website, putting the cost at $0.9 trillion. The discrepancy arises because the counts do not tally the same thing.

The CBO report explains the difference in the tallies. Appendix B shows that the actual cost of Obamacare is $1.9 trillion as reported by the Mail.  However, after the CBO report says that after the government collects the individual penaltes, the employer penalties, the Cadillac Tax and other taxes, then the net cost after new taxes is $1.35 trillion -- Lauter’s figure.

Amount billions $

Item

$47

Penalty payments by uninsured people

164

Penalty payments by employers

149

Excise tax on high premium insurance plans

281

Other revenues

$639

Total

 


The Los Angeles Times piece makes it sound like the nation is getting a bargain. But in reality the nation is paying $1.9 trillion. It is “only” $1.35 trillion because of an accounting trick which represents the $639 billion as already collected. It’s a bargain in the same sense that you are “only” being charged the outstanding balance for stuff you’ve paid a deposit on.

Obamacare’s Giant Price Tag

POSTED one day ago BY HEALTH CARE COMPACT

Cost continues to be the weakest point of Obamacare.  The full details of that cost are only now emerging. Philip Klein of the Washington Examiner cites a CBO report concluding that the actual cost of the ACA was not the “around 900 billion” cited by the president, but more than double. Nearly 2 trillion dollars.

When Obama pitched the healthcare law to Congress, he said it would cost "around $900 billion" over 10 years. But his statement was misleading because the way the law was designed, the major spending provisions didn't kick in until 2014. This meant that 10-year estimates at the time the law was passed in 2010 were artificially low, because they included four years (2010 through 2013) in which spending was negligible.

The new CBO analysis finds that between fiscal years 2016 and 2025, spending on the law's expansion of Medicaid will cost $920 billion and insurance exchange subsidies will cost nearly $1.1 trillion. The major spending provisions, taken together, will total $1.993 trillion.

This does not include the non-subsidized premiums that are being paid by the policy holders themselves.  It represents the amount of money the taxpayer is putting into Affordable Care.  In exchange for this expenditure, how many people are helped?  A little arithmetic shows it to be 23 million people.

The CBO also said it expected the law's exchanges to cover 21 million by the end of the 2016 fiscal year and for Medicaid to cover an additional 13 million — gains that it projects will be partially offset by a reduction of 11 million people in employer or other existing coverage.

That can be calculated easily as 21+13-11=23 million persons.  The cost per person is therefore 2 trillion divided by 23 million or about $87,000 per person.  The benefits purchased for this gigantic sum are questionable.  The core problem with Obamacare is that it does not seem to be value for money.  Rather it appears to be an overpriced boondoggle.

Fee For Service vs Capitation

POSTED one day ago BY HEALTH CARE COMPACT

Bruce Japsen at Forbes describes the next phase in the ACA’s medical reform program -- this time specially designed not to increase coverage but to reduce cost. “The Obama administration will push Medicare payment rapidly away from fee-for-service medicine within four years, outlining a plan to have half of all Medicare dollars paid by to doctors and hospitals via “alternative” reimbursement models by the end of 2018.”

Vox calls it the “White House's radical new plan to change how doctors get paid”.  There is nothing new or radical about it.  Anyone who was encountered a “set menu” at a restaurant or ordered a “value meal” at a fast food outlet knows the concept.  Currently doctors and hospitals bill according to fee-for-service.  This is the restaurant equivalent of a la carte ordering.  At a fast food restaurant you can think of it as ordering items separately.

What Obamacare wants to do is bundle the services into packages, something that is already happening but which they want expanded. Japsen writes: “Currently, just 20 percent of payments from the Medicare health insurance program for the elderly are paid via alternative payment models like bundled payments, patient-centered medical homes and accountable care organizations, a rapidly emerging care delivery system that rewards doctors and hospitals for working together to improve quality and rein in costs.”

It sounds reasonable enough.  Most of us know that ordering a “value meal” is generally cheaper than constituting the same thing by individual item. The resemblance is so great that even the terminology used is similar to fast food. “The whole system is moving towards value-based payments,” says Vox.  You know, like a “value meal”.

The “value meal” idea is also not new. It is called capitation.  When you cater a wedding or other event, you charge by the number of guests and provide “fullness” in the same way that hospitals are supposed to provide “wellness”.  But the catch is this. Capitation or bundling does not by itself provide value. It only provides value if there is competition among providers.

You can be clipped by a caterer just as well as in a dishonest a la carte restaurant. To see this, remember that food in prisons is also provided on a bundled basis, but food in prison is not necessarily any good.  In fact it is terrible because the prisoner cannot simply go elsewhere to eat.  The reason value meals at fast food restaurants are cheap is because if you don’t like the value meal at McDonald’s you can go down the block to Burger King, or perhaps get the set meal at a Chinese restaurant.  It is competition, not the mode which creates the economies.

Recently the Australian medical association examined the question of whether capitation improved preventive care in New Zealand.  The conclusion: “there has been no discernable increase in preventive care services by GPs paid an annual fee to look after the health of their patients, according to the New Zealand Medical Association.”

Under arrangements introduced in New Zealand in 2002, GPs derive half their income from capitation payments, with the remainder fee-for-service payments which, under the Kiwi system, include hefty patient co-payments of around $45 to $50 per visit ($17 for disadvantaged groups).

Blended arrangements are in fact a common sight at restaurants.  At Burger King you can order a Whopper Value Meal or order the Whopper by itself.  It’s a blended menu.  Compare this to what the ACA has in store. Vox writes:

The Affordable Care Act also created Accountable Care Organizations: larger groups of doctors that band together and take a lump sum of money to care for a specific group of patients, much like what the White House wants lots of providers to do under this new plan.

This could benefit the patients.  It could reduce costs.  But it will not by itself do so.  The medical catering service Vox enthuses over is only as good as its implementation.  In fact it contains a hidden danger. Obamacare has been building up monopolies by encouraging the consolidation of providers -- the larger groups of doctors that band together and take a lump sum of money to care for a specific group of patients.  This reduces competition.

The reason why value meals in the food industry are cheaper is primarily not because of the bundling, but because they are in competition with other establishments.  Without competition bundled food is prison food.  Who’s for prison food?

Anecdotes

POSTED 2 days ago BY HEALTH CARE COMPACT

Justin Haskins tells what is disparagingly referred to as an anecdote: his unpleasant experience at the hands of Obamacare.  The story begins with him trying to buy insurance and finding himself paying a higher rate than he used to.

“I’m sorry sir,” the polite Healthcare.gov customer-service agent said. “There’s nothing I can do. You’re either going to have to enroll in Medicaid or you’re going to have to pay the full health-insurance rate.”

“The rate you quoted earlier?” I asked. “That’s nearly 30 percent higher than my current insurance bill, I just can’t afford it.”

“You’ll have to pay the full rate, yes,” the agent replied.

“I don’t understand,” I explained. “I have plenty of money to pay you a reasonable rate, but I can’t afford to pay the same rate a millionaire would be asked to pay. Why can’t I just receive a partial subsidy? I’m willing to pay more than what Medicaid offers.”

“Sir, that’s just not how the system works.”

Right. That’s not how ObamaCare works; it doesn’t work at all.

Haskins’ problem was that he was a young graduate student and metal plan premiums are tough on the young, who have to be soaked to pay for the old and the uninsurable.  As described elsewhere, the “young invincibles” have had to pay extraordinarily more so that favored other groups can receive a subsidy.

Haskins didn’t want to be on Medicaid, which he saw as welfare. So he bought a short term plan while he sought another option. Then it occurred to him that anecdotes -- of which he was one -- when multiplied enough became statistics.  Obamacare was driving away the young, if he was any indication of the trend.

The reason is obvious. If young, healthy people — the group that the American Enterprise Institute’s Scott Gottlieb and Kelly Funderburk say is being “ripped off” by ObamaCare rates — opt out of the ObamaCare exchanges, the exchanges will collapse in a “death spiral” because not enough healthy folks will be paying in to make up for the less-healthy ones, who need more care.

My experience perfectly highlights the insanity of the Affordable Care Act. It forced me — a paying, insured, well-educated, healthy American — out of the coverage I’d had, then tried to push me into Medicaid.

The program wouldn’t let me pay more when I offered to pay a higher rate to stay out of Medicaid, and it provided only one other option: paying the highest rate available for insurance I didn’t use once in 2014.

Rather than take the easy route and enroll in Medicaid, I paid my own way with a private plan of my choosing. Now, instead of being rewarded for saving taxpayer money, I’m being punished with a fine of at least $95. What a country!

There is a tendency among Obamacare’s advocates to dismiss these as isolated occurrences; to assure themselves that on the whole their program is well loved and even helpful.  They will be blind until the last.  People are not stupid, and they know when they are being ripped off.

The Deep Seated Resentment Against Obamacare

POSTED 2 days ago BY HEALTH CARE COMPACT

Even though Obamacare advocates have assured anyone who will listen that the Republican’s “have learned Obamacare is unrepealable”, Dr. Ben Carson appears not to have heard the news.

Ben Carson on Saturday delivered a forceful defense of conservatism, arguing for dramatically scaling back the federal government and saying that he wouldn’t support Obamacare even if it worked. …

Carson said that the U.S. should cut its government by “attrition” — not replacing any federal employees that retire in the next 4-5 years. The resulting smaller government would mean that “they don’t have time to stick their noses in people’s business,” he said, to applause.

On the Affordable Care Act — which Carson has on several occasions compared to slavery — the famous former surgeon said he opposed any government intrusion in health care. “Even if it worked, I would oppose it,” Carson said of Obamacare. “It doesn’t.”

Neither Carson nor Cruz -- who swore to repeal ‘every word’ of Obamacare -- are stupid men. Doctors and Senators are rarely idiots.  Both men probably understood the deep wellsprings of resentment and dissatisfaction which the ACA advocates affect not to understand, or if they understood them, believe will pass.

This has led Obamacare’s advocates to adopt a the strategy of stonewalling until the storm passes.  Every criticism of their pet medical program is met with unyielding resistance and threats of veto.  They cannot bring themselves to see the resentment is real, and they will underestimate it to their peril.

Is the Obamacare Part-Time Effect Real?

POSTED 2 days ago BY HEALTH CARE COMPACT

Louis Jacobson of Politifact tries to assign a degree of believability to the assertion by the CEO of the Carl’s Jr restaurant chain that 'Obamacare has caused millions of full-time jobs to become part-time'.  In the end Jacobson finds that it probably true that many people have been pushed down into part-time jobs, but it might not be millions.  Just a few hundred thousand, and therefore only half-true.

The statistics, in this case, are inadequate to either prove or disprove that "millions" of Americans have seen their job go from full-time to part-time due to the law. That number is possible, but unsupported. That said, there’s evidence suggesting that hundreds of thousands of workers may have seen their hours cut as the law’s impact began to be felt. That’s not "millions," but it’s not insignificant either. On balance, we rate the claim Half True.

One study that tried to answer the question empirically was Leslie Muller’s ACA Small Employer Survey from the Grand Valley State University.  The scope of the study was confined to small firms in West and Southwest Michigan.  The summary of its findings are:

OVERALL

1. Only a quarter of small firms that offered health insurance in 2013 and 2014 plan on continuing to  

offer plans in 2015 and 2016. .  

2. Of those offering plans in 2014, 75% plan on offering insurance in 2015. Half of these firms plan  

on offering plans in 2016.  

3. Sixteen percent of firms are uncertain as to whether they will offer insurance in 2015; 28% are  

unsure about 2016.  

4. Of those companies not offering plans in 2015, 68% plan on sending employees out to the public  

exchange to buy individual health insurance.  

CHANGES TO HEALTH PLANS

1. 87% of firms have already or are considering increasing the cost share of insurance costs borne by  

the worker.  

2. 73% have or are considering shifting costs by using a high deductible health plan (HDHP).

3. 67% have or are considering shifting costs by changing prescription drug coverage.

CHANGES TO HIRING

1. 46% have or are considering limiting or reducing new hiring

2. 28% have or are considering reducing their overall workforce.

This suggests a far higher level of damage than Jacobson is willing to admit and may be much closer to  Carl CEO Andy Puzder’s estimate, which Jacobson cites.

Puzder provided some anecdotal evidence from his own sector -- restaurant chains -- that suggests a plausible case for "millions."

Many restaurant chains, he noted, are operated as franchises. In his own company’s case, 230 franchisees own 73 percent of the company’s 2,920 restaurants in the United States; the company itself owns the rest. While the parent company employs about 20,000 people, its domestic franchisees employ many more -- about 55,000. And industry leaders like McDonalds and Burger King have more franchises and franchise employees.

The disparate nature of franchise ownership makes it difficult to calculate the number of workers who may have had their hours cut. Based on his own experience at his company and the conversations he’s had with other industry CEOs, Puzder thinks it’s reasonable (but, he acknowledges, unscientific) to assume that 20 percent to 25 percent of their operational employees have had their hours cut to under 30 per week due to the employer mandate.

But more importantly, the Grand Valley State University study captures a whole host of cost cutting measures which are not even part of Jacobson’s fact checking.

Elizabeth Warren unwittingly gives credence to Puzder’s claims when she denounces the attempts to shift the definition of full time work back to 40 hours as “corporate welfare”.

Warren said that the bill effectively shifts the burden away from companies and onto taxpayers.

"This bill is corporate welfare," Warren said at a hearing held by the Senate Committee on Health, Education, Labor & Pensions. "Big corporations would get to cut health benefits for millions of workers, and push people out of their employer insurance plans. Some of those people will lose their health insurance all together. Others would be pushed onto federal programs, expanding the reach of Obamacare, and taxpayers would get stuck with the tab."

The costs have increased dramatically and companies, especially small firms, are attempting to escape them. This is well borne out by the Grand Valley State study.

OVERALL

1. Only a quarter of small firms that offered health insurance in 2013 and 2014 plan on continuing to  

offer plans in 2015 and 2016. .  

2. Of those offering plans in 2014, 75% plan on offering insurance in 2015. Half of these firms plan  

on offering plans in 2016.  

3. Sixteen percent of firms are uncertain as to whether they will offer insurance in 2015; 28% are  

unsure about 2016.  

4. Of those companies not offering plans in 2015, 68% plan on sending employees out to the public  

exchange to buy individual health insurance.  

CHANGES TO HEALTH PLANS

1. 87% of firms have already or are considering increasing the cost share of insurance costs borne by  

the worker.  

2. 73% have or are considering shifting costs by using a high deductible health plan (HDHP).

3. 67% have or are considering shifting costs by changing prescription drug coverage.

So yes, they are trying to “shift” the costs.  But where did these costs come from to begin with? What Warren misses is that some or most of these costs are a consequence of Obamacare itself. They were created by the very program she is supporting. Employers are scraping the same amount of butter over more toast.  

What Warren wants is for companies to come up with more butter so that more toast can be buttered to the previous degree of richness. This actually constitutes a tax increase, though Warren won’t say that.  Naturally companies will try to escape the increase by embarking on economies -- exactly what Puzder says they’re doing.

Nobody now seriously argues that Obamacare has reduced the costs of health care. In fact, Ezra Klein of Vox proudly claims that only the Democrats had the political courage to admit you needed more money to ‘solve’ the health care problem -- an irony since Obamacare was supposed to cut the amount of money needed to begin with.

But now that more money is required -- true apparently and not half true -- it is hardly fair to point the finger of accusation at those who have to bear the increases.  Obamacare is a job killer, or at least, a job disincentivizer.

“Every Word”

POSTED 3 days ago BY HEALTH CARE COMPACT

Them’s fighting words.  Although the public has been assured for months -- by Democrats -- that the Republicans have given up on repealing Obamacare, some Republicans at least have given the contrary impression.

DES MOINES, Iowa –  Conservative heavyweights joined with up-and-comers in hammering President Obama Saturday over everything from the health care law to his immigration policies as they played to a sold-out Iowa crowd in what amounted to the opening bell of the Republican presidential campaign. …

“The most important tax reform we can do is abolish the IRS,” Texas Sen. Ted Cruz told the fired-up audience.

The firebrand senator compared the EPA to a locust and got a huge reaction when he demanded to “repeal every word of ObamaCare.”

I guess that means Cruz wants to repeal Obamacare.  At least it would seem.

That Third Party Data Sharing

POSTED 3 days ago BY HEALTH CARE COMPACT

The saga of the reported sharing of client data by Obamacare with third-parties continues apace.  After the Associated Press broke the data sharing arrangement it was reported that the offending code had been removed. CNN, which earlier reported on the sharing said the code had been expunged.  But apparently CNN spoke to soon.

Earlier this week, the government came under fire after the Associated Press showed that Healthcare.gov was relaying users' personal information, such as zip code, income level, pregnancy status and whether or not you are a smoker.

That information was being shared with Google (GOOG), Twitter (TWTR, Tech30), Yahoo (YHOO, Tech30) and other companies that track people online, like the advertisement display service DoubleClick.

The evidence was on the website code itself.

But on Friday, CNNMoney read the code and found that Healthcare.gov was no longer relaying personal information to DoubleClick and others. …

But health officials would not explain why DoubleClick, a company in the advertising industry that already tracks people's browsing habits, should be allowed to know whether users smoke or are pregnant.

For its part, Google told CNNMoney it doesn't desire your personal health information anyway.

"We don't want and don't use that kind of data," said Andrea Faville, a Google spokeswoman. "And we don't allow DoubleClick systems to be used to target ads based on health or medical history information."

The data sharing’s only been scaled back. The Hill reports:

Health officials are scaling back the amount of consumer data shared with private companies amid privacy concerns for consumers on the federal ObamaCare exchange.

The Obama administration made changes to the HealthCare.gov website that limit the amount of data available to third parties for marketing or analysis, The Associated Press reported Friday afternoon. …

"We believe that the use of these tools are common and represent best practices for a typical e-commerce site," Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, said in a statement shared with The Hill.

Apparently the policy remains to share the client’s data, the only question being how much. This is about as disturbing as giving a vendor direct debit rights over your account on the assurance that he will withdraw your money only according to “best practice”. It’s an assurance without substance. But then the whole program might be.

Caring Enough to Take Your Money

POSTED 3 days ago BY HEALTH CARE COMPACT

Remember how Obamacare was going to save the American health system by keeping it from going bankrupt?  No? Well neither does Ezra Klein who now argues in Vox that the reason Republicans can’t come up with an Obamacare replacement is that unlike Democrats, they don’t care enough about health care to pay its cost.

Now don’t get the idea Klein means that Mitt Romney and Ted Cruz or Marco Rubio are unwilling to pay for American healthcare out of their personal fortunes.  Because Barack Obama, Hillary Clinton and Elizabeth Warren aren’t either. Klein is talking about tax dollars when he says “to pay for its cost”. He writes:

But the conservatives who actually want to pass a health-care reform plan realize there's basically no way to do it without accepting the post-Obamacare baseline: they need to spend a lot of that money, and they need to keep a lot of those taxes, in order to achieve their goals.

The irony, then, is that Obamacare might be the best thing to ever happen to conservative health reformers. If they have any chance of getting their party to prioritize health reform, it's only because Obamacare is so loathed by their co-partisans, and if they have any chance of actually designing a workable policy, it's only because Obamacare has given them money they can use toward their plans. …

Democrats wanted to pass health reform badly enough that they were willing to go through this buzzsaw to get it done. They were willing to have the internal party fight over what kind of plan to support, and then to go through the brutal legislative process required to make that plan into a bill, and then go through the political hell of canceling people's plans and implementing their replacement. They were, in other words, willing to lose a lot to win health reform. Ultimately, Obamacare passed, and it's working, but Democrats paid an enormous political price for it.

“See,” he argues, “we did this for you.  The tax money is there -- now spend it!”

First of all this talk about political sacrifice is sheer revisionism. As it was being passed many pundits believed it would a generation of Democratic voters. And about those costs. Obamacare’s architects were never up front about the costs.  The president said it would cost less than a cell phone plan -- he didn’t mention someone else would get slugged with the real price.  Nancy Pelosi famously said you would have the pass the bill to see what was in it.  

They hid behind a cloud of ink all the way. If this is courage, then what is cowardice?

Cowardice is portraying a bait and switch scam as an act of high minded statesmanship once its been found out.  And that is perilously close to the proposition being presented here.  What remains is an astonishing argument based on the premise he and people like him care enough about you to take your money and spend it the way they see fit, because you’re not smart enough to do it for yourself.  Apart from being a candid admission of dishonesty -- a way of saying that all talk about savings were as much as crud as the promise you could keep your doctor if you liked your doctor -- it perches on a self-constructed pile of vanity that is a marvel to behold.

Obamacare becomes like Dostoevsky’s Grand Inquisitor, unashamed to lie to people, indeed to tax them, for their own good.  He will bear upon himself the burden of doing what needs to be done.  Now please fill out the form.

Like the Inquisitor, the Messiahs of Obamacare would take upon the themselves the moral burden of finding the money even if only to offer it  to their Republican successors should such a misfortune befall.  But Klein’s basic problem is that he thinks right thinking people want his coveted taxes. He cannot imagine that they don’t. If the last election meant anything, it is that many voters don’t think much of the Inquisitor’s so-called moral sacrifice.  He can keep his morality and let the taxpayers keep their money.  If only those who are bent on saving the world at other people’s expense want to do people a favor, might they, if they would, just please go home.

Found Out

POSTED 4 days ago BY HEALTH CARE COMPACT

Stung by reports that it was sharing data with third parties gathered by its Obamacare webiste, the HHS quietly removed the offending code.  CNN, which earlier reported on the sharing said:

Earlier this week, the government came under fire after the Associated Press showed that Healthcare.gov was relaying users' personal information, such as zip code, income level, pregnancy status and whether or not you are a smoker.

That information was being shared with Google (GOOG), Twitter (TWTR, Tech30), Yahoo (YHOO, Tech30) and other companies that track people online, like the advertisement display service DoubleClick.

The evidence was on the website code itself.

But on Friday, CNNMoney read the code and found that Healthcare.gov was no longer relaying personal information to DoubleClick and others. …

But health officials would not explain why DoubleClick, a company in the advertising industry that already tracks people's browsing habits, should be allowed to know whether users smoke or are pregnant.

For its part, Google told CNNMoney it doesn't desire your personal health information anyway.

"We don't want and don't use that kind of data," said Andrea Faville, a Google spokeswoman. "And we don't allow DoubleClick systems to be used to target ads based on health or medical history information."

There are two standards of honesty in this world.  The first is the honesty which prevents someone from putting his hand in the cookie jar even if no one is looking. The second is the honesty that makes a person withdraw his hand from the cookie jar once caught.  What goes for honesty goes for competence.  Obamacare’s designers are not of the former, but of the latter.

The Fate of Whistleblowers

POSTED 4 days ago BY HEALTH CARE COMPACT

Two stories from opposite sides of the Atlantic Ocean illustrate the sad fact that all bureaucracies are ultimately alike in their instinct for self preservation.  Whistleblowers may spring up from time to time, even in the most monolithic of organizations.  But they will never be loved.

A whistleblower with the National Health Service in Britain told the press that her career was ruined after she took on the system.

A whistleblower says her career was destroyed by NHS managers after warning about how vulnerable patients were coming to severe harm.

Dr Hayley Dare, 42, a psychologist,even claims to have received a poison-pen letter from one of her bosses saying her children would suffer if she lost her job which also threatened: ‘You cannot win, you cannot beat us’.

She said conditions were so appalling at the mental health unit where she worked that one 72-year-old woman died after staff forgot about her.

You can’t fight city hall.  You can’t fight the VA either. One January 22, Stripes reported that doctor who blew the whistle found himself behind the 8-Ball.  Dr. Richard Hill said:

“I was told quite bluntly that if I see something wrong and say something about it, I would definitely be fired,” he said.

Janice Perry, president of the local chapter of the National Federation of Federal Employees that represents staff at the Fort Detrick VA clinic, declined to comment.

Hill provided documentation of the charge to The Frederick News-Post. In a May 8, 2014, letter to Hill, the chief of primary care services at Martinsburg’s hospital stated the charge.

The great thing about a competitive market system is that if you don’t get good service at once place you can take your business elsewhere.  Monopolies and trusts are undesirable, and even criminal by consequence.  Yet the ultimate monopoly is government provided health care.  Where do you go once all the health care is provided by a single entity?  How do you blow the whistle against such overwhelming power?

The answer is usually, you don’t.

The Seductive Allure of Central Planning

POSTED 4 days ago BY HEALTH CARE COMPACT

Michael Dougherty, writing in the Week, pens an article which very elegantly captures the publicized Republican alternatives to Obama but ultimately focuses on the wrong issue.  He casts the problem facing the Republicans as one of advocacy divided among three or more alternatives.

The Reform camp takes as a given that the GOP cannot pass a law that leads to lost coverage for millions who receive it through the various Rube Goldberg mechanisms of the ACA. Instead, the Reform camp, represented best by health-care wonk Avik Roy, works to keep the same amount of people covered but expands the market pressures within health-care exchanges by putting so many more people into them. Roy would simultaneously begin to push people out of Medicare and Medicaid and into the exchanges. It’s a plan for lighter regulation, but not a completely free market.

The Replace camp is represented best by: 1) the 2017 Project and 2) the Patient Choice, Affordability, Responsibility, and Empowerment Act (or CARE), which had been cosponsored by Sens. Tom Coburn, Richard Burr, and Orrin Hatch (Coburn has since left Congress). Unlike other conservative alternatives, these plans do not go after the great white whale of tax-free employer-provided health insurance plans, partly because it would be too immediately disruptive and partly because doing so may weaken resistance to a single-payer system. Essentially the “Replace” camp leaves most of the pre-ACA health-care system in place, along with some popular features of ObamaCare, but changes the mechanisms for driving costs down, concerning itself mostly with reforming the private market for health insurance. These are plans for overhauling only what was irrevocably broken before the ACA.

Lastly … considers the Restart school, embodied by Louisiana Gov. Bobby Jindal, whose premises are a bit different. Jindal doesn’t worry about the exact number of people who will have insurance, saying that doing so plays into Democratic hands. Jindal’s plan puts almost all its emphasis on reducing health-care costs. Jindal would extend the tax-preferred treatment given to employer plans to all plans.

All the Republican-supported plans are attempts to increase competition rather than cartelize a more regulated market. Almost all of them would allow insurers to charge older customers more, and younger customers less, than is currently allowed under the ACA.

So far Dougherty’s presentation is admirable. He then concludes on a non-sequitur: “If Republicans want to avoid the fate of other center-right parties in Europe that become mere budget-fixers on national health systems, they have to be much more united on their strategy than they are now.”

Dougherty seems to believe, as do many other policy analysts that one big plan must drive out the other.  In that universe there are right and wrong solutions. If Obamacare is a “wrong” solution then Republicans are duty bound to find the “right” solution so that the defective plan can be replaced.

But as the Health Care Compact advocates have long pointed out, this approach is fundamentally wrong.  The basic problem besetting the health care system is a governance question: who decides.  It is not a policy question.  This is not to say that all policies are alike and none are better than others.  However it is to assert that central government cannot necessarily find the best one and prescribe it for time to come.

Why should just one of the three models described by Dougherty be better than all the rest?  Suppose it is none of the three but Single Payer?  What if it depends on which of the three models suits a particular state.  Further suppose that some combination of models is actually the best.  What if model A is better for now but model B is better suited for next decade?

If people were locked into insurance models the way they were locked into health care insurance models it would be crazy. The only model that allows all these possibilities to happen is the Health Care Compact because it does not prescribe a single unitary Republican model to replace the unitary Obamacare model.  Instead it provides a governance framework for Vermont to try Single Payer if it wants or 2017 if it prefers.

Of course this argument has simplistically reduced the point of contention to a single item.  But it is nevertheless the case that the Republicans can never free Americans from Obamacare if they accept the proposition that the Republicans must formulate an equally massive plan to replace Obamacare. To do so would concede the implicit assertion of the administration that consumers are too dumb to choose things for themselves.

Less, not more regulation is the proper direction to take.  Lower-level, not Washington-made governance is the correct thing to do.  No more big plans.  They are what created the problems in the first place.

Discredited Obamacare Firm is Back

POSTED 5 days ago BY HEALTH CARE COMPACT

General Douglas MacArthur popularized the saying that “old soldiers never die.  They just fade away.” But had that crusty warrior lived in the twenty first century he might have said: old discredited federal contractors never die.  They just keep coming back.

The Daily Caller reports that CGI, the company which abjectly failed to roll out the Obamacare website is back.  “Seven months after federal officials fired CGI Federal for its botched work on Obamacare website Healthcare.gov, the IRS awarded the same company a $4.5 million IT contract for its new Obamacare tax program.”

As early as February, 2014 the company was on the comeback trail.

CGI Group Inc. (GIB/A), the Canadian company that lost the Obamacare website contract after a botched rollout, is pursuing new federal and state government work in the U.S. to bolster sales in its biggest market.

“Our view is that the brand isn’t damaged,” said Chief Executive Officer Michael Roach, 61. “We may see one-offs here and there, but I don’t see anything that will last. We’re prepared to talk to our clients about what we’re learning here. We’ve not been banned from anything. We’re not barred.”

And indeed they’re baaack.

“There have been many instances in our industry where other companies have run into something similar, and it’s passed with time,” Roach said. “There’s no doubt about it, this one got a lot more publicity.”

Nothing ever changes in Washington.  Maybe the date on the calendar, but little else.

The Financially Vulnerable Young Invincibles

POSTED 5 days ago BY HEALTH CARE COMPACT

Obamacare was always going to require ripping off for the young. Expanding the high risk pool of elderly and those with pre-existing conditions required an expansion of the low risk pool of healthy young people to balance it out. The iron laws of arithmetic meant that some people would have to pay in so that the system could pay out.

The New Yorker wrote in early 2014:

The obsession with the young invincibles is easy to understand. The economics of insurance depends on the pooling of risk, so for Obamacare to work on a national level you need healthy people (who will pay premiums but not rack up a lot in health-care costs) to enroll along with sicker people (whose health-care costs will more likely dwarf the premiums they pay). Since young people are typically healthier, getting them in the risk pool will help hold over-all costs down. But young people also know that they are healthier—and consider themselves invincible, even though they’re not—so they may prefer to take their chances and not pay for insurance.

So the solution was simple. Obamacare charged the young invincibles who they could enrol into the system a much higher rate than the old.  Dr. Deborah Ann Travis Honeycutt, M.D. describes in the Hill how her young patients are groaning under the financial weight:

College students are the hardest-hit demographic when it comes to ObamaCare’s cost increases. Typical 20-somethings in Georgia now face premiums averaging $2,750 per year—a 179 and 108 percent increase for men and women, respectively, over what similar pre-ObamaCare plans cost. That’s a demoralizing reality for college students working their way through school while still having adequate time to devote to their studies.

Georgia’s young are not alone. Millennials—young people between 18 and 29 years old—nationwide are drowning in rising health care costs. Average premiums for 27-year-olds increased in 45 states after ObamaCare went live last fall. Young women saw their health insurance costs skyrocket by an average 62 percent nationwide, while young men paid up to 99 percent higher than they did just one year ago. …

The supposedly benevolent principle underlying this provision is that seniors shouldn’t have to pay more for health care, even when they disproportionately account for health care spending. The typical 65-year-old spends more than five times what a typical 22-year-old spends in annual medical costs—$9,744 compared to only $1,834 per year, respectively. This 3-to-1 cap thereby forces college students to pay for their grandparents’ medical care, whether they like it or not.

This is inherently unfair. Forcing Millennials to pay more for health insurance because of their age rather than their medical needs amounts to little more than government-sanctioned discrimination.

These cost increases couldn’t come at a worse time for Millennials, either. The unemployment rate for people between ages 16 and 29 today is a staggering 14.7 percent—more than double the national rate of 5.8 percent. And for those college graduates who are fortunate enough to find a job, their starting salaries are lower in today’s dollars than those of both their parents’ and their grandparents’ generations.

The iron law of redistribution brooks no escape: soak those who can pay to support those who can’t.  That means make the young pay for the old.  This might work well enough if the youngsters could be sure that when they themselves grew old the same intergenerational subsidy would be given them.  But that requires an act of faith that the young don’t have any more.

That crisis of faith may in turn produce what insurers call a death spiral.  If the young, disgusted by their high premium rates, leave the system, then Obamacare will have no choice but to increase the burden on those few “invincibles” who remain even more, which will squeeze them out even faster.  It will produce a kind of  “flight” similar to the process which destroyed Detroit, in which anyone who could left the city until only those who depended on public welfare were left -- without the tax base to sustain it.  If the problem Dr. Honeycutt describes is not solved, a death spiral will set in.

Cost is the biggest danger facing Obamacare. It is pricing itself out of business.  Those who believed that “subsidies” or “free government money” could negate arithmetic will find that if couldn’t save Detroit it won’t save Obamacare.

The Domino Enigma

POSTED 5 days ago BY HEALTH CARE COMPACT

Cost problems in many forms continue to hound Obamacare.  Some of these are directly self-inflicted.  For example, the Obamacare had a little known calorie label clause “buried deep within the ACA’s 10,000 pages”.  

Each restaurant chain with over 20 locations is required to display the calorie content of each food and drink item it serves on signs and printed menus–with vending machine distributors subjected to the same rules.

Sounds harmless enough doesn’t it? It’s creating a major analytic problem for Domino’s Pizza and will do worse to Pizza Hut. The problem is that customers can change toppings to suit their taste creating an almost unimaginable potential variety in menu items.

A problem specific to pizza chains is the challenge of displaying a vast number of possible calorie totals across all of the materials that the rule potentially counts as a “menu.” Considering that Domino’s customers can customize their own pizzas, there is an endless number of possible combinations of toppings, each of which has a different calorie count. Liddle said a low-ball estimate of combinations Domino’s offers is 34 million. Pizza Hut has 2 billion possible combinations.

Of course the problem generating the right calorie count for each combination can be solved, given enough computer programming hours, staff training, logistics and effort.  But one could have said the of Enigma, the German coding machine whose ability to translate plaintext into billions of possible combinations supposedly rendered it unbreakable.  All the same it’s 2015 and computer science has advanced since the Second World War.

President Obama’s own Office of Management and Budget listed the menu display imposition as the third most burdensome statutory requirement enacted that year, forcing retail outlets to expend 14,536,183 work hours every year just to keep Uncle Sam happy.

But what makes it more ridiculous is that the effort is completely pointless. Studies show calorie labels make almost no difference. “A study of mostly low-income adults in Philadelphia, which recently enacted its own calorie labeling mandate, found that the regulation had no effect whatsoever on fast-food consumption, and that two-thirds of McDonald’s customers didn’t even notice the labels. The same research team, led by an NYU Medical School professor, found similar results in New York City. Now, the federal government expects different results nationwide.”

Yet that is the way bureaucracy is.  A simple, harmless looking requirement eventually imposes huge costs on the consumer while adding almost nothing of value to health care.

Vetoed By the Facts

POSTED 6 days ago BY HEALTH CARE COMPACT

The order is out. Stand fast. Do not retreat a single step. No pasaran! President Obama drew a line in the sand in his state of the union speech.

President Obama took a defiant tone Tuesday as he promised to ward off Republican attacks on his signature policies, from healthcare to immigration.

“We can’t put the security of families at risk by taking away their health insurance, or unraveling the new rules on Wall Street, or refighting past battles on immigration when we’ve got a system to fix,” Obama said.

“If a bill comes to my desk that tries to do any of these things, I will veto it. It will have earned my veto,” he said to applause.

The trouble is, the Republican majority sitting in congress was elected precisely to overturn Obamacare.  Why does Obama think he can hold the line?  Is he expecting reinforcements in the shape of a spate of good news?  Will people realize at tax time that “hey it’s nice to pay back the money I received as subsidies last year?”  Will they like it when they are auto-reenrolled in plans with much more expensive premiums? Are they going to be thrilled when they realize that their premiums and deductibles are up in any case?  Is it going to come as good news that their data is being shared with third-parties?  And what will Medicaid patients say when it becomes obvious the money has run out?

What will happen when taxpayers understand they are facing hefty penalties under the individual mandate?  How are they going to react when the employer mandate kicks in?

The cavalry is riding to the scene all right, but it is reinforcing the opposition to Obamacare, not to help it.  As the ACA’s proponents said, they thought it would be a done deal by now.  Dug in too deep to shift. A fait accompli.  But nothing of the sort happened.  It is teetering worse than ever, no thanks to the Republicans, but due to its own perverse, costly and defective nature.

President Obama has been outflanked by the flood of costs he swore to contain.  They are through his defenses.  He can threaten all he wants, but the truth is Obamacare has been vetoed by the facts.

No Behemoth

POSTED 6 days ago BY HEALTH CARE COMPACT

NPR notes that there’s a lot of anger -- almost religious anger -- against Obamacare. It cites the example of “Oklahoma state Rep. Mike Ritze … the Republican lawmaker, a family doctor [who] has stood behind three anti-Obamacare bills supported by conservative groups in Oklahoma and other states. None has made it into law, but Ritze plans to pick up the fight in the 2015 legislative session that convenes in the Sooner State next month.”

And then there’s “more than 700 Obamacare-related bills were filed in the states during 2014 or carried over from 2013 in states where legislatures allow that … some bills seek to ‘nullify’ the law or find creative ways to hinder its enforcement, while others are perennial filings inspired by Tea Party activists and other early foes of Obamacare”.

Yet for all that heat there’s been fairly little obvious light.  Conservative columnist Mark Levin predicted that the new Republican legislature would fold before Obama on every point, content to win a little victory here and a little triumph there.

The reason for this inability to translate political anger into action, according to John Goodman, is that the Republicans are divided among themselves.  In the muddle Obama is escaping.

The Affordable Care Act is one big mess. Even most Democrats know it’s a mess. It’s disliked on the left almost as much as it’s hated on the right. So you would think that Republicans would have a golden opportunity to offer an alternative. But they don’t have one.  They’re not even close.

Why is that?

In a post the other day, Ezra Klein pointed out a problematic trilogy: (1) virtually all Republicans say they want to repeal Obamacare, and most say they want to replace it with something better; but (2) replacing Obamacare means tackling the tough problem of health care reform; and (3) Republicans don’t agree among themselves on whether they even believe in health reform.

Why don’t Republicans believe in health reform? Because (this is me, not Ezra) they think about health reform in the wrong way. …

Republicans and Democrats tend to think alike. They believe that health reform means reforming the private sector. The reason: They believe that our most serious health care problems (cost, quality and access) originate in the private sector. In fact, our most serious problems originate in the public — not the private – sector. True health reform means reforming government.

This is exactly what the Healthcare Compact has been saying all along.  The health care problem is a governance problem.  It is not a policy problem.  The real difficulty lies in determining who decides how health dollars are spent, not prescribing in excruciating detail how the dollars are spent.

The real danger for the Republican Party is that they will replace one bureaucratic behemoth with another.  The answer is no behemoth.  That is the one clear message that the Health Care Compact must hammer upon.

Data Sellout

POSTED 6 days ago BY HEALTH CARE COMPACT

The story of Obamacare’s sharing of individual data with third-parties has now become mainstream news. CNN reports: “Healthcare.gov, the federal website where you sign up for Obamacare, is quietly sharing your personal information with private companies.”

The evidence is in the computer code on the website itself. It shows that Healthcare.gov is relaying certain information, such as your zip code, income level, pregnancy status and whether or not you smoke.

That information is being shared with several third parties. DoubleClick is a Google (GOOG) subsidiary that serves up advertisements and tracks your movements online. Healthcare.gov also shares your data with Google, Twitter (TWTR, Tech30), Yahoo (YHOO, Tech30), YouTube and others.

All the administration can say is that they’ve told the third parties not to misuse the data. “"When consumers fill out their online Marketplace applications, they can trust that the information they're providing is protected by stringent security standards and that the technology underlying the application process has been tested and is secure," HHS said. But as CNN rightly says, “but this doesn't explain why these companies see your data in the first place.”

Feedback, the administration says. The need for feedback to measure consumer satisfaction, explains why the third parties are seeing individual data in the first place. “A Medicare spokesman said the government uses these data firms to measure the performance of HealthCare.gov. However, it wasn't disclosed how the government ensures that these security policies are being followed.”

This explanation is ridiculous.  With all the billions that the administration has expended on Obamacare, they could have built their own custom monitoring system instead of leaking out the data to third parties in order to receive a copy of the reports.  Perhaps the most forceful argument is that it’s too late now, after having entered a house of questionable activity, to be quibbling over virtue.  The Lowell Sun writes:

By now, no one in this country should have any expectation of privacy, especially when accessing the Internet.

However, in light of the Sony hacking scandal and the president's call for stronger cybersecurity measures to protect consumers, it's disturbing to note that dozens of data companies are allowed to troll the government's own health-insurance website, unbeknown to the millions of Americans who have signed up for Obamacare.

These firms have embedded connections that allow them to track users, and in the process build profiles that are vital tools for advertisers. That information could include your age, income, ZIP code, and whether you smoke or if you are pregnant.

It's been documented by technology experts who analyzed HealthCare.gov, and confirmed by The Associated Press.

Like most things about Obamacare it’s fundamental justification is fait accompli.  It’s too late to cancel the subsidies, too late to repeal Obamacare, too late to stop Medicaid expansion, too late to stop data sharing.  Too late for everything.

Reason Magazine says it is yet one more worthless promise broken.  One more “never gonna happen” that just happened.

Since before Obamacare's health insurance exchanges went online, there have been worries about the safety and security of personal data collected by the system. But despite hearings and government watchdog reports saying that necessary security precautions weren't taken, the Obama administration has always assured the public that their data is perfectly secure.

“There’s no higher priority than protecting consumer information and maintaining trust for the consumers,” Andy Slavitt, who is slated to take over the top post at the Centers for Medicare & Medicaid Services later this year, told Politico last November.

Turns out we didn't need to worry about hackers breaking into the government's data troves. The government has been secretly sending out sensitive personal data, including age, zip code, and income information, to private advertising and marketing companies, according to a worrying report this evening from the Associated Press:

If you believed that “if you like your doctor you can keep your doctor” or “if you like your health plan you can keep your healh plan” you will surely believe that “there’s no higher priority than protecting consumer information and maintaining trust for the consumers.”

Is 2015 the Year of High Noon?

POSTED one week ago BY HEALTH CARE COMPACT

Despite all the talk suggesting that the repeal of Obamacare is no longer on the agenda, the response by Republican spokesmen following the State of the Union Address was reiteration of the goal to remove it from the books.

Republicans vowed to repeal and replace ObamaCare following President Obama's State of the Union address, a speech that repeatedly touted the successes of the healthcare law.

Newly elected Sen. Joni Ernst (R-Iowa) criticized the reform law for canceling healthcare plans and claimed it has raised premiums and "hurt … hardworking families."

"Americans have been hurting, but when we demanded solutions, too often Washington responded with the same stale mindset that led to failed policies like ObamaCare," Ernst said in the GOP's rebuttal to Obama's speech.

"We’ll … keep fighting to repeal and replace a healthcare law that’s hurt so many hardworking families," she said.

Indeed the rhetoric on both sides of the aisle has been uncompromising.  President Obama has vowed to veto any attempts to repeal Obamacare while the GOP to all appearances is prepared to see in a legal grave.  While some pundits have dismissed these fighting words as posturing, there’s always the possibility that both sides mean exactly what they say.

Perhaps 2015 will be the scene of intense political conflict -- and no kidding.

Forget About It

POSTED one week ago BY HEALTH CARE COMPACT

A curious thing happened during the president’s State of the Union Address. Sarah Kliff noted, “here's one bizarre thing: Obama barely mentions Obamacare, despite the fact that open enrollment is still open! People have until February 15 to sign-up — you'd think the president would use this address to promote that fact, right?”

She also Tweeted: “The phrase Affordable Care Act does not come up once in the President's prepared address (yes, it's the first thing I searched for)”, although he did mention health care insurance in one paragraph.

Why should Obama not mention Obamacare?

The obvious answer is that he doesn’t want to associate himself with it.  Anyone who is proud of an achievement usually misses no opportunity to associate himself with it.  In Shakespeare’s Henry V, the king reminds all gathered that everlasting fame would be the reward of all who fought with him on St. Crispian’s day.

   This day is call'd the feast of Crispian.

   He that outlives this day, and comes safe home,

   Will stand a tip-toe when this day is nam'd,

   And rouse him at the name of Crispian.

   He that shall live this day, and see old age,

   Will yearly on the vigil feast his neighbours,

   And say 'To-morrow is Saint Crispian.'

   Then will he strip his sleeve and show his scars,

   And say 'These wounds I had on Crispian's day.'

   Old men forget; yet all shall be forgot,

   But he'll remember, with advantages,

   What feats he did that day. Then shall our names,

   Familiar in his mouth as household words-

   Harry the King, Bedford and Exeter,

   Warwick and Talbot, Salisbury and Gloucester-

   Be in their flowing cups freshly rememb'red.

   This story shall the good man teach his son;

   And Crispin Crispian shall ne'er go by,

   From this day to the ending of the world,

   But we in it shall be remembered


In the case of Obamacare it seems a situation of “best not mentioned”.  This is the most damning thing of all.  It recalls the phrase that victory has a thousand fathers but defeat is an orphan.  What do you call Obamacare if even Obama would rather forget it?

Collapsing Under Its Own Weight

POSTED one week ago BY HEALTH CARE COMPACT

Richard Epstein at the Hoover Institution describes what he calls “the slow death of Obamacare”.  It is being suffocated by its own weight, an asphyxiation brought about by the mistaken belief that it could force the employer provided sector to do more, and the health care exchanges to sell perfected insurance by creating a bewildering maze of regulations.

These regulations have at great cost expanded coverage without reducing the cost of healthcare provision by one iota.  It’s regulatory approach relied on the creation of discontinuities -- ceilings on income, hours worked, or some proxy measure -- which segregated people into pools, divided by boundaries, such as the 30-hour “full time work” limit.

But the real world is not divided into discrete pools, nor are people so easily segregated into neat groupings. Well functioning markets fix this problem by offering a nearly continuous line of product offerings.  The US health care system has for a long time lacked a well functioning market.  Under the system whereby insurance companies “negotiate” with hospitals, the price list of services is not even known to the public.

This led to what Epstein called “inferior care at premium prices”.  Obamacare’s solution, was rather than to free the markets by removing the constraints, to add more of them.  Under this new layer of regulation prices have increased further.  That is the asphyxiation under which Obamacare is slowly perishing.

Now the Republicans are about to enter the same trap.  Objecting to the 30 hour full time rule, they are going to move it to 40 hours, replacing one discontinuity with another.  Many of the GOP proposals amount to exchanging one set of bureaucratic ideas for another.  The market will simply stifle under a changed set of rules when the solution is to remove as many of the rules as possible altogether.

The direction of reform should be to remove rather than to add regulation.  The Republicans must resist the temptation to create their own Gordian knot.  But that temptation has proved irresistible to politicians.  It may seduce the GOP as it has seduced the Democrats.

The Paperwork Python

POSTED one week ago BY HEALTH CARE COMPACT

Why are half of all companies still struggling to implement Obamacare nearly four years after the bill was passed? Fortune Magazine’s one word answer: paperwork.

About half of both mid-sized and large employers say they are not fully prepared to accurately apply all of the Affordable Care Act compliance standards, according to a new study by ADP  ADP 1.04% . Only 46% of mid-sized companies and 51% of large ones say they are equipped to meet the annual health care reporting requirements.

“The reporting that has to be done has to be accurate,” said David Marini, a vice president and managing director for ADP’s strategic advisory services. “Someone has to sign off that these documents are correct. There’s a whole new level of rigor.”

Along with the extension of insurance coverage, there are a host of regulatory and record-keeping standards that businesses are required to meet. The list includes accurately tracking employee hours, reporting health insurance enrollment and eligibility to federal authorities, and ensuring health plan offerings meet minimum standards of care and affordability

The stakes are high.  Penalties, legal liability.  Regulatory trouble. In order to fill out this paperwork and check it, companies have to spend more on it.  Lawyers, accountants, HR experts -- who’s going to hire them? Who’s going to pay the cost? Ultimately the consumer and taxpayer must, because in this world there is no free lunch.

This exacerbates the biggest problem facing Obamacare: cost.  The ACA was supposed to make health care cheaper.  Instead, from failed websites to complex tax forms, from constantly shifting networks to masses of paperwork engulfing companies it has added cost after cost.

Cost is the biggest danger to Obamacare.

Information Security Under Obamacare

POSTED one week ago BY HEALTH CARE COMPACT

One of the lesser known effects of Obamacare will be the creation of a giant database of health records.  It will be called the National Data Warehouse.

The Department of Health and Human Services (HHS) is looking for vendors to run its "National Data Warehouse," a database for "capturing, aggregating, and analyzing information" related to beneficiary and customer experiences with Medicare and the federal Obamacare marketplaces. Although the database primarily consists of quality control metrics related to individuals' interactions with customer service, potential contractors are to "[d]emonstrate ... experience with scalability and security in protecting data and information with customer, person-sensitive information including Personal Health Information and Personally Identifiable information (personal health records, etc.)." Vendors are also instructed that one of the requirements of a possible future contract would be "[e]nsuring that all products developed and delivered adhere to Health Insurance Portability and Accountability Act (HIPAA) compliance standards."

There are concerns that third-party components used in the Obamacare system will make it and the information pipes which flow into it as leaky as a sieve.

WASHINGTON –  A little-known side to the government's health insurance website is prompting renewed concerns about privacy, just as the White House is calling for stronger cybersecurity protections for consumers.

It works like this: When you apply for coverage on HealthCare.gov, dozens of data companies may be able to tell that you are on the site. Some can even glean details such as your age, income, ZIP code, whether you smoke or if you are pregnant.

The data firms have embedded connections on the government site. Ever-evolving technology allows for individual Internet users to be tracked, building profiles that are a vital tool for advertisers.

Connections to multiple third-party tech firms were documented by technology experts who analyzed HealthCare.gov, and confirmed by The Associated Press. There is no evidence that personal information from HealthCare.gov has been misused, but the number of outside connections is raising questions.

In case anyone thinks these fears are paranoid, it will be well to note that the president himself is warning of cybersecurity threats in his State of the Union address.

WASHINGTON— In his State of the Union address Tuesday night, President Barack Obama is expected to focus on several new cybersecurity and privacy proposals recently announced by the White House. The measures call for greater information sharing between the federal government and private companies, and new security initiatives to prevent high-profile hacks.

Health records are among the most sensitive pieces of information related to an individual.  Obamacare is collecting vast amounts of data into its infirm system and is actually building a giant warehouse at a time when the president is warning of cyberattacks.  What could go wrong?

What if the Dems Got Obamacare’s Costs Wrong?

POSTED one week ago BY HEALTH CARE COMPACT

The problems besetting Obamacare may be ascribed, according to its proponents, to the fact that it is “unfinished”.  Like anything good whose finishing touches have yet to be applied, it only seems problematic.  Just you wait until the magnum opus is completed and then it will be a wonder.  Healthcare advocacy group Families USA says:

Obamacare is great, but it leaves healthcare reform unfinished … The law does a lot to expand coverage, according to the paper, but many Americans will still find it difficult to get the insurance and care they need. For instance, many low-income Americans are living in states that have rejected the law’s Medicaid expansion. And even with insurance tax credits, many people will still find premiums unaffordable.

Seven years from now, there will still be 31 million uninsured Americans—a situation the group calls “unacceptable.”

The main problem: there aren’t enough subsidies.

Dubbing their recommendations Health Reform 2.0, the group is recommending that many of the health law’s provisions be taken further and wants an error in the law known a the “family glitch” to be fixed.

The way the law is currently written, if an individual’s employer-sponsored health coverage is deemed affordable only for them — but not for their family members — the family members are still banned from collecting insurance subsidies in the insurance marketplaces.

Who can argue with more subsidies?  The only problem is where will they get the money to give away?  As matters stand, nobody has a good handle on the Obamacare’s costs, a situation that has led to widely fluctuating premiums, according to the New York Times:

An analysis by The New York Times shows, for example, that the cost of one midlevel silver plan in Colorado rose 36 percent west of the Rocky Mountains this year, while another dropped nearly 40 percent in the northeastern plains. …

The variations in premium prices are also a direct result of what the insurer-friendly health care law permits. Insurers can target territories, choosing areas within a given market where they can attract enough members and put together provider networks that will negotiate on price. In addition, insurers were given some protection by the federal government to reduce possible losses in the early years, so some are experimenting with very low prices that may not be sustainable over the long term.

Insurers say they still do not have a firm grasp of what premium levels will allow them to cover the people who are signing up and not lose money on their medical care.

It is a mistake to think that the King vs Hablig case before the Supreme Court poses the greatest danger to Obamacare.  The real danger to the program is a cost blow-out. There no evidence to suggest it has cut the cost of health care.  Obamacare may even have increased the costs.  Subsidies can temporarily mask the cost increase from the consumer.  But ultimately the higher costs have to be met by higher premiums, bigger deductibles, and narrower networks.  It is exactly what we are seeing now.

Already the fall out from tax penalties, increased premiums caused by automatic re-enrolment and demands to return tax credits are being felt. Some Democratic Senators fear Obamacare may become an albatross around their necks.

Charles Schumer of New York, in the remnant of Democrats whose Senate careers have survived Obamacare, voiced similar sentiments in a National Press Club speech three weeks after the 2014 elections. “Democrats blew the opportunity the American people gave them” in 2008, Schumer said. “We took their mandate and put all of our focus on the wrong problem—health care reform.”

Not the wrong problem but the wrong solution.  By adding layers of ‘government solution’ onto the already high costs, they made things unsurprisingly more costly.  And now it threatens to drag the liberal project down.  It is cost that is the danger to Obamacare.

Helping Obama Out of a Fix

POSTED one week ago BY HEALTH CARE COMPACT

Catherine Rampell, an opinion writer at the Washington Post, characterizes how the administration wants to approach bipartisanship. She wants the Republicans to help the president get rid of all the Obamacare elements he’s having second thoughts about. Like the employer mandate.

Rather than debating whose version of the mandate is less harmful, Congress and the White House should join forces and eliminate it. After all, unlike the other Obamacare mandate — that all people have health insurance — the employer mandate is not all that crucial to the smooth, death-spiral-free functioning of the nation’s health system, now that we have a thick individual market….

Which is perhaps the real reason the White House and congressional Republicans both seem unhappy with the employer mandate but reluctant to fully dismantle it: Doing so would increase federal deficits by eliminating revenue raised from penalties and increasing the pool of Americans eligible for subsidies. But there are better, less distortionary ways to address these budget concerns while still promoting access to affordable health insurance — if only Congress and the White House could just admit they’re both on the same page.

A cynical Republican might ask: why help the president out of a jam?  But a more basic question would be, ‘why is the president in a fix in the first place?’  Because of the unintended consequences of Obamacare intervention in the first place.  In fact, the employer-based insurance is a legacy of FDR’s intervention in wage controls.  Obama tried to undo FDR and now he wants to undo what he did in the first place.

Perhaps the most fruitful approach is to find a bipartisan way to peel away all the layers of regulation, incentives, subsidies and distoritons that both parties have piled on over the years. The forward and reverse movement on the employer mandate is an example of all that is wrong with a government that has made up its mind to turn everything into a political football.

It’s is somewhat dismaying to read in the National Review that some Republicans are looking forward to the Supreme Court finding against the administration in King vs Burwell in order to obtain a pretext to strike a deal with Obama on favorable terms. John Fund writes:

If the Supreme Court ultimately finds that the Obama administration violated the law in issuing subsidies to some 6 million Americans in the 37 states where the federal government (rather than the individual state) runs the health-care exchanges, it could force a wholesale revision of Obamacare. Jonathan Turley, a liberal constitutional-law expert at George Washington Law School, told me recently that a Supreme Court victory for the plaintiffs in Halbig would put the continued existence of Obamacare up for grabs and force President Obama to the negotiating table with Congress and state legislatures.

It would be tragic to discover that the entire hue and cry about Obamacare was simply a pretext to get a chance to make a deal with the administration.  The likely outcome of any deal would be another horse designed by a committee; another complex monstrosity that no one can understand.

Far better to take the Health Care Compact approach, which holds out the promise of less government and more simplicity, not more of the same.

The Last of Marilyn Tavenner

POSTED one week ago BY HEALTH CARE COMPACT

Marilyn Tavenner’s departure from CMS has been largely free of criticism.  But that changed today as Republican Senators linked her departure with the failures of Obamacare.  Fortune reports:

Republican senators including Orrin Hatch, chairman of the Senate Finance Committee, praised Tavenner for performing admirably under difficult conditions. Senate Majority Leader Mitch McConnell said he hoped her replacement would not be distracted by Obamacare, calling it “a gigantic, unworkable law.”

In the House, Republican Darrell Issa blamed her agency for “padding” Obamacare enrollment numbers, saying: “Tavenner had to go.”

Well she’s gone, but Obamacare remains.  One wonders whether, after having held the line for the president for so long, Tavenner finally decided it was time to fall back on retirement or another job in the private sector.

Alex Wayne at Bloomberg takes up the tale of negative vibes which are now beginning to emerge. “Marilyn Tavenner, the U.S. official who directed the stumbling roll-out of Obamacare as well as its recovery in recent months, will resign as head of the Centers for Medicare and Medicaid Services.”

Washington can be a cruel town.  But it is also one with a rapid news cycle.  By this time next week Tavenner will have moved on.

Taxes, Taxes

POSTED one week ago BY HEALTH CARE COMPACT

The public is beginning to realize that tax time is Obamacare time.  Or maybe it’s the other way around.  Either way it comes to the same thing. The Washington Times writes: “Those Americans who didn’t get health insurance last year could be in for a rude awakening when the IRS asks them to fork over their Obamacare penalty — and it could be a lot more than the $95 many of them may be expecting.”

Most Americans don’t pay attention to politics because they’re too busy earning a living.  But the IRS is going to get their attention.

“People would hear the $95, quit listening, and make an assumption that that was what their penalty was going to be,” said Chuck Lovelace, vice president of affordable care for Liberty Tax Service. “I think that a lot of people will be surprised when they get in there and find out that their penalty is [based] on their household income.”

The penalty is designed to prod Americans to buy insurance and the penalty for not having it is scheduled to rise considerably: to a $325 minimum or 2 percent of income in 2015, and to a $695 minimum or 2.5 percent of income in 2016.

Even the relatively media-saturated state of California will find itself taken by surprise as the Mercury News  reports: “More than a million Californians benefitted from federally subsidized health insurance in 2014 through the nation's health care law. But now the law is about to give many of them a migraine.”

It's tax season, and for the first time Obamacare is showing up on tax forms. And it's leading to confusion and angst over new rules and their impact on taxpayers' pocketbooks.

That's because taxpayers must now reconcile the subsidy they received with the income they estimated they would earn last year. In addition, people who ignored the Affordable Care Act's requirement to obtain health insurance in 2014 now face a financial penalty levied by the Internal Revenue Service -- unless they qualify for an exemption.

Readers of this site will be familiar with this -- it has been the subject of many previous articles.  But ordinary people will be taken at unawares.  Yet it was inevitable.  Obamacare’s “free” money and subsidies had to come from somewhere.  The money people got had to be recovered -- all too often from the very same people who received it.  You can call it bait and switch.  You can call it a shel game. Or you can call it Obamacare.

Obamacare Proponents, Foes Spar Over CBO Modeling Scenarios

POSTED one week ago BY HEALTH CARE COMPACT

Sarah Kliff at Vox cites a study by Harvard’s Theda Skocpol concluding that the CBO never “explored the possibility of limiting insurance subsidies to the state marketplaces after the law's full implementation.”  In costing or scoring the implementation of Obamacare, the CBO always assumed the existence of federal subsidies. That fact, it is argued, “proves” that the architects of the ACA never saw the state exchanges as a necessary part of the subsidy granting process at all.

However, Michael Cannon at Forbes says it proves nothing more than what the CBO has itself said:  they assumed all states would deliver subsidies as a simplifying assumption.  All the scenarios cited by Skocpol as proof were nothing more than constructs flowing from this assumption.

Cannon cites another bill scored by the CBO which categorically examines scenarios in which state exchanges do not pay subsidies.

An alert Vox reader already informed Kliff that the claim that CBO never condsidered the possibility of Exchange subsidies in some states but not others isn’t exactly true. The comprehensive health care bill approved by Democrats on the Senate’s Health, Education, Labor, and Pensions (HELP) Committee in 2009 (S. 1679) would have given states four years to establish Exchanges themselves, after which point the federal government would establish an Exchange.  ...

In fact, the HELP bill would have withheld Exchange subsidies in both federal Exchanges and state-established Exchanges if the state did not cooperate by implementing the bill’s employer mandate. Even the government’s amici concede the HELP bill, which was merged with the Finance committee’s health care bill to form the PPACA, conditioned Exchange subsidies on states implementing the law. So much for Skocpol’s claim that “no one in Congress considered premium subsidies restricted to certain states to be either possible or desirable.” (Senate Democrats discarded this part of the HELP bill when crafting the PPACA, but retained and strengthened the Finance bill’s language conditioning Exchange subsidies on states establishing Exchanges.)

Thus the policy assumptions clearly conceived the possibility of state exchanges not delivering subsidies.  Citing computed scenarios based on simplification does not extinguish that policy posture. Cannon writes that the CBO also calculated scenarios assuming all states would expand Medicaid, and yet the Supreme Court already held that the states could refuse expansion.

In other words, the fact that the CBO assumed there would be subsidies in all 50 states under the HELP bill or the PPACA does not indicate that Congress did not intend to condition those subsidies on state cooperation. The CBO also assumed that the PPACA’s Medicaid-expansion subsidies would be available in all states. Does that mean those subsidies were not conditional on state cooperation?

The bottom line is that the King vs Burwell case is still an open question that the Supreme Court must resolve.  It’s not been “decided” by the discovery of the CBO documents by a long shot.

Out of One Pocket and Into Another

POSTED one week ago BY HEALTH CARE COMPACT

CBS News reports that more Americans are able to pay their bills, despite the fact that the bills have not gotten any smaller, because they are covered with Obamacare.  The cost of treatment may be higher than ever, but don’t worry “someone else” -- the insurance company or the government -- is paying for it.

A new study from The Commonwealth Fund found that the share of American adults who reported trouble in paying their medical bills slipped to 23 percent last year, or 43 million people. That marks the first decline since 2005. By comparison, the percentage of Americans with trouble paying medical bills in 2012 stood at 30 percent, or roughly 55 million people….

While the decline in uninsured Americans has been noted by other research organizations, the law's impact on health care costs has been debated, with some critics claiming that businesses and workers would be hurt by expenses related to mandated enrollment.

Yet The Commonwealth Fund's findings may provide some reassurance that the law is helping American families, many of whom have been walloped by rising health care costs at a time when wages have remained stagnant.

Medical debt has hobbled millions of Americans, hurting their credit scores and creating other financial headaches. About 43 million Americans have an overdue medical debt on their credit reports, the Consumer Financial Protection Bureau said in a December report.

Avik Roy, writing in Forbes says, hope you like the noose.  “The U.S. hospital industry is crony capitalism at its finest.”  They are overcharging the patient by a wide margin, and all Obamacare is doing is shoveling more money at them.

On Sunday evening, CBS’ 60 Minutes did a feature story on Steven Brill’s new book, America’s Bitter Pill, in which Brill complains that Obamacare didn’t do enough to tackle the exorbitantly high price of U.S. hospital care. “Obamacare does zero to change any of that,” says Brill. That’s not exactly right. What Brill—and CBS—don’t tell you—is that Obamacare is driving hospitals to charge you more than they already do.

Steven Brill, founder of The American Lawyer and Court TV took a starring role in the health care debate when he published the Time article “Bitter Pill,” describing how hospitals charge extreme prices for ordinary care to the uninsured. For example, Sean Recchi, an uninsured lymphoma patient, went to MD Anderson Cancer Center, a world-renowned facility in Houston, to seek treatment. MD Anderson proceeded to charge him $283 for a $20 chest X-ray. They charged him more than $15,000 for blood tests costing a few hundred dollars. They charged him $13,702 for a dose of Rituxan, a lymphoma drug, for which the average U.S. hospital price is around $4,000. All told, Recchi’s course of treatment cost $83,900. Whatever he couldn’t pay was called “uncompensated care.”

Well not this uncompensated care is compensated -- by the taxpayer.  Avik Roy points out what CBS News misses.  Paying the bills without lowering the costs only means the money Obamacare boasts of spending has been gotten from somewhere.  And that somewhere is the taxpayer’s pocket.  Roy writes:

Thanks to federal intervention in the health care system—Medicare, Medicaid, and the employer tax exclusion—hospitals have been able to charge whatever they want for their services, knowing that the average consumer has no idea how much he’s paying, because he’s paying mostly through taxes and other indirect means.

In 2013, U.S. government entities—i.e., taxpayers—spent a half-trillion dollars subsidizing American hospitals. By 2021, thanks in part to Obamacare, that will grow to $800 billion a year. That’s more than twice what the military spends subsidizing the aerospace industry.

And here’s the thing. While Brill rightly criticizes Obamacare for not doing anything to bring down the cost of hospital care, he’s actually an ardent supporter of the law. And this is the fundamental problem with Brill’s thesis. Obamacare doesn’t merely not do anything to bring hospital costs down. It actively works to drive hospital costs upward, by doubling down on the incentives hospitals have to charge more to patients.

Not only is Obamacare pouring in the coal, it is ramping up the price.  Avik Roy points out that the ACA is driving hospital consolidation, leading to even higher prices. “Since 2010, when Obamacare was passed, there has been a spike in the number of hospital M&A [merger and acquisiton] transactions.”

The Daily Signal’s Aylene Senger has a detailed chart showing the process of diminished competition in insurance markets throughout the US.

In 2009, when President Obama was trying to sell his health care reform ideas to Congress, he promised a competitive marketplace, where costs would decrease and quality would increase. …

2015 state-level competition. A comparison of the number of insurers selling coverage in the 2015 exchanges with the number of insurers that sold individual policies in the states before Obamacare took effect shows that the Obamacare exchanges are nationally 21.5 percent less competitive at the state level.

Roy describes the process whereby monopolies are being encouraged.  With the rise of monopolies comes the corresponding rise in prices.

The spike in hospital mergers is being driven by two things. The first is that Obamacare expands government-sponsored insurance, like Medicaid. Government insurance pays less than private insurance pays, so hospitals seek to merge so they can gain more leverage on private insurers to charge whatever they want. In 1993, for example, Harvard’s two main hospitals—Massachusetts General and Brigham and Women’s—merged, and immediately began jacking up prices to the privately insured and uninsured populations.

The second is that Obamacare creates a government program, called Accountable Care Organizations, whose explicit goal is to encourage hospitals to consolidate the provider industry, thereby giving them more leverage to charge higher prices. In 2011, a Federal Trade Commissioner called attention to this problem, noting that “the net result” of ACOs “may therefore be higher costs and lower quality health care.”

But who cares as long as the insurance company pays for it.  The consumer might, since the insurer ultimately pays out of the premiums collected.  The taxpayer might, since subsidies ultimately originate from the taxpayer.  But the administration doesn’t.  They’ve bought the vote and gotten the voters to pay the cost.

Tavenner Quits

POSTED one week ago BY HEALTH CARE COMPACT

Marilyn Tavenner, administrator of the Center for Medicaid and Medicare Services (CMS) announced she would step down from her position next month.

Tavenner is leaving after five turbulent years overseeing the agency. Her tenure included the disastrous rollout of the government’s HealthCare.gov website as well as, most recently, an inflated tally of total ObamaCare enrollment.

Her departure comes at a time when the program is facing serious legal challenges in the Supreme Court and a legislative attack by the Republican majority in Congress.  Tavenner was known for her wide net of contacts.  Despite the fact that she worked for a Democratic administration she apparently had good personal relationships with Republicans, in fact with many of the major layers in the health care industry.

Her temporary replacement,  Andrew Slavitt, the agency’s second-ranking official, is a graduate of the Harvard Business School but does not have the extensive contact network of Tavenner. Darius Tahir of Modern Healthcare suggests that Slavitt’s temporary job may last longer than might be expected. The reason is that whoever comes next will have to take the “hot seat”.

Speculation will now turn to whom President Barack Obama might nominate to replace Tavenner and if any nominee can gain approval from the Republican-controlled Senate.

“I think it's going to be very hard to get someone confirmed into this role,” said Dr. Scott Gottlieb, a scholar with the American Enterprise Institute, a conservative think tank. “I wouldn't be surprised to see someone act in the role for a prolonged period and then be appointed for the final year during a recess.”

It would be difficult for Obama to find a replacement with Tavenner's political relationships. Gottlieb called her “responsive” to congressional Republicans, for example.

Tom Scully, a former CMS administrator and current general partner at investment firm Welsh, Carson, Anderson & Stowe, said that he was “surprised she didn't leave earlier.”

Obamacare is moving into the most critical period since its enactment.  Tavenner may simply be getting out of the line of fire.

Redistribution

POSTED one week ago BY HEALTH CARE COMPACT

The Achilles Heel of Obamacare continues to be costs. Recently a local news channel had the opportunity to interview HHS secretary Sylvia Burwell.

In an exclusive broadcast interview with News 8's Janet St. James, Burwell had trouble explaining why costs have risen so sharply for those who don't qualify for a subsidy.

"Well, people were paying for indigent care that was occurring before people were insured... before the Affordable Care Act took place," Burwell said. "When we see more and more people receiving insurance, what we know is there is more downward pressure on those premiums in terms of passing along that indigent care."

The message is: wait and maybe one day they’ll go down since policy is moving in the right direction. But Janet St. James was onto something.  So that health care can become “affordable” to subsidized groups, it has to become less affordable to unsubsidized groups.  Someone has to pay for the free lunch.

This is exactly the point made by Drew Altman in the Wall Street Journal explaining why Harvard University faculty are incensed about the price rises to their insurance.

Like a quiet revolution in health insurance, deductibles have been steadily increasing for many years. But a mountain was made out of a mole hill when Harvard University’s plan for employees to pay modest deductibles and other forms of cost sharing kicked off a firestorm at the university and a broader discussion about whether Harvard was somehow affirming conservative principles by giving its employees a little more skin in the game. ...

Harvard was doing what many, if not most, employers do: increasing cost sharing a little in a given year to avoid a larger premium increase. It’s the only tried-and-true way employers have to hold down premium increases, and it’s one reason that deductibles and other forms of cost sharing are rising.

We need a broad and substantive national discussion about the changes occurring in health insurance and the growth of high-deductible plans. Some cost sharing is an appropriate part of a health insurance plan. The question is: When does cost sharing get so high that it endangers economic security, access to care, and health, especially for people who are sick and need more care?

For too long, Harvard faculty have had it good.  Now to keep costs down it has to be less good, starting with “deductibles” liked to skin in the game.  Only by charging people with “Cadillac plans” more can money be freed up for subsidies to other people.  The truth is that the cost of medical care cannot go down uniformly.  It will go down for some but only because it will go up for others.  Obamacare has failed to budge the underlying costs of care.  This means that to be “affordable” to some it must be “unaffordable” to others.

Another Strategic Opportunity for the Health Care Compact

POSTED one week ago BY HEALTH CARE COMPACT

The Hill cited sources claiming that the GOP’s strategy toward Obamacare had shifted -- without them admitting it -- away from full repeal.

The party remains far from consensus on how to handle the law, but threats from the its far-right members have largely faded as members look to show a GOP Congress can govern ahead of 2016, when the party hopes to retake the White House.

“If we can show that we can lead, we might get an even bigger majority in 2016. We might get the White House,” the aide said. “Republicans can say, ‘See, we were right? Put us in charge, and we’ll repeal the whole damn thing.’ ”

The change in tone can be seen even among hard-line Republicans, including Sen. Ted Cruz (R-Texas), who recently said he wanted to fix the “most onerous” pieces of the Affordable Care Act.

“There used to be an argument pretty prevalent on the Hill: They’re not going to do anything to fix Obama’s problem and force people to live with consequences,” said Stuart Butler, who spent 35 years leading policy for the conservative think tank, the Heritage Foundation.

“Well now, that seems to be not quite the strategy,” said Butler, who is now a senior fellow for the Brookings Institution.

A number of pundits have rushed into the vacuum, none more boldly than Avik Roy, who’s written a plan describing precisely what he thinks should happen. He describes the cup of hemlock he thinks should be offered to the administration in the event they are defeated in King vs Burwell.

Republicans, who now control both the House and the Senate, have three basic options for responding to a victory in King v. Burwell. The first would be what we can call the “let it burn” option: doing nothing. Doing nothing would effectively blow up the federal exchange, while keeping most of Obamacare’s costly insurance mandates intact. About four million people could lose their Obamacare subsidies, with many returning to the ranks of the uninsured.

While such an outcome might please the most hardened anti-Obamacare activists, it contains risks for Republicans. Politically, the voters would likely blame Republicans for not offering an alternative path forward. Most states would likely set up their own, unreformed exchanges. And from a policy standpoint, the GOP would be foregoing what might be their best opportunity to reform the health care system.

The second option would be to surrender: to simply legalize what the Obama administration has attempted to do through extralegal means. That would meaning signing on to Obamacare’s blizzard of destructive mandates and regulations.

The third option is Avik Roy’s plan, which contains one significant item of interest to the Health Care Compact. (Emphasis mine)

In my health-reform plan, Transcending Obamacare, I propose an alternative to Obamacare’s exchanges, one that could not only replace Obamacare but also, over time, replace the Great Society’s government-run health insurance programs for the poor and the elderly.

Importantly, the plan doesn’t require Republicans to repeal every word of Obamacare. They could do that and replace it with the Transcending Obamacare approach; or, they could achieve the same result by a partial repeal and deregulation of the law.

How would that work? Under the reformed health insurance markets proposed in Transcending, Americans would be free to choose from a broad array of health insurance plans, instead of being forced by the government to choose from a narrow set of federally-certified options:

The Plan repeals the ACA’s individual mandate requiring most Americans to purchase government-certified health coverage. The Plan restores the primacy of state-based exchanges and state-based insurance regulation. It expands the flexibility of insurers to design exchange-based policies that are more attractive to consumers, because they are of higher quality at a lower cost. The Plan expands access to health savings accounts. Because these reforms lower the cost of insurance for younger and healthier individuals, they have the potential to expand coverage, despite the lack of an individual mandate.

States would gain the further option of abandoning exchanges entirely, and simply offering means-tested tax credits to their lower-income residents.

According to economic modeling we conducted in partnership with University of Minnesota economist Stephen Parente, we estimate that such reforms would decrease the cost of the average single insurance plan by 17 percent; the impact would be larger in the states that have seen the highest premium increases under Obamacare.

The key point of confluence is Roy’s idea of deregulating healthcare insurance choices and reducing the federal government footprint in the health care payment system. Since the major reason for high cost is the lack of competition, policy movement along these lines can produce significant dividends.  Roy predicts it will cut insurance costs by 17%.

Be that as it may this creates another strategic opportunity for the Health Care Compact to make alliances.  The time to either repeal or replace Obamacare -- perhaps both -- is drawing nigh and the HCC should be there at the finish.

The Medicaid Free Lunch

POSTED one week ago BY HEALTH CARE COMPACT

Patrick Ishmael, “an analyst for the Show-Me Institute, a free market think tank based in Missouri”, explains in Forbes that Medicaid expansion money does not come from zero-sum pool.  Each Medicaid expansion is a separate deal.

Medicaid expansion funding is dictated not by some division of a funding pie, but by the beneficiaries and states participating in the program. If, say, one state expanded Medicaid but no others, that wouldn’t mean one state would get the Medicaid money that would have been earmarked for every other state. Rather than some large pie being split, state Medicaid expansions are more like a series of pies baked in separate ramekins — distinct from and independent of one another. If a ramekin goes unused, nothing really changes about the other ramekins. …

That means that Illinois, for example, isn’t getting “Missouri’s expansion money” because 1.) Missouri already receives more Federal money than it contributes, and 2.) the nature of Illinois’s Federal Medicaid benefits aren’t really dependent on Missouri’s participation anyway.

That separateness comes not only into play for federal money but also for state money.  In any event there is no “free lunch” which states which refuse to expand Medicaid miss.  The Feds aren’t going to buy you a lunch or feed your share to some other state.

That’s in addition to the fact that by not implementing Obamacare, Missouri also avoids the direct costs of an expansion and some of the enormous costs of the less-talked about woodwork effect.

This is a direct refutation of Ezra Klein’s argument that failing to expand Medicaid means just that: a missed free meal.  He writes in bold, “DEMOCRATS CREATED A GIANT SUBSIDY FROM BLUE STATES TO RED STATES AND REPUBLICANS ARE TURNING IT INTO A GIANT SUBSIDY FROM RED STATES TO BLUE STATES”.  But Ishmael says there’s no such thing because refusing Medicaid doesn’t turn into a bonanza for some other state.

Obamacare Overburdens the IRS

POSTED one week ago BY HEALTH CARE COMPACT

Geoffrey Norman at the Weekly Standard can’t understand why the Obama administration is so determined to veto any changes to the Affordable Care Act, because they’ve already changed it 46 times themselves. “As Tyler Hartsfield and Grace-Marie Turner of the Galen Institute write:”

By our count at the Galen Institute, more than 46 significant changes already have been made to the Patient Protection and Affordable Care Act: at least 28 that President Obama has made unilaterally, 16 that Congress has passed and the president has signed, and 2 by the Supreme Court.

Norman calls Obamacare “the soup sandwich of big government programs”.  There is something definitely Frankenstein-like about it, consisting as it does of numerous seemingly unrelated pieces.  Much of Obamacare is actually implemented by the IRS. The Hill writes that the IRS is now in a position where if it devotes time to Obamacare it takes time away from regular tax collection.  But on the other hand, if it devotes time to regular tax duties it risks neglecting Obamacare.

Nina Olson, the national taxpayer advocate …has long criticized congressional efforts to roll back the IRS’s budget, which include a $346 million cut enacted in December. She also noted that the IRS resources going toward implementing the agency’s role in the Affordable Care Act would help cause a decline in taxpayer services.

But it’s hard to see the Obama administration as the victim. It wanted Obamacare.  It expanded government’s role in health care payments, serving as a sort of super-insurance and income transfer mechanism and now it is saddled with the task.  The cost of administering Obamacare will probably run to the tens of billions.  This vast machinery is overstressing even the IRS.  It has forced hundreds of thousands of doctors to file reams of paperwork.  It will compel millions of taxpayers to seek help from H&R Block simply to square their Obamacare policies with their income tax returns.

Just as Frankenstein’s monster turned on its creator, so also is Obamacare’s administrative beast turning on its designers.

Robert Lazewski Warns Against Replacing One Monster With Another

POSTED one week ago BY HEALTH CARE COMPACT

Well known health care analyst  Robert Laszewski warns that Republicans will be tying a noose round their necks if they attempt to replace Obamacare with another Washington based, one-size-fits-all bureaucratic monstrosity.  He writes, “Of course that begs a question, Just what should we do to make health insurance reform politically and financially viable?”

The first change he suggests is to simplify things. Government is part of the problem. “Obamacare is an overregulated monster of an insurance marketplace reform that violates a basic marketplace rule ­­­­–– it doesn't meet most customers' needs because of its individual mandate and penalties, its limited choices, high deductibles, still high premiums and narrow provider networks.”

Democrats have a point when they argue that ObamaCare was built on Republican ideas. The problem is that Democrats have layered too much complexity on top of those ideas.

There is a Republican chassis underlying ObamaCare.

Health insurance exchanges are a Republican idea. Both presidents Bush and candidates Bob Dole and John McCain have proposed advanceable tax credits as a way to help people buy health insurance. Getting rid of pre-existing conditions and medical underwriting has always been a Republican objective.

But just as Tolkien’s Orcs are descended from the Elves, so too is Obamacare derived after many mutations from market ideas.  The challenge, Lazewski says, is to find some way to recover the nuggets from the slurry.  In the end it will be necessary to give the Democrats some credit for what must replace Obamacare, because if the debacle of the last six years proves anything, it is that some form of bipartisanship is necessary.

And that is why the Health Care Compact idea has not lost its validity.  It provides an opportunity not only to simplify the problem by removing one layer of complexity by returning the problem to the state level, it also sidesteps the problem of partisanship by allowing multiple and competing solutions to the health care problem.

The worst thing the GOP can do is replace one monster with another.

IRS and HHS Prepare For Heavy Weather

POSTED one week ago BY HEALTH CARE COMPACT

HHS Secretary Sylvia Burwell and IRS Commissioner John Koskinen are battening down the hatches for the coming storm.  Kosinken expressed confidence that his agency, which has accepted that it can hardly cope up with its regular tax duties, will be able to discharge its Obamacare duties with dispatch.

Still, Koskinen also noted that the IRS’s budget problems – the agency just absorbed another $346 million cut – would make it more difficult to enforce Affordable Care Act requirements. Plus, taxpayers looking for answers about how to comply with the law will face long wait times on the phone, the IRS chief noted. …

Troy Lewis of the American Institute of Certified Public Accountants said that one of the worries for tax preparers is the kind of taxpayer affected by the Affordable Care Act requirements. The most recent changes for the filing season, like a new surtax on capital gains income last year, mostly affected wealthier taxpayers, Lewis said.

“They’ve never had to do much beyond input a W-2 and take a standard deduction,” Lewis said about many of the taxpayers affected by the healthcare requirements.

Taxpayers, Lewis added, still aren’t particularly well educated on the ACA requirements, and the IRS was late circulating forms for the healthcare law. That means those who received the credit for health insurance last year based on out-of-date income reporting could be in for some “sticker shock,” Lewis said.

“You’re going to have well-meaning, relatively informed taxpayers saying: ‘What do you mean I owe?’” said Lewis, a Utah CPA who heads up the accountant group’s tax committee.

Koskinen did warn taxpayers who got coverage through the health insurance marketplaces to make sure they had received the new form – called a 1095-A – detailing the amount of subsidies received before filing. Taxpayers should receive those forms by early next month, Koskinen said.

Translation: it’s going to be a rough ride.  Burwell was also practicing her whistling as she prepared to cross the graveyard.  “Health and Human Services (HHS) Secretary Sylvia Mathews Burwell is taking a defiant stance against the upcoming court challenge to ObamaCare that threatens to unravel the administration's healthcare law,” the Hill reported.

She declined to say whether the administration had a contingency plan for the potential loss of $64 billion in subsidies, adding: “I’m going to stick with where I am."

The Supreme Court announced in November that it would take up the subsidies case, surprising many court-watchers and healthcare experts.

Burwell has no choice but to hope for the best.  A loss in the Supreme Court would be crippling.

The Wellness Trap

POSTED one week ago BY HEALTH CARE COMPACT

One of the criticisms leveled at religious health care sharing ministries is the requirement among members to lead a ‘moral’ life, abstaining among other things from a “lifestyle that does not meet the guidelines of the organization, such as drug or alcohol abuse, or extramarital sex.”  These strictures are portrayed as backward, narrow, bigoted and oppressive.

However Obamacare has its own version of such lifestyle mandates.  They’re called wellness programs.

Pretty soon your mom might not be the only one nagging you to quit smoking or lose weight—and it won’t stop at nagging. As the NYT reports, workplace penalties for non-participation in wellness programs are on the rise. The ACA gave employers more freedom to offer rewards or penalties in order to make their employee pools less of an insurance risk, and apparently they’re running with it. …

It makes sense for an insurer to charge someone who engages in risky behavior more than someone who doesn’t: pegging risk to cost is exactly how insurance works. But when it is done through the workplace, that adds an extra layer of coercion to the process.

Reuters writes that “U.S. companies are increasingly penalizing workers who decline to join ‘wellness’ programs, embracing an element of President Barack Obama's healthcare law that has raised questions about fairness in the workplace.”

For some companies, however, just signing up for a wellness program isn't enough. They're linking financial incentives to specific goals such as losing weight, reducing cholesterol, or keeping blood glucose under control. The number of businesses imposing such outcomes-based wellness plans is expected to double this year to 46 percent, the survey found.

"Wellness-or-else is the trend," said workplace consultant Jon Robison of Salveo Partners.

The difference between a healthcare sharing ministry’s lifestyle program and Obamacare’s “wellness” is that membership in the ministry is voluntary.  On the other hand, membership in Obamacare is subject to coercion. “Sign Up for Health Insurance—or Pay Up for Not Having It, California’s Obamacare Exchange Warns,” reports Reason Magazine.

Covered California, the largest of the state-run health insurance exchanges set up under Obamacare, is about to start emphasizing the tax penalties one can incur by not getting covered. …

“Shared responsibility payment”—in plain English, the fine for declining to carry qualifying coverage—remains one of the most absurd bureaucratic euphemisms in recent memory.

Even with fines amounting to thousands of dollars, Gallup found that “about 35 percent of uninsured people in the United States would rather pay a fine than buy coverage under ObamaCare … The number of people defying the individual mandate has grown over the last year, increasing 6 percentage points since last November, according to the polling data released Thursday.”

Perhaps one of the reasons for consumer unwillingness to sign up is the feeling that once absorbed in the system the system will own them.  Employees who refuse to get with the “wellness program” face substantial penalties, which taken together make it effectively compulsory.

Last year, Honeywell was sued over its wellness program by the Equal Employment Opportunity Commission. The EEOC argued that requiring workers to answer personal questions in the health questionnaire - including if they ever feel depressed and whether they've been diagnosed with a long list of illnesses - can violate federal law if they involve disabilities, as these examples do. And, if answering is not voluntary.

"Financial incentives and disincentives may make the programs involuntary" and thus illegal, said Chris Kuczynski, an assistant legal counsel at the EEOC.

Using the same argument, the EEOC also sued Wisconsin-based Orion Energy Systems, where an employee who declined to undergo screening by clinic workers the company hired was told she would have to pay the full $5,000 annual insurance premium.

In the words of Commentary Magazine, it is “wellness or else”.  Those who would deride the health care sharing ministries might want to examine the enforced lifestyle clauses of Obamacare.  John Gizzi of Newsmax notes that similar programs among private companies encouraged a culture of fakery as employees struggled meet the wellness activity quotas.

"The program awarded gift cards and debit cards to employees who self-reported, on the plan's website, completion of wellness activities. According to many initial reports, these employees collected $310,960 by falsely claiming they had completed triathlons, marathons, and other strenuous events."

Noting that "sometimes the employees are required to do nothing more than claim they completed an activity — as in the Kansas City case," Merberg said that "even employers less inclined to place blind faith in their employees' self-reported fitness achievements are likely to take their word in a manner only slightly more formal — for example, having them submit an attestation saying they don't smoke in exchange for a discounted health-insurance premium."

Perhaps more importantly, employees will have to turn in increasingly detailed reports to maintain their “wellness” status which is in turn needed by the company to send information up the chain to Obamacare central.

One woman Lewis put Newsmax in touch with — and who requested anonymity, dubbing herself "Anxious and Waiting" — told of her employer changing from a "voluntary, incentive-based wellness program to a mandatory, incentive-based participatory program."

She freely admitted that "initially, I was able to find loopholes in the program that I could exploit to technically comply, thus qualifying for the $1,200 'incentive,' and yet avoid turning over my personal information. The second year, the loopholes had been closed and I was forced to pay for the privilege of maintaining my privacy.

"The third year, covered spouses and domestic partners were 'invited' to participate, but it was not mandatory for them. My husband declined to participate and, once again, I opted to pay the $1,200 penalty rather than comply with the employee mandate."

Ironically Obamacare was advertised as a program which welcomed people with pre-existing conditions -- including unhealthy lifestyles -- into the health insurance fold.  But as with other aspects of the program, there was an element of bait-and-switch.  You are welcome to join provided you turn over the management of your lifestyle to the program.  Get with it -- or pay the fine.

Failure to Bend the Cost Curve

POSTED about 2 weeks ago BY HEALTH CARE COMPACT

The failure of Obamacare to “bend the cost curve” was never more on display than in the results of its experiments to do just that. National Public Radio describes the data from “ambitious experiments run by the health law's $10 billion innovation lab” where the most promising ideas were trialled by the best and the brightest.

The closely watched program is one of many efforts to control costs and improve care being run by the Center for Medicare and Medicaid Innovation, which was created by the Affordable Care Act.

Dozens of community agencies on aging, from Ventura County, Calif., to southern Maine, were offered money to try to ensure that older people leaving the hospital received care that reduced their chances of being readmitted within a month. …

But an early evaluation found that only four of the 48 groups studied in the Community-based Care Transition Program significantly cut readmissions compared with those in a control group.

At the same time, 29 groups have either withdrawn from the program or have been terminated by the Department of Health and Human Services for failing to achieve targets, agency officials said.

This very depressing result bodes ill for any overall attempts to cut costs overall, since if efforts under nearly ideal conditions could fail so dismally, the cost outcomes in the rough and tumble of the world are far less likely to succeed.  It also suggests that the variables that Obamacare believed to be important to cutting costs are not very significant at all.

But the negative results are not wholly without benfit, for they explain why Obamacare has so far failed to cut the price of health care delivery.  It can’t.  It cannot even under the best of experimental conditions.  For supporters of the law this should be proof that reform must assume another shape. However well intentioned Obamacare might be, it’s just not working.  Therefore replacement is an intellectual necessity.  The current road leads nowhere.

The Woes of the IRS and Obamacare

POSTED about 2 weeks ago BY HEALTH CARE COMPACT

The budgetary and political problems of the IRS may turn out to have a negative effect on Obamacare. Reductions in service may mean the agency will answer fewer than half of its calls this year.  “Large IRS budget cuts imposed by Congress mean taxpayers are likely to receive the worst levels of service in 14 years, according to a report Wednesday by National Taxpayer Advocate Nina Olson.”

The IRS implements key parts of Obamacare through the tax credits which are used to provide subsidies.  Up to 21 pages of regulations are involved.  In fact, H&R Block expects to earn an additional $104.25 million helping taxpayers deal with Obamacare.

(Reuters) - H&R Block Inc expects a boost from new U.S. tax forms required under President Barack Obama's healthcare law and from new clients seeking the company's help, Chief Executive Officer Bill Cobb told Reuters on Wednesday.

Cobb said the Kansas City, Missouri, company expected about 25 percent of its clients to file one of two forms newly required on 2014 returns by the 2010 Affordable Care Act.

This dependence on the tax system will mean that the bottlenecks at the IRS will necessarily affect Obamacare.  A certain percentage of those unanswered calls will be in regard to health care -- and they will not be attended to.

Small Details on Which Repeal May Turn

POSTED about 2 weeks ago BY HEALTH CARE COMPACT

With the fight between the president and congress over Obamacare looming over the next few months attention has started to focus on Elizabeth MacDonough, Parliamentarian of the United States Senate.  Parliamentarian? What’s that?  Perhaps the easiest way to describe it is the job of procedural adviser to the presiding officer of the Senate.  Wikipedia writes:

The Parliamentarian of the United States Senate is the official advisor to the United States Senate on the interpretation of Standing Rules of the United States Senate and parliamentary procedure.

As the Presiding Officer of the Senate may not be fully aware of the parliamentary situation currently facing the Senate, staff from the Senate Parliamentarian's office sit on the Senate dais to advise the Presiding Officer on how to respond to inquiries and motions from Senators. The role of the parliamentary staff is strictly advisory; the Presiding Officer is in no way required to follow their advice, though they almost always do so. The office also refers bills to the appropriate committees on behalf of the Senate's Presiding Officer. If facing the dais, the Parliamentarian is the second from the left.

MacDonough was appointed to her job in 2012 and has been careful to avoid partisan identification, according to Politico. But her potential impact on the tactical situation of the floor debate is now receiving scrutiny.  Parliamentary rules could play an important role in determining how a particular legislative strategy plays out.

in the so-called Byrd bath, the closed-door sessions when Republican and Democratic staff make their case to the parliamentarian about what goes in the bill and what stays out. It’s named for former Senate Majority Leader Robert Byrd, who created the complicated system years ago.

That process could significantly raise MacDonough’s profile if the Republicans use reconciliation for either tax reform or Obamacare. Both would be hugely controversial. President Barack Obama has repeatedly said he would veto any GOP bill that guts Obamacare.

The scrutiny now being focused on any hillock, blade of grass or terrain feature of the legislative battlefield is foreshadowing of the battle royale that is anticipated to take place.

Still in the Red

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Although Obamacare has yet to point to any gains beyond ‘slowing cost increases below what they would have been’  -- as compared to expenses in some counterfactual universe, Bloomberg Government shows its’s already spent $73 billion in real startup money.

(Bloomberg) — Nearly five years after passage, the Affordable Care Act (ACA) and a companion electronic health records (EHR) program have run a startup tab of more than $73 billion, the Bloomberg Government analysis finds.

Part of that total is the cost of healthcare.gov, the flawed website and related enrollment system intended to expand U.S. health insurance coverage.

BGOV’s analysis shows that costs for both healthcare.gov and the broader reform effort are far greater than anything publicly discussed. They’re also substantially greater than what the Congressional Budget Office (CBO) initially estimated health reform would cost by this point, although not what the agency’s more recent piecemeal estimates suggest.

Meanwhile, the changes in health-care financing and delivery on which the money is being spent remain very much in their startup phase.

Without any tangible returns.

Unless the enterprise is to be permanently in the red, the $73 billion “investment” has to bring in a return from somewhere, as cost savings or increased benefits for the same price.  But so far, Obamacare has managed only to offer overpriced narrow networks with high deductibles.  It’s hard to see what ROI may be claimed there.

Of course, a lot of people “made money”.  The IT contractors of the failed websites. Insurance companies. Obamacare Navigators. Bureaucrats in newly created giant departments.  But that is not the same as bending the cost curve.

We’re still waiting for that.

Why the Individual Mandate Acts Like a Regressive Tax

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Andy Pudzer, who runs a restaurant business, says that a mere 6% of his 6,900 employees signed up for Obamacare, opting instead to brave the penalty, rather than buy an unattractive product.

The last open-enrollment date for our company, CKE Restaurant Holdings, Inc., was Dec. 4, 2014. As of that date, our company had approximately 20,000 employees, 6,900 of whom worked 30 or more hours a week and were eligible for ObamaCare-compliant health insurance. We elected to offer them coverage rather than pay the employer penalty, which would have sent workers to ObamaCare’s health-insurance exchanges, where those who qualified could receive federal subsidies to help pay for insurance.

Of the 6,900 eligible employees, 1,447 already had ObamaCare-compliant insurance through our pre-existing company plans. That left 5,453 employees eligible to sign up. A grand total of 420 actually enrolled. That’s a mere 2% of total employees, or 6% of eligible employees.

Why didn’t they enrol? Pricing. Pudzer explains that it many chose to pay the penalty and then get noncompliant insurance, rather than pay for expensive compliant insurance that didn’t deliver much anyway.

The employee portion of the annual premium for our least-expensive “bronze plan” is $1,104. If you don’t believe you need health insurance, $325 beats $1,104. But employees compelled to pay the penalty still won’t have compliant insurance. For those who want insurance, then, we offer all our employees—full and part time—access to inexpensive group health-care coverage that is not ObamaCare compliant.

Compliant insurance doesn’t necessarily mean adequate insurance.  The high deductibles and narrow networks of many Obamacare plans may mean you are better off with noncompliant coverage which actually delivers more of the healthcare you need.  What workers then do is pay the fine to make the bureaucrats go away and leave them free to choose what theywant.  It’s quite a hefty penalty.

ObamaCare will penalize the 5,033 eligible employees who elected not to enroll, unless they have compliant health insurance from another source. For 2015, the penalty is the higher of $325 or 2% of annual household income above about $10,000. The 5,033 employees who declined insurance make $24,663 a year on average. As a result, the employees without insurance generally will pay the $325 penalty, as it takes $26,250 before the 2% penalty is higher.

But it buys the consumer freedom of choice.

The head of California's Obamacare exchange ironically confirms the coercive nature of the individual mandate by casting the exhortation to buy insurance as a threat: don't "p---" away your money by failing to get covered!

Covered California CEO Peter Lee's blunt words Tuesday came as he warned Golden State residents about increased fines under Obamacare this year for not having health insurance, and as he announced that more than 217,000 new customers had signed up for plans sold by the exchange.

Those fines, paid in the form of tax penalties, are at least $325 per adult, and half that amount per child, but can be as high as 2 percent of household income in 2015.

In a briefing with reporters, Lee noted that a family of four that opted not to get coverage in 2015 could end up paying "a $1,000 penalty that is essentially being p----- away." …

He said that "we want to use the tax penalty" as an incentive to get currently uninsured people to sign up in the state. "We want to get out the message, loud and clear, that if you sign up at any time during open enrollment, you will not be subject to the penalty."

"For many consumers, understanding the penalty makes a difference," Lee said. "Many do not understand the penalty, or the size of the penalty, and that's exactly why we're ramping up the messaging about the penalty."

This has the effect of forcing a lot of low income people into buying their lousy product. California has been rocked by the  scandalously limited natureof its Obamacare networks. Maybe paying the penalty is worth it to get out healthcare jail.

The Job Impact of the Individual Mandate

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Economics writer Ben Casselman looks at the impact of the individual mandate on employment patterns.  Some Obamacare advocates have claimed that since the percentage of part time employees has not risen then the individual mandate has not created the so-called 29ers, after people who are only less than 30 hours a week, the ACA threshold for part time workers.  Casselman writes:

The reality, though, is a bit more complicated. Obamacare hasn’t led to a shift from full-time employment to part-time. But the evidence suggests it has led some employers to limit the hours of workers who were already part-time, effectively giving a pay cut to some of the most vulnerable Americans.

What is the evidence?

The share of part-timers working just below 30 hours a week has been rising for roughly the past two years, while the share working just over 30 hours has been falling. … In 2009, before the Affordable Care Act was passed, 9.7 percent of part-timers worked between 25 hours and 29 hours and 7.7 percent worked between 31 and 34. In 2013, those numbers were 11.1 percent and 6.6 percent, respectively.

Other evidence also supports the idea that at least some employers are capping workers’ hours in response to the law. Average weekly hours are rising in the economy as a whole, but are falling for workers in many of the sectors most likely to be affected by the Affordable Care Act’s employer mandate — industries with lots of low-wage, part-time workers who historically haven’t been offered health insurance.  ..

Taken together, the evidence suggests that the health law has likely led a few hundred thousand workers to see their hours cut or capped. That’s small in the context of an economy with 150 million workers. But it isn’t a minor issue for those workers. Most of them are among the economy’s most vulnerable: low-wage, part-time workers who likely have few other options.

That may not be the slam-dunk Obamacare opponents are looking for, but it does suggest that that the individual mandate has not been employment neutral.  And why would it be?  Creating an extra cost has the effect of dampening demand.  Obamacare may be regarded by its advocates a net good, but it can hardly be argued it is cost-free.  Costs affect employment.  We would expect to see an impact, and not find there is none at all.

Both Sides Prepare Battlespace for Showdown

POSTED 2 weeks ago BY HEALTH CARE COMPACT

The disinformation war over Obamacare has reached new, ridiculous and partisan heights.  Not long after Reason magazine debunked the story that Scott Walker had been converted to the Affordable Care Act comes an article in the National Review assuring readers that Texas was not defecting to Obamcare.

Governor-Elect Greg Abbott (R., Texas) will not expand Medicaid despite hopes by Obamacare supporters that he would do so following a report that he inquired about Utah’s variation of the health program.

“Fear not — Governor-elect Abbott has fought Obamacare and will continue to fight against it. He believes the ACA is not the best option for patients, doctors or taxpayers,” spokeswoman Amelia Chasse tells National Review Online in a statement. “Greg Abbott believes that Texas should be able to address our unique health-care situation without federal interference, putting patients and doctors in charge of health-care decisions.”

Abbott and his team “were surprised” to read a Houston Chronicle article that construed his request for information about Utah’s compromise with the federal government as a statement of interest in bringing Obamacare to Texas, according to one source close to Abbott’s team.

The Republican messaging on the alternative to Obamacare has been mixed. Greg Abbott manages to project one idea that is a key component of the Health Care Compact: block grants.

Abbott does have a reform proposal for Medicaid, but it doesn’t involve using the dollars from Obamacare’s expansion. “Medicaid  is in dire need of reform by giving the states more local control in the form of block grants,” a campaign document of Abbott’s “Healthy Texans” plan says.

The elements of Obamacare’s replacement are leaking out, bit by bit. Ted Cruz understood the need for maintaining strategic focus.  The Texas Senator’s message is now no longer just repeal, but repeal and replacement.  His latest statements indicate that clearly.

Cruz cautioned allies, huddled for a two-day policy conference at the conservative Heritage Foundation, not to mistake the results of November's elections as endorsement of the Republicans. Instead, Cruz said the results were a rejection of business-as-usual Washington tactics.

Republicans, Cruz said, must heed the public's frustration and deliver.

"We need to do everything humanely possible to repeal Obamacare," Cruz said. "The only reasonable, prudent outcome is to acknowledge this thing isn't working and we need to repeal it and start over."

Obamacare’s advocates know it is an all out struggle and have employed every trick in the book to weaken their thrusts of their opponents.  But Cruz is right.  The electorate is expecting a showdown.

No Class

POSTED 2 weeks ago BY HEALTH CARE COMPACT

The huge and rambling Affordable Care Act is wasteland of many ruins.  It’s so big that gigantic bureaucratic wrecks, like lost cities, are hidden beneath its overgrowth of red tape.  Take the Community Living Assistance Services and Supports (CLASS) Act.

The Community Living Assistance Services and Supports Act (or CLASS Act) was a U.S. federal law, enacted as Title VIII of the Patient Protection and Affordable Care Act. The CLASS Act would have created a voluntary and public long-term care insurance option for employees, but in October 2011 the Obama administration announced it was unworkable and would be dropped.[4] The CLASS Act was repealed January 1, 2013.

The act was the brainchild of the late Senator Ted Kennedy.  It was a wildly uneconomic idea which promised a continuous payout to everyone who paid in a small contribution into the program.  Nobody thought it could fly, not even the administration.  But they included it in Obamacare anyway, as the Washington Examiner reports.

Within HHS, officials expressed concern that CLASS would “create significant new burdens on the states.” Coming at a time when governors of both parties were criticizing the “mother of all unfunded mandates” in the form of Obamacare’s Medicaid expansion, a CBO finding that CLASS imposed mandates on states in the billions, or tens of billions, would have prompted bipartisan outrage — and could have scuttled the program entirely. But from its introduction to its repeal, CBO at no point even acknowledged the significant cost to states associated with CLASS.

When nobody was looking, even the administration quietly killed it.  Probably only in something as vast as Obamacare could an $86 billion white elephant hide without anybody fully noticing it.  It’s a reminder of how much waste, fraud and abuse can hide in a trillion dollar program.

The Symbolism of Obamacare

POSTED 2 weeks ago BY HEALTH CARE COMPACT

In very American way Obamacare has become a litmus test of political philosophy. US News describes what might be described as “conscientious objectors” to the administration’s health care program.

“It’s almost a philosophical or political statement,” says Gerry Wedig, a professor at the University of Rochester's Simon Business School.

For Brewer, buying a plan on her own would mean she would not have enough to pay for housing, she says, so she chose not to be insured this year and will have to pay a penalty in her 2016 tax filing that is likely to be 2 percent of her income. She has no dependents, is healthy, does not use prescriptions and says she has been careful about her health choices, not overusing medical care.

"I am frustrated. I am angry. And I say 'no' to the exchanges," she says. "Somebody has to stand up and this is the only way I can do it. I will not be signing up under duress. I’m taking care of myself."

Dave Klemencic, 55, also has chosen to go without health insurance. He could receive a tax subsidy, but says on principle he will not, adding that he does not believe it's in the best interest of the country.

It may be hard for some on the political left to believe, but some Americans feel as strongly about health care choice autonomy as others might feel about voting rights or free speech.  In fact, the Supreme Court has just rejected a challenge from a group of doctors who argue that the individual mandate amounted to a government takeover of medicine.

Forbes has the story of Tennessee Governor Bill Haslam’s efforts to launder Medicaid expansion funds into something more politically acceptable to an anti-Obama electorate.  For many, accepting Obamacare money is in many ways similar to taking the devil’s paycheck.  In fact, some of its advocates wish it to be that way in order that it may be imposed as a means of political surrender.  For its opponents, it has become something of a litmus test of independence.

But the die was cast when Obamacare was passed without a single Republican vote.  The admnistration was determined to ram things through by main force and find it resisted in the same way.

Money, Money Everywhere and Not a Penny to Spend

POSTED 2 weeks ago BY HEALTH CARE COMPACT

The paradox of Obamacare is that hospitals can actually receive less without medical care becoming any cheaper or insurance premiums falling in the least bit. Chris Rauber of BizJournals notes the poor outlook for California hospitals despite the increased number of people theoretically eligible under Medicaid expansion or Obamacare exchange plans.

"The challenge for hospitals and physicians is that the (Obamacare) exchanges pay far less than traditional insurance has," said Mark Laret, CEO of UCSF Medical Center, "increasing the financial pressures on hospitals." It's harder for hospitals to get private plans to subsidize the uninsured or those in Medi-Cal, and many Medi-Cal patients "can't find a doctor," Laret said.

Meanwhile, some see power shifting from hospitals to organized medical groups such as the 3,800-doctor Hill Physicians Medical Group.

Wanda Jones, president of the New Century Healthcare Institute, notes that former Hill CEO Steve McDermott predicted the day would come "when money would flow through medical groups and treat hospitals like cost centers."

The changes will likely culminate into greater pressure on weak hospitals such as Doctors Medical Center in San Pablo, which is limping toward what seems to be closure or radical resizing next year. This year's biggest story "will be the continued decay of hospital revenues and potential closures of hospitals," said medical group and managed care consultant Walter Kopp.

This seems perverse.  With spending on medical insurance at a high and no sign of abatement in the cost of procedures why are hospitals going under?

The probable answer is that more costs have been added than new revenues gained.  Obamacare may have brought in -- via the individual and employer mandates -- more money, but it has cost money too.  Cost in terms of dysfunctional incentives.  Cost in terms of complexity and bureaucracy. And these costs have outweighed the additional revenues.

60 Minutes Takes on Obamacare

POSTED 2 weeks ago BY HEALTH CARE COMPACT

60 Minutes has made headlines revealing what any reader of this site already knows: Obamacare has simply forced people to buy insurance that is no cheaper than the “unaffordable” insurance it sought to replace. CBS News summarizes the venerable show’s segment bottom line.

“Author Steven Brill, who has spent the past two years immersing himself in the subject, has come out with a new book, ‘America's Bitter Pill,’ that takes a comprehensive look at what the new law does and doesn't do. Brill argues that Obamacare is the product of what he calls an "orgy of lobbying" and backroom deals in which just about everyone with a stake in the $3-trillion-a-year health industry came out ahead - except the taxpayers.”

What it does is make people buy insurance. What it doesnt do is make health care any cheaper. The CBS story says: “good news: More people are gonna get health care. Bad news: We have no way in the world that we're gonna be able to pay for it.”

Brill learned that when it came to controlling costs, the White House was told up front--

Steven Brill: If you go after costs, you're never going to get anything passed because the lobbyists will just not allow it to be passed.

Lesley Stahl: So let's go through what each entity won.

Steven Brill: The drug companies they were going to get $200-plus billion worth of new customers able to pay for drugs. They were going to avoid the calamity of the real reforms that they were worried about: price controls generally.

Lesley Stahl: Canada.

Steven Brill: You and I being able to buy drugs from Canada. That would have cost them hundreds of billions.

The hospital lobby did agree to cuts in how much the federal government compensates them for Medicare patients, but Brill says overall the trade off in new paying patients would more than make up for that. And the hospitals managed to keep other cost controls completely off the table, allowing them to charge whatever they can get for hospital stays and greatly mark up drug and test prices.

The Colorado Springs Gazette described the situation succinctly. “Insurance not the same as affordable care”.

For the vast majority of Americans who have histories of working and paying for insurance, the law has made health care less accessible and more costly. …

The true result shows up in a darker finding by another recent Gallup poll. It determined that one in three Americans put off medical treatment for themselves or other family members in 2014 because of costs. The health care deferral rate is the highest in Gallup’s history. A whopping 38 percent of middle class Americans with household incomes between $30,000 and $75,000 delayed care because of deductibles and co-pays, up from 33 percent in 2013.

Nearly 30 percent of households earning more than $75,000 delayed care in 2014, which is almost double the 17 percent who deferred in 2013.

To spread thin the country’s health care services, the Affordable Care Act uses the tax code to discourage high-end policies that come with low or no deductibles and relatively high premiums. Because insurance costs have risen under the new law, typical employers offer plans with deductibles so high most employees don’t come close to reaching them.

And all those people who have insurance for the first time cannot exactly celebrate. The average deductible for a Bronze plan on a government exchange is $5,181 for 2015, based on a study by HealthPocket. For families with these plans, the average deductible this year is $10,500. Even when a Bronze plan kicks in, it typically covers only 60 percent of a consumer’s medical costs.

We repeat: Coverage is not the same as care. Redistribution does not create abundance".

Redistribution may not create abundance,but it sure can buy votes.  And maybe that was the whole point of it all along.  One woman told her story.  After subsidies, the plan she purchased on an Obamacare exchange came to $12.07 a month.  She had a health card. The only problem was it didn’t doing anything.  She couldn’t make an appointment to see a doctor, nor could she afford the deductible.

My premium for the HMO plan I chose from the cafeteria of options, with my tax credits applied, was $12.07 a month in 2014. Not bad. Hardly worth a quibble. I had a $5,000 deductible. My assigned doctor had just retired, but was working six hours a month at La Esperanza Clinic in San Angelo, so the chances of the nearly 300 of us assigned to that doctor actually getting an appointment with him were slim to none. The chances of me meeting a $5,000 deductible were even slimmer.

But hey. I didn’t complain. I could afford $12.07 a month and I was legal. No fines to worry about.

Then they raised her premiums this year.  And her new health card is still worthless.

But for no apparent reason, other than it could, the premium was raised to $108.20 a month – $1,298 and some change a year. Seriously. Now I’ve been told by more than a few people that $108.20 a month is not much to pay for health insurance. And you know, I can see why they would say that. It’s actually several hundred dollars less than I paid a month when my insurance was provided through an employer.

The difference is that short of something catastrophic happening (and I pray that it doesn’t), the insurance is completely worthless, though not quite as expensive as the fine I would be charged for not having the health insurance. So it’s not a matter of whether it is affordable, it’s a matter (to me at least) that it is a waste of money. I simply argue that $1,300 could be better used – perhaps even on healthcare.

For people like her, being “covered” is hardly a consolation.  Unless she gets catastrophically sick she’s paying $1,300 a year to an insurance company for basically no current benefit.

The Company Which Actually Offered Affordable Insurance

POSTED 2 weeks ago BY HEALTH CARE COMPACT

John Tozzi at Businessweek tells the long and doleful story of a Minnesota insurance company which sold Obamacare insurance which was actually affordable and wound up losing their shirt.

A year ago, PreferredOne looked like an Obamacare success story: The Minnesota health plan offered some of the lowest premiums in the country and captured 60 percent of the state's roughly 55,000 new Obamacare enrollees. But those premiums were too low, it turns out, to cover the medical care and other expenses of all those new customers. In the fall, PreferredOne steeply hiked rates for 2015 and dropped out of Minnesota's Affordable Care Act marketplace entirely, saying it was “not sustainable" to continue.

Thousands of its customers now find themselves orphaned.  With PreferredOne no longer an Obamacare policy, they will be enrolled in expensive plans according to a complex formula computed under the law.

“The people who do not exercise an active choice to find a new plan will have a significant increase in cost,” says Roger Feldman, a health economist at the University of Minnesota. "I would guess they’re just not going to pay it.”

What doomed PreferredOne  was cost.  They bet on being able to cut costs -- just like the president promised.  They lost the bet.

While its business providing group insurance to employers appeared stable, policies sold directly to individuals were paying out more in medical claims than they were collecting in premiums.

Feldman, the University of Minnesota economist, speculates that the company bet on keeping costs down by attracting a lot of customers with low rates.

The more savvy insurance companies knew the costs would remain unchanged -- as a recent 60 Minutes program reported -- and they simply charged higher premiums with higher deductibles.  The lower costs were a chimera.  The higher premiums are all too real.

Keep Your Eye on the Pea

POSTED 2 weeks ago BY HEALTH CARE COMPACT

What makes scoring Obamacare so hard is that it is, in many respects, like a shell game.  It is a vast money moving machine that transfers funds from one class of Americans to another. John Goodman notes how it has affected middle-class health care choices.

Here is something few pundits predicted.

Poor, long-uninsured patients are getting Medicaid through Obamacare and finally going to the doctor’s office for care. But middle-class patients are increasingly staying away.

Take Praveen Arla, who helps his father run a family practice in Hillview, Kentucky. The Arlas’ patient load used to be 45% commercially insured and 25% Medicaid. Those percentages are now reversed, report Laura Ungar and Jayne O’Donnell in USA Today.

What’s the difference? Medicaid patients generally face no deductible or copayment when they seek care. But people who get health insurance at work or buy it in the (Obamacare) exchanges can face high out-of-pocket costs.

Nationwide, the size of the average deductible more than doubled in eight years, from $584 to $1,217 for individual coverage according to the Kaiser Foundation. Deductibles of $1,000 and up are now the workplace norm. In the exchanges, total out-of-pocket costs can reach $6,600 for an individual and $13,200 for a family. Moreover, the bulk of people who get insurance in the exchanges are choosing high-deductible plans.

A social engineer might retort, “what’s wrong with that?”  Isn’t redistribution good?

Well the pea is always on the move in a shell game. Merill Matthews reports that “Doctors Face A Huge Medicare And Medicaid Pay Cut In 2015”.  People can go to Medicaid now, but when the pea is moved under another shell, there won’t be very many doctors left in Medicaid.

If you thought it was getting increasingly difficult for Medicare and Medicaid patients to see a doctor, you’re right—and that problem may get even worse in 2015.

Doctors who still accept Medicare patients could see an average reduction of  21.2 percent in Medicare reimbursement rates, according the Department of Health and Human Services.  And a new Urban Institute study claims primary care physicians who still take Medicaid patients could see an average reduction of 42.8 percent.

Think those pay cuts just might affect access to medical care?

At issue is what the Affordable Care Act, or Obamacare, did and did not do.

First, what it did do: Obamacare increased Medicaid reimbursement rates for primary care physicians to Medicare levels—but only for two years, 2013 and 2014.

Therefore in a couple of years the situation will have flipped again.  Better to be middle class once more than to be indigent, because having insurance with a deductible will be better than having a health care that no doctor will accept.  One might ask: who’s better off than before?

Maybe no one is, but each group had its brief halcyon day -- before the pea moved to another shell.

Forty Hours

POSTED 2 weeks ago BY HEALTH CARE COMPACT

The Investor’s Business Daily has an article on the relative merits of defining “full time” work at the 30 or 40 hour threshold.  The basic objection is that the 29ers may simply be replaced by the 39ers.  There are more potential 39ers than 29ers, hence the potential impact of raising the definition of full time to 40 hours is greater than it is now.

The National Review editorialized that shifting the law's full-time definition to 40 hours "threatens to make the law worse."

The magazine's editors, echoing an issue that the liberal Center on Budget and Policy Priorities and other ObamaCare defenders have raised: A lot more people work 40-hour weeks or just above than clock exactly 30 hours or a bit more.

No one knows for sure how employers would react, but it's possible that more workers could have their hours reduced just below the full-time threshold, if it's raised to 40 hours, then has been happening at 30.

So why not remove the threshold altogether?  The problem is that Obamacare has created a procrustean bed.  By creating a class of “full time” employees who must be given company health benefits, the occupant of the bed must be truncated to fit it.  A tradeoff now exists between the number of hours you employ a worker and the point at which mandated benefits kick in.

A cost-minimizing employer now faces a step function beyond which the relationship with the employee changes.  At which point the incentive to create 29ers or 39ers comes into play depends on the economics of the business.  Creating threshold at 40 hours simply creates a different set of problems than at 30 hours.

But if what is to be maximized is the sum of employer and employee benefits, some other mechanism should be found to incentivize a good solution.  Defining health care access in terms of hours worked creates an economic hazard from which there is no easy escape.

Fifty Straws

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Michael Cannon at the Cato Institute poses 10 questions concerning the effect of raising the full-time work threshold from 30 hours to 40 hours within the overall context of repealing Obamacare.  He points out that it creates obstacles which stand in the way of a full repeal.  The issues Cannon raises are too complicated to enter into at length.  However, they rightly focus on the absence of an roadmap for what replaces the Affordable Care Act.

There’s no strategy or at least none that can be gleaned from the piecemeal attacks the Congress is now mounting.

However any one-size-fits-all replacement for the ACA would inevitably be problematic.  Obamacare’s scope -- and therefore the scope of its repeal -- is so vast that huge constituencies must win while others must lose.  There are just too many moving parts to avoid offending someone.

That’s why the Health Care Compact is a much better approach.  Whereas a national health plan must resemble ready to wear clothing, in standard sizes which fit everyone approximately but no one very well, the Healthcare Compact allows bespoke tailoring on the part of each state.  The policies can be much more closely tailored to local conditions and needs.

Cannon is right in saying that moving one stick in a pile of straws will destabilize the whole edifice.  But that will be true no matter who piles the straws.  The better solution is to have 50 straws lying on the table, which are not easily toppled.

Is Scott Walker Obamacare’s Newest Advocate?

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Reason Magazine takes a long look at the claim that Scott Walker is the newest Obamacare advocate by saying “But, in the end, there’s no real substantive difference between a federal exchange, or a state exchange, or the in between, the hybrid, the partnership.”

This quote is alleged to blow the political bottom out of King vs Burwell, which is about whether the Federal government can pay subsidies to policy holders even if there is no state exchange.  Clearly, if  “there’s no real substantive difference between a federal exchange, or a state exchange,” then who cares about state exchanges.

Reason’s rebuttal revolves around supplying the full Scott Walker quote.

When I looked — and I spent nearly two years looking at this . . . I visited [Washington DC], as a new governor in December in 2010. As part of that visit I met with Secretary Sebelius, the head of the federal department of HHS, and have spent the last two years with my team, my administration, my cabinet, working with the federal government trying to fully understand and comprehend what it meant to my state and other states. And it was clear! It’s a SINO, "state in name only."

This really isn’t an exchange that the states run or even run in a partnership. The federal government determines what’s going to be covered. How it’s going to be covered. And the only distinction is whether or not a state can say that they’re running it, put up a sign that says they are running it. But, in the end, there’s no real substantive difference between a federal exchange, or a state exchange, or the in between, the hybrid, the partnership. And so I said, if I can’t run it, if I don’t have control over it, why would I take the responsibility of explaining to people something that I don’t have any control over.

Reason concludes: “When he says he concluded that there was no difference between a state exchange and a federal exchange, he's pretty clearly talking in terms of the flexibility and authority that state officials would have to manage and customize their own exchanges.”  Is Scott Walker Obamacare’s latest advocate.  Probably not.

The Doomed Cadillacs

POSTED 2 weeks ago BY HEALTH CARE COMPACT

It’s not just Harvard. All “Cadillac” health care plans are heading for rough seas, as  Alex Wayne and John Lauerman of Bloomberg report:

Large employers are increasingly putting an end to their most generous health-care coverage as a tax on “Cadillac” insurance plans looms closer under Obamacare.

Employees including bankers at JPMorgan Chase & Co. (JPM) and college professors at Harvard University are seeing a range of moves to shift more costs to workers. Companies are introducing higher deductibles and co-payments, rising premiums and the imposition of wellness programs that carry penalties for people who don’t comply. …

The tax on Cadillac plans -- named after the luxury vehicle to denote their lavishness -- is one reason the growth in health-care premiums has slowed since the Patient Protection and Affordable Care Act took effect in 2010.

Last year, average family premiums rose 3 percent to $16,834, while single premiums held steady at $6,025, according to the Kaiser Family Foundation. Companies with a large percentage of high-wage workers paid more, with an average of $6,244 for single coverage.

The logic is simple, if you raise the price on something, you lower the demand for it and most often lower the price. The whole strategy of Affordable Health Care is to make it Unaffordable to the people with jobs use less of it.  Then there’ll be more health care to go around for those who can’t afford it.  Apart from the premium, the instrument of choice is the deductible.

The tax “is having the effect that was intended, which is the cost of these plans are being reduced,” Christopher Condeluci, a former Senate Republican aide who helped design it, said in a phone interview. “Sadly, the way in which they’re being reduced is they’re shifting more costs onto the employees.”

Premium increases for employer-provided health insurance, which covers about 48 percent of Americans, “slowed markedly” in 31 states since 2010, the year the Affordable Care Act became law, the New York-based Commonwealth Fund reported today. Nationally, premium growth fell by about a percentage point after the law, to 4.1 percent a year on average, the report said.

Deductibles, however, have more than doubled in all but six states since 2003, the report said.

All is proceeding as foreseen.

The High Cost of Dreams

POSTED 2 weeks ago BY HEALTH CARE COMPACT

Everyone’s known that people receiving subsidies might have to give back money, but what few expected was how many people would have to pay back to the federal government.  The Los Angeles Times reports that up to 50% of those who received subsidies from the government are going to wind up owing.

Experts project that 40% to 50% of families that qualified for financial assistance might have to repay some portion because their actual household income for 2014 was higher than what they estimated during enrollment.

Those repayments could range from a relatively small amount to thousands of dollars in some cases. In California, some of the first clues may emerge later this month when the state issues tax notices to 1 million consumers.

About 85% of the roughly 7 million Americans who signed up last year through government-run exchanges paid discounted premiums thanks to subsidies. 

"This could flip people from having a refund to not," said John Graves, an assistant professor of health policy at Vanderbilt University in Nashville. "Nobody can project their income down to the last dollar. It could be a huge deal.

That comes on top of the fact that health insurance is more expensive this year.  The Commonwealth Fund has a map showing the rise of employer insurance premiums across the country. In New York, for example, premiums went up by nearly $1,000 for a single between 2010 and 2013.  Perhaps just as painful, deductibles went up from $891 to $1,112.

The benchmark silver plans in the Obamacare exchanges went up by a smaller percentage, but they’re still up. USA Today reports: “the average premium for a benchmark "silver" health plan in the Obamacare marketplaces rose only 2% this year, and consumers had more plans from which to choose. But the tax penalty for going without insurance will double.”

But if Obamacare insurance rose “only” 2%, wages have risen by less -- 1.7% according to the Wall Street Journal, “barely ahead of inflation”.  Obamacare silver plan prices have risen faster than the rate of inflation but in cases their deductibles have risen as well.

The fines, deductibles, premium hikes, etc are jointly making “affordable care” less affordable. Probably nowhere was this more vividly illustrated than by the reaction among Harvard faculty members to the effect Obamacare would have on their health care plans.  The New York Times describes how the faculty went up in arms when they realized what it would cost.

WASHINGTON — For years, Harvard’s experts on health economics and policy have advised presidents and Congress on how to provide health benefits to the nation at a reasonable cost. But those remedies will now be applied to the Harvard faculty, and the professors are in an uproar.

Members of the Faculty of Arts and Sciences, the heart of the 378-year-old university, voted overwhelmingly in November to oppose changes that would require them and thousands of other Harvard employees to pay more for health care. The university says the increases are in part a result of the Obama administration’s Affordable Care Act, which many Harvard professors championed.

Jonathan Chait, writing in New York Magazine, says that conservative critics are barking up the wrong tree. The whole point of Obamacare was to make health care more expensive so that it would be more efficient.

The theory undergirding Harvard’s changes is that excessively generous health insurance is inefficient. If consumers bear zero cost, they will over-consume health-care services, thus driving up prices for everybody in the system. Harvard is imposing relatively modest increases in deductibles — a $20 fee for a doctor’s visit, and deductibles up to $250 a year for an individual. Faculty members accustomed to health insurance that covers 100 percent of their costs find a new plan covering merely 90 percent offensive.

He forgot to add: narrower networks and shifting people around evanescent networks would play their part too. Whether or not you agree with the Chait’s economic theory, one thing seems incontrovertible. “If you like your health plan you can keep your health plan … if you like your doctor you can keep your doctor” was a lie.  So was “Affordable Healthcare”. Obamacare might be a “good thing” -- that is arguable -- but it was clearly sold as another thing.

When people heard “affordable health care” many thought they were going to get “free” or at least “cheap” healthcare. They thought they were going to keep their doctors and their health plans.  Whether or not Obamacare is good for them in some sense, what seems undeniable is that it isn’t what it was cracked up to be.

Perhaps nothing underscored the gap between “free healthcare” and its actual cost than Vermont’s failed attempt to establish a single payer system.  The state was forced to abandon the idea because it would cost as much as everything else put together. Megan McArdle did a post-mortem analysis of the fact that it foundered on its own unaffordability.

While I was away last week, Vermont decided to scuttle its single-payer health-care plans. I predicted as much six months ago, for one simple reason: A single-payer system would cost too much. When faced with the choice of imposing double-digit payroll taxes or dropping his cherished single-payer plan, the governor of Vermont blinked.

"But Megan!" I hear you cry. "Single-payer systems are cheaper, not more expensive! Look at Europe!"

Alas, however, as I wrote at the time, there is nothing about single payer that will magically allow us to cut costs to European levels. People who believed otherwise were substituting a crude eyeballing of international statistics to substitute for reasoned analysis, in part because it told them what they wanted to be true: that they could have the universality and progressiveness of a single-payer system without having to ask the taxpayer for a giant heap of money to provide those benefits. They were, in the words of one of my favorite public-policy professors, "getting high on their own supply."

The true believers were smoking their own dope. But “dope” is an ambiguous dope.  In a way everyone’s been played for a dope.

When People Eventually Pay for Their Own Subsidy

POSTED 3 weeks ago BY HEALTH CARE COMPACT

Perhaps nowhere were the redistributive aspects of Obamacare more on display than in two contrasting news stories.  In his remarks to the public on the occasion of the end of the year, Vice President Joe Biden said: “An awful lot of people who didn't think they could or would find quality, affordable health insurance are actually able to get assistance from the government to help them pay for their health care plans at a cheaper rate. Let me give you an example. A family of four with an income of around $95,000, they can still get a subsidy to lower their health care premiums.”

Free money is great, but no money is really free. The question raised by Biden’s remarks is: if families earning $95K are eligible for subsidies, who is paying for the subsidies themselves?  The answer may be: ‘the same people’.

The Washington Examiner writes: “Half of Obamacare subsidy recipients may owe refunds to the IRS”.

As many as 3.4 million people who received Obamacare subsidies may owe refunds to the federal government, according to an estimate by a tax preparation firm.

H&R Block is estimating that as many as half of the 6.8 million people who received insurance premium subsidies under the Affordable Care Act benefited from subsidies that were too large, the Wall Street Journal reported Thursday.

“The ACA is going to result in more confusion for existing clients, and many taxpayers may well be very disappointed by getting less money and possibly even owing money," the president of a tax preparation and education school told the Journal.

A lot of money will be changing hands, some of it only for a very temporary period. It’s a little bit like those sales promotions in which a person wins a “prize” only to learn he’ll be charged for it.  But most people must have guessed this already.  Obamacare has not made medical care cheaper.  The only way it has maintained the image of affordability has been to move money around like a shell game.

The Tax Implications and Exemptions to Obamacare

POSTED 3 weeks ago BY HEALTH CARE COMPACT

The tax consequences of Obamacare continue to be in the news with the Boston Herald describing what Massachusetts taxpayers -- already used to Romneycare -- must additionally do to comply with the federal tax impact of health care.

Massachusetts filers used to dealing with the state’s mandated health-care coverage requirement on their state income taxes since the 2007 tax year now must address their insurance status on their federal income tax returns for the first time.

“What’s most important is to be aware if your taxes are impacted,” said Nancy Lebeau, master tax adviser and an enrolled agent for H&R Block in North Andover. “There are so many moving parts to the Affordable Care Act that H&R Block started preparing in 2010 and training all of its tax professionals.” …

But there are more than 30 exemptions that could help, including exemptions if you’re uninsured for less than three months of the year, for households whose income level is below the minimum filing amount or for non-U.S. citizens without valid immigration documentation.

Yes, you read that right. Illegal immigrants are exempted from the penalty, presumably because they’re not qualified for Obamacare. James Edwards at the Center for Immigration Studies wrote:

Uninsured illegals won't face the consequences that American citizens will face if they don't obtain health insurance. Such "nonexempt individual[s]" must "maintain minimum essential coverage" — that is, pay for government-approved insurance that could be more expensive and cover more services than the person wants — "or make a shared responsibility payment", that is, pay a fine — or "tax" as the Supreme Court designated the fine.

If illegal aliens face no insurance mandate and no penalty for being uninsured, that means they are freer than American citizens, whom the government is compelling to buy health coverage or else. Granted, illegals aren't supposed to be able to enroll in the Medicaid welfare program or collect a subsidy under Obamacare. But illegals can still get "free" health care (i.e., paid for by taxpayers or private insurers, or written off as bad debt by providers) in emergencies. Their U.S. citizen children qualify for Medicaid and the Children's Health Insurance Program. And the earlier rule makes it much easier for illegals to defraud the system. Plus, Sen. Ted Cruz (R-Texas) explained how the amnesty plus Obamacare would make it more attractive for employers to fire American workers and hire newly amnestied foreign workers.

But it’s yet another of the quirks of this extremely complex program.

The High Deductible Crisis

POSTED 3 weeks ago BY HEALTH CARE COMPACT

High deductibles and narrow provider networks continue to make a mockery of the phrase Obamacare boast that it has “covered” an unprecedented number of people.  They are covered in the sense that a baby blanket covers an adult.

Regina LaVarry, of Shreveport, uses mustard and mayonnaise as home remedies to help manage her high blood pressure. She also takes half of the prescribed dosage of her diabetic medicine to stretch it. Sometimes, she won’t take the medication for several days to make it last.

Her reason for doing this is the $500 health insurance deductible — which she can’t readily afford on an hourly wage of approximately $11 an hour. Add to that co-pays for medication and other out-of-pocket expenses she must pay for health care, LaVarry finds herself choosing between whether to buy medication or pay other bills.

Hardest hit are the middle class who find that they’re high deductible coverage is in many cases less useful than the no or low deductible coverage of the indigent.

Physicians such as Praveen Arla, who helps his father run a family practice in Hillview, Kentucky, are witnessing a reversal of health care fortunes: Poor, long-uninsured patients are getting Medicaid through Obamacare and finally coming to his office for care. But middle-class workers are increasingly staying away.

“It’s flip-flopped,” says Arla. Patients with job-based plans, he says, will say: “‘My deductible is so high. I’m trying to come to the doctor as little as possible … What is the minimum I can get done?’ They’re really worried about cost.”

The basic reason for this is intent.  Obamacare is a redistributive program.  Money is flowing from “wealthier” Americans to the poor.  Never mind that the “wealthier” aren’t really wealthy.  This takes the form of jacking up the cost of employer-provided coverage.

There is, however, an indication that the bigger story may be found off to the side, in the private sector. Most Americans get their health insurance through their employer. Some experts say that is changing. It is common to hear predictions that by 2020 or 2025 the percentage of Americans covered by their employers will drop to around 20 percent from the current level of 60 percent.

Employers want to shed that extra expense. We see the move toward that goal in the higher premiums charged employees and especially in the high deductibles. Those deductibles are so high for many employees that a new Commonwealth Fund survey indicates four in 10 working-age adults “skipped some of kind of care because of cost,” USA Today reports. Here is a hint why: The number of workers with deductibles rose from 55 percent eight years ago to 80 percent today. In addition, the amount of that deductible is getting higher each year.

Moreover, the subsidies that Obama boasts of providing to low income policy holders have got to be extracted from someone.  One way to extract money is simply to reduce the value of claims.  That is easily accomplished by making many middle class policies high deductible insurance.

The amount of deductibles is increasing, too. Kaiser also found that, in 2006, only 10 percent of workers with an individual plan had a deductible of at least $1,000. By last year, that had gone up to 41 percent. In the same timeframe, the average deductible on an individual plan had increased from $584 to $1,217. Almost 20 percent of workers have an average deductible of at least $2,000. Deductibles for family plans are at least two times as much, and often more.

There is after all, no free lunch.  The “free lunch” of Obamacare beneficiaries is paid for by putting it on the tab of the middle class.

How Single Payer Died in Vermont

POSTED 3 weeks ago BY HEALTH CARE COMPACT

New details are emerging in the saga of Vermont’s attempt to establish a single-payer health care system.  The demise of the single-payer project was sudden, and for its supporters, a huge letdown. The Waterbury Record recounted how the PR buildup had raised hopes among single-payer advocates to a fever pitch. Then on the eve of the proverbial “championship match”, the governor suddenly announced the game had been canceled for lack of ticket sales.

It’s football playoff season, and pregame shows are full of grown men screaming at one another, hopping up and down, banging on shoulder pads and generally getting hysterical. Then they charge onto the field and spend several hours running into one another at full speed.

Imagine if, when all the screaming and hopping was over, the coach said, um, well, we’re not going to play today. You wouldn’t want to be that guy, facing down thousands of pounds of football beef.

That’s the situation Gov. Peter Shumlin is in now. The fervor among Vermont advocates of health care reform has been building for several years, pointing toward a single-payer system that recognizes health care as a human right.

Even more intriguing was an aide’s suggestion that Washington, not Montpelier, was the real problem all along. “The director of health reform for Governor Peter Shumlin says the biggest threat to a plan to make Vermont the first state in the country with a universal, publicly funded health care system was the federal government."

The main obstacle to single-payer was cost.  Vermont could not afford it.  The Federal government contributed to the Vermont’s financial problem in two ways.  First, Obamacare had apparently done nothing to make health care cheaper. That cost mountain stood in the way of the single-payer dream.

"The main thing that's standing between Vermonters and a raise right now is the ever-rising cost of health care," Shumlin told reporters at a news conference Tuesday morning. "I am bound and determined to work together with the Legislature, with the Green Mountain health care board, with the health care community, to move from a fee-for-service payment system to one that reimburses providers for outcomes, for actual results.

The second problem was that Vermont was counting on Washington to kick in at least a half billion dollars worth of money.  Shumlin was apparently under the impression that the administration could find that sum for him.  But as the days passed it was clear Washington didn’t have the money or was never going to part with it.

Cushioning that shock would require an additional $500 million in revenue, Lunge added, and that was the last straw. Previously, another nearly half-billion dollar financial hole had opened when the Shumlin administration staffers heard from the federal government.

An expected $637 million in federal Medicaid revenue had dwindled to $344 million, while funds anticipated from Affordable Care Act sources had plummeted from $267 million to $106 million.

Those estimates emerged from complex calculations of how much the federal government would send to Vermont to support Medicaid and health insurance under the ACA without single-payer in place, and the assumption that the continued flow of that cash could be arranged.

Single-payer came crashing down for the basest of reasons: there wasn’t enough money. One staffer “declined to speculate on future efforts to create a so-called single-payer system, but voiced pessimism about the nationwide environment for such an effort.”

“I don’t think we can hope for the feds to do the right thing in the near future,” he said. “I don’t have a timeline.”

The translation for single-payer hopefuls is: don’t call us, we’ll call you.

Why ER Usage Is Still Up

POSTED 3 weeks ago BY HEALTH CARE COMPACT

One of the things that Obamacare promised to do was cut down on the usage of hospital emergency rooms. The visit to the ER was a proxy indicator of how well a healthcare system was working.  By expanding “coverage” Obamacare advocates reasoned, people with insurance would not longer wait until their illnesses reached emergency proportions.

Two reporters for the Los Angeles Times try to make sense of why ER use has actually grown in California.

A key measure of hospital emergency room use in Los Angeles County shows continued growth during the first six months of Obamacare, but also points to shifting patterns of where patients are choosing to receive urgent medical treatment.

With the healthcare expansion last year, many are watching how the Affordable Care Act affects emergency room use.

President Obama has promised his signature health law will gradually reduce expensive ER visits as access to other kinds of care is expanded. Critics contend newly insured patients — especially those enrolled in Medi-Cal, the state's low-income health program that picks up most patient costs — aren't likely to seek care elsewhere, and will overwhelm emergency rooms.

Neither of those outcomes were clearly evident in the first months of the new healthcare system's operation in Los Angeles County, according to a Los Angeles Times analysis.

Data hospitals report to the state show that as insurance coverage was extended to hundreds of thousands of residents, ER visits for ailments not serious enough to require an admission grew 3.9% in the county in the first half of 2014, compared with the same period the previous year. The growth is in line with annual increases of 3% to 5% in the three years prior to the federal healthcare overhaul.

But there’s really no mystery to solve.  The probable reasons why people are still flocking to the ER “for ailments not serious enough to require an admission” are the narrow Obamacare network and the high deductible.  An analysis by USA Today showed “In more than a tenth of the counties covered through healthcare.gov, the minimum deductible available for a family plan at the silver level has increased since last year — sometimes as much as $5,000. In other cases, consumers are trading high deductibles for lower premiums.”

The holder of an Obamacare health card has to climb out of a deep hole before his insurance coverage starts going into effect.  Until that threshold is reached, he might as well not have insurance.  Hence he goes to the ER.  The other factor which may be driving the ER usage is narrow networks.  If you’ve got a non-life threatening but nasty chest infection you may not feel like driving 50 miles to your network doctor after waiting a week for an appointment. So you go to the ER.

In many high-deductible scenarios Obamacare “health card” holders behave as if they were uninsured.  This is not what the administration promised, but it is how things have worked out.

The Party’s Over

POSTED 3 weeks ago BY HEALTH CARE COMPACT

The year 2015 will probably mark the transition of Obamacare from Daddy Warbucks to Scrooge. The seed money is nearly used up and the administration has grown markedly less generous with money.  First of all, 2015 is the year when employers face penalties if they don’t provide their workers with Obamacare-compliant insurance.

Companies with more than 100 full-time workers must offer affordable health insurance to at least 70% of their staff. This "employer mandate" was supposed to take effect in 2014, but the Obama administration delayed it to this year.

Companies will be fined if they don't offer coverage and even just one of their workers gets subsidized insurance on an Obamacare individual exchange. For 2015, the fine is $174 a month times the number of full-time employees (minus 80 workers).

But that penalty is higher if the company offers insurance, but it's not considered affordable or comprehensive. In that case, the employer pays $261 a month for each employee who received subsidized coverage on an individual exchange.

To be affordable, the plan's premiums can't cost a worker more than 9.56% of his income. This applies only to employee-only coverage since the health reform law does not consider the affordability of family coverage.

To be comprehensive, the policy must pay for at least 60% of the staff''s collective medical expenses and cover an array of essential health benefits, such as prescriptions and maternity care.

The most dramatic effects will be felt in low-wage industries where benefits were similarly downscale.  The second big piece of money news is that Obamacare policy holders who have done better than expected are going to surrender part of their pay raises to the federal government.

Obamacare enrollees who received subsidies to help pay for coverage will soon have to reconcile how much they actually earned in 2014 with how much they estimated when they applied many, many months ago.

This will likely lead to some very unhappy Americans. Those who underestimated their income either will receive smaller tax refunds or will owe the IRS money.

That's because subsidies are actually tax credits and are based on annual income, but folks got their 2014 subsidy before knowing exactly what they'd make in 2014. So you'll have to reconcile the two with the IRS during the upcoming tax filing season.

As the New Year deepens, people will begin to discover that they will have to pay the freight, one way or the other, for Affordable Health Care.  This was always going to be the case.  But politically it will come as a surprise. For too many people, “Affordable Health Care” meant free health care.  It’s anything but that.

All Your Data in Government Hands

POSTED 3 weeks ago BY HEALTH CARE COMPACT

One of the most potentially far reaching consequences of Obamacare is the wholesale transfer of medical records into the keeping of the government’s "National Data Warehouse".  It will contain not only overall ‘performance metrics’, it will also contain actual medical records. The Weekly Standard reports: (emphasis mine)

The Department of Health and Human Services (HHS) is looking for vendors to run its "National Data Warehouse," a database for "capturing, aggregating, and analyzing information" related to beneficiary and customer experiences with Medicare and the federal Obamacare marketplaces. Although the database primarily consists of quality control metrics related to individuals' interactions with customer service, potential contractors are to "[d]emonstrate ... experience with scalability and security in protecting data and information with customer, person-sensitive information including Personal Health Information and Personally Identifiable information (personal health records, etc.)." Vendors are also instructed that one of the requirements of a possible future contract would be "[e]nsuring that all products developed and delivered adhere to Health Insurance Portability and Accountability Act (HIPAA) compliance standards."

Despite the requirement that the database be HIPAA compliant, and therefore legally restricted as to access, the fact remains that the data will be in the physical possession of the federal government. Democrats should remember there may one day be a Republican president and vice-versa.  And this worries some people.

"The potential for abuse is enormous," says James S. Robbins, the deputy editor of Rare.com, noting that the massive database includes "income and financial data, family size, citizenship and immigration status, incarceration status, Social Security numbers, and private health information."

And that’s just the tip of the iceberg.  The National Data Warehouse is part of a larger, $15 billion “Virtual Data Center”.  Government is going into medical records in a big way.  This represents an enormous expansion of government power over practically the entire citizenry. The physician patient relationship is one of the most confidential that there is.  And suddenly, the government potentially has all the records. The Latin writer Juvenal famously asked: Quis custodiet ipsos custodes?  “Who will guard the guardians?”

The Changing of the Guard

POSTED 3 weeks ago BY HEALTH CARE COMPACT

One chapter in Obamacare clearly came to an end today when the Obama administration's top aide in charge of promoting Obamacare left the White House, almost certainly with the intention of joining the Hillary Clinton campaign. “Marlon Marshall, an aide to Hillary Clinton's 2008 presidential campaign, is leaving the White House to rejoin 270 Strategies, a Democratic consulting firm he helped found.”

Word of Marshall's departure from the White House had been rumored for months, both inside and outside 270 Strategies. Buzzfeed reported in December that he was thought to rejoin the consulting firm and the Washington Post broke the story Friday morning.

The now former White House aide is close with Roby Mook, an operative who many Democrats see as the frontrunner for Clinton's 2016 campaign manager job. Mook and Marshall worked together on Clinton and Obama's 2008 campaigns and share a small group of confidants and friends. If Mook is tapped for the top campaign job, Marshall is expected to get a top position, too.

A thumbnail of Mook’s career is summarized in Wikipedia. “Mook joined Hillary Clinton's 2008 presidential campaign in 2007. He served as the campaign's state director for Nevada, Indiana, and Ohio. Clinton won the popular vote in all three states. Mook then managed Jeanne Shaheen's successful campaign for the United States Senate that fall. Mook joined the Democratic Congressional Campaign Committee (DCCC) in 2009 as their political director, and was named independent expenditure director of the DCCC in May 2010.[5] After the 2010 House of Representatives elections, where the Democrats lost the majority, Mook was named executive director.[6] In the 2012 House of Representatives elections, he aided the Democrats in gaining eight seats.”

Although Mook is a seasoned political operative, he has no obvious close connection with Obamacare. However, Marshall’s addition to the Hillary Clinton campaign team suggests the Democrats are planning to carry at least parts of the healthcare scheme over into a Clinton administration, possibly repositioning it to appeal to minority voters and urban residents.

In addition to helping salvage the Affordable Care Act's rollout in 2013, Marshall helped lead the efforts to launch the My Brother’s Keeper Community Challenge. More than 140 cities have signed up for the the initiative, aimed at improving the lives of young men of color.

Employer Mandate Hits Low Wage Companies

POSTED 3 weeks ago BY HEALTH CARE COMPACT

The Orange County Register discusses the impact of the Obamacare Employer mandate provision, whose grace period expired and which will be implemented full force this year. “Starting today, one of the most-feared aspects of the Affordable Care Act takes effect after some delay, and requires large businesses to provide health coverage to their employees or face financial penalties.”

It explains that some industries will be affected more forcefully than others. “Think restaurants, retail and low-wage workers.”

Consider companies with a high share of low-wage workers, defined as firms where at least 35 percent of workers earn $23,000 a year or less. Among those establishments, 74 percent offer health insurance, according to the Kaiser Family Foundation.

“It’s really that segment of the economy, among low-wage workers, where the changes will be the greatest,” Levitt says. “If I’m a restaurant owner or own a small chain of restaurants and don’t offer coverage to my employees now, my world will change a lot after Jan. 1, and it will change for the workers as well.”

Matt Sutton, a vice president at the California Restaurant Association, which represents about 22,000 dining establishments, confirms that some restaurants are scrambling to comply. “It’s the hottest topic in town,” he says.

Paul Galewitz says that for some low-wage industries the only option will be to put the employees on Medicaid. Writing in the Washington Post, Galewitz says:

The Gold ‘N Silver Inn in Reno, Nev., has long offered health coverage to its employees — but many of the cooks, dishwashers and waiters who make close to minimum wage can’t afford the $100 monthly premium. …

But Neil Trautwein, a vice president with the National Retail Federation, said that if workers and their families qualify for Medicaid and other government health programs, there is nothing wrong with having them sign up.

Employers must consider different strategies to meet the coverage mandate, he said.

“As companies are pressed by rising health coverage costs, and some will be taking it on for the first time, they will have to look at everything within their reach,” he said.

The problem is that Medicaid itself is in financial trouble.  California, one of the “bluest” of states has “no plans to make up for an expiring federal pay incentive designed to entice doctors to treat low-income patients. The end of the subsidy with the start of the new year could result in steep pay cuts for many doctors participating in the Medicaid system for needy Californians.”

Because the fact is, if people can’t afford to pay a $100 insurance premium someone else will have to.  Whether that payment is called a subsidy or Medicaid is just a question of nomenclature.  The hundred dollars has to come from somewhere to make the insurance coverage meaningful.

Obamacare has not managed to bend the cost curve.  It is making health care “affordable” not by reducing the cost but by moving other people’s money around.  The employer mandate is no different.  In the end the employers must pay the cost, one way or the other, or find someone else who will.

Medicaid Expansion and Alzheimer’s

POSTED 3 weeks ago BY HEALTH CARE COMPACT

One of the biggest potential problems in Obamacare Medicaid expansion is it may squeeze out the elderly who now rely upon Medicaid to pay for their nursing home care. “Medicaid is the largest payer of nursing home costs in the country.”  Although people are living ever longer, many of those years are blighted with Alzheimer’s.

More than 15 million people care for loved ones suffering from Alzheimer's disease. Most people are aware of the emotional toll of caregiving, but another unwanted result might be personal financial loss by the caregiver. According to a new survey released by AgingCare.com, more than one quarter of Alzheimer's caregivers spend more than $4,000 each month, around $50,000 each year, on their loved one's needs.

According to the survey, caregiver costs include a variety of goods and services. Costs for home care, assisted living, or nursing home care might come out of caregivers’ funds. The Genworth Cost of Care Survey found that each of those services costs around $45,000, $42,000, and $87,600 (for a private room), respectively. On average, a person suffering from Alzheimer's disease lives for eight to 12 years after diagnosis and, at $4,000 per month, the costs accumulate quickly.

Too many Obamacare advocates have taken states to task for refusing to take “free” Federal medicaid money.  But no money -- not even Federal money -- is free.  There are only so many dollars to go around.  Putting the indigent onto Medicaid solves one problem, but only at the cost of creating another.  Put enough people on Medicaid expansion and inevitably you run out of money for nursing homes.

No wonder one British doctor called cancer the 'best death' – and added ‘so don't waste billions trying to cure it’.  You have to make financial room for other recipients.  To make room at the table others will have to leave it. Obamacare failed to make medical care cheaper and this means it can only keep going by redistributing the limited resources that are available.

The Best Death

POSTED about 4 weeks ago BY HEALTH CARE COMPACT

Dr. Richard Smith, a former editor of the British Medical Journal called dying of cancer “the best death” and that we should “stop wasting billions trying to cure” it.  The Independent reported how Dr. Smith regarded the advantages of cancer:

Cancer allowed people to say goodbye and prepare for death and was therefore preferable to sudden death, death from organ failure or “the long, slow death from dementia”.

The assertion that society should “stop wasting billions trying to cure” cancer recalled the statement by former vice presidential candidate Sarah Palin that Obamacare would eventually implement death panels in order to avoid the cost of treating the old and terminally ill.

[G]overnment health care will not reduce the cost; it will simply refuse to pay the cost. And who will suffer the most when they ration care? The sick, the elderly, and the disabled, of course. The America I know and love is not one in which my parents or my baby with Down Syndrome will have to stand in front of Obama's "death panel" so his bureaucrats can decide, based on a subjective judgment of their "level of productivity in society," whether they are worthy of health care. Such a system is downright evil.

The intention to implement “death panels” has been hotly denied by the administration.  But that doesn’t mean that a similar outcome will not ensue from the cost-cutting efforts of the Affordable Care Act.  The rising trend of higher copayments mean that people with chronic ailments and cancer patients are spending more for their medications.

People with Obamacare coverage who take medications for cancer, HIV, multiple sclerosis, and other chronic diseases might pay more out of pocket next year. A greater share of insurance plans sold in the healthcare.gov marketplace will require consumers to pay 30 percent or more of the cost of specialty drugs, according to a new analysis from consultant Avalere Health.

Cost sharing is one of the ways insurers can limit premiums. Patients pay for a greater portion of the medical care they need through deductibles, co-pays, and co-insurance. That last technique splits the bill for medical care, with patients paying a fixed percentage of the total cost and the insurance plan picking up the rest.

Avalere looked at how much cost sharing was required for drugs insurers considered “specialty” medicines. There’s no consistent definition of specialty drugs; the term generally refers to medicine used to treat severe or rare illnesses. The doses can cost thousands of dollars a month. Asking patients to pay 30 percent of that can mean some people skip doses they can’t afford.

Some people are complaining that Obamacare extinguished their old insurance and replaced it with “affordable health care” that essentially put their medications out of reach.  Stephen Blackwood, writing in the Wall Street Journal, described how he watched his mother lose the insurance which used to pay for her medication to a replacement Obamacare policy which was a health card without the health care.

When my mother was diagnosed with carcinoid cancer in 2005, when she was 49, it came as a lightning shock. Her mother, at 76, had yet to go gray, and her mother's mother, at 95, was still playing bingo in her nursing home. My mother had always been, despite her diminutive frame, a titanic and irrepressible force of vitality and love. She had given birth to me and my nine younger siblings, and juggled kids, home and my father's medical practice with humor and grace for three decades. She swam three times a week in the early mornings, ate healthily and never smoked….

As with most cancers, one thing led to another. There have been several more surgeries, metastases, bone deterioration, a terrible bout of thyroiditis (an inflammation of the thyroid gland), and much more. But my mother has kept fighting, determined to make the most of life, no matter what it brings. She has an indomitable will and is by far the toughest person I've ever met. But she wouldn't still be here without that semimonthly Sandostatin shot that slows the onslaught of her disease.

And then in November, along with millions of other Americans, she lost her health insurance. She'd had a Blue Cross/Blue Shield plan for nearly 20 years. It was expensive, but given that it covered her very expensive treatment, it was a terrific plan. It gave her access to any specialist or surgeon, and to the Sandostatin and other medications that were keeping her alive.

And then, because our lawmakers and president thought they could do better, she had nothing. Her old plan, now considered illegal under the new health law, had been canceled. …

The news was dumbfounding. This is a woman who had an affordable health plan that covered her condition. Our lawmakers weren't happy with that because . . . they wanted plans that were affordable and covered her condition. So they gave her a new one. It doesn't cover her condition and it's completely unaffordable.

The bright side to Mrs. Blackwood’s predicament is Obamacare, by refusing to pay for her medication is saving the system money.  Without intending to be a death panel, the increased cost-sharing or copays mean the system will stop “wasting billions trying to cure it”.  One could take the view that the money saved can be diverted to pay for preventive medicine for younger people and that is a higher and better use of money.

But that would be to argue in favor of a particular judgment, not to dispute the fact that Obamacare is making a judgement.  There’s only so much money to go around and therefore some will have to do without.  Perhaps the biggest tragedy of Obamacare is that it is not succeeded in reducing the cost of health care, but only changing the distribution of what is available.

Perhaps one day Obamacare will “bend the cost curve” and more people, rather than less will receive treatment for cancer.  Until then, it has only changed the curve describing the distribution of who got what -- and who were left to face what Dr. Richard Smith called “the best death”.

The Obamacare PR Campaign Runs out of Dough

POSTED 4 weeks ago BY HEALTH CARE COMPACT

The plan to establish Obamacare as a fixture assumed the key battles would be fought early; that both the public relations fight and the enrollment challenges would be over in the first two years. The money required to win these fights was correspondingly front loaded, but unexpectedly strong political opposition has meant that the money is running out -- and Obamacare has not yet seized its key objectives.

Joanne Kennen at Politico notes that the Obamacare PR big guns have fallen silent, having run out of funds, which are its ammunition.  No one works for free, especially activists.

Health care reform advocates who struggled for decades to pass Obamacare left the job half-undone. …

And advocates now have far less money to defend the law politically. The sources they tapped to push for the law’s passage in 2010 have largely been exhausted. Some leading pro-Obamacare organizations have shut down or quietly merged. ...

Advocates thought they could declare victory and move on. Major liberal groups turned their attention, and their wallets, away from health care reform and toward other causes like climate change, immigration and Wall Street regulation. Health care voices might not have been silenced. But they were muted. ...

“Everyone assumed that the big battle was passage,” said Neera Tanden, who worked on the ACA in the Obama White House …

“The funding community has dramatically and almost uniformly abandoned health care advocacy,” said Rachel Rosen DeGolia, executive director of the Universal Health Care Action Network, a national organization that links pro-health reform groups.

What is worse, the unsustainable pump-priming money is running dry. Ezra Klein in Vox says that everyone involved with Medicaid expansion has to take a pay cut. Recently Obamacare advocates have been touting the growing number of governors who have signed up to Medicaid expansion.  That is like the owner of the Titanic boasting of new passengers just as the ship was going down.

Thousands of Medicaid doctors are bracing for a tough start to 2015: a 42 percent pay cut.

The Affordable Care Act temporarily boosted payment rates for primary care doctors who see Medicaid patients in 2013 and 2014. The idea was to make sure doctors kept participating in Medicaid — which typically has low reimbursement rates — even as the program expanded to cover millions more Americans this year.

That earlier Obamacare pay raise was big, averaging out to a 73 percent increase for primary care doctors across the country. But it was also temporary, lasting only two years, and is set to run out on December 31. That means, beginning January 1, 2015, Medicaid doctors will earn less each time they see a patient — or, they could decide to pull out of the program altogether. Nobody is totally sure which way doctors will go.

As if that were not enough, the Obamacare exchange premiums are rising sharply, even though the number of policy holders receiving federal subsidies rose from 80 to 87%.  How long can the subsidies be sustained?  Perhaps not long enough to win.  The Obamacare planners had figured the law would by now be so well established that there would be no turning back.

Unfortunately the bait in the “bait-and-switch” routine got eaten too early.  The money has run out before Obamacare became unassailable.  Now with even bigger enemies riding down on it the program is running out of bullets. What cavalry is there left to ride to its rescue?

Coverage Without Health Care

POSTED 4 weeks ago BY HEALTH CARE COMPACT

The Bulletin reports what everyone has long known.  Obamacare is mostly Medicaid expansion -- even and mostly especially -- for the chronically sick.  The problem is that neither the metal plans for Medical expansion are particularly well suited to people with chronic conditions.  Take the case of this man.

For Elson, with advanced diabetes, chronic high blood pressure and an income too high for Medicaid but too low to pay all his bills, the Affordable Care Act came too late.

He had forgone insulin for most of the year when he arrived at his eye doctor’s office in September, huffing and puffing due to fluid in his lungs. He was off his blood pressure pills, too, and all of his medications except a drug he takes for neuropathic pain caused by diabetes. His swollen legs were covered in painful blisters where excess fluid had seeped out.

In the past, he had vowed to keep working through his ailments — installing security systems, a business that he said earned $28,000 in a good year. But now he sounded defeated.

“I don’t have no get-up-and-go,” he said. “I’m getting to the point that now it hurts too much to work.”

He had surgery last winter to stop bleeding at the back of his eyes, a complication of diabetes, and the ophthalmologist, Dr. Inder Singal, was pleased with the result. But when Elson told him he was still uninsured because the premiums and deductible had proved too high, Singal shook his head.

“What a great intent,” the doctor said of the health care law, “but there are still way too many kinks.”

The metal plans with their high copayments and Medicaid with its spare network of providers create between them a crack that many people fall through.  Thus it may be possible to be “covered” and still not have the right kind of health care to meet one’s health needs.  The insurmountable problem continues to be cost.  Whether the cost is represented by high deductibles or in the time required to actually find  a Medicaid provider, it may be too prohibitive for people to overcome.

It’s a reminder that what matters is health care, not a health card.

Rationing vs Competition

POSTED 4 weeks ago BY HEALTH CARE COMPACT

There are two approaches to solving the health care cost problem.  One way is to make medical procedures cheaper.  The other is to ration it.  Jonathan Gruber, the MIT economist who early on knew that Obamacare would not cut costs, accepted that rationing would have to be the way to go.  The Examiner looks at some of Gruber’s past remarks and notes his candor.

“It’s about telling patients, ‘That surgery doesn’t do any good, so if you want it you have to pay the full cost.’ It’s basically about saying that we as a society are going to have a minimal insurance package that reimburses effective treatments but that makes people pay on their own for ineffective treatments.

“It doesn’t deny treatment. For instance, in England you can’t get an organ transplant if you are over a certain age. That may be good policy or not, but it will never happen in this country, not in our lifetime.”

Gruber goes on to say that this sort of cost-based rationing exists in other aspects of life. “We don’t say everyone has to have a large screen TV. If you want a large screen TV, you have to pay for it.”

First of all consumers as a whole always pay for it.  Whether the money is collected by the taxman before it is paid to the doctor as ‘free government money’ or whether it is paid to the doctor direct as a fee, the money is paid and the collective payer is the consumer.  The government is only the middleman.

But where Gruber’s argument fails is when one notes that a very large number of people now own large screen TVs -- and more each year.  The real price of TV screens has been dropping over time.  Back in the 1960s, a 21 inch screen TV was huge. Today such a screen would be considered small.

The big problem with Obamacare is that it has not nothing substantial to cut the costs.  Those are still determined by the bloated chargemaster lists of hospitals -- which are bloated precisely because they have been conditioned to the pockets of insurance companies and the federal government.  And just as TVs would still be expensive if only insurance companies or government bought them, so too are hospital services still expensive.

The only way out is rationing, or as Sarah Palin called them, “death panels”.  Death panels are what the medical care system has in place of rationing.  If government were in charge of TV screens, they’d be rationed too.

Obamacare Fail the Poor and The Middle Class

POSTED one month ago BY HEALTH CARE COMPACT

Lucy Westcott of Newsweek follows the activities of Remote Area Medical (RAM), a charity known for providing services to Third World countries like Mexico, Haiti and Guatemala.  In recent years RAM has been meeting a need closer to home: America’s rural poor.

People have been flocking to their clinics, often sleeping out in cars to get a good place in line when the clinic opens.

These are people too poor for Obamacare. Spokesman Stan Brock “says the Affordable Care Act has had no effect on the turnout. For those who need RAM’s services, even the public insurance option is too great an expense, and there aren’t enough doctors or dentists where they live anyway.”

The RAM is often hampered by bureaucratic red tape. “Changing the law to allow doctors to cross state lines is absolutely key to providing masses of help to the underserved,” said Brock.

But it’s not just the lack of money to buy Obamacare, nor even the deductibles that stand in the way of the poor. It’s not even that many policies don’t cover dental work or vision problems.  It’s that the whole medical care system is too complicated.  Jeanne Pinder, a former New York Times journalist writes that medical procedures are priced so variably that nobody can make sense of it.

“I paid the whole thing and then found out I could have had it done for half the price only blocks away. My first foray into individual insurance — and it sucked.”

That’s someone who learned the hard way that prices can vary wildly in health care. An MRI: $300 or $6,221? A cardio stress test: $100 or $2,500? It’s your money, and your health, and you have a right to know.

It’s hard enough for an urban sophisticate to make sense of the medical maze and almost impossible for a rural poor person to decipher.  Pinder sees in this an opportunity for an application to make health care more rational for the middle-class consumer.

Our mission at ClearHealthCosts.com has been to expose pricing disparities as people shop for health care. But back in 2011, when I decided to build a website that would reveal what stuff actually costs in the health care marketplace, people said it couldn’t be done:

“Powerful forces will put you out of business.”

“Nobody cares what things cost in health care.”

“The Affordable Care Act will make it all irrelevant.”

They were wrong.

So far Obamacare has not done much to make costs more transparent to end users.  It is still uses the old “let the insurance company pay for it” model.  Pinder understands that competition can only happen when the consumer actually “sees” the price and can react to it.

Here’s what some of our community members told us on PriceCheck:

“I was told a procedure would be $1,850. I have a $7,500 deductible. So I talked to the office [manager], who said if I paid up front and agreed not to report the procedure to Blue Cross, that it would be $580.”

“I have insurance, but it’s not very good …. My daughter will need an MRI again next year, and thanks to your organization and what I learned on NPR, I will shop around next year and maybe just pay cash.”

“Worked with billing for several weeks to work down price. Goes to show the price isn’t the price….” [billed at $1,407, paid $900]

The only way to pay $900 instead of $1,407 is to know where the good prices are. ClearHealthCosts works by using crowdsourcing and customer feedback to build up a map of prices.   This information is uniquely valuable because Obamacare does not collect it.

We collect cash or self-pay rates from providers on 30 to 35 “shoppable” procedures, such as MRIs, cardio stress tests, and walk-in clinic visits. Our survey methodology elicits consistent apples-to-apples prices every time. We tell providers who we are and what we’re doing, and we ask them for their cash or self-pay prices. If they have questions, we point them to the site. Most tell us the prices; some, though, say they do not give prices over the phone, or give prices only to patients.

Once we have the prices, we juxtapose them with corresponding Medicare reimbursement rates, where applicable, because they are the closest thing to a benchmark price. …

At ClearHealthCosts.com, we’re partnering with KQED public radio in San Francisco and with KPCC/Southern California Public Radio in Los Angeles on PriceCheck — a crowdsourcing project to create a large database of cash and self-pay prices that are specific to named providers. …

Thus armed, a consumer can identify the deals. This is the essence of competition: few barriers to entry on both sides of the market and transparent prices. Obamacare doesn’t do this. It is just a way to buy subsidized insurance for certain groups of consumers by charging other consumers more through an exchange. Its failure to create a real market, complete with listed prices for procedures (not for insurance) is it’s biggest defect.

Pinder argues that prices enable choice. What Obamacare does is create an elaborate mechanism to pay an unknown, almost unseen price.

If you want the $6,221 MRI, you should have it — but you should pay for it, not me, not my employer, not my government. If you want the $300 test, it’s yours. If you want to buy your prescription for $150, go ahead. But you should also know that if you walk two blocks, you can get it for $17. (Yes, these are real numbers.) And you shouldn’t need to be a detective to discover this. …

Transparent markets benefit consumers, as providers compete to win business and healthy market forces produce benefits for suppliers. Witness how the markets for airline tickets, cars, and real estate were transformed by technology and transparency. Like it or not, health care is close behind.

Obamacare is failing on two counts. It’s health care exchanges are not designed to meet the needs of the truly poor.  Furthermore, its exchanges do not meet the needs of the middle class buyer.  It’s high deductibles and acceptance of opaque prices simply paper over, but do not solve the real problems.

Have Brain Will Travel

POSTED one month ago BY HEALTH CARE COMPACT

The ongoing saga of Jonathan Gruber underscores the danger of intellectual emptiness.  The intellectual lightweight isn’t Gruber, who is astonishingly fecund, but his Democratic employers, who cannot seem to think for themselves.  The MIT economist is due to be grilled before Congress and asked to explain just what he meant by calling the American voters saps.

The Democrats are terrified to be depicted as sharing his opinion.  The Republicans are trying to pin Gruber on the Democrats, while the Democrats claim they never heard of him

Representative Darrell Issa, chairman of the House Oversight Committee, said panel members will ask consultant Jonathan Gruber about possible deceptions and a lack of transparency in the 2010 Affordable Care Act, better known as Obamacare.

Republicans have seized on videos in which Gruber, a healthcare economist at the Massachusetts Institute of Technology and an Obamacare consultant, says the law was written in a "very tortured way" to hide taxes, and passed thanks to "the stupidity of the American voter."

Issa said the public deserved an explanation from Gruber at Tuesday's hearing. …

Representative Elijah Cummings, the top Democrat on the House Oversight panel, called Gruber's comments "very unfortunate." He said he would use the hearing to talk about the benefits of Obamacare.

"To spend hours upon hours of time trying to get (Gruber) to explain himself, to me it does not insure one more person, it does not help heal anybody, and it doesn't do anybody any good. We're wasting our time," Cummings said.

Republicans also want to question an administration official about inflated enrollment figures for Obamacare.

But Gruber’s role as a thinking cap for hire emerged again as it was revealed that he may have been the intellectual father of the tobacco tax increase, a subject which turned explosive with the death of street cigarette peddler Eric Garner at the hands of a New York cop.  Michael Bloomberg hired him to make the case for the tobacco tax.

Gruber’s position on cigarette taxes was already established and well-documented. In April 2002, he published an article titled “Do Cigarette Taxes Make Smokers Happier?” that promoted the benefits of higher cigarette taxes. In May of that year, Gruber also wrote an article titled, “Estimating Price Elasticities when there is Smuggling: The Sensitivity of Smoking Price in Canada.” The report pointed out that in Canada in the 1990s there was widespread smuggling "in response to large tax increases." Therefore, Gruber was fully aware of the potential of illegal cigarette sales from tax increases when he wrote his 2008 article for Mayor Bloomberg.

Both Obamacare and tobacco taxes have been public policy disasters that have spawned myriad unintended consequences. In Obamacare, millions of people have lost their doctors and/or policies. Enrollment numbers are way below the Obama administration's projections. Soon we will find out if companies will cancel employer plans, thereby throwing many more people onto the exchanges than anticipated.

In regards to cigarette taxes, the problem of black-market tobacco sales has exploded all along the east coast. According to a Bloomberg article published in May, Maryland Comptroller Peter Franchot stated, “We are all-hands-on-deck as far as cigarette smuggling because it’s no longer a mom-and-pop operation... It’s something that significant criminal entities are involved in, and it’s a target-rich environment.” What happened on Staten Island with Eric Garner is tragic, but his confrontation with police would not have happened without the cigarette taxes which created a market for his alleged illegal sales—taxes passed without consideration for unintended and often adverse consequences.

The workflow that is emerging from an examination of Gruber and the Democratic Party is that he provides the rationale for various new taxes or impositions that the party members are incapable of articulating themselves.  Then they pass the law.  Not that they understand it, mind you.  But then they can always quote the intellectual from MIT.

Need  justification for taxing cigarettes? Call Gruber.

Need a reason to take over the health industry? Call Gruber.

Of course Gruber himself knows what the deal is.  He is perfectly aware the politicians are playing the voters for chumps. His sin was to admit it. His job was to play Hired Brain. The saga of the economics professor illustrates very clearly how cynical the policy game has become.  And that leads people to think that all those studies concerning Global Warming, the War on Women, of Immigration Reform are nothing but scams decked out in deceptive intellectual finery to appear respectable.

But like Gruber said: with the voters that dumb, how can you stop yourself?

The Grassroots Activist Who Found Obamacare’s Most Serious Legal Flaw

POSTED one month ago BY HEALTH CARE COMPACT

USA Today describes the strange origin of the lawsuit that may doom Obamacare.  “A Supreme Court challenge that poses a grave threat to President Obama's health care law had its genesis precisely four years ago as a power-point presentation by a self-proclaimed pessimist from South Carolina.” The man’s name was Tom Christina.

"I'm a pessimist," the employee benefits lawyer told his audience at the American Enterprise Institute four years ago, explaining why he feared the original challenge to the law's individual health insurance mandate would fail — a prediction that proved prophetic. So he devised another line of attack. …

The idea was picked up by an Ohio law professor, given a policy and public relations push by a Washington health economist and turned into a lawsuit by an Oklahoma attorney general. Three more lawsuits followed.

Nearly five years after the law was passed, their effort has reached the Supreme Court, which saved the president's signature domestic policy achievement in 2012 but now could deal Obama a significant setback.

The challenge hinges on four words repeated several times in the statute: "established by the State." It posits that only state-operated health insurance exchanges can offer the federal subsidies that make premiums affordable for millions of participants. In 36 states where the federal government runs the exchanges, the lawsuit claims, such assistance shouldn't be allowed.

But the real author of the lawsuit were the legislators who sloppily wrote the law and thus made the challenge inevitable.

The legal argument was fleshed out early in 2011 by Jonathan Adler, a law professor at Case Western Reserve University. Asked to write a paper for a University of Kansas School of Law conference, he read the 906-page law, "which it's clear a lot of people didn't do." He concluded that tax credits were dangled as an incentive for states to create the online exchanges, which administration and congressional proponents deny.

It was that sloppiness which opened the door to the challenge.

The lesson of Mary Landrieu

POSTED one month ago BY HEALTH CARE COMPACT

The debate over whether Obamacare was a disaster for the Democratic party may have set off a word war between Senators Schumer and Harkin as ‘for’ on the one hand, and stalwarts Henry Waxman, Steny Hoyer and Paul Krugman as ‘against’ on the other. But the decisive proof supporting Schumer and Harkin came with the loss of Mary Landreiu’s Senate seat in Lousiana.

Landrieu was defeated mostly because she was widely perceived to have been a supporter of Obamacare. This became abundantly clear when the Democratic candidate tried to fend off questions at a radio interview.

Such has been her desperation, facing an imminent loss in today’s runoff against Congressman Bill Cassidy (R-LA), she accepted a Friday interview with Tea Party-conservative radio host and critic Jeff Crouere. …

Crouere began by asking her why she had been absent for so long, to which she apologized — albeit awkwardly — and then countered that “I’ve been looking for you as well.”

The first question of substance was on why Landrieu gave a decisive vote in favor of Obamacare, since Crouere sees it as the death knell to her career in the US Senate. After she responded for 50 seconds, acknowledging that the law had flaws but diverting attention to Hurricane Katrina aid, he gently interjected, “well, right,” but he could not get another word in.

“Hold on, Jeff,” she said curtly. “You asked me a question. Let me finish.”

It was all downhill from there not just for the interview but for Landreu’s candidacy as well. There is something about Obamacare that the public doesn’t like and that negative outlook has manifested itself in the ouster of Democratic candidates in otherwise safe seats.  People like Waxman, Hoyer and Krugman should ask themselves what it is that the voters don’t like.

Any honest answer will probably include the admission that many voters feel it has been shoved down their throats.  This is the fate of any centralized and monolithic health care program.  One size cannot fit all.  The very same danger now haunts the Republicans, who are in a position of strength analogous to the Democrats in 2009. The GOP should avoid making exactly the same mistake.

The great virtue of the Health Care Compact is it addresses the governance question of “who decides”?  The states should decide.  In that way Vermont and Massachusetts can chart a course separate from that of Texas, for example, within a general set of objectives.  If some new centralized program is foisted on the public by Republicans then history may repeat itself.  The voters don’t like being forced to act against their will. Not even by the Democrats.

Imploding Obamacare in Place

POSTED one month ago BY HEALTH CARE COMPACT

Another analyst prepares the nails for Obamacare’s coffin. Chris Conover at Forbes prepares a checklist through which the ACA can be systematically replaced. “Every item on this list potentially could be voted on and sent to the president before he leaves office.”  It is designed like a demolition plan specifying a sequence of abolition that will leave no currently insured person twisting in the wind, and therefore proof against serious criticism.

The other reason for the list is that healthcare is such a big topic that it’s impossible to tackle it all at once. Obamacare tried to cram everything into a single statute and created a mess. Therefore Conover urges that the effort be broken down into bite-sizes:

A few principles might help guide the selection of specific options to adopt and their timing:

  • Start small and build momentum.  To the degree a “snowball” effect can be created, this both maximizes the chances of picking off Democrats (who learned a lesson from the disastrous elections of 2010 and 2014) and of amplifying the public anger that presumably will manifest itself should SCOTUS rule next June that the administration has acted lawlessly regarding Exchange subsidies.

  • Arrange legislative packages in “themes.” This will better educate the public about why the changes are needed …

  • Have only one Obamacare vote per month. This again maximizes the odds that a public with limited attention span will hear and understand whatever core messages/rationale relate to that legislative package.

  • Make each legislative package budget neutral.  This will be an essential component of getting the public to understand that Republicans are capable of responsible governance and making hard choices.

America is a vast country, and there remains the question of how each state will adapt to the process. Conover says there should be greater state flexibility regarding exchanges and Medicaid.  This is a page right out of the Health Care Compact’s book. The fact that Conover mentions it is yet one more reason to take the opportunity to push the idea hard.

The Health Care Compact is an idea which many others are independently stumbling upon.  It’s time to incorporate it into the strategy for repeal.

Obamacare’s Defects Will Force the President to Reopen Debate

POSTED one month ago BY HEALTH CARE COMPACT

Obamacare is full of inexplicable gaps because it wasn’t really intended to cover everyone.  It’s goals were to 1) save the insurance industry and 2) give relatively more people a health card.  It has been moderately successful at those two goals.  But it has been less successful and giving people financial access to health care.

The question of bailouts to the insurance industry has come up again, with a newly Republican controlled Congress questioning the authority of the administration to use public funds to rescue insurers who lose money in Obamacare.

The risk corridors program has been the subject of behind-the-scenes debate over the past year, with Congress trying to find out whether the risk corridor program has to be cost-neutral and, if not, whether it requires a congressional appropriation to fund payments to insurance companies.

The risk corridor program allows the government to take money from insurance companies that make “excessive” profits and pay insurance companies that fall into the red. But it is possible there will be no excessive profits, or at least not enough revenue from it to cover the losses of unprofitable insurers.

Although the Obama administration originally claimed the risk corridors would be self-funding and not require taxpayer dollars, there’s nothing in the law requiring this. Instead, it seems the administration simply assumed there would be enough excess profits to fund the program’s payments to insurers with excess losses.

But whether Congressionally approved or not, any arrangement which potentially bails out insurance companies is an invitation to abuse.

Gaps in the Obamacare design are making it impossible, even by its own proponent’s admission, to provide affordable insurance to individuals.  This is because of the “step”  nature of the subsidies.  If you don’t make the cutoff due to a technicality, you are excluded from the subsidies offered.  NPR writes:

The Affordable Care Act is expected to provide around $10 billion in subsidies this year to make health insurance affordable for low- and middle-income people. But a quirk in the law is denying subsidies to a significant number of low-income people, especially those with families.

The quirk in question is a corner case where a breadwinner gets cheap insurance from his employer thereby making him ineligible for a subsidy.  But the formula prescribed only applies to the actual employee. Should he decide to include his family in the group plan, the insurance becomes expensive and yet Obamacare rules exclude him from the subsidy.

The trouble is that Obamacare is set in stone. President Obama dare not let Congress fix, change or improve anything because it would open the floodgates to changing it wholesale. NPR says “Democrats have been hesitant to open debate on the law at all, because of fear it would be eviscerated during the legislative process. With the Republican takeover in Congress, the chance of eliminating the family glitch seems unlikely to improve anytime soon.”

This is clearly an unsustainable strategy.  No president can “freeze” a law as if it were some article in the Constitution, especially when his party has lost control of both houses. But the defects of Obamacare are now glaring -- even to NPR.  Obamacare will be repealed and replaced.  The question is no longer “if”, but “when”.

Obamacare Tries to Airbrush Out Gruber

POSTED one month ago BY HEALTH CARE COMPACT

Jonathan Gruber continues to serve as a sacrificial lamb.  Picwell, a consulting firm with traditionally close ties to Obamacare, has removed all references to Jonathan Gruber, formerly one of its stalwarts.

Gruber was previously touted as part of Picwell’s expert team as it launches a major project to analyze all of the choices made by Obamacare enrollees during the open enrollment period that began on November 15. But now Gruber’s photo and bio has been removed from the firm’s website.

Picwell is comprised of major Obamacare-world players, including former top UnitedHealthCare official Jay Silverstein.

The efforts by advocates of the Affordable Care Act to distance themselves from Gruber recalls the efforts made during the Stalin era to airbrush disgraced persons from the public record.

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Administration officials would rather the economist would disappear. But Gruber has been called to testify before the House of Representatives. And that creates a problem of optics.

“The Obama administration is asking Rep. Darrell Issa not to put its senior Medicare official next to the now infamous Obamacare ‘architect’ when both testify on Capitol Hill next Tuesday.”  They are probably hoping that by putting actual physical distance between Gruber and other witnesses the economist’s role in its design will not be noticed.

However, the record all too clearly shows that Gruber played an important part in crafting the program’s design parts of which he labeled as deceptive -- intentionally so -- the better to foist it on the American voter.

Exemptions

POSTED one month ago BY HEALTH CARE COMPACT

The trickle is becoming a flood.  Democrats apart from Senator Schumer now realize that Obamacare is dying and it is time to design a replacement. “A top New York union has just given the state’s senior senator an opening to reach across the aisle to work with Republicans to overhaul ObamaCare.”

The opportunity comes in the form of a new federal lawsuit against ObamaCare filed by the Correction Officers’ Benevolent Association. Union President Norman Seabrook sums up his problem this way: “ObamaCare will bankrupt us."

At issue is an ObamaCare regulation outlawing plans with caps on prescription-drug benefits. The union happens to have a supplemental, city-subsidized medical fund that had just that: a $10,000-per-family annual limit on drug benefits.

Because ObamaCare forced the union to drop the cap, more than two dozen of Seabrook’s members have soared above it. That leaves the union with two unappetizing choices: shut down the fund completely, which would mean fewer benefits for its members, or go broke.

What Seabrook is looking for is something the administration has given other unions: an exemption.

Obamacare is full of exemptions.  There’s even a company whose business is to find the exemption that’s right for millions of Americans. Liberty Tax Service says:

Millions of Americans and legal residents are eligible for exemptions to the Affordable Care Act (ACA), but many still have not completed the necessary application to receive these exemptions. Liberty Tax Service wants to encourage them to apply before tax season opens by offering exemption application assistance free of charge.

One of the problems with the Affordable Care Act is that it had to be crafted overbroadly to embrace the diversity of the 50 states.  It is so convoluted even Chuck Todd called it a “mess”.  He said:

It’s amazing how many people I have in here who were telling me stories, “We just assumed we could fix that in conference committee and we could do this here” and all that stuff, so they allowed a lot of sloppy language and sloppy this and sloppy that to happen and they just let all these guys put whatever they wanted in it because they said we’ll clean it up in conference. Well, obviously that didn’t happen. . . . At the end of the day, it’s the “Keep the Insurance Companies’ Industry Intact Act.” They own it and obviously they want all these customers so I wonder if that’s something somebody you’ll start hearing more and more Democrats second-guessing themselves on.

But even the best legal craftsmen could not have avoided overcomplexity.  There are hundreds, perhaps thousands of interest groups or special circumstances which can never be accommodated by a single overarching health-care system. Obamacare handles these problems by issuing “exemptions”. It pokes holes in itself.

The better approach would have been to craft a framework under which the states could build individual implementations.  The exemptions are handled by customization rather than through a special pleading with the president.  The fact is that Obamacare is now a threadbare tissue that has been ripped apart by the Democratic party itself.

The unions are asking the Republicans to support an exemption.  The Republicans should not succumb to the temptation of granting it.  Rather they should devolve the governance process to the levels below Washington.  Or else the exemptions become the rule.

Randy Barnett Looks at Life After Obamacare

POSTED one month ago BY HEALTH CARE COMPACT

Paul Krugman, who still thinks Obamacare is a wonderful program that people are too dumb to appreciate, took Chuck Schumer to task for calling it a political mistake. “Krugman concludes, perhaps the politics of Obamacare wouldn’t be quite as bad if Democratic politicians actually defended ‘the best thing they’ve done in decades,’ rather than frantically flee their own historic achievement.”

Krugman still hasn’t gotten the news that the Democratic Party was annihilated in the 2014 midterm elections because voters hated the program that he thinks so very much of.

Randy Barnett, a Georgetown University law professor, is under no illusions about Obamacare’s viability.  Barnett knows it is near death because the Supreme Court might actually drive a stake through its heart.  He argues that the Republicans can hasten its demise by crafting safety net that will allow the court to pull the trigger on the Affordable Care Act.

Insiders know that this challenge has a decent chance of success. Rather than asking the court to establish some grand constitutional principle, the justices are merely being asked to hold the IRS to the actual wording of the law, which is not nearly so heavy a lift.

The eventual outcome of the case doesn't matter as much as the decision to hear it. With the lawsuit now looming over them, all the "stakeholders" — such as insurance companies and health care providers — know that the subsidies for health insurance in 36 states are in serious jeopardy. And the end of these subsidies means the end of the insurance mandate for businesses in those states, which kicks in only if employees are eligible for subsidies on an exchange. …

In short, now everyone needs to invest in devising a replacement for Obamacare. Even better, by developing such an alternative, Republicans can make a favorable ruling more likely.

Obamacare is now in the end game. But many of the alternatives proposed, including Barnett’s are simply other Washington-made versions of the Democrat’s grand health care plan. If there is one thing the failure of Obamacare should have taught it is that a one-size-fits-all solution is too risky a business.

Barnett is right in saying now is the time to put forward an alternative to Obamacare.  But what is needed is a framework to move the health care decision making down into the states. In that way the resulting system will be free from legal or political defects that threaten the whole system should the national mood shift.  It can’t be built on one leg. It needs 50 legs.

Obamacare As The Fountain Of Lawsuits

POSTED one month ago BY HEALTH CARE COMPACT

Bertha Coombs writing in CNBC, says employers should brace for lawsuits related to the Affordable Care Act.  The thousands of pages of statute and untold volumes of regulation have created endless opportunities for lawyers to sue.  Honeywell found itself sued for implementing the “wellness” provisions of Obamacare.

When CEO David Cote advocated for Honeywell employees to take a health survey as part of a company wellness program, the last thing he expected was a lawsuit, Cote told CNBC on Wednesday morning.

"I have to admit I was more than a little bit surprised by this suit … in fact, 'infuriated' might be a good way to put it," Cote said on "Squawk Box."

The U.S. Equal Employment Opportunity Commission, an independent agency, is suing Honeywell for imposing penalties for employees who don't want to take the test. If Honeywell employees and spouses choose not to take the biometric survey, they could be penalized up to $4,000 each, through surcharges and lost contributions. The lawsuit said the program violates the Americans with Disabilities Act and Genetic Information Nondiscrimination Act.

"If they don't get the survey, then they have to pay $100 more per month for their policy," Cote said. "So we don't refuse anybody any coverage. And the whole point is, why should people who don't care about how they're living, why should they be able to take advantage of all the people who do care?"

Then there’s the employer mandate, which gives rise to potential liability if an employer cuts a person’s working hours.

Starting in January, companies with more than 50 workers are required to offer affordable health coverage to workers who put in more than 30 hours per week, or face a penalty.

The law gives workers the right to file a complaint if their hours are cut and as a result they lose access to health coverage.

"Anytime an employer ... decides to do that—reduce an employee's hours or terminate employees so they don't have to provide them with health-care coverage—that could give rise to a claim," said Christopher Williams, a fiduciary product manager at Travelers Insurance. His firm recently launched coverage for ACA-related risk.

Williams said Obamacare litigation risk is something most large firms haven't thought much about yet, but plenty of lawyers are focused on the issue.

"There's thousands of pages of regulations, and they're going to look through those statutes ... to come up with novel causes of action. We've started to see that already," he said.

With all that potential for hassle, wouldn’t companies be better off giving their employees some money to go buy “affordable health care” on one of the Obamacare exchanges.  After all, isn’t it a good thing to swell the ranks of Obamacare rolls, almost a social or patriotic duty?

Don’t even think it, writes Karen Klein in Bloomberg Business Week. “Officials got wind that some employers planned to bypass the mandate by giving their workers bonuses, asking them to decline company-sponsored insurance and sending them to the Obamacare marketplaces to buy subsidized policies. Nudging sick workers, in particular, onto the exchanges could save employers’ health plans money and shift the cost onto publicly subsidized plans. The Labor Department published new guidelines in November to explicitly forbid that practice.”

Yes, you read that right. You can be sued if you encourage your employees to get coverage on the Obamacare exchange instead of offering it yourself. A lot of people actually thought that the president wanted people to buy Obamacare metal policies.

“Brokers were running around selling this idea that employers could give everybody a raise and say, ‘Go, get the tax credit, knock yourselves out,’ and they wouldn’t pay a penalty. Go figure—the IRS got wise to that,” says Keith McMurdy, a partner in the employee benefit division at Fox Rothschild, a law firm in New York City.

Arlene Weintraub of the Entreprneur cited a survey which found that very few executives knew what compliance with Obamacare entailed.

The deadlines for coming into compliance with Obamacare are rapidly approaching—they’ll hit companies with more than 100 full-time employees this coming January and firms with between 50 and 99 full-timers in January 2016. Regardless of where your company falls, you’re likely feeling a bit overwhelmed. According to a survey of companies with 50 to 999 employees released in October by Automatic Data Processing of Roseland, N.J., more than 75 percent of executives lack confidence in their understanding of the Affordable Care Act. One out of three midsized businesses have already faced fines for not following its requirements, and most have vastly underestimated the time and money it will take to be fully compliant.

In fact she cites on situation which could have come straight out of the “dumping” prohibition. What if employees choose to go to an Obamacare exchange? Would that be dumping?

For example, if you employ a lot of workers making $30,000 or less, and your plan costs employees 9.5 percent of their wages, which is the maximum allowed under the law, some may balk—and make choices that cause problems come reporting time. “If they have to put 9.5 percent towards their health insurance, that’s almost three grand, which is a lot of money,” McAnelly says. If workers go to the federal or state exchanges instead to get a better deal, and they take tax credits for doing so, they could get in hot water with the IRS. “If the employer reports that they offered them coverage, the employee is going to get a notice saying they shouldn’t have gotten those premium tax credits.”

The bottom line, says McAnelly: “Educate your employees, make sure they understand, or there could be a lot of trouble.”

Weintraub suggests starting a ‘wellness’ program to reduce group insurance costs.

The Beacon Group recently sent nurses out to one of its clients to do voluntary blood pressure screenings for its employees, for example. “They found seven people that had high blood pressure that needed to be controlled with medication. Those seven people had no idea,” Cellucci says. “We headed off something that could have been much worse. We subsidized 100 percent of the cost of that, but it turned out to be a rather small investment considering the results.”

But obviously Weintrab hadn’t read about Honeywell being sued for collecting information on employee’s health conditions, like taking their blood pressure.  Apparently you can get sued under Obamacare whatever you do.  Perhaps it was designed that way.  

The Health Care Compact Escape Hatch

POSTED one month ago BY HEALTH CARE COMPACT

Jim Geraghty at the National Review rhetorically asks whether Democrats are secretly hoping King and Burwell will put Obamacare out of its misery.  But Geraghty is barking up the wrong tree. It is really the Health Care Compact which offers the least embarrassing line of retreat for the Affordable Care Act.

If you accept…

A) Obamacare/the Affordable Care Act is an extraordinarily complicated, interlocking, jenga-tower-like piece of legislation that will not work if any significant part is removed, particularly the the individual mandate or the subsidies for those purchasing on the federal exchange, and…

B) President Obama will never, ever, ever allow Obamacare to be repealed, or for Republicans to repeal a portion that would lead to the collapse of the entire initiative, and…

C) That certain Democrats are beginning to realize that Obamacare is a political albatross that will only worsen with time.

Will certain Democrats secretly hope that the Supreme Court rules in King vs. Burwell that the text of the law only allows for subsidies on state-run exchanges, and that the IRS cannot allow subsidies on federal exchanges?

That decision would effectively destroy Obamacare. The consequences would be instant and severe, with millions of people losing their subsidy, determining their insurance policies are now unaffordable, and cancelling them. There’s an argument that eliminating the subsidies in states using the federal exchange would be a backdoor way of rescinding the individual mandate: ”The mandate includes an exemption for people who can’t afford coverage, and without subsidies, millions more people would qualify for that exemption.” Insurers would have millions of canceled policies, with former customers who can’t afford a new policy. The consequences of unsubsidized Obamacare might be so bad that there might be bipartisan agreement to repeal the whole thing and start over.

If you’re a Democrat, this is a way to get rid of the political costs of Obamacare without ever having to admit that the law was badly conceived, written, implemented, administered, and so on.

But consider what would ensue if Congress proposed the following King and Burwell. It would pass a law extending subsidies for one year, thus fixing King and Burwell.  Then it would allow states to choose their own mode of health care, giving over to them the monies that are collected in each state for the purpose. Vermont can choose Single Payer,  Massachusetts and Oregon can continue Obamacare, and a bunch of other states can choose a more market based system like the 2017 project.  Nobody would be forced to adopt a health care system the voters didn’t like.

Suddenly the Republican Party does what the administration could never conceive: let people choose.  It would work. It would make the Republicans popular.  It would get the Democrats off the hook.  It might even deliver affordable healthcare.  What it will certainly do is set different systems in competition.  And may the best system win.

Price Issues Dog Affordable Care

POSTED one month ago BY HEALTH CARE COMPACT

Price continued to dominate the list of problems afflicting Obamacare. The White House has admitted the Obamacare premiums are going up.  The Associated Press reports:

WASHINGTON — Many HealthCare.gov customers will face higher costs next year, the Obama administration acknowledged Thursday in a report that shows average premiums rising modestly.

However, officials said millions of consumers who are currently enrolled can mitigate the financial consequences if they are willing to shop around for another plan in a marketplace that's becoming more competitive.

Premiums for the most popular type of plan will go up an average of 5 percent in the 35 states where the federal government is running the health insurance exchanges, said a report from the Health and Human Services Department

There are two parts to the admission.  The first is that the average premium is going up by 5%.  The second is that the increase is likely to be larger than 5% unless a person shops for a new policy.  There are costs to switching policies.  The hassle of new networks, providers, terms and conditions are inevitable.  But not all of those willing to incur those switching costs can find a plan equal to the cost of their old one.

Officials with HealthCare.gov, the online health insurance marketplace for 37 states including Missouri and Illinois, and the Centers for Medicare and Medicaid Services urged consumers to return to the site and explore new plan offerings.

They said 70 percent of the 6.7 million Americans currently enrolled in a marketplace plan could find lower premiums for the same level of coverage in 2015.

That would leave 30% unable to find lower premiums for the same level of coverage.  The administration is clearly alive to the danger than customers will be riled by higher prices. Jason Millman of the Washington Post writes: “The Obama administration on Thursday issued a plea to Obamacare customers returning to the law's health insurance marketplaces: shop around if you want to get a better deal this year.”

Less noticed but equally important is the increase in deductibles.  Obamacare’s deductibles are already high and now they are going higher.  Out of the 3,000 plans, fully 900 are increasing their deductibles.

ProPublica and the New York Times have published an analysis of 2014 and 2015 plans in 34 states being offered on the federal government’s health insurance exchange, often through the website Healthcare.gov.

Customers of more than 900 plans will see their out-of-pocket maximum for medical bills increase, usually to $6,600 for individuals, the most permitted by federal law for next year, the analysis shows. Only about 250 plans are reducing their out-of-pocket maximums. About 180 plans are being discontinued for at least some customers, and the rest are keeping the same limits.

A $6,600 deductible is a steep hill to climb for the average person. This plus the increase in average premiums, aggravated perhaps by a failure to shop, will make Obamacare a millstone on many people’s backs.  The high price of Obamacare makes a mockery of its title: the Affordable Care Act.

What’s affordable about it?

Harkin Has Regrets Over Obamacare

POSTED one month ago BY HEALTH CARE COMPACT

The National Review notes that outgoing Senator Tom Harkin (D) believed Obamacare was too complicated to work. He would have preferred a single payer system.

Outgoing senator Tom Harkin (D., Iowa) joined the chorus of Democratic lawmakers expressing some regret about the passage of Obamacare in 2010 — because he believes Democrats passed up an opportunity to pass a single-payer system and settled for “complex, convoluted” Obamacare.

“We had the votes to do [a fully public plan] and we blew it,” he told the Hill in a recent interview. …

“We had the power to do it in a way that would have simplified health care, made it more efficient, and made it less costly, and we didn’t do it,” he said. “So I look back and say we should have either done it the correct way or not done anything at all.”

Single payer systems are simpler to administer.  They do not necessarily deliver better health care.  The Soviet Union for example, began a universal health care system in 1918.  Soviet health care was certainly less complicated that Obamacare’s system of exchanges, but whether it was any good is certainly debatable.

A two-tier system was created: one for the "gray masses" and the other, with a completely different level of service, for the bureaucrats and their intellectual servants. In the USSR, it was often the case that while workers and peasants were dying in the state hospitals, the medicine and equipment that could save their lives was sitting unused in the nomenklatura system.

At the end of the socialist experiment, the official infant-mortality rate in Russia was more than 2.5 times as high as in the United States and more than 5 times that of Japan. The rate of 24.5 deaths per 1,000 live births was questioned recently by several deputies to the Russian Parliament, who claim that it is 7 times higher than in the United States. This would make the Russian death rate 55 compared to the US rate of 8.1 per 1,000 live births.

But whether or not Harkin is correct to like single payer, the fact remains that the Democratic legislators passed a program even they did not believe in.  They loaded blanks into the gun -- knowing they were blanks -- and gave the gun to people assuring them it would shoot.

They are disappointed in Obamacare. But they should be disappointed in themselves.  

Coburn and Roe Ask Supreme Court to Review IPAB

POSTED about 2 months ago BY HEALTH CARE COMPACT

Senator Tom Coburn and Congressman Phil Roe, both medical doctors, take on the IPAB, or Independent Payment Advisory Board, a body established under Obamacare.

The Independent Payment Advisory Board, or IPAB, is a fifteen-member United States Government agency created in 2010 by sections 3403 and 10320 of the Patient Protection and Affordable Care Act which has the explicit task of achieving specified savings in Medicare without affecting coverage or quality. Under previous and current law, changes to Medicare payment rates and program rules are recommended by MedPAC but require an act of Congress to take effect. The new system grants IPAB the authority to make changes to the Medicare program with the Congress being given the power to overrule the agency's decisions through supermajority vote.

Coburn and Roe are supporting yet another lawsuit against Obamacare, this time challenging the constitutionality of the IPAB itself. “In the four years since the Affordable Care Act was passed, health care in our country has become more complicated and expensive. The law has many troubling aspects, but the Independent Payment Advisory Board is among the worst and most dangerous. This is why, on Thursday, several members of the House will file an amicus brief asking the U.S. Supreme Court to take up Coons v. Lew. This lawsuit, filed by the Goldwater Institute on behalf of Dr. Eric Novack, an orthopedic surgeon, and Nick Coons, an Arizona businessman, challenges the constitutionality of IPAB.”

The suit will argue that:

  • IPAB violates constitutional separation of powers by usurping functions that belong only to Congress;

  • IPAB violates medical autonomy and privacy

  • The ACA runs afoul of the Health Care Freedom Act

The principle defense against Coons vs Lew is that IPAB hasn’t had the chance to injure anyone yet. Jonathan Adler of the Washington Post writes:

On August 7, in Coons v. Lew, the Ninth Circuit held resolution of this constitutional challenge was premature.  According to the court, it was possible that future actions by IPAB could injure the plaintiffs.  One of the plaintiffs was a doctor who sees Medicaid patients and fears lower reimbursement rates.  Yet the IPAB has not been constituted yet, and its first cost-cutting recommendations (once they are made) will not become effective for several years from now, at the earliest.  Thus, the court concluded, the plaintiffs were only alleging a potential future injury of the sort that is not justiciable under Article III.  On this basis, the court concluded the challenge was unripe and should be dismissed  for lack of jurisdiction.

However, Coburn and Roe argue that Constitutional issues should persuade the Supreme Court to decide the case now.  A number of legal challenges are converging on the Court, which impel it to deal with these separate issues once and for all.

Can the President Spend Money Without Appropriation?

POSTED about 2 months ago BY HEALTH CARE COMPACT

The challenges to Obamacare on the legal front have come thick and fast. Not only are the subsidies paid in states without an exchange being challenged but a decision on the constitutionality of the IPAB has been urged on the Supreme Court by Senator Coburn and Congressman Roe, both medical doctors.

Now comes another potential challenge. USA Today reports that congress is objecting to the administration appropriating money for itself.  That power they argue, belongs to Congress.

WASHINGTON — Earlier this year, the Obama administration quietly moved nearly $4 million in health insurance subsidy payments from one Treasury account to another.

The budget director explained action in terms of "efficiency." But the House of Representatives says the transfer skirted the law and violated the Constitution — and is asking a court to strike down part of the Affordable Care Act as a result.

That argument comes from a lawsuit filed by the House of Representatives last month as it attacks Obamacare on two fronts. The first, long-debated claim is that Obama did not have the power to delay a provision requiring large employers to provide health insurance for full-time employees.

But the lawsuit also raises a brand new argument: That paying insurer subsidies out of an account not appropriated by Congress violates the separation of powers.

The lawsuit challenges a lesser-known provision of Obamacare that gives subsidies to health insurance companies as a way of helping reduce out-of-pocket expenses for low-income policyholders who buy insurance on government exchanges.

The Affordable Care Act authorized those payments — but didn't set aside any money specifically for them. The lawsuit argues that the money needed to come from annual appropriations from Congress.

Whatever the legal merits of the case may be it sets up a clash between the branch of government that controls the purse -- Congress -- and the branch that spends it, the Executive.  The wide difference of political opinion between the branches means that the President will have to operate Obamacare more or less unilaterally because he cannot obtain the cooperation of Congress.  There are limits to what each can do.  It remains to be seen whether the president can implement a law which is not only widely unpopular with the voters -- as shown by the 2014 election results -- but which Congress will stop at nothing to defund.

It is doubtful whether a program of Obamacare’s mandate can be carried forward without a substantial political mandate.  Little things can be pushed forward without support. A huge program cannot make headway without the consensus that the Affordable Care Act sorely lacks.

Obamacare Enrollment Tapers Off

POSTED about 2 months ago BY HEALTH CARE COMPACT

Alarm bells began ringing in the HHS as enrollments for Obamacare at government exchanges began to slow down after starting fairly fast.

Fewer people signed up for Obamacare plans on HealthCare.gov in the second full week of open enrollment than did so the first week, data released Wednesday showed.

There was also a pronounced drop off in the number of people applying for eligibility determinations, and calling the phone center of HealthCare.gov, which serves 37 states, officials said. The drops came during a week, Nov. 22 through last Friday, which included the Thanksgiving holiday. …

Experts believe there will be a significant surge of sign-ups for 2015 plans around that deadline. Obamacare enrollment also will be boosted by HealthCare.gov's plan to automatically re-enroll a large majority of customers unless they switch plans or drop coverage on their own.

A sales force is out in full strength trying to drum up enthusiasm for the program. “ObamaCare outreach campaigns across the country are diving deeper into the hard-to-reach uninsured populations such as rural areas with hopes of driving up enrollment in its second year, several state directors said Wednesday.”  They are even in the shopping centers.

Malls in a number of states across the country are allowing health care navigators to set up shop around stores to hawk the benefits of ObamaCare.

It’s all part of a Health and Human Services campaign to snag as many sign-ups as possible. Government reps will be armed with information packets and other promotions to pitch to Americans.

Will the enrollees show up before the last bell? The ACA’s second year targets have already been pared down.  It remains to be seen if it can meet even those reduced targets.

Breaking the Democratic Coalition

POSTED about 2 months ago BY HEALTH CARE COMPACT

While many Americans were stuffing their Christmas turkey, the Obama administration was stuffing the Federal Register full of new rules. Betsy McCaughey of the New York Post describes the big document dump over the holiday and characterizes it as legislation by executive action.

On Thanksgiving eve, the Obama administration dumped reams of mind-numbing ObamaCare regulations into the Federal Register — including yet more unilateral rewrites of the Affordable Care Act.

Dropping the rules as most Americans were busy preparing for the holiday made a mockery (again) of President Obama’s promise to have “the most transparent administration in history.” The stunt has even worked to keep most of the media from reporting on the rules.

Yet the changes these regulations make in the health-care law are substantial. … The president has made two dozen changes to his health law by executive fiat, from delaying the employer mandate to allowing people to keep health plans that don’t meet ObamaCare standards.

In fact, the House of Representatives is suing him (after Obama explicitly challenged it to do so) for making changes without Congress’ OK.

Veteran Thomas Edsall, writing in the New York Times, argues that the president’s Obamacare actions have created huge political problems for the Democratic party, which were articulated by Senator Chuck Schumer.  While acknowledging that many of Obamacare’s defenders have criticized Schumer for ‘trash talking’ Obamacare, Edsall argues that Schumer’s main criticisms are completely irrefutable.

He points out a Brookings Institution survey which shows that the healthcare program has shifted income away from the middle-class to the lower class voters. The Democrats are losing the middle class without winning over the lower income segments. The 2014 elections showed that even Hispanics are shifting to the GOP.  Edsall concludes:

In combination with the growing Republican allegiance of whites, these trends raise the possibility that the Democratic plan for victory by demographics could implode, which would make the case for a full scale re-evaluation of its strategies and policies glaringly obvious.

Whatever you think of Senator Schumer, you begin to understand why he spoke out as forcefully as he did.

Not only that, but as the Thanksgiving document dump showed, Obama is now unable to govern in any significantly bipartisan way. He cannot open even the smallest crack to the Republicans and must perforce rule by executive order.  Byron York at the Washington Examiner maintained that the price of Obamacare has been the shattering of the traditional Democrtic coalition.

The Obama damage is two-fold. First, his success relied on a coalition that likely will not survive, or at least survive at full strength, without Obama himself on the ticket. Secondly, Obama drove a significant portion of white voters away from the Democratic Party.

Put those two things together — smaller Obama coalition and more alienated whites — and the result could be huge trouble for whoever the Democratic presidential nominee is in 2016.

First the coalition: Obama's powerful appeal to minorities, women, and young people propelled his decisive wins in 2008 and 2012. But those voters didn't show up at the polls in 2010 and 2014.

Obamacare is not only an operational failure, it is a political disaster.  One way or the other the Democratic Party has to fix its worst mistakes.  Since they cannot fix it by reaching across the aisle, the president must attempt to patch it by unsustainable measures.  It has become a millstone round the neck of the Democratic Party.  They have to cut it loose to even fix it.  The problem confronting them is: “how”?

Is the HHS Misleading Itself on Infections?

POSTED about 2 months ago BY HEALTH CARE COMPACT

Back in 2013 New Jersey hospitals claimed that Obamacare had reduced the rate of infections in hospitals. How? By penalizing hospitals if patients were re-admitted for infection.

It took only one year for hospitals to achieve broad-based improvements, according to an association report released this week. The initiative, known as Partnership for Patients, was launched at the beginning of 2012 and is scheduled to continue through the end of this year.

The state saw improvements in 11 of the 12 quality categories being tracked by the federally funded initiative. The improvement in the readmission rate is particularly significant for the state. Hospitals with high levels of readmissions face financial penalties under a separate ACA program.

An NJHA affiliate is one of 26 "hospital engagement networks" across the country that is aiming to reduce the 12 preventable problems by 40 percent from 2011 to 2013.

"It was a full-court press," Holmes said.

This year the claims are more definite. “The Obama administration today said 50,000 fewer patients died in hospitals and $12 billion in “health care costs were saved” due in part to initiatives woven into the Affordable Care Act that helped reduce hospital-acquired infections from 2010 to 2013.”

The report, linked here, from the U.S. Department of Health and Human Services shows 1.3 million fewer hospital-acquired conditions from 2010 to 2013. Infections acquired included everything from an illness acquired from a misplaced catheter to acquiring the superbug known as  MRSA.

“These data represent significant progress in improving the quality of care that patients receive while spending our health care dollars more wisely,” Health and Human Services Secretary Sylvia M. Burwell said in a statement accompanying the report.  “HHS will work with partners across the country to continue to build on this progress.”

The effort, while controversial among some providers of medical care, was cheered by the health care industry.

The evidence for improvement cited by HHS secretary Sylvia Burwell is as follows is ambiguous:

“Just think for a moment about what saving even one life means to a family, a congregation, a community. What it means to have one more full seat around the Thanksgiving table,” Health and Human Services Secretary Sylvia Mathews Burwell said in prepared remarks to the Centers for Medicare and Medicaid Services’s Quality Conference in Baltimore.

She said the 17 percent reduction translates into $12 billion in savings for patients and medical providers.

While the administration said it had never seen a drop like this, officials acknowledged that it did not have good enough data to compare the reduction to pre-2010 trends. Nonetheless, they insisted that nothing published prior to 2010 came close to the 9-percent annual drop they measured between 2012 and 2013 alone.

One possibility which may emerge in the next few days is that the hospitals reported fewer infections in order to avoid penalties. Readers will recall that the Veterans Administration hospital records were twisted in order to comply with the mandates required by the supervising bureaucracy.

In 1995, VHA established a goal of scheduling primary and specialty care medical appointments within 30 days to ensure veterans’ timely access to care. … The VA Office of Inspector General (OIG) reports in 2005, 2007, and 2008 found the reported outpatient waiting times to be unreliable because of data integrity concerns associated with VHA’s scheduling system.,  The discrepancies found by the OIG between requested appointment times documented in medical records and in the databases, and incomplete waiting lists are attributed to patient preference or the scheduler’s use of inappropriate scheduling procedures.

According to a 2010 VA memo, the problem of "gaming strategies" inside the VA to meet performance goals dates to at least 2008. VA Deputy Undersecretary for Health Administrative Operations William Schoenhard wrote, "It has come to my attention that in order to improve scores on assorted access measures, certain facilities have adopted use of inappropriate scheduling practices..." Schoenhard listed 24 tactics identified in a 2008 study as inappropriately reducing the official measures of patient wait times

The mandated waiting times became linked to bonuses.  What happened next was that things “improved” dramatically on paper, but in actuality many veterans were gamed into dead end queues and essentially denied care. “An audit from the Secretary of Veterans Affairs said, ‘some front-line, middle, and senior managers felt compelled to manipulate’ records to meet performance goals. The manipulation of records was done with the knowledge of senior managers in the Phoenix VA system and possibly those of other VA facilities.”

The fact that the HHS “had never seen a drop like this, officials acknowledged that it did not have good enough data to compare the reduction to pre-2010 trends” suggests they should treat this with caution. Until they can describe and quantify the mechanism for such a dramatic improvement the problem of reporting to the requirement cannot be dismissed.

Naturally the hospitals would report lower rates of infection.  They would be fined otherwise.

Exchanges Aren’t Competitive Markets

POSTED about 2 months ago BY HEALTH CARE COMPACT

John Goodman has a long and thoughtful piece on why Obamacare isn’t real insurance and why the exchanges aren’t really competitive markets.  The main reason they’re not markets is the products on them are not comparable in any real sense.  While they can be compared by premium and deductible, neither of these measures the attributes of interest of medical care.

Intelligent comparison shopping is virtually impossible.

Think about what you would have to consider to make a reasoned choice. For starters, you have to consider all the health problems you might have. For example, you might get cancer, heart disease, diabetes…  Then you would have to compare the networks of all the different plans for cancer care, heart care ….

But wait. It isn’t even that simple. Turns out, cancer isn’t cancer. There are 200 different types of cancer. Cancer can appear in any organ, for example, and there are 60 organs. So you can’t just compare “oncologists” in various networks. You have to consider all the different types of cancer that might afflict you and which network would be best for each one. …

So instead of doing the kind of analysis that would stump even Watson, what are real world people actually doing? They are making choices based on one or two simple parameters and then they are sticking with that choice – come hell or high water. For example, healthy people are looking only at price. People with a serious health problem are trying to find a network that has a doctor they already trust. And that’s about it.

Goodman makes a point which former HHS secretary Sebelius made in another context. Speaking to USA Today’s Susan Page, Sebelius said: “A lot of Americans have no idea what insurance is about," she said. "I think the financial literacy of a lot of people, particularly people who did not have insurance coverage or whose employers chose their coverage and kind of present it to them, is very low — and that has been a sort of stunning revelation. It's not because people hid it from folks. It's because this is a complicated product.”

Goodman cites studies which show that once people buy an Obamacare policy, they simply stick with the first one they happen upon because there’s no easy way to choose a better one.  All this talk about competition is entirely for the rubes.

Federal employees have been in a similar “managed competition” system for more than three decades – in fact it may be the oldest such system in the world – and the switch rate has been consistently less than 5 percent at annual open enrollment periods.

He notes that’s it’s not even really even health insurance. It only looks like health insurance.  But more on this another time.  Suffice it to say Goodman thinks it is “a carnival of perverse incentives” that ushers people into a seemingly placid pool of safety, but one infested with unrestrained man-eating sharks.

Obamacare Weighed Down by Immigration Dispute

POSTED about 2 months ago BY HEALTH CARE COMPACT

Kevin Drum warns in Mother Jones that president Obama’s immigration amnesty may indirectly sink Obamacare. The problem is that the immigration executive order is reportedly perceived by some justices on the US Supreme Court as executive overreach.  This may make SCOTUS less willing to give the executive the benefit of the doubt in interpreting the disputed language in the Affordable Care Act.

The Los Angeles Times writes: “President Obama always knew his plan to shield millions of immigrants from deportation would enrage Republicans on Capitol Hill who oppose most of what he does.”

But by claiming the power to forge ahead based on his executive authority, the president may well lose the one conservative he still really needs: Chief Justice John G. Roberts Jr.

Two years ago, the chief justice surprised many by joining liberals on the court to uphold the constitutionality of Obama's Affordable Care Act. And he probably holds the deciding vote in a second legal challenge to the healthcare law — one that seeks to eliminate government insurance subsidies to low- and middle-income enrollees in two-thirds of the nation. …

In June, the high court ruled Obama exceeded his power when he made temporary recess appointments during a brief Senate break. Roberts joined Justice Antonin Scalia in a separate opinion that would have gone further by banning nearly all such appointments. They asserted "all presidents have a high interest in expanding the powers of their office" and it was the court's duty to keep them in check.

The same week, a 5-4 majority that included the chief justice ruled that the administration went too far when it required Christian business owners to pay for certain contraceptives for female employees.

When Obama announced his executive action on immigration last month, it set off another furor on the political right, where it was denounced as an abuse of power befitting a "monarch" or an "emperor."

Ilya Shapiro, a lawyer for the libertarian Cato Institute, said the immigration order is the "starkest example" of what he called the president's "pattern of lawlessness."

The theory is that Obama only has a limited number of free passes at the Supreme Court and he’s used them all up.  Now that he needs the court to read statutory text as the opposite of its literal meaning, he may be in trouble.  It hasn’t helped, according to Sam Baker at the National Journal, that the administration’s supporters have been so dismissive of the legal issues and contemptuous of opposition.

The Supreme Court doesn't care whether you think the latest Obamacare case is ridiculous. ...

According to the Left, that line is routinely portrayed as a drafting error, a simple mistake that arose when multiple versions of the Affordable Care Act were hastily crammed into one. "Death by Typo: The Latest Frivolous Attack on Obamacare," read the headline on a Nov. 4 Paul Krugman column.

But by downplaying the challenge in this way, referring to the sentence in question as a "typo" or a "drafting error," Obamacare's supporters risk playing right into the challengers' hands, Lazarus argues. His fear is that this rhetoric is setting the groundwork for the Court's conservative justices to say, in effect, that their hands are tied—that they see they error, are powerless to fix it, and so must dismantle the statute.

Obamacare may suffer, not a “death by typo” but death by hubris, as it tries to scoff and bluff its way past everything.

Overly Complex

POSTED about 2 months ago BY HEALTH CARE COMPACT

One of the lesser known factors affecting the adoption of Obamacare is the ‘hassle factor’.  Recently, California health providers have been criticized for overly narrow networks. “Two leading health insurers drew new fire from Wall Street for overstating their Obamacare doctor networks and trying to deflect the blame.”

One of the major reasons given by doctors for staying out of Obamacare networks is all the effort they must put into joining it and the complexity involved therein. These include onerous paperwork,  overcoming resistance to high deductibles and being unable to refer people to specialists in a narrow network.

Responses were anonymous, but included: “We are going to have to hire additional staff just to manage the insurance verification process,” “Identification of ACA plans has been an administrative nightmare,” and “We thought we would be able to identify ACA insurance exchange products by their insurance card, but quickly found out this isn’t so.”

High levels of patient cost-sharing is also a challenge. Seventy-five percent of doctors responding reported that patients with ACA exchange coverage “are very or extremely likely to have high deductibles compared to patients with traditional commercial coverage.”

Doctors involved in the study also described “significant patient confusion” when it came to understanding their plans, and reported patients who learn about their deductible after the fact are more likely to cancel appointments and procedures, affecting preventative measures and doctor visits.

Doctors are also concerned with network limitations, according to the survey. Many practices are out of the network of Obamacare plans; 20 percent of respondents said their practice was excluded from a network they would have liked to participate in. Limited networks also make referrals to other doctors a problem.

Gary Cohen of Health Affairs talks about “new” or “smart networks” which are still limited but provide value.  But the effort required to create such “new networks” seems almost out of proportion to any reasonable improvement.  Obamacare appears to be an energy sink of ever growing complexity.  It is like a command-line computer application, potentially great if you are willing to learn programming and spend endless hours in it.

The New Yorker says that the real threat to Obamacare is that it switching costs are so high people may simply stay in bad plans to avoid the pain of a re-do.

The key problem is what economists call switching costs. Sometimes they are tangible: if you want to get out of your cell-phone contract, you’ll have to pay a penalty. More insidious is what Handel calls “hassle costs”—the time and energy required to do enough research to make an informed switch. These are especially high when products and services are complicated and confusing, as with banking and health insurance, and when there are lots of potential options, which amplify people’s anxieties about making a bad choice. “The complexity is daunting, and these things just aren’t intrinsically interesting to most people,” Handel said. Obamacare has an extra layer of complexity, since you have to take subsidies and taxes into account. And since different insurers use different networks, getting a better deal often means finding a new doctor—a big disincentive.

When switching costs are high, it’s much easier for companies to raise prices. If you have a storage unit, you may well have been lured by an attractive monthly rate, only to find that it soon started rising by significant increments. (What are you going to do? Move all your stuff?)  …

Decision-support companies, which analyze huge tranches of data in order to come up with personalized rankings of insurance plans, could work with the Obamacare exchanges. That probably won’t make insurers very happy, but it should please taxpayers. We’re going to pay most of the bill when Obamacare recipients make poor choices. So we should do all we can to help them make better ones.

This is all a roundabout way of describing a bad product.  Any health care system which is as complicated as Obamacare is unlikely to help poorly educated, lower income people.  If a consumer needs “decision support companies” to make sense of plans it is really a lost cost.

The Replacement for Obamacare

POSTED about 2 months ago BY HEALTH CARE COMPACT

James Capretta of the American Enterprise Institute says that the potential end of Obamacare is in sight.  He believes that the incoming Congress will first attempt to repeal, then replace the unpopular program.  He sets out what he believes are the basic flaws of the ACA and from it derives the characteristics of its proposed replacement, probably by June when the Supreme Court rules on King vs Burwell.

Capretta writes sees the basic problem of Obamacare in these terms.

The pre-ACA health system left too many Americans with inadequate and insecure insurance, treated individuals unfairly who bought insurance on their own, allowed too many people with preexisting conditions to fall through regulatory cracks, and inflated costs with open-ended federal entitlement programs and tax subsidies.

The ACA’s answer to these problems was to consolidate power over the entire system within the federal government. But that’s exactly why the public is so uneasy about what passed in 2010 (in addition to being unhappy with the process that was used to enact it). The door is open for ACA opponents to present an alternative vision for reform that addresses the real problems in American health care without the big-government baggage of the ACA.

He sketches out the replacement.

The starting point for a full replacement plan should be a rational synthesis of the two best reform plans now on the table: one developed by the 2017 Project (a group dedicated to developing a conservative reform agenda for the next administration) and the other by Republican Senators Richard Burr, Tom Coburn, and Orrin Hatch. The two plans share much in common. They are practical, market-based solutions. They both retain the employer-based health-insurance system for the vast majority of Americans, even as they would encourage more cost discipline in the most expensive job-based plans with a limitation on the federal tax break for employer-paid premiums. To broaden insurance enrollment and to correct an inequity in current law, they also would provide a new federal tax credit to households without access to employer coverage. The credit would be adjusted by age (and, in the case of Burr-Coburn-Hatch, by income) and could be used to purchase any state-approved health-insurance product. Finally, the plans would create a new “continuous-coverage protection” construct: People who stay continuously enrolled in health insurance would be protected from premium hikes based on their health status and from exclusions from coverage based on a preexisting condition.

But Capretta leaves out one big problem which only the Health Care Compact can address.  Obamacare was too monolithic.  It was one-size-fits-all.  His proposed replacement, though much better in content, is nevertheless a similarly monolithic, made in Washington solution.

Some Democratic states (like Massachussets) will want to adopt some for of Obamacare (as Romneycare) or even go (like Vermont) to single payer.  A monolithic replacement won’t let them.  Roles will be reversed with some states refusing to go along with the 2017-based solution.

The Health Care Compact (HCC) provides a framework for both implementing a replacement and permitting dissenting states to go their own way.  It has the virtue of being implementable by parts.  There is no need to insist on uniformity and this will introduce an element of diversification so lacking in the Affordable Care Act.  The Health Care Compact is simply a better governance framework than the made-in-Washington alternative.

When the HCC began, the fight against Obamacare looked like a quixotic, David versus Goliath struggle.  It seemed hopeless. Now David is on the verge of winning against Goliath. It’s time for the Health Care Compact to stride to the fore and take its place in the council of winners to craft the successor to the unlamented ACA.

You Can’t Take It With You

POSTED about 2 months ago BY HEALTH CARE COMPACT

John C. Goodman points out that the real roadblock to rationale health care delivery is the tax code.  FDR’s wage controls forced post war health plans to assume the form of employment benefits, which are not taxed.  That fact has severely restricted the portability of health care plans.

Unlike wages, the premiums the employer pays for employee health insurance are not counted in the employee’s taxable income. When you add together federal and state income taxes and payroll taxes, the ability to buy insurance with pre-tax dollars is worth almost half the cost of the insurance to many middle-income employees.

There’s just one problem. The insurance has to be group insurance. That’s the kind of insurance you eventually lose when you leave the group (switch jobs). Most states explicitly outlaw employer’s buying individually owned insurance (which employees can take with them) with pretax dollars. Even if a state hasn’t outlawed it, most lawyers think the practice is illegal under federal law.

This lack of portability is one of the things Obamacare will fix, its advocates say.  The metal plans are better, they claim, because you can take it with you.  But Goodman notes there’s a potentially legal way you can take employment insurance with you -- if the feds allow.

Over the past decade or so, however, a number of employers and their employee benefit advisors seem to believe they have found a loophole: Health Reimbursement Arrangements (HRAs). These accounts are funded by employers and Treasury regulations explicitly allow employees to use the money to pay premiums. But can the insurance be individually owned?

Some experts say “yes.”

But the Obama administration, you guessed it, says no.

Enter the Obama administration.  According to Robb Mandelbaum, writing in the New York Times:

In a technical guidance issued last year and reiterated in May, the Internal Revenue Service issued a clear warning about such health reimbursement arrangements…. The guidance “makes it very difficult, if not impossible, for an employer to pay for an employee’s individual insurance with tax-free dollars,” said Seth Perretta, a health and tax lawyer with the Groom Law Group in Washington….

So there you have it. The Obama administration has come down squarely against portable health insurance – threatening enormous fines for any employer who tries it.

Goodman may be too harsh.  The Federal government often refuses with the left hand what it grants with the right.  But the point remains: Obamacare was created to dismantle a tax mess a Democratic president created in the first place -- and doesn’t.

Can Obamacare Commandeer Resources

POSTED about 2 months ago BY HEALTH CARE COMPACT

Some legislators in Texas are openly challenging Obamacare by sponsoring legislation which would prohibit carrying the state from assisting the Federal Government in implement key parts of the law.  This would set up a court challenge to determine which would prevail.

A bill has been introduced to amend the Texas state constitution with a provision to protect health freedom in the state. Senate Joint Resolution 16 (SJR 16), introduced by Sen. Donna Campbell (R-New Braunfels) on Nov. 18, would prohibit any agency from compelling Texans to participate in any health care system, or from penalizing them or taxing them for choosing not to participate….

Fox News Senior Judicial Analyst Judge Andrew Napolitano noted that such actions were not just legal, but effective. “If enough states do this, it will gut Obamacare because the federal government doesn’t have the resources…to go into each of the states if they start refusing,” he said.

Based on the long-standing principle known as the anti-commandeering doctrine, the legislation is on strong legal grounds. In four major cases from 1842 to 2012, the Supreme Court has consistently held that the federal government cannot “commandeer” states, requiring them to enforce or expend resources to participate in federal law or regulatory programs.

Another form of commandeering is being opposed by the American Medical Association.  The issue under dispute is whether the Federal Government can require doctors to “lend” the system up to 90 days of medical care for an amount which may or may not be paid back.

The American Medical Association is protesting an Obamacare provision it argues will leave doctors with the bill for up to two months of unpaid care.

The provision requires insurers to allow patients with federally-subsidized health insurance plans a 90-day grace period to pay their premiums before canceling the coverage. Insurers are on the hook for the first 30 days of care, if the customer never pays up, but doctors will be stuck without payment for any services between 30 and 90 days, until the coverage is canceled.

The American Medical Association was a strong supporter of Obamacare.

You can think of this as the Federal Government ‘commandeering’ a doctor and forcing him to work on a patient for up to 90 days for free. “If a patient is being treated for a serious illness, that requires ongoing care,” Dr. Ardis Dee Hoven, president of the AMA, said in a press release Wednesday. “The physician is having to assume the financial risk for this. That’s the bottom line.”

Like some legislators in Texas the AMA may not like “commandeering” and may use their lobbyists to make their pleasure felt. Both are some form of pushback against the idea that Obamacare can simply direct action without funds to pay for the work.

Lack of Transparency

POSTED about 2 months ago BY HEALTH CARE COMPACT

One of the things that Obamacare has not solved -- nor has any health care system been wholly successful -- is solving the resource allocation problem.  For example, Britain’s National Health Care system often makes irrational decisions, such as letting a person go blind because it would be cheaper to give him a cane and seeing eye dog, because of the fragmented incentives among competing bureaucracies.

The answer to the NHS is apparently more centralization: “For the answer, follow the money, which doesn’t sit in a big pot dispensed by someone with responsibility for the whole problem, but lots of smaller pots each managed by people with a narrow responsibility and a partial view of the problem. The owners of these pots have no interest in the impact of their decisions on other pot-holders.  In fact, they have an incentive to push the problem and the expense somewhere else.  The incentive gets stronger at a time of austerity. It comes down to a simple question: why would I run the risk of overspending my budget for a notional gain somewhere else in the public sector?”

But as “Gary Cohen, a former Obama administration official who helped oversee the launch of the federal health website” says, all the clever management models in the world cannot overcome the law of supply and demand.  Ultimately health care costs are driven by the supply of resources.

Q: You warn that regulators could get in the way of creating good narrow networks. How?

COHEN: We have to recognize we have a physician shortage in this country that has nothing to do with the ACA or with what networks insurers create. When you listen to regulators from very rural states, what they will say is, “We don’t have enough doctors, regardless of what the network looks like.” We need to be sensitive to local conditions. Travel time to see a doctor is different in a densely populated urban area than in a rural area. We should look at what is the quality of care being provided in this network and is it serving the population well, rather than just looking at time and distance.

Although no health care system can be perfect, the existing of a giant intervening bureaucracy like the NHS or the HHS has the tendency of muddling price signals.  There is so little transparency in Obamacare that patients don’t even know what they’re paying for.  The most infamous example is in California, which is investigating some companies for misleading patients.

More than 25% of physicians listed by Anthem Blue Cross and Blue Shield of California weren't taking Covered California patients or were no longer at the location listed by the companies, according to state reports released Tuesday.

In some cases, these errors led to big unforeseen medical bills when patients unwittingly ventured to out-of-network doctors for medical tests or a surgery. …

As a result, their narrower networks and more restrictive policies were a jolt to many people and often came to light only when they were getting treated. The insurers compounded the problem with inaccurate provider lists, mislabeled insurance cards and false assurances about coverage, according to patients, doctors and regulators.

The opaque networks, complicated deductibles, shifting plan costs distort information for everybody.  Under these circumstances resources can be allocated very poorly because nobody knows what is going on. Perhaps the worst thing about Obamacare is that it interposed yet another layer of signal loss in an already complicated health care system.

The Broken Backend of Obamacare

POSTED about 2 months ago BY HEALTH CARE COMPACT

In the battle of narratives over the success of the Affordable Care Act the details are sometimes omitted.  For example,  8 million people are said to have enrolled in Obamacare during 2014.  “During open enrollment (Oct 1st, 2013 – March 31st, 2014. And then until April 19th, 2014 under special enrollment) over 8 million Americans enrolled in a marketplace plan”

However, according to Reuters, citing administration sources, only 7.3 million people were paid up in their premiums. “(Reuters) - The Obama administration on Thursday said 7.3 million people were up to date on their monthly premiums for private health plans under President Barack Obama's healthcare law as of Aug. 15. Republicans have long sought the number of Obamacare enrollees who have paid premiums as potential evidence that the administration's initial enrollment figures were exaggerated.”

So how many people are actually enrolled in the Metal plans? Would that be 7.3 million or 8 million?  Wait a minute, maybe it’s really  that 6.97 -- er 6.7 million.  The New York Times writes:

The Obama administration’s overcounting of the number of people enrolled in Affordable Care Act health plans reveals how all the glitches in the government’s computer system have yet to be worked out.

Instead of the 7.3 million people that the government reported were enrolled in health insurance plans in September, congressional investigators discovered that the number was 6.97 million. A more recent estimate of 7.1 million should have been 6.7 million, Sylvia Mathews Burwell, Secretary of Health and Human Services, acknowledged Thursday.

The reason they’re only now discovering that 8 million is really 6.7 million is that the backend of the system is broken and still unfinished.  This has been widely reported, but is highlighted by the fact that some of the data is in the form of 297 Excel spreadsheets.

Marilyn Tavenner, the administrator of the Center for Medicare and Medicaid Services, the H.H.S. division that is running the marketplaces, shared the 7.3 million number in September. At the time, her spokesman, Aaron Albright, said that no further breakdowns could be offered. There were no counts by state or by demographic groups. Mr. Albright said that the department was releasing the overall number because the counts of customers provided by health insurers to the department had stabilized.

The House Oversight and Government Reform Committee asked for the enrollment records behind the number. Caitlin Carroll, a spokeswoman for the committee, said it came in the form of 289 Excel spreadsheets, each with the enrollments for an individual health plan in a given state. Added together, total enrollment did equal 7.3 million. But committee staff noticed that there were a number of “outlier” plans, with premiums much too low for comprehensive health insurance. When the staffers checked out the plans, they turned out to be dental insurance.

Obamacare in 2015 might be better than Obamacare in 2014, but two years into the launch it is still troubled.

Illegal Aliens and Legal Immigrants in Obamacare

POSTED about 2 months ago BY HEALTH CARE COMPACT

Just as it turns out that amnestied illegal aliens could get health benefits after all, the newspapers report that legal immigrants are having trouble signing up for Obamacare.

First of all, it turns out that president Obama’s assurance that amnestied illegals will not be eligible for benefits isn’t watertight after all. “A central argument in Obama’s defense of the most extensive overhaul to the immigration system in decades was that those given reprieves from deportation would not qualify for Obamacare benefits. The president reminded critics that Dream Act-eligible immigrants previously granted deportation deferrals could not enroll in federal health exchanges.”

But ”the White House now acknowledges that many of the illegal immigrants spared from deportation under Obama’s sweeping executive action will become eligible for Social Security and Medicare benefits once they reach retirement age.”

To make matters more ironic, a defect in the Obamacare website does not allow legal immigrants to upload proof of Green Card status.

WASHINGTON - Immigrants are baffled by what looks like an obvious lapse on the government's health insurance website: There is no clear way to upload a copy of a green card.

That's the government identification document that shows an immigrant is a legal U.S. resident, entitled to benefits under the health care law.

The organization Foundation Communities, which serves many immigrants in Austin, Texas, says the government website doesn't list an option to upload a green card. Yet, there is a way to upload other documents. …

An administration official says a fix is in the works.

Doubtless a “fix is in the works”.  But the juxtaposition of messages communicates as nothing else does, the Obama administration’s obsession with redistribution. It’s focus is on taking money from productive law abiding residents and passing on benefits to persons of dubious eligibility.

Obamacare’s Economic Failure

POSTED about 2 months ago BY HEALTH CARE COMPACT

The biggest problem of the Affordable Health Care act, otherwise known as Obamacare, lies in that it is unaffordable.  Even with subsidies applied, many of its ‘metal’ policies were unusable because of extremely high deductibles and narrow networks of doctors. Citing a Gallup Poll the Washington Times reports that more people are delaying treatment after Obamacare than there were before it.  The reason: they couldn’t afford to pay for health care. “The increase in delayed treatment because it’s seen as too expensive could reflect high deductibles or copays that are part of the newly insured’s plans … said Gallup.”

The number of Americans with private health plans who put off medical treatment because of cost jumped from 25 percent in 2013 to 34 percent in 2014, according to the poll.

More upper-income Americans also delayed treatment this year, up to 28 percent from 17 percent last year, showed the poll.

However, the percentage of lower-income Americans — those with annual household incomes under $30,000 — who put off treatment in the past 12 months dropped from 43 percent in 2013 to 35 percent in 2014.

The percentage of middle-income Americans who have put off medical treatment remains roughly the same as last year, at 38 percent.

Asked to rate the seriousness of their medical condition of illness, 22 percent of Americans who delayed treatment due to cost said they had “very” or “somewhat serious” conditions.

“This is double the 11% who say they have put off treatment for a non-serious condition. Furthermore, the percentage who have put off treatment for a serious condition has increased slightly since 2013,” Gallup said.

The deductibles were so high they precluded treatment.  The Gallup report suggested the income transfer effects of Obamacare.  More middle and upper income Americans delayed treatment while lower income people advanced the timetable of their treatment.  If anything illustrates the difference between having a health card and obtaining actual health care, the delays in treatment does.  What’s the use of having a ‘health card’ if you can’t afford to use it?

Perhaps the most revealing admission of Obamcare’s weakness comes from the Brookings Institution, which is known to be liberal.  Yet it acknowledges that the ACA was never going to cover all the uninsured.  

World-renowned AIDS researcher William Haseltine, in an online book written for the left-of-center Brookings Institution, proposes implementing such a policy by copying the very successful system used in Singapore. Even in a Fantasyland where the ACA had worked perfectly, it was only projected to cover half the uninsured, but this solution delivers universal coverage. A market-driven solution such as this is clearly a reform most free market Republicans should embrace, and it delivers the universal health care Democrats prize most highly.

Nor did it make treatment cheaper.  The big problem with the ACA is that it was nowhere good enough, nor useful enough to justify the enormous costs spent on it.  If effectively function like a gigantic Three Card Monte scam, shifting around money, but never able to buy more medicine for those who needed it.

This will eventually force its replacement.  The Democrats already understand this.  They are simply delaying the inevitable as long as they can.

More Red Tape

POSTED about 2 months ago BY HEALTH CARE COMPACT

The Boston Herald reports that many businesses may get slugged with penalties they don’t see coming when a tide of poorly understood Obamacare regulation hits them. “Beginning Jan. 1, Affordable Care Act reporting requirements will get underway for businesses, opening the floodgates to potentially billions of dollars in penalties nationally for companies that fail to comply.”

To help them navigate their way through the intricacies of the ACA, Cross Insurance, one of New England’s largest independent insurance providers, will host a free seminar for businesses with 50 or more employees at 1:30 p.m. Thursday at Atlantic Wharf’s Fort Point Room at 290 Congress St. in Boston.

“We don’t think most businesses are aware of the reporting requirements,” said Keith Ferdinando, Cross Insurance’s senior vice president of benefits. “The myth is Obamacare is going to go away now that the Republicans are going to have control of Congress. But they’re going to have a very difficult time taking away health care from millions of Americans who have just received subsidized insurance. Employers need an action plan.”

That goes double for small businesses.  Big companies already have armies of lawyers and accountants to go over compliance. Little outfits have got to hire some of their own.

The reporting requirements and penalties will be particularly onerous, Hurst said, for small businesses.

“The system is rigged against them because they aren’t self-insured,” Hurst said. “Larger companies that have human resource departments and legal staff (to handle the reporting) — they’re doing pretty well. We just hope there’s some leniency with how the law is phased in.”

As of Jan. 1, all businesses will be required to track whether they are offering their employees insurance and whether it’s affordable — that is, whether it costs 9.5 percent or less of each employee’s gross income, said Bill Fields, president of Health Plan Solutions in Boston and Mashpee.

If it costs more, companies will be required to notify their employees that they can sign up for health insurance through the state’s Health Connector website and receive a subsidy, Fields said.

Of course someone has to pay the lawyers.  That cost will probably be passed on to the consumer.  It’s Affordable Health Care alright, but only if you like irony.

How Obamacare Cost the Democrats the Senate

POSTED about 2 months ago BY HEALTH CARE COMPACT

John C. Goodman asks: “did Obamacare cost the Democrats the election?”  The answer is probably ‘yes’, but not for the reasons often advanced.

As Byron York writes, “there were 60 Democrats in the Senate on Christmas Eve 2009 when they voted in lockstep to pass the Affordable Care Act. Soon there will be 46 Democrats in the Senate, or perhaps 47 if Sen. Mary Landrieu manages to eke out a win in Louisiana.”  Obamacare has clearly cost the Democrats the Senate.

The real reason is not that the Democrats are being punished for their compassion.  They are being punished for being tools of the the lobbies.  As Goodman argues, the politicians in Washington did it for the money.

Since the days of Franklin Roosevelt, the Democratic Party has been a collection of special interest groups. What Democrats do when they are in office is legislate favors for the interest groups who support them at the polls. But once in a while Democrats do something that is purely ideological and for which there is virtually no special interest support.

In the first two years of the Obama presidency, Democrats controlled both houses of Congress and they had a filibuster proof majority in the Senate. It was a perfect opportunity to satisfy the ideological goals of their left wing base. But no reform is possible without the support of the core special interest constituencies. So we got national health reform completely designed by special interests!

I can’t emphasize this enough. The people being helped by Obamacare (the uninsured) had absolutely no input into the design of the Affordable Care Act. The health reform bill was completely and totally designed by people who were already insured and who had an economic interest in making sure health reform was good for them.

The result, of course, has been a big mess. Such a mess that Democratic candidates in this last election were on the defensive about Obamacare from the git go.

Obamacare isn’t dying from Republican hard-heartedness.  It’s perishing from the fact that it’s no good; that it’s mostly the insurance companies who are making money.  Economist Jonathan Gruber had hoped no one would notice.  Unfortunately the voters had noticed by 2014 and punished the Democrats.

A Thanksgiving Family Discussion

POSTED 2 months ago BY HEALTH CARE COMPACT

Think Progress has a long piece titled “How To Talk To Your Tea Party Uncle About Obamacare This Thanksgiving”.  It contains tips and tricks designed to convince relatives to love Obamacare.  There was a similar effort last year.  But these coaching articles have been dismal failures, going by the results of a Rassmussen Poll: “a growing number of voters say their health insurance coverage has changed as a result of the new national health care law, and the most in over a year now say that change has been negative.”

This year the “progressive” family members can try to win over the uncles with this piece of news. “Illegal immigrants to be eligible for Social Security, Medicare”.  

“Hey uncle.  Your taxes are going to going up next year to pay for the healthcare of illegal immigrants.”

The uncle might reply to her niece or nephew. “Yes, I’ve read the article. But according to the White House, it’s YOU who will probably have to pay for their Social Security and Medicare.”  The uncle might can read them the text of the news report:

Illegal immigrants who apply for work permits in the U.S. under President Obama’s new executive actions will be eligible for Social Security and Medicare, the White House says.

Under the sweeping actions, immigrants who are spared deportation could obtain work permits and a Social Security number, which would allow them to pay into the Social Security system through payroll taxes.

No such "lawfully present" immigrant, however, would be immediately entitled to the benefits because like all Social Security and Medicare recipients they would have to work 10 years to become eligible for retirement payments and health care. To remain qualified, either Congress or future administrations would have to extend Obama's actions so that those immigrants would still be considered lawfully present in the country.

The uncle will note that “in ten years, I’ll most likely be dead or retired.  You however, will still be working -- assuming you find a job -- and its your taxes that will be used to pay these benefits.”

The readers of Think Progress might stare at each other in horror and amazement.

“You mean we have to pay?”

“Yes,” said the uncle. “And pay for the other millions of illegal aliens who may follow in the wake of this first batch.”

“That sucks,” the nephews said.

“Oh nonsense.  Happy Thanksgiving.”