Tag: Healthcare reform

The Continued Implosion of Obamacare

Great Scott:

A labor union representing roofers is reversing course and calling for repeal of the federal health law, citing concerns the law will raise its cost for insuring members.

Organized labor was instrumental in getting the Affordable Care Act passed in 2010, but more recently has voiced concerns that the law could lead members to lose their existing health plans. The United Union of Roofers, Waterproofers and Allied Workers is believed to be the first union to initially support the law and later call for its repeal.

The roofers are in a uniquely bad position. As McCardle points out, union shops are facing stiff competition from smaller non-union shops. Those small shops will now be getting a subsidy to buy insurance on the exchanges. Doubtless, had the Democrats not passed a draft bill in the first place, some union subsidy would have accounted for this. But it was a draft bill and it does have these problems. So expect more unions to come out in favor of “repeal and replace”.

Oh, and it’s not just unions:

A senior Democratic senator who helped write President Barack Obama’s health care law stunned administration officials Wednesday, saying openly he thinks it’s headed for a “train wreck” because of bumbling implementation.

“I just see a huge train wreck coming down,” Senate Finance Committee Chairman Max Baucus, D-Mont., told Obama’s health care chief during a routine budget hearing that suddenly turned tense.

Baucus is the first top Democrat to publicly voice fears about the rollout of the new health care law, designed to bring coverage to some 30 million uninsured people through a mix of government programs and tax credits for private insurance.

Baucus is playing politics a bit here since he’s up for re-election. And, to be fair, he’s not calling for Obamacare to be repealed but worrying that the exchanges will not be ready (a concern we talked about last week).

But we’ve now got at least one labor union and one liberal senator publicly acknowledging what everyone has know for several years: this isn’t going to work.

Sebelius Doesn’t Know What Insurance Is

One of the problems that I encounter in the debate over healthcare reform is that a lot of people simply do not understand what insurance is. Insurance is not a magical money tree that gives you free stuff. It is a way of spreading out risk. It has a secondary function in aggregating purchasing power so that insurance can negotiate prices. But, in the end, insurance will always cost the average person more than paying for things on their own.

The primary purpose of insurance is prevent catastrophe. We buy home insurance hoping that we will lose money on it but knowing it’s there if our house burns down. We buy car insurance hoping we will lose money on it but knowing it’s there if we get in a big accident.

But health insurance, at least by the Left, is seen differently. Rather than being seen as a way to spread out risk or combine our purchasing power, it is seen as a way to get free healthcare. I’ve mentioned this before but it remains a perfect illustration of the problem. When I was in graduate school, the students were pushing for birth control pills to be covered by insurance. And they were shocked and angered to find out that this coverage would increase health insurance rates by … the cost of the pills (actually, very slightly less since the insurance negotiated a slightly lower price). They couldn’t wrap their minds around the idea that insurance is a device to mitigate risk, not a machine for dispensing handouts.

I and many other critics of Obamacare have pointed out that it is actually going to make healthcare utilization higher and costs higher by mandating first dollar coverage. When going to the doctor for every sniffle only costs $10, what do we think is going to happen? When you’re only paying 10% of the cost of an MRI, what is going to happen? Catastrophic plans or plans with high deductibles have been proven to keep healthcare costs down without compromising care. When their own money is at astake, people forgo unnecessary procedures and save up for real health problems. As David Goldhill pointed out, you could get every uninsured person a high-deductible plan, give them a $5000 voucher and you’d still save money over government-issued comprehensive coverage. And not compromise health.

Ladies and gentlemen, our Secretary of Health and Human Services:

But Kathleen Sebelius, the Secretary of HHS, thinks that catastrophic insurance isn’t really insurance at all.

At a White House briefing Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can’t be compared to the comprehensive coverage available under the law. “Some of these folks have very high catastrophic plans that don’t pay for anything unless you get hit by a bus,” she said. “They’re really mortgage protection, not health insurance.”

She said this in response to a report from the American Society of Actuaries arguing that premiums are going to rise by 32% when Obamacare kicks in, as coverage gets more generous and more sick people join the insurance market. Sebelius’ response is apparently that catastrophic insurance isn’t really insurance at all–which is exactly backwards. Catastrophic coverage is “true insurance”. Coverage of routine, predictable services is not insurance at all; it’s a spectacularly inefficient prepayment plan.

I want you to sit back and let the roll over you. Our HHS Secretary does not know what insurance is. She really thinks it’s a magical money machine that can give free care to everyone without prices going up. The only reason premiums would go up is because what they had before wasn’t “real insurance.”

Oh, yeah. Obamacare is going to go just fine. It’s totally going to cut healthcare costs when it’s run by people who have no understanding of insurance, medicine, economics or markets. Nothing to see here!

Pelosi Watch: College Students

Doh!

College students will soon wake up to the fact that they have been had. While they were overwhelmingly supportive of the Patient Protection and Affordable Care Act (PPACA or “ObamaCare”) when their charismatic President was championing it, they will not be pleased when they find out that there is a huge price they will have to pay. ObamaCare will be anything but affordable.

Apparently, New Jersey is the only state in the nation that currently requires all college students to have healthcare coverage. This has always been a bare-bones plan costing from $100-600 per year. The new healthcare regulations will force these plans to be phased out, as the mandated coverage under ObamaCare will cause the premiums to rise from a few hundred dollars to $1,700 per year.

North Carolina has experienced this as well. The reason is very simple and is something conservative and libertarians have been talking about since the day Obamacare was passed. If you mandate a high minimum standard for insurance, you are going to price people out of the market. We may soon reach point where paying the Obamacare tax and waiting until you’re sick to get insurance is a better choice than getting insurance.

Told ya.

The Healthcare Market

Reason has a great video about a free market healthcare system in Oklahoma. It is definitely worth six minutes of your time. By going outside the traditional insurance model, they have cut healthcare prices to a fraction of what they usually are.

A few things to clarify. This obviously wouldn’t work for people without jobs or cash to pay for these services (although it would be cheaper than Medicaid). And some of the most expensive parts of our healthcare system — long-term and end-of-life care — would not fit under this model. But, if this were applied universally, we would be talking about massive and major cuts in our healthcare bill and imminently more affordable care for hundreds of millions.

I can testify to a couple of aspects of this first-hand. I left the healthcare industry 17 years ago, but it was getting top-heavy with administrators then. I am assured by friends and relatives it has only gotten worse. It is not unusual at all for the highest paid people in a healthcare system to be, not doctors, but administrators like — oh, let’s take a random example — Michelle Obama before her husband became President.

I have also had two encounters with our healthcare system this year. The first was with the traditional system when I had my gallbladder popped out. Even that comparatively simple procedure was ridiculously expensive. But my surgeon’s fees were a comparatively small fraction of that; most was the hospital. The second was with a completely private system in our (so far unsuccessful) attempts to have a second child. Fertility isn’t cheap, but we got rigid quotes, outstanding service and doctors determined to go the last mile. At one point, we had to switch fertility medication at the last minute when the clinic was closed. The head nurse had us pick it up from her house. How often does that happen in the traditional system?

Obamacare has many flaws but the biggest is that it completely turns its back on the idea of a free market in healthcare. There is no provision for high-deductible major medical plans (again, if you’ve never read it, read David Goldhill on this). There is no incentive for innovation. Its cost controls are the kind of top-down bureaucratic bullshit that fails (if we’re lucky) or creates bad unintended consequences (if we’re not).

Oklahoma is showing the way forward. Does anyone want to follow?

The Obamacare Stumble

I am Hal’s complete lack of surprise:

By the end of this week, states must decide whether they will build a health-insurance exchange or leave the task to the federal government. The question is, with as many as 17 states expected to leave it to the feds, can the Obama administration handle the workload.

“These are systems that typically take two or three years to build,” says Kevin Walsh, managing director of insurance exchange services at Xerox. “The last time I looked at the calendar, that’s not what we’re working with.”

These marketplaces often get described as a Travelocity or Expedia for health benefits. While that might be the case for the consumer experience, experts say the underlying technology is hugely more complex, a maze of interconnecting computer systems meant to deliver health insurance to 30 million Americans.

“The reality is, states and the federal government are building something new,” says Pat Howard, who runs state health issues for consulting firm Deloitte. “There’s a rough blueprint in terms of federal regulations, but there’s still a number of decisions that need to happen to operationalize this.”

Read the whole thing, including a lovely chart on the complexity underpinning these exchanges. It’s going to take years and cost immense amounts of money to get these exchanges going. And then we’ll see if it works. I expect the entire thing to fall over at least a few dozen times.

As I said, I’m not surprised at all. It’s difficult enough to build complex insurance markets from the bottom up. Building them from the top down, to borrow a phrase from P.J. O’Rourke, is like building the Great Pyramid from the top down. Right now, Obama is holding up a big pointy piece and the states are scrambling around for two million blocks of stone.

Update: Here’s the graphic of how the exchange system will work. No one could set up something like this on a timescale of months.

The Newest Obama Tax Hike

Volokh:

The Congressional Budget Office has just released new estimates of the number of people who will be subject to the individual mandate penalty tax for failing to obtain qualifying health insurance in 2016. According to CBO’s new analysis, the penalty tax will be paid by six million people. The penalty tax will generate an estimated $7 billion for the U.S. treasury and 80 percent of those paying the penalty tax will earn less than 500 percent of the poverty level. (For reference, the poverty line for a family of four is $23,050 in 2012, according to HHS.)

Now remember something, kids. This “penalty” is a tax. The Supreme Court said. Barack Obama says so as of about two months ago. All the Democrats are saying this is a tax since that was the only way the Supreme Court would uphold it.

So … Barack Obama has a tax increase planned for about five million poor and middle class families. Granted, it won’t kick in until he’s a lame duck in a hypothetical second term. But it’s a tax hike, nonetheless. And not on the rich.

The Spending Caps Cometh

Remember when all those crazy Right Wing bloggers were complaining that Obamacare would lead to price caps and healthcare rationing? Ha ha ha. We were all so … oh. Turns out a bunch of the Obamacare architects are working on the next step.

The most far-reaching proposal is to have states, with the encouragement of federal grants, put in place a mechanism to set overall health-cost caps, covering both public and private spending.

Massachusetts, having discovered that its Romney-instituted, Obamacare-like version of reform has been great at extending coverage, less good at controlling costs, has recently adopted such limits. Maryland has capped hospital spending.

Some of the other proposals — competitive bidding on medical equipment, allowing more work from NPs and reigning in malpractice — are reasonable. But the keystone is capping healthcare expenditures, with caps set by “independent council composed of providers, payers, businesses, consumers, and economists”: the usual gang that will either be controlled by special interests or rendered impotent by Congress.

The Day After

“It is not our job to protect the people from the consequences of their political choices.” – Chief Justice Roberts

Yesterday was one of the most important days in American political history. Over a million people tuned into SCOTUSblog to find out what was happening. I read more and posted more in comments sections and on Twitter than I ever have.

Let’s be clear: I think Obamacare is a bad bill. What few cost controls it attempts are ineffective and misguided. It massively expands the horrible Medicaid system. It will blow up the deficit. It does nothing to increase competition or consumer involvement. Its model — Romneycare — has controlled insurance prices and increased coverage. But that has come with an exploding state budget and increasingly ham-fisted efforts to clamp down on costs.

But the ultimate impact of yesterday’s decision may be different than what we think. Allahpundit has a roundup of some of the more interesting commentary, including must-reads from Orin Kerr, George Will and Ezra Klein. The gist is that while we may have lost the battle, we may also have put ourselves on track for winning the war. The Decision does several critical things:

  • It set limits on the use of the Commerce Clause, which has long been the duck blind for liberal activism. This is now Constitutional law.
  • In doing so, it reverted Obamacare to a tax, which means it can be repealed with 51 votes (same as when it was passed). And yes, the bill did originate in the House, technically.
  • It set the first limits in American history on the ability of the Federal government to use its spending power against the states. This limit was upheld by two of the liberal justices.
  • It reaffirmed the idea of judicial restraint. Roberts’ opinion goes to great lengths on this, reaffirming the idea that if there are multiple interpretations of a statute, the Court should go with the one that complies with the Constitution. This is the kind of judicial restraint we’ve wanted for decades.
  • It did all this without appearing to be a partisan decision.
  • Think about what happens if the GOP wins the election and actually — and this is by no means a certainty — repeals or massively repairs Obamacare. The Left will lose Obama’s signature achievement and the only legacy will be a firm precedent set for restraining the power of the federal government. This possibility is almost enough to make me consider voting for Romney, something I was incredibly dubious about just 24 hours ago.

    We shouldn’t be rending garments. We should be seeing this as the long game — the slow move toward a more restrained federal government. In the long run, National Federation of Independent Business v. Sebelius — actually, let’s just call it Sebelius so that she will always be tied to this — may turn out to be one of the most important conservative decisions in history. But it’s up to us to take advantage of the opportunity.

    Axlerod’s Dollars

    You know, instead of trying to delegitimize the Court’s decision before they make it (assuming they overturn Obamacare, which at least SCOTUSblog thinks won’t happen), the media could be, I dunno, talking about how we got Obamacare in the first place:

    Rewind to 2009. The fight over ObamaCare is raging, and a few news outlets report that something looks ethically rotten in the White House. An outside group funded by industry is paying the former firm of senior presidential adviser David Axelrod to run ads in favor of the bill. That firm, AKPD Message and Media, still owes Mr. Axelrod money and employs his son.

    The story quickly died, but emails recently released by the House Energy and Commerce Committee ought to resurrect it. The emails suggest the White House was intimately involved both in creating this lobby and hiring Mr. Axelrod’s firm—which is as big an ethical no-no as it gets

    You should read the whole thing, which is as complicated as a Wall Street scam. It describe an advocacy group created by Democrats and funded by industry to support Obamacare. This was, you remember, at a time when it was opposition to reform was being blasted as industry astroturfing. Anyway, at White House direction, the lobbying group hired Axlerod’s firm to run ads.

    To me, the corruption or appearance thereof in the hiring of AKPD is the lesser issue, although the one that runs afoul of ethics laws. The more telling thing — the thing the mainstream media has rarely talked about — is how deeply involved industries like big Pharma, big Labor and Big Medicine were in the writing, promotion and ultimate passage of PPACA.

    Just something to keep in mind tomorrow if/when the Left Wing starts screaming about the will of the people being over-written.

    Aside: I have no idea how the Court is going to rule tomorrow. There’s a part of me that worries about an overturn since Obamacare without the mandate is worse for our country that Obamacare with one. And I don’t trust Congress to find a fix if industry suddenly has to insure everyone no matter what. As far as the Constitution goes, however, I think overturning it is the right thing to do. And I’m disgusted by the attempts of the Left to undermine the decision before it’s been made.

    (If the Court does uphold Obamacare, the only solace would be watching the Left have to backpedal and admit they were wrong … if the Left had any shame. But the don’t, so I expect they would simply declare victory and pronounce the law unrepealable since SCOTUS upheld it.)

    In the end, if SCOTUS just overturns the mandate, the consequences will be slow in coming. As Ezra Klein points out, under Obamacare, not having insurance is a really great deal. You can pay only a few hundred to a few thousand dollars a year and still get insurance at the last minute. This is what happens when a law is crafted to politics rather than results.