Tag: Medicaid

Insurance is Not Healthcare

For a long time, conservatives and libertarians have been pointing out that Obamacare has come at a steep price for the insured. Not only are health insurance premiums rising, but the new plans cover less, demand healthcare within ever-shifting networks of approved providers and foist larger out-of-pocket expenses on patients.

Well, looks like the New York Times finally figured this out:

A study by the Commonwealth Fund this month found that the rise in health insurance premiums in employer-based plans had slowed in 31 states since the passage of the Affordable Care Act (good news, right?). But premiums were still rising faster than median incomes (hmm). More important, perhaps, the researchers found that patients were paying more in health care expenses than ever before, during a time of stagnant wages (not so great). In fact, nearly 10 percent of median household income now goes to pay premiums and deductibles, the study found. And that does not include other kinds of health payments that patients now encounter, such as co-pays and uncovered drugs or services.

A recent New York Times/CBS poll found that 46 percent of Americans said they had trouble affording health care, up 10 percentage points in just one year. Some of the cost problems may ease as patients — now known as health care consumers — learn what to expect and how to choose and navigate their plans.

In other words, premiums slowed down … but only because out-of-pocket expenses increased. On balance, that might not be such a bad thing. I’ve long advocated high-deductible plans as a way to bring the healthcare consumer back into the picture. David Goldhill once pointed out that if we replaced Medicaid with a high-deductible plan, we’d save enough money to give every poor person a voucher to cover their deductible.

But this isn’t the high-deductible idea. This is creating a hyper-regulated marketplace in which insurers are expected to provide “reasonably priced” health insurance to everyone, no matter how sick they may be. So doctors flit in and out of approved networks. Out-of-state clinics come to be preferred over in-state ones. And all of this is enforced with the threats of massive bills if you don’t do the insurance company’s bidding. And if you do their bidding, you’re still facing far larger healthcare bills than you were dealing with before Obamacare.

All of this was predictable of course. You simply can not expand health care coverage to ten million people — many of whom couldn’t get coverage because of expensive medical conditions — and not have it make insurance more expensive. We warned people about this for years. We had concrete examples of this in places like New York and Massachusetts. And yet everyone is acting all surprised when they discover that healthcare isn’t free.

Note one thing the story leaves out: the increasing number of doctors who are refusing to see Medicaid patients. Medicaid expansion is a big reason the Obama Administration can claim that they’ve insured ten million people. Only a couple of million have gotten private insurance thanks to Obamacare; most are in the Medicaid gulag.

Given the media’s lag, I expect we’ll start seeing stories about that in about 2019, at which point it will be blamed on President Walker.

Addendum: You may remember that a big pillar of Obamacare was that it would be paid for, in part by the savings from Electronic Healthcare Records. Yeah, that’s not working out either. Again, this was predicted. The one thing we all knew going into this was that EHRs are very expensive.

The Triumph of Obamacare

I think it’s time for us on the blog to finally admit that Obamacare has been a roaring success, far in excess of what even the most optimistic supporters projected. I mean, just check out the numbers:

  • At least six million people have signed up for insurance on the exchanges, close to the seven million Obama hoped for. Now granted, only two million of those were previously uninsured; the rest were people who were already insured but had their plans — some of which they really liked and were much cheaper — cancelled because they weren’t compliant. And, granted, nine million previously insured people have bought policies by ignoring the marketplaces and dealing with insurance companies directly (which was a fairly typical number prior to Obamacare). But two million people! All we need is 24 more Obamacares and there will be no uninsured!
  • Actually, Obamacare is even better than that. About 4.5 million people have been swept into Medicaid. Now granted, Medicaid is not a very good insurance system. Many of the best doctors refuse to see Medicaid patients and Medicaid-intensive hospitals are some of the worst in the country. But still, that means only nine more Obamacares and we’ve got this uninsured problem licked!
  • Something less than a million people are uninsured right now because their insurance was cancelled by Obamacare regs. Meh. Serves them right for having jobs.
  • The CBO projected in February that 13 million more people would have insurance thanks to Obamacare. And here we are, two months later, and it’s looking we may actually have a whole third of that! A third! And almost all of that is by expanding the glorious Medicaid system!
  • We’ve gotten all this for the bargain basement price of, depending on who you believe, somewhere between $1 trillion and all the money in the world plus all the money on other planets that will be discovered by the James Webb Telescope. Now, granted, for that price, we could probably have bought high-deductible plans for all of the newly insured and given them a $5000 HSA to cover the deductible. That wouldn’t have disrupted anyone else’ insurance either. But then what would the poor bureaucrats do?
  • I think we all know the conclusion to draw from this: we need to now move to single payer. The success of Obamacare tells us that we need single payer. And the failure of Obamacare tells us that we need single payer. The canceling of perfectly legitimate insurance plans tells us we need single payer. The massive premium increases tells us we need single payer. Actually, when Venus is in the house of the ram, it tells us that we need single payer. When the sun rises in the east, we need single payer.

    We just need single payer dammit ‘cuz REASONS!

    We Should Hope This Works

    As the insurance exchange debacle drags on into its fourth week, the Democrats and the Obama Administration continue to dodge questions, obfuscate and try to find ways to blame Republicans. Yesterday’s hearing featured Democrat Frank Pallone calling the hearing a “monkey court” because Republicans have the temerity to wonder what the hell is going on with an overhaul of one-fifth of our economy. The Democrats’ media dog-washers are trying to silence liberal critics of the system using the “under no circumstances ever agree with conservatives, especially when they’re right” doctrine.

    But they can’t keep up the facade. Conservatives, libertarians and honest liberals are detailing the many flaws this system has and the significant hurdles it faces getting online. Those critics are not passe about this; they are livid. And they should be.

    One of the memes that is emerging among the Obamacare defenders is that Republicans and other opponents of Obamacare have no right to criticize the utter complete failure of the federal exchanges because we opposed it reform the first place. Since we opposed Obamacare, how can we complain about it? You’ll remember, of course, how that logic was applied to the Iraq War. Those who opposed the war never complained about how the war was executed or what happened in the aftermath of it.


    But as an opponent of Obamacare myself, I am highly critical of the rollout because … I actually want the insurance exchanges to work. Everyone — conservative, liberal, libertarian or monarchist — should want the exchanges to work for three very important reasons.

    First, the exchanges are one of the few good ideas that got into Obamacare. One of the things that drives up insurance costs is the lack of competition. The exchanges force open competition between the insurance companies, which is a good thing. They’re not perfect, of course or even particularly good. A better exchange system would have cheaper entry-level insurance, allow insurance to be sold across state lines and have fewer coverage mandates (it would also, you know, work). But compared to subsidies, coverage mandates, purchase mandates, Medicaid expansion and the IPAB, the exchanges are almost smart.

    Second and more far more important is that if the insurance exchanges don’t work for a long time or if the purchase mandate is delayed, the result could be the complete destruction of the individual insurance market.

    A lot of people don’t appreciate how much Obamacare is like a house of cards. Insurance companies can no longer deny coverage and have priced insurance on the exchanges based on the idea that people will be “taxed” for not buying insurance. This only works, however, if people are actually forced to buy insurance. Otherwise, they will wait until they are sick to insure themselves. If people can’t buy insurance or aren’t made to, the result is a death spiral where insurance gets more and more expensive and more and more people wait until they are sick to buy it.

    This isn’t some theoretical possibility. It happened in New York:

    New York state’s guaranteed issue and community rating rules—the two regulations that limit how insurers can charge based on health history and require them to sell policies to all comers—took effect in 1994. At the time, there were about 752,000 policyholders in the state’s individual market, or about 4.7 percent of the non-Medicare population. But by 2009, according to a Manhattan Institute report by Stephen Parente and Tarren Bragdon, the state’s individual market had practically disappeared, leaving just 34,000 participants, or about 0.2 percent of the non-elderly population. Individual insurance premiums, meanwhile, were among the highest in the nation—about $388 on average in 2007, compared with just $151 in California, another big Democratic-leaning state. In New York City, the annualized premium cost for individuals was more than $9,300 and more than $26,400 for a family.

    The result, in other words, was a combination of sky-high premiums and far fewer insured individuals.

    The individual markets only survived at all because insurance companies could make up the losses from less stupid states. But Obamacare is national; there is no other state to make money off of.

    If people can’t buy insurance, the result will be the complete meltdown of the individual insurance market and millions of Americans becoming uninsured. In fact, many have already lost their insurance as companies cancel individual policies in anticipation of the Obamacare exchanges.

    Now maybe you think that’s acceptable. Obamcare will implode, the Democrats will be blamed and Republicans will sweep back into power (assuming they don’t screw it up). But look beyond the politics. Millions of Americans will be cast into an insurance purgatory that they may never get out of. The individual insurance market works because of people being good citizens — buying insurance when they don’t need it so that the market can support those that do. If that culture is destroyed, if Americans get into the habit of waiting until they are sick to buy insurance, they may never get out of it. A good example of this is the Israeli Daycare Study where daycare centers imposed a fine on people for picking up their kids late. The result? More parents showed up late because they could now buy off their guilt. And when the fine was rescinded, the parents kept showing up late because the social norm of being on time had been effectively destroyed.

    Once the individual market collapses, we may never be able to rebuild it. We may be in a situation where your insurance choices are either through your employer or through Medicaid. That is an extremely high price to pay for making Obama look bad and maybe winning an election.

    (It has been suggested, here and on other blogs, that this sabotage is deliberate; that Obama is deliberately crippling the individual market to lead us toward single payer. I’m open to the possibility of a subconscious desire to wreck the private market. But I have a hard time believing in any conspiracy with this administration. It’s not that they wouldn’t try. It’s that these guys are so incompetent that if they actually tried to sabotage the exchanges, the result would be a perfectly functioning exchange system.)

    Now my second point may cause many liberals — who see Obamacare as a stepping stone to single payer — to quietly rejoice. Already, many are blaming this on the private sector. Who will be the first to say this “proves” we should trash private insurance and go with single payer? Who will be the first to say we should just expand Medicaid to everyone who isn’t insured by an employer?

    But this idea is mind-bogglingly stupid. If the Democrats destroy the individual insurance market and increase the number of uninsured, Americans will not thank them for it. We are not going to rise up in a mass and say, “Oh, you great ones who took away our insurance. Tell us what to do next!”

    And frankly, if anyone thinks Medicaid is the future of health insurance (oh, wait, here’s Krugtron the Ever-Wrong making the case) they need to spend a few weeks working in a hospital that only takes Medicaid. Medicaid is only marginally preferable to no insurance at all, providing a consistently lousy quality of service. That’s how it keeps costs down. In fact, Krugman’s defense of Medicaid is made entirely in terms of costs. His only acknowledgement of the downside of consigning millions to the Medicaid gulag is this:

    But the problems of access, such as they are, would largely go away if most of the health insurance system were run like Medicaid, since doctors wouldn’t have so many patients able and willing to pay more.

    Yes. I’m sure those doctors will take massive pay cuts rather than leave the field. Let’s apply Krugman’s logic to academia, another industry afflicted with runaway costs. We could cut those costs by turning the entire shebang to the community college model. And the problem of finding good professors for those colleges would disappear if they no longer had universities like Princeton able and willing to pay more.

    (My apologies to community colleges, who are far better at teaching than Medicaid is at insuring.)

    Obamacare is a bad law. It ignores everything we’ve learned about healthcare reform over the last decade and applies a model that at least twenty years old. But the situation with Obamacare could get far, far worse and could do permanent damage to the healthcare system if the exchanges don’t start working. Everyone should hope that they do because this isn’t a political game: this is the healthcare of millions of people. We will never be able to truly reform the system if there’s nothing left to reform.

    Piling On

    Apropos to Alex’s post below, the huge news in the last day is a study from Oregon that looked at the effects of expanding Medicaid. As McCardle points out, the study was done under near ideal circumstances. Oregon could not expand Medicaid to everyone who wanted it, so they created a lottery. Sociologists swooped in and recruited. The result was a study of 6000 people with Medicaid and almost 6000 without. One of the authors was an Obamacare architect. This is the kind of diverse randomly-selected sample that sociologists dream about.

    The result is …. not much:

    Utilization went up, out-of-pocket expenditure went down, and the freqency of depression diagnoses was lower. But on the three important health measures they checked that we can measure objectively–glycated hemoglobin, a measure of blood sugar levels [and diabetes indicator]; blood pressure; and cholesterol levels–there was no significant improvement.

    It’s one of two major RCTs that have ever been done on insurance. And like the first one, it doesn’t show a signficiant effect. That is huge news. Not good news–obviously, it’s much nicer if giving people money to pay for health care makes them obviously much healthier. But big.

    And it’s actually bigger, and more important than Obamacare. We should all be revising our priors about how much health insurance–or at least Medicaid–really promotes health. What this really tells us is how little we know about health care, and making people healthy–and how often data can confound even our most powerful intuitions.

    In other words, insuring people resulted in more spending by the government, but not necessarily improved health. Gee, I think I’ve heard that before.

    As you can imagine, the liberals are spinning as fast as they can. And, to be fair, they have a point. The study covers only of a couple of years and it might take a while for long-term effects to show up. But you know that if the study showed even the slightest improvement in health, they would be shouting it from the rooftops. They have, after all, spent years citing dubious studies that claim that the lack of universal healthcare kills, if I remember the Obamcare rhetoric correctly, at least 17.4 billion Americans every year. And, in fact, when the first Oregon study came out and showed that people weren’t healthier, per se, but felt better, the liberals crowed about it.

    The new study is much more difficult to twist abut that’s not stopping their attempts. One thing they have harped on is that the insurance is preventing people from being financially destroyed by a health crisis. But Avik Roy is all over that in a must-read response to liberal excuse making:

    Medicaid reduced financial hardship for the poor, by protecting them against catastrophic health risks. Wonderful, but we could have achieved the same outcome for a fraction of the price, by adopting the plan proposed by Florida’s Will Weatherford and Richard Corcoran: Offering low-income Americans a subsidy with which to purchase catastrophic coverage on the open market. That plan was foiled by people—including Republicans—who insisted on expanding Medicaid instead.

    Ross Douthat is on the same page:

    But what if we lived in a world in which the Republican Party had fully embraced the views of many right-of-center health policy writers (and some G.O.P. politicians, including the John McCain of 2008) and supported an alternative to Medicaid expansion, which would change the tax treatment of health insurance to free up money to create a universal tax credit or voucher designed to spur the purchase of catastrophic health insurance plans? What if the choice, in other words, weren’t between the current health care law and a repeal-plus-nothing G.O.P., but between the current health care law and the best conservative thinking on the issue?

    This is, in fact, what most libertarians have advocated for years, including me.

    I remind you that this isn’t a trivial question. Obamacare gambles some $750 billion on the idea that Medicaid will improve health outcomes, boost the economy, reunite the surviving Beatles and help us all lose ten pounds with diet and exercise. If the gain from that huge investment is this marginal, it is not worth it. I’m sorry to be cruel, but it not worth $750 billion to save only a few lives.

    I do want to repeat my earlier caution that it would be odd to conclude that health insurance has no health benefit. We may not know for a while. But I do think it’s becoming clear that Medicaid expansion is not going to be the miracle breakthrough that so much of the Left has claimed it would be. If lack of insurance really were killing as many people as the Left insists it is, the Oregon data would show it. You might even already see a difference in mortality rates.

    I know it surprises some people, but improving our nation’s health is not as simple as simply throwing lots of money around.

    This Week in Flip-Flopping


    Mitt Romney said congressional Republicans were wrong to accept a deal last year that could ultimately result in across-the-board spending cuts, including massive cuts to the military.

    “I thought it was a mistake on the part of the White House to propose it,” Romney said on NBC’s “Meet the Press.” “I think it was a mistake for Republicans to go along with it.”

    I’m just reeling at that. The spending cuts were Obama’s idea? And the Congressional GOP went along? And now we need to undo those spending cuts? What on Earth is Mitt Romney talking about? Oh, wait … it gets better:

    And while the Republican nominee has repeatedly vowed to work towards a repeal of President Barack Obama’s health care reform, Romney said in the interview he favors some measures found in the law.

    “Well, I’m not getting rid of all of health care reform. Of course there are a number of things that I like in health care reform that I’m going to put in place,” he said.

    Romney listed the provision that ensures those with pre-existing conditions can get coverage as one aspect he would include in his own health care plan, which he said would “replace Obamacare.” The former Massachusetts governor has taken heat for opposing the federal health care law despite the fact it was largely modeled after the 2006 law he signed in the Bay State.

    It is just a week past Labor Day and Romney is already conceding bits of the agenda. To be fair, some commentators think he means going back to the pre-Obamacare law which said that you could transfer insurance and not be denied for pre-existing conditions. But if he does mean that people should be not be barred from insurance for pre-existing conditions in general, something Republicans have supported, that, uh … won’t work without a coverage mandate.

    The “good news” is that Obama is matching Romney in the Flip-Flop Voter Flip-Off Sweepstakes. You remember the Ryan Plan and how evil it was to offer seniors the option of a private plan? Well, it looks like HHS is about to implement … the Ryan plan:

    In his convention speech in Charlotte, President Obama vowed to block the Republican Medicare reform plan because “no American should ever have to spend their golden years at the mercy of insurance companies.”

    But back in Washington, his Health and Human Services Department is launching a pilot program that would shift up to 2 million of the poorest and most-vulnerable seniors out of the federal Medicare program and into private health insurance plans overseen by the states.

    The administration has accepted applications from 18 states to participate in the program, which would give states money to purchase managed-care plans for people who are either disabled or poor enough to qualify for both Medicare and Medicaid. HHS approved the first state plan, one for Massachusetts, last month.

    Medicare only covers 80% of medical expenses. Seniors have to find the other 20% from other resources. And for poorer seniors, Medicaid is that other resource. What the states want to do is roll these dual-coverage citizens into private plans that will used managed care to cut expenses. California estimates this could save them half a billion a year.

    It’s not a bad idea, actually. Medicare and Medicaid are notoriously wasteful, paying out just about any claim. If private companies get involved, there might be some actual resource review. Hell, there could even be — gasp! — fraud investigation! Bowles-Simpson recommended it. And the list of opponents is practically a whos-who of bad healthcare reform ideas.

    No, the policy is not necessarily the problem; the hypocrisy is. Either moving patients to private system is an evil abandoning of our commitments or it isn’t.

    So Romney is embracing Obama policies and Obama is embracing Romney policies. The closer we get to this election, the more it looks like no choice at all.

    Another PPACA Ooops

    Actually, I don’t think this is an accident:

    President Barack Obama’s health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.

    Obligatory “we have to pass it to know what’s in it” jab.

    The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services department.

    Up to 3 million more people could qualify for Medicaid in 2014 as a result of the anomaly. That’s because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility. It might be compared to allowing middle-class people to qualify for food stamps.

    That’s on top of the 16-20 million Obamacare already sweeps into Medicaid. And we wonder why the states are screaming about Medicaid costs.

    I don’t think this is an accident. Both Bush and Obama have massively expanded the socialized Medicaid system. This system has terrible reimbursement rates and many hospitals and doctors simply don’t accept it. The Medicaid-heavy hospitals are some of the worst in the country. We are slowly and inevitably moving toward a system where most Americans will get substandard cheap care while the elites are taken care of in boutique hospitals.

    That’s not a bug; that’s a feature. That’s usually how socialism works.