“Obamacare Death Spirals”: The Latest Prediction Of Doom Hits The Conservative Blogosphere
A new meme has arrived on the scene from the voices and pens of the anti-Obamacare devotees who remain more committed to frightening than informing when it comes to healthcare reform.
It’s the Obamacare “death spiral”— and it’s coming to a conservative blog near you.
Through a series of articles already going viral—thanks to a piece published on National Review Online and one by my Forbes colleague, Dr. Scott Gottlieb –we learn that the threat of impending doom ‘du jour’ comes via an allegation that, due to the poor launch of the healthcare.gov website, younger and healthier participants will now be more likely to stay away than sign up.
This, the falsely fearful argue, will result in an insurance pool jammed with older and sicker people without the required participation of younger and healthier Americans needed to balance the pools.
The result of such an event?
As insurance companies are forced to pay out more claims —due to their older and sicker participant base—without sufficient premium income from younger and healthier people less likely to call upon the insurer to pay for medical care, the insurance company is forced to raise their premium costs so they don’t loose money. As this problem builds upon itself year after year, it becomes, as it is termed in the insurance industry, a ‘death spiral’ as, sooner or later, the insurers are forced out of business when the premium costs get too high to be affordable by much of anyone.
Clearly, the authors suffer from a lack of understanding of human behavior—particularly when it comes to young people who are not given to dealing with these sort of issues until the deadline approaches…meaning we really don’t yet know anything about the potential success or failure of the insurance pools available on the health care exchanges.
If you doubt this, you might want to review what took place with the forerunner of Obamacare—Romneycare.
According to Jonathan Gruber, one of the key architects of the Massachusetts health care exchange—a program that the overwhelming majority of Massachusetts residents favor and support—and one of nation’s leading experts on all things Obamacare, “Massachusetts launched its health insurance program at the beginning of 2007 but enrollment didn’t fully flesh out for a year. In fact, it was less than 6% of the year’s total by the end of the second month. (emphasis added)”
In other words, people of all ages tend to wait until the deadline is upon them before coming to grips with an obligation like purchasing health insurance. But if you have kids, you know that younger people are even more likely to delay matters such as this.
Yet, here we have the opponents of the Affordable Care Act, ready to declare the entire program DOA based on a prediction of ultimate demise via the ‘death spiral’—and all because the slow start of the federally operated state healthcare exchanges are precluding younger and healthier prospective participants from signing up during the initial weeks of availability.
Even stranger, Dr. Gottlieb argues that, as a result of the failures of the federal website launch and the negative cascading effect he suggests will likely follow, more people will be driven out of the exchanges due to higher premiums in future years. In its place, Gottlieb proposes, these people will turn to “off-exchange” policies, purchased by going directly to an insurance company, broker, etc. for policies that are not offered on the exchange.
Gottlieb writes—
“Over time, conforming and non-conforming insurance policies sold entirely outside the exchanges could look increasingly attractive to consumers; even accounting for the subsidies many people would get for staying inside the exchanges.”
Why would they do this? Because, Dr. Gottlieb suggests, the off-exchange policies will be cheaper.
Setting aside that I have no idea what Gottlieb is referring to when he speaks of “non-conforming” insurance policies as every individual insurance policy, whether available on the exchange or not, must, for all practical purposes, meet the basic benefits requirements set forth in the Affordable Care Act, I can’t quite fathom why buying less expensive insurance off the exchanges would be a bad thing.
There is a tendency among those dedicated to burying healthcare reform to miss the point when it comes to the objectives of Obamacare. They spend so much time working out how to creatively attack the law that they simply cannot recall why we needed healthcare reform in the first place.
At its core, the law is designed to do three things—get insurance company abuses under control, make healthcare coverage more readily available to virtually all Americans and institute a series of experiments designed to bend the cost curve in healthcare delivery.
This being the case, why would anyone care whether you buy your insurance coverage off-exchange or on-exchange, so long as you obtain healthcare coverage? What’s more, the individual mandate does not require that you shop on the exchanges—it only requires you to purchase a qualifying policy.
The healthcare exchanges are designed to create competition among insurance companies. Should it not work, and Dr. Gottlieb is correct that the events occurring on the exchange will produce lower costs of an off-exchange policy—even for those who qualify for subsidies which are only available on the exchange—then we will have learned that the exchanges did not create the intended competition.
But, if Gottlieb is right and people can buy a cheaper policy that meets the requirements of the ACA off-exchange, then the objective of the law will be accomplished.
The bottom line here is that, by any reasonable and rational metric, it is far too early to know whether or not the insurance programs offered on the healthcare exchanges will manage to maintain the balance required of sick versus healthy and old versus young. In the final analysis, the doomsayers may turn out to be right. Maybe it just won’t work.
Or, maybe it will.
This is something we will simply not know for quite a few years.
Therefore, where exactly is the benefit of predicting a dire result at this stage of the game based on no available evidence whatsoever? Can there be any possible use of this information aside from giving political opponents some newly minted ammunition? Will the knowledge that insurance policies offered on the exchanges could experience a death spiral—a possibility that has existed for health insurers since the dawn of the industry—do anything to improve the odds of success?
If there is anything we can be sure of, it is that there will be a great many surprises along the way as we make these major adjustments to our healthcare system—some that will be good and some that will not.
As for the suggestion that we are in some immediate crisis because the healthcare.gov website has not yet worked as required, Jonathan Gruber, again, provides a reasonable and rational explanation of what is really happening and what it means.
USA Today reports that Gruber describes the current situation as “DEFCON 1″—a political problem, but probably not a problem yet for the marketplace.
If healthcare.gov is not running by Thanksgiving, it would be “DEFCON 2″, a real problem because people want to get insurance by January, but it’s not a crisis.
The crisis, according to Gruber, arrives if people cannot get insurance until March of 2014.
Gruber added that, in Massachusetts, officials were not focused on how well enrollment went on a day-to-day basis. They looked at the long-term potential, and expected that people would sign up in time to avoid the penalty.
Finally, Gruber noted, “I’m pretty confident they’ll have it up and going by Thanksgiving.”
So, how about we leave the death spiral stuff in the back room until the moment comes to actually haul it out and parade it around?
After all, at the rate Obamacare opponents are tossing out and using up their theories of pending disaster, they will soon run through their play book and have nothing left in their quiver.
Wouldn’t that be a shame?
By: Rick Ungar, Op-Ed Contributor, Forbes, October 28, 2013
“Replace The Sequester, Not Sebelius”: While She Tries To Fix A Broken Website, Congress Allows Rest Of Government To Crash
An embarrassing mistake, which should be considered a scandal, has caused the Internal Revenue Service to perform far fewer tax reviews and cut back its fraud investigations, costing the Treasury billions of dollars. Have there been any angry House hearings? No.
That same mistake has forced the National Institutes of Health to cut more than 700 advanced research grants, delaying the progress of vaccines and experimental treatments. No hearings.
And it has cost the economy hundreds of thousands of jobs, according to the Congressional Budget Office, but there is no sign that Republicans want to investigate what went wrong.
That’s because the mistake is called the sequester, and Republicans know what went wrong: they caused it by threatening default in 2011 and then refusing any budget agreement that included new taxes the next year. They’d much rather investigate a serious bumble by the Obama administration in rolling out the health-care website — which will eventually be fixed — than examine the effects of their own actions.
The paradox of Republican complaints about the website’s failings has been widely noted: They are pretending to care about the technical problems of a law they want abolished. But in fact the hypocrisy goes much deeper than that. In virtually every department of government, the right wing has used the sequester to encourage government to stumble, creating backups and denials of service that will be far more damaging than the ones going on at www.healthcare.gov. The sequester, which has been the Tea Party wing’s sole legislative victory, is evidence that its members want government to do less with less, and that they aren’t interested in having it work efficiently in delivering services to the public.
Any lawmaker who came to Washington to improve government, rather than shrink it, would do everything possible to reverse the sequester, as Democrats will try to do in a budget conference beginning this week. (They will be joined in that effort by a few Republicans who want only to turn back the cuts to the Defense Department.) But most Republicans, ranging from Senate Minority Leader Mitch McConnell to the furthest extreme in the House, have said they have no intention of letting the budget caps expire, and certainly aren’t interested in replacing them with higher revenue.
The only thing they have clamored to replace is Kathleen Sebelius, the Health and Human Services secretary. While she tries to fix a broken website, Congress is allowing the rest of government to slowly crash.
By: David Firestone, Editors Blog, The New York Times, October 28, 2013
“Make ’Em Pay”: House Republicans Act As If They Are Immune From Majority Sentiment, But Each Is Up For Re-Election In 2014
Where do you go if you’re a “Deadliest Catch” kind of guy, manliest of manly men, but couldn’t fish for king crab because some jelly-bellied Republicans threw a tantrum 5,000 miles away and shut down the government?
What do you do if you’re a farmer in Kansas who could not put winter wheat in the ground or get this year’s cattle vaccine because your government agriculture office was deemed nonessential? Whom do you see about the home loan that was held up, the family restaurant near the federal building that couldn’t meet October’s payroll, the bookings lost at season’s end in dozens of national parks?
Real Americans, the wind-chapped toilers so often invoked by politicians in a phony froth, lost real money from the real pain inflicted on their livelihoods by the extortionists in Congress this month.
How much money? At least $24 billion was the estimate given by Standard & Poor’s. Small business was hit particularly hard. And it’s a rolling pain, affecting consumer confidence, that will be felt through a holiday buying season that can make or break many retailers.
“I am a small businessman in a big ocean with big bills,” said Captain Keith Colburn, an Alaska crab fisherman, in Senate testimony during the shutdown. “I need to go fishing,” said the skipper, who is featured in the reality TV show “Deadliest Catch,” but was being held back by “a bunch of knuckleheads,.” who prevented marine regulators from doing their jobs.
So, who pays? For years, Republicans have been trumpeting the idea that when a government action hurts a private business, the government should compensate for the loss. This principle is based on a broad reading of the takings clause of the Fifth Amendment; it’s usually summoned as leverage against environmental regulation.
But in the case of the federal shutdown, of course, the economic hit on millions of Americans didn’t come from government — it came from one political faction in the House of Representatives. You could sue the Tea Party, but what is that? A bunch of costumed zealots on Fox are not responsible for anything that comes out of their mouths and lands in the porous mind of someone like Representative Ted Yoho of Florida.
You could sue Ted Cruz of Texas for initiating the calamity with a marathon of self-absorption. But the senator, like all members of Congress, has broad protection to pretty much say or do anything he wants inside the thick-walled refuge of the Capitol, a free speech guarantee that is warranted even when abused by vanity projects like Cruz.
What’s left is the ballot box. And here, Red State America can do a huge service for the rest of country. The states hit hardest by the shutdown, it now appears, were those where Republicans prevail. Virginia, with its wealth of government jobs and businesses that depend on those jobs, is Exhibit A. There, Republicans are likely to lose the governor’s race next week in part because their party disrupted so many lives in October’s meltdown.
The more difficult job will be ousting, from hardened, gerrymandered districts, the people who put ideology ahead of common sense and commerce. They seem faceless and buffoonish. They act as if they are immune from majority sentiment. But each of them is up for re-election a year from now, and the good news is that almost 75 percent of voters say most Republicans in Congress don’t deserve to be sent back to Washington.
In some districts, it will be civil war. What’s left of moderate Republicans are organizing to go after the crazies. “Hopefully, we’ll go into eight to 10 races and beat the snot out of them,” former Representative Steve LaTourette of Ohio told the National Journal. His group of fed-up Republicans, Defending Main Street, plans to raise $8 million to target the looniest of the loons.
Make Steve King of Iowa pay. As key government offices across the country were shuttered, as farmers in his district could not get their loans processed, King crowed, “We’re right!” He exists because political theater requires new players in clown makeup. The Des Moines Register recently suggested a slogan for King: “Send me back to Washington so I can continue to embarrass Iowa.”
Make Darrell Issa of California pay. Using the vast apparatus of his House Oversight and Government Reform Committee, he is going after National Park Service rangers. Having shut down the government, Issa wants to know why popular parks and monuments were closed. The audacity! During an earlier hearing, a fellow congressman provided an answer: He held up a mirror and aimed it at Republican lawmakers.
And certainly make Marlin Stutzman of Indiana pay. This congressman gave history the money quote on the shutdown. “We have to get something out of this,” he said. “And I don’t know what that even is.” A year from now, he can find out.
By: Timothy Egan, Op-Ed Contributor, The New York Times, October 28, 2013
“U.S. Chamber Carrying The Tea Party Label”: The Tea Party and Wall Street Are Even Closer Than We Thought
Ever since the Tea Party Republicans arrived on the scene in Washington, I’ve cast a wary eye at the notion of them as grass-roots insurgents disconnected from the party’s big business and Wall Street base. Heck, when I went looking for one Tea Party tribune, Rep. Tom Graves of Georgia, the night of the August 2011 vote to resolve that summer’s debt-ceiling showdown, I found him at a fundraiser in AT&T’s box at National Stadium.
But even I, with my lack of illusions on this score, was startled to see just how tight the business lobby-Tea Party bond has been, as revealed in today’s Washington Post by Tom Hamburger and Jia Lynn Yang, with help from the Center for Responsive Politics. They report:
The American Bankers Association gave more money over the past two election cycles to GOP lawmakers who in effect voted to allow the United States to default on its debt than those who voted against that scenario. The ABA contributed $2.2 million to lawmakers who ultimately ignored the group’s warnings, second only to the Club for Growth and just ahead of Koch Industries, both of which are leading sources of funds for conservative candidates…
At financial services firms, including hedge funds and major banks, contributions totaled more than $26 million over the past two election cycles to the Republican lawmakers who voted against a deal to reopen the government and avoid a first-ever debt default. Employees and the political action committee of Goldman Sachs, which didn’t comment for this article, gave $1.06 million from 2009 to 2012 to the group of GOP lawmakers who voted against the deal. At Bank of America, which also declined to comment, contributions totaled $1.03 million. Hedge funds gave $1.7 million….
Employees and political action committees at Honeywell, the manufacturing conglomerate [whose CEO David Cote was among the Fortune 500 types warning against the shutdown] contributed nearly $2.1 million to last week’s naysayers while providing slightly less to yes-voting Republicans. At AT&T, contributions reached $1.9 million for no-voting members and $2.1 million for those voting “yes.”
Even the proud leader of the defund-Obamacare government-shutdown movement got the business lucre:
Sen. Ted Cruz (R-Tex.), whose 21-hour floor speech helped spark the crisis and who voted against the debt-ceiling deal, received $786,157 from financial services companies — more than the $705,657 he received from the Club for Growth. Cruz’s wife works at Goldman Sachs, whose PAC gave $5,000 to her husband in 2012.
The question now, of course, is whether big business and Wall Street keep shoveling money toward those in the congressional suicide caucus. There are already signs of a rethinking underway, with talk of non-lunatic business-backed challengers in Michigan and Utah, and with some donors holding off on writing the usual checks to the GOP. Still, the Post’s report reminds us that we should not be surprised if this shift is marginal at best. The fact is, Ted Cruz and his ilk were making no bones at all about what they planned to do in Washington, and got plenty of backing from supposedly sober business types nonetheless. Why? Because their interests overlap more than the new talk of a rift acknowledges, on everything from taxes to organized labor to government regulations. What was the final demand that many in the shutdown caucus were making? The elimination of a tax on some of the highest-margin companies in the country—not exactly a typical pitchfork-wielding cause. Make no mistake: The great Shutdown Debacle of 2013 may have carried the Tea Party label, but it was made in the U.S. Chamber of Commerce and the C-suite.
Addendum, 5:30 p.m. Wednesday: It’s worth noting that Ted Cruz is not just getting big financial support from Wall Street. He’s also on its health plan.
By: Alec MacGillis, The New Republic, October 23, 2013
“The Republican Self-Preservation Act”: Texas Voter ID Law Discriminates Against Women, Students And Minorities
Texas’s new voter ID law got off to a rocky start this week as early voting began for state constitutional amendments. The law was previously blocked as discriminatory by the federal courts under the Voting Rights Act in 2012, until the Supreme Court invalidated Section 4 of the VRA in June. (The Department of Justice has filed suit against the law under Section 2 of the VRA.) Now we are seeing the disastrous ramifications of the Supreme Court’s decision.
Based on Texas’ own data, 600,000 to 800,000 registered voters don’t have the government-issued ID needed to cast a ballot, with Hispanics 46 to 120 percent more likely than whites to lack an ID. But a much larger segment of the electorate, particularly women, will be impacted by the requirement that a voter’s ID be “substantially similar” to their name on the voter registration rolls. According to a 2006 study by the Brennan Center for Justice, a third of all women have citizenship documents that do not match their current legal name.
Just yesterday, this happened (via Rick Hasen), from KiiiTV in South Texas:
“What I have used for voter registration and for identification for the last 52 years was not sufficient yesterday when I went to vote,” 117th District Court Judge Sandra Watts said.
Watts has voted in every election for the last forty-nine years. The name on her driver’s license has remained the same for fifty-two years, and the address on her voter registration card or driver’s license hasn’t changed in more than two decades. So imagine her surprise when she was told by voting officials that she would have to sign a “voters affidavit” affirming she was who she said she was.
“Someone looked at that and said, ‘Well, they’re not the same,’” Watts said.
The difference? On the driver’s license, Judge Watts’s maiden name is her middle name. On her voter registration, it’s her actual middle name. That was enough under the new, more strict voter fraud law, to send up a red flag.
“This is the first time I have ever had a problem voting,” Watts said.
The disproportionate impact of the law on women voters could be a major factor in upcoming Texas elections, especially now that Wendy Davis is running for governor in 2014.
Moreover, the state is doing very little to make sure that voters who don’t have an ID can get one. As I mentioned, 600–800,000 registered voters don’t have an acceptable voter ID, but according to the Dallas Morning News “only 41 of the new cards were issued by DPS [Department of Public Safety] as of last week.”
Getting a valid photo ID in Texas can be far more difficult than one assumes. To obtain one of the government-issued IDs now needed to vote, voters must first pay for underlying documents to confirm their identity, the cheapest option being a birth certificate for $22 (otherwise known as a “poll tax”); there are no DMV offices in eighty-one of 254 counties in the state, with some voters needing to travel up to 250 miles to the closest location. Counties with a significant Hispanic population are less likely to have a DMV office, while Hispanic residents in such counties are twice as likely as whites to not have the new voter ID (Hispanics in Texas are also twice as likely as whites to not have a car). “A law that forces poorer citizens to choose between their wages and their franchise unquestionably denies or abridges their right to vote,” a federal court wrote last year when it blocked the law.
Texas has set up mobile voter ID units in twenty counties to help people obtain an ID, but has issued new IDs to only twenty voters at the sites so far.
Supporters of the voter ID law, such as Governor Rick Perry, argue that it’s necessary to stop the rampant menace of voter fraud. But there’s no evidence that voter impersonation fraud is a problem in Texas. According to the comprehensive News21 database, there has been only one successful conviction for voter impersonation—I repeat, only one—since 2000.
Texas has the distinction of being one of the few states that allows you to vote with a concealed weapons permit, but not a student ID. Provisions like these suggest that the law was aimed less at stopping voter fraud and more at stopping the changing demographics of the state. Based on what we’re seeing thus far, the law might better be described as the Republican Self-Preservation Act.
By: Ari Berman, The Nation, October 23, 2013
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