“Political Skullduggery”: Indiana Fudges Truth On Health Exchange Rates To Make Obamacare Look Bad
Sometimes, the political urge simply overwhelms anything resembling common sense and appropriate behavior.
Witness the latest example of political skullduggery playing out in the great State of Indiana where GOP Governor Mike Pence has found it necessary to take extreme liberties with the reporting of the state’s healthcare exchange data—all to justify his anti-Obamacare political positioning.
Anyone paying attention to data projecting what a health insurance policy will likely cost on the newly formed individual policy insurance exchanges could hardly miss the headlines late last week announcing that premiums for health insurance policies stood to rise to an average monthly price of $570—a 72 percent increase over current rates in Indiana.
Of course, if this data is correct, it would be quite a blow to Indiana residents at the hand of the dreaded Obamacare.
At first glance—the only glance the Indiana officials intend for you to see—this is certainly disturbing news. Even those willing to accept the projections and claims made by the President during last week’s health care address—where he referred to the ‘good news’ in California, Oregon, Washington and, particularly, New York—would have to come to the understanding that there may, indeed, be states where the law is going to badly hurt consumers.
Fortunately, there are those whose job it is to dig below the surface of that ‘first glance’ to discover the truth of any situation—and, in this situation, we learn that Indiana has sought to play cute in its efforts to present a grim picture of the healthcare reform law, even when the data reveals otherwise.
You see, while the states that have already released their projections have based their price expectations on what insurance company filings suggest will be the cost of a ‘Silver’ plan (the second least expensive option to be offered on the exchanges), Indiana decided to publish their projections based on a calculation that took all the levels of plans to be offered—ranging from the less expensive Bronze and Silver plan to the most expensive Gold and Platinum plans—and averaged them all together to come up with their projected rates.
As Sy Mukherjee points out, “That’s like saying the average cost of a car in an Indiana dealership is $100,000 because it sells $20,000 Fords, $60,000 BMWs, and $220,000 Lamborghinis — technically true, but highly misleading.”
Exactly.
What possible benefit can there be to taking an average of costs ranging from most expensive to least expensive when we know full well that the overwhelming majority of those living in Indiana—and, for that matter, everywhere else—will purchase the policies in the lower cost ranges?
How do we know this?
We know this because we have the evidence of buying patterns provided by the State of Massachusetts, a state that has been utilizing this system for quite some time now.
As Sarah Kliff at the Washington Post reports—
“In Massachusetts, 8 percent of enrollees bought a gold plan. Eighty-four percent chose bronze or silver. At least one carrier in Indiana seems to agree with this distribution. In state rate filings, Physicians Health Plan of Indiana estimates that 45 percent of its enrollees will pick bronze and 38 percent take up silver. It is expected that the average mix of Individual Market will be more toward less rich benefit plans and credit should be given for the associated reduction in induced utilization,” the company wrote in its filing. In other words, the average plan cost isn’t a great estimation of what the average person will pay.”
Ms. Kliff also did a little digging to discover that the actual prices for Bronze and Silver plans in Indiana are going to be far below the $512 a month estimate provided by the state’s government.
“Anthem’s rate filing includes projections for health insurance costs in their bronze plans. A 47-year-old male who does not smoke would be charged, on average, $307 per month. Sample plans from another plan, MDWise, predict a 47-year-old man will be charged $294 and $391 for a bronze and silver plan, respectively.”
While you may find the actual rates of the policies to be made available on the Indiana individual exchange to be good news or bad— depending on what you currently pay for health coverage—one would at least hope that the state would want to put out an honest analysis.
“Putting The Train Wreck On Hold”: Everything Anti-Obamacare Republicans Predicted Is Proving To Be The Opposite Of Reality
The Affordable Care Act, like every landmark piece of legislation in modern times, has faced its share of trials. Getting it through Congress was nearly impossible, and the law was very nearly killed by the Republican appointees on the U.S. Supreme Court.
But with the law now secure and President Obama re-elected, there’s one more major challenge for “Obamacare” to overcome: the implementation hurdle. As we discussed several weeks ago, this is at least as big a hurdle as the others, and more than a few observers have raised the prospect of a “train wreck.” Even those who generally defend the law are worried.
They are, however, a little less worried today. As Matt Yglesias explained, implementation of the law is “fundamentally” going quite well.
The latest evidence comes to us today from California, America’s largest state and one of the states that’s tried the hardest to actually implement Obamacare. As Sarah Kliff explains, their exchanges are getting set up, and it looks like premiums for “silver” and “bronze” plans are both going to be lower than was previously expected. Far from a “train wreck,” in other words, the biggest single set of clients for the program is getting something like a nice, smooth high-speed train ride.
There was also good news from Oregon recently, where insurers that had initially come in with high premium bids are now asking to resubmit with cheaper offerings in the face of competition. And the Affordable Care Act’s goal of slowing the growth in aggregate health expenditures is also coming true.
Yep, at least for now, everything anti-ACA Republicans predicted — on premiums, on competition, on exchanges, on escalating costs — is proving to be the opposite of reality.
Now, because of state-by-state differences, there will be quite a bit of variety in outcomes. If you live in California or another state dominated by Democratic officials, you’ll likely have a very positive impression of how the law is being implemented, and how it benefits you, your family, and your community.
If you live in, say, Texas, you’re likely to have a very different kind of experience.
As Jonathan Cohn explained this morning:
Unfortunately, millions of uninsured and under-insured Americans live in places like Florida and Texas, where there is far less sympathy — and a great deal more hostility — to the idea of Obamacare. It’s entirely possible that the insurance bids in those states will be a lot higher, precisely because state officials there are doing nothing to help and quite a bit to hurt implementation. But if that happens, blame won’t belong with the heath care law or the federal officials in charge of its management. It will belong with the state officials who can’t, or won’t, deliver to their constituents the benefits that California’s officials appear to be providing theirs.
It’s not necessarily an explicitly partisan matter — I’m not saying that Democrats are necessarily better at health care governance. Rather, the point is, Democrats don’t have an ideological axe to grind when it comes to trying to sabotage federal health care law. Rick Perry, however, does.
To be sure, these red-state residents won’t be left out entirely, and they’ll still benefit from all kinds of consumer protections and expanded access that they’ll really appreciate, even if they don’t yet realize the available benefits. But the full benefits of implementation will elude them for a while in ways blue-state residents won’t have to deal with.
Regardless, the news out of California is a bit of a breakthrough, and heartening news for anyone hoping to see the Affordable Care Act succeed. For more on this, also take a look at the reports this morning from Klein, Krugman, and Beutler.
By: Steve Benen, The Maddow Blog, May 24, 2013
“Mooching Off Medicaid”: Conservatives Like Big Government Just Fine When It Lines Their Pockets
Conservatives like to say that their position is all about economic freedom, and hence making government’s role in general, and government spending in particular, as small as possible. And no doubt there are individual conservatives who really have such idealistic motives.
When it comes to conservatives with actual power, however, there’s an alternative, more cynical view of their motivations — namely, that it’s all about comforting the comfortable and afflicting the afflicted, about giving more to those who already have a lot. And if you want a strong piece of evidence in favor of that cynical view, look at the current state of play over Medicaid.
Some background: Medicaid, which provides health insurance to lower-income Americans, is a highly successful program that’s about to get bigger, because an expansion of Medicaid is one key piece of the Affordable Care Act, a k a Obamacare.
There is, however, a catch. Last year’s Supreme Court decision upholding Obamacare also opened a loophole that lets states turn down the Medicaid expansion if they choose. And there has been a lot of tough talk from Republican governors about standing firm against the terrible, tyrannical notion of helping the uninsured.
Now, in the end most states will probably go along with the expansion because of the huge financial incentives: the federal government will pay the full cost of the expansion for the first three years, and the additional spending will benefit hospitals and doctors as well as patients. Still, some of the states grudgingly allowing the federal government to help their neediest citizens are placing a condition on this aid, insisting that it must be run through private insurance companies. And that tells you a lot about what conservative politicians really want.
Consider the case of Florida, whose governor, Rick Scott, made his personal fortune in the health industry. At one point, by the way, the company he built pleaded guilty to criminal charges, and paid $1.7 billion in fines related to Medicare fraud. Anyway, Mr. Scott got elected as a fierce opponent of Obamacare, and Florida participated in the suit asking the Supreme Court to declare the whole plan unconstitutional. Nonetheless, Mr. Scott recently shocked Tea Party activists by announcing his support for the Medicaid expansion.
But his support came with a condition: he was willing to cover more of the uninsured only after receiving a waiver that would let him run Medicaid through private insurance companies. Now, why would he want to do that?
Don’t tell me about free markets. This is all about spending taxpayer money, and the question is whether that money should be spent directly to help people or run through a set of private middlemen.
And despite some feeble claims to the contrary, privatizing Medicaid will end up requiring more, not less, government spending, because there’s overwhelming evidence that Medicaid is much cheaper than private insurance. Partly this reflects lower administrative costs, because Medicaid neither advertises nor spends money trying to avoid covering people. But a lot of it reflects the government’s bargaining power, its ability to prevent price gouging by hospitals, drug companies and other parts of the medical-industrial complex.
For there is a lot of price-gouging in health care — a fact long known to health care economists but documented especially graphically in a recent article in Time magazine. As Steven Brill, the article’s author, points out, individuals seeking health care can face incredible costs, and even large private insurance companies have limited ability to control profiteering by providers. Medicare does much better, and although Mr. Brill doesn’t point this out, Medicaid — which has greater ability to say no — seems to do better still.
You might ask why, in that case, much of Obamacare will run through private insurers. The answer is, raw political power. Letting the medical-industrial complex continue to get away with a lot of overcharging was, in effect, a price President Obama had to pay to get health reform passed. And since the reward was that tens of millions more Americans would gain insurance, it was a price worth paying.
But why would you insist on privatizing a health program that is already public, and that does a much better job than the private sector of controlling costs? The answer is pretty obvious: the flip side of higher taxpayer costs is higher medical-industry profits.
So ignore all the talk about too much government spending and too much aid to moochers who don’t deserve it. As long as the spending ends up lining the right pockets, and the undeserving beneficiaries of public largess are politically connected corporations, conservatives with actual power seem to like Big Government just fine.
By: Paul Krugman, Op-Ed Columnist, The New York Times, March 3, 2013
“Another Anti-Obamacare Headline”: Beware The Great Health Insurance Scam Of 2014
The anti-Obamacare world is atwitter over comments made last week by Aetna CEO, Mark Bertolini, who predicts that some insurance markets will “go up as much as much as 100 percent” when Obamacare takes hold in 2014—with the average increases running between 25 percent and 50 percent in the small group and individual segments of the business.
Mr. Bertolini has dubbed this phenomenon “premium shock”.
To be sure, this is a great headline for those who remain committed to defeating the Affordable Care Act with nothing better to suggest in its place. However, the facts reveal that Bertolini’s comments—while just maybe true for a very few participants buying coverage on the exchanges in the individual markets—are completely misleading with respect to the individual markets and likely completely untrue as applied to the small group market.
So, how is Mr. Bertolini arriving at his dire predictions?
Apparently, it’s all about (a) the new tax placed on health insurance company sales, (b) the community rating requirements that now prohibit older participants in a health insurance pool to be charged more than 3 times what is paid by younger members and (c) the new minimum standard of benefits that will need to be provided to those who purchase health coverage on the exchanges.
Pretty scary, yes?
The problem with Mr. Bertolini’s prediction is that it is completely and utterly at odds with not only the Congressional Budget Office (“CBO”) projections but with American Health Insurance Plans (AHIP) —the very lobbying organization that represents Aetna and was an active and hugely important supporter of Obamacare.
In 2009, the CBO projected that the Affordable Care Act will have little impact on small and large group policies. This is notable given the expectation that, by 2016, the small group market will represent 13 percent of the total insurance market while large groups will provide coverage for a full 70 percent of Americans with health insurance coverage. Do the math and you find that, according to the CBO, 83 percent of all covered Americans will experience little to no change in premium rates beyond normal increases that would occur had Obamacare never become the law of the land.
As for the individual markets, which will comprise 17 percent of the overall insurance market in 2016, premium rates are predicted to rise about 10 to 13 percent by 2016—considerably lower than the doubling Mr. Bertolini has suggested will take place in 2014.
What’s more, approximately half of those gaining coverage in the individual market will qualify for the government subsidies, thereby reducing the price of their insurance premiums below where they currently exist.
Of course, it is not uncommon for people to discount CBO projections and proclaim them to be biased when the projections fail to meet a desired political narrative.
So, let’s see what Aetna’s own trade association, AHIP, has to say.
A review of the AHIP website reveals that the sales tax imposed on the health insurance companies—and sure to be passed along to consumers—will account for a premium increase averaging 1.9 percent to 2.3 percent by 2014 and 2.8 percent to 3.7 percent by 2023.
Now, you may object to this potential increase—but it is a long way from the increases Mr. Bertolini is predicting.
On the subject of community rating—where insurance companies will now be prohibited from charging older participants in their health insurance pools as much as 10 times more than what they charge younger members even if the elder participants have no pre-existing health problems—AHIP indicates that limiting the rates for the older participants to only 3 times the rate charged the young will result in some younger insurance customers paying as much as 45 percent more in premium payments while older participants will pay 13 percent less.
No doubt, this is a large part of what Aetna’s Bertolini is relying on when trying to freak out the public.
The problem with Bertolini’s prediction is that even this large percentage increase, should it prove to be actuarially accurate, would not apply in the small and large group markets- it would apply only to a very limited number of people purchasing their health insurance on the exchanges who are (a) very young and (b) not qualified for subsidies.
The number is also misleading in its severity.
According to AHIP, the average premium paid by a 24 year old in the individual marketplace is $1200 a year. Using AHIP’s numbers, the price of making the cost of heath insurance more equitable for a 60 year old will potentially cost that 24 year old, on average, an extra $45 a month.
While I don’t mean to minimize this increase, as I recognize that every dollar counts when one is young and getting started, it is important to keep the actual price tag in perspective and weigh the equities when considering that those at the older age range have been overcharged for many years.
The reality is that the young have been paying unreasonably low premium rates for for a very long time—it being in the health insurance company’s profit interest to bring in as many young and healthy people as possible in the door by charging artificially low rates. The problem is that they make up for it by charging artificially high rates to the older people the insurance company would rather not have in the first place. What the ACA seeks to do is correct this situation so that 60 year olds are not precluded from gaining health insurance coverage by being priced out of the market.
Note that this problem could have been averted for younger Americans had we lowered the Medicare age to 55 however this was not acceptable to the Congressional GOP.
And that brings us to the topic of minimum benefits that must now be including in insurance policies offered on the health care exchanges, another area where large increases can be found in the effort to alarm the public.
According to AHIP, the additional costs attributable to health insurance companies actually having to provide a meaningful benefit ranges for as little as a tenth of a percentage point in Rhode Island to 33 percent in Maine where, apparently, health insurance policies do not provide much in the way of actual coverage. And, again, these numbers apply only to the individual marketplace on the exchange.
Thus, if you are one of the 8.5 percent of Americans who will be buying your coverage on the exchange in the state of Maine (making for a very, very tiny percentage) you may now have to pay more to actually get some health care coverage in exchange for what you pay.
So, what does all this tell us?
Gary Klaxon, Vice President of the Kaiser Family Foundation—one of the few health care think- tanks that just about everyone agrees is completely non-partisan and objective, had this to say about Mr. Bertolini’s predictions:
“That just seems silly. I can’t imagine anything going on in the small-group market that would change the average premium that much. On the individual market, there’s arguments for things changing, but those magnitudes seem high.”
Silly, indeed.
There is, of course, more to this than what the anti-Obamacare folks are choosing to report.
That would be the part where Bertolini noted in his ‘premium shock’ comments that this huge, one-time jump in premium rates to be expected in 2014 also includes increases in costs that would come even without the health care reform law.
Translation—health insurance companies have been trying to raise rates at a ridiculous pace ever since the word ‘Obamacare’ first entered the American lexicon, always seeking to blame these increases on the law even before the law became the law. So, when 2014 arrives, you can be certain that they will do everything in their power to grab as large an increase as they can get away with in order to preserve their profits.
Mr. Bertolini is merely laying the groundwork for that effort as Obamacare has provided the health insurance industry with a wonderful scapegoat, perfectly suited and even more perfectly timed to cover the inescapable truth of health insurance—it is a business model whose time has passed.
The sooner the American public realizes that private health insurance companies no longer work, the sooner we can get busy with the solutions that, while politically uncomfortable, can actually solve the nation’s health care challenges.
In the meantime, if you are a part of a large or small business health insurance group, there is no reason to expect that there should be significant—if any— increases in your premium charges in 2014. If you are an individual who will be shopping for health insurance on the exchanges, the 50 percent of you that will qualify for subsidies should experience premium costs at a lower rate than what you are currently paying, If you are in that other half, you may, indeed, see some increase in your rate—but nowhere near the ‘doubling’ the insurance industry would like you to believe is in your future.
By: Rick Ungar, Op-Ed Contributor, Forbes, December 20, 2012
“The Grandfather Of Obamacare”: How Mitt Romney Paid For Romneycare With Federal Help
Republican presidential candidate Mitt Romney told Univison in an interview Wednesday that he did not mind when President Obama called him the “grandfather” of Obamacare when referring to the program Romney instituted when he was governor of Massachusetts. Quite the opposite. Romney thought other states might take a page from the Massachusetts playbook.
We didn’t have to cut Medicare by $716 billion. We didn’t raise taxes on health companies by $500 billion, as the president did. We crafted a program that worked for our state. I believe the right course for health care reform is to say for each state we’re going to give you the Medicaid dollars you’ve had in the past, plus grow them by 1 percent. And you, as the states, are now going to be given targets to move people to insurance, and you craft programs that are right for your state. Some will copy what we did; others will find better ideas.
Romney is right: The state of Massachusetts did not cut Medicare to finance health care (nor could it have, as states don’t have a say in the federally financed entitlement budget). Whereas the Affordable Care Act levies a tax on insurance companies and makers of medical devices, the Massachusetts law has no similar provision.
But could a state with a capped Medicaid budget, as Romney has proposed, copy what Romney did in Massachusetts and end up with universal coverage? Romney’s own experience suggests probably not: His state a special pot of federal money, alongside a preexisting assessment on hospitals and insurers, to expand insurance coverage to 98 percent of its population.
Way back in 1985, under then-Gov. Michael Dukakis, Massachusetts set up a program called the Uncompensated Care Pool. Much like the name suggests, the pool is used to finance health care for those without insurance. Massachusetts financed the plan largely through assessments on hospitals and insurers. Under Romney’s administration In 2004, each industry paid in about $157 million to keep the pool running. That plan still operates today — under the name Health Safety Net – and covers health care needs that Massachusetts residents cannot afford.
Since the late 1990s, Massachusetts has also received additional Medicaid funds to enroll populations that other states traditionally do not cover. In 2005, when Romney was governor, the federal aid amounted to $550 million. As former Romney adviser John McDonough explains in his book “Inside Health Policy,” the funds were crucial to laying the foundation for universal health coverage. He takes us back to 2005, when the George W. Bush administration was getting ready to end that special funding arrangement:
“In Masachusetts, $350 million is a lot of money, and the news set off alarm bells. Governor Romney reached out and formed a partnership with Senator Kennedy to scheme how to keep the extra federal dollars coming. At that moment, the state’s mundane desire to retain federal dollars merged with the policy goal of universal coverage to create a new policy imperative. Romney and Kennedy proposed that Massachusetts keep receiving the extra payments and in return the state would shift the use of those dollars [to] subsidies to help lower-income individuals purchase health insurance coverage.”
Ryan Lizza recounts a similar version of events in his New Yorker article on Romneycare. That state ultimately secured three years of additional Medicaid funding, $1.05 billion, which largely financed the Massachusetts expansion. Both accounts suggest that it was a special commitment from the federal government, rather than a capped budget, that spurred Massachusetts’ success.
Since then, employers and individuals have chipped in to keep the universal coverage program afloat. The Blue Cross Blue Shield Foundation of Massachusetts saw spending by both of those groups increase in the year after Romneycare became law, which they attribute to rising medical costs and the insurance expansion.
Five years later, it’s largely federal funding that keeps Massachusetts’ universal coverage afloat. Since 2005, the state has twice renewed that federal waiver — the one Lizza and McDonough wrote about — to provide additional Medicaid dollars to the state.
The most recent renewal was last December 2011, when the state secured $26.75 billion in federal funds over the course of three years. It will, among other programs, continue to finance the universal coverage program.
“The milestone agreement also ensures the ongoing success of Massachusetts’ historic health care reform initiative, through which more than 98 percent of the Commonwealth’s residents, and 99.8 percent of children, have health insurance,” Massachusetts Health and Human Services Secretary JudyAnn Bixby wrote at the time. “The waiver fully funds our ongoing health care reform implementation.”
So Massachusetts used not just federal Medicaid money but federal dollars above and beyond that Medicaid money to finance their health reforms. It is difficult to see how Romney’s proposal to cut Medicaid spending and hand that reduced share over to the states would allow other states to follow Massachusetts’ example. It might not even permit Massachusetts to continue following Massachusetts’ example.
By: Sarah Kliff, The Washington Post, September 21, 2012
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