“Health Reform Lives!”: The Reality Is That Obamacare Is An Imperfect System, But It’s Workable — And It’s Working
To the right’s dismay, scare tactics — remember death panels? — and spurious legal challenges failed to protect the nation from the scourge of guaranteed health coverage. Still, Obamacare’s opponents insisted that it would implode in a “death spiral” of low enrollment and rising costs.
I mention all of this to give you some perspective on recent developments that mark a break in the string of positive surprises. Yes, Obamacare has hit a few rough patches lately. But they’re much less significant than a lot of the reporting, let alone the right-wing reaction, would have you believe. Health reform is still a huge success story.
Obamacare seeks to cover the uninsured through two channels. Lower-income Americans are covered via a federally-funded expansion of Medicaid, which was supposed to be nationwide but has been rejected in many Republican-controlled states. Everyone else has access to policies sold by private insurers who cannot discriminate based on medical history; these policies are supposed to be made affordable by subsidies that depend on your income.
Nobody ever expected Obamacare to cover all the uninsured. In fact, Congressional Budget Office projections made in 2013 suggested that about 10 percent of nonelderly U.S. residents would remain uncovered: some because they are undocumented immigrants, some because of the gap created by red-state Medicaid rejection and some because they would fall through the cracks of a complicated system. But the law was nonetheless projected to produce a sharp reduction in the number of Americans without insurance, and it has, especially in states like California that have tried to make it work.
Meanwhile, both insurance premiums and the cost of subsidies designed to make them affordable came in far below expectations in both 2014 and 2015.
Sooner or later, of course, there were bound to be some negative surprises. And we’re now, finally, getting a bit of bad, or at least not-great, news about health reform.
First, premiums are going up for next year, because insurers are finding that their risk pool is somewhat sicker and hence more expensive than they expected. There’s a lot of variation across states, but the average increase will be around 11 percent. That’s a slight disappointment, but it’s not shocking, given both the good news of the previous two years and the long-term tendency of insurance premiums to rise 5-10 percent a year.
Second, some Americans who bought low-cost insurance plans have been unpleasantly surprised by high deductibles. This is a real issue, but it shouldn’t be exaggerated. All allowed plans cover preventive services without a deductible, and many plans cover other health services as well. Furthermore, additional financial aid is available to lower-income families to help cover such gaps. Some people may not know about these mitigating factors — that’s the problem with a fairly complex system — but awareness should improve over time.
Finally, UnitedHealth Group made a splash by announcing that it is losing money on the policies it sells on the Obamacare exchanges, and is considering withdrawing from the market after next year. There were some puzzling things about the announcement, leading to speculation about ulterior motives, but the main thing to realize is that UnitedHealth, while a huge provider of employment-based insurance, is actually a fairly small player in this market, and that other players are sounding much more positive.
Oh, and official projections now say that fewer people will enroll in those exchanges than previously predicted. But the main reason is that surprisingly few employers are dropping coverage; overall projections for the number of uninsured Americans still look pretty good.
So where does that leave us? Without question, the run of unexpectedly good news for Obamacare has come to an end, as all such runs must. And look, we’re talking about a brand-new system in which everyone is still learning how to function. There were bound to be some bobbles along the way.
But are we looking at the beginnings of a death spiral? Some people are indeed saying that, but as far as I can tell, they’re all people who have been predicting disaster every step of the way, and will still be predicting imminent collapse a decade from now.
The reality is that Obamacare is an imperfect system, but it’s workable — and it’s working.
By: Paul Krugman, Op-Ed Columnist, The New York Times, November 23, 2015
“Republicans’ Little Act’s Of Vandalism”: The Secret Swipe At Obamacare — And You
Underscoring how much mischief can result when Congress acts in haste and in secret, hidden away in the year-end omnibus spending bill being acted on this week is an attack on a key provision of the Affordable Care Act long targeted by the GOP.
The provision involves risk corridors, which are designed to stabilize insurance premiums in the first few years of the law. The year-end spending bill quietly erodes funding for the provision.
Republicans have chosen to label the provision a “bailout” for insurance companies. I’ve labeled that position the most cynical attack on Obamacare, because those who advance it — notably Sen. Marco Rubio (R-FL) — obviously know it’s a lie. They know it’s actually a consumer protection feature, so calling it “corporate welfare,” as Timothy P. Carney did this week in the Washington Examiner, is a neat bit of disinformation. Adding to the cynicism, the same provision is an essential part of Medicare Part D, which the GOP enacted in 2003.
Here’s another sick irony: One of the raps on the risk corridor provision is that it was “buried deep” in administration explanations of the bill, as Rubio put it. But in fact, the ACA was extensively debated and available for scrutiny by any legislator who chose. The attack on the provision, however, actually is “buried deep” in the year-end spending bill: it’s on page 892 of the 1,603-page bill, which has barely been debated at all.
Let’s see how risk corridors work, and how they’re undermined by the spending bill.
It was well understood that health insurers would have difficulty pricing their plans in the individual market in the first years of the ACA, starting in 2014. Not only would some insurers be entering that market in volume for the first time, but the market itself would be dramatically altered by the flood of new customers and such ACA rules as the prohibition on exclusions for pre-existing conditions. Some insurers will end up setting their premiums too low, and therefore will have to pay out benefits higher than they expected; others will set their rates too high, and will capture a windfall.
Without a safety valve, these miscalculations could have an impact on premiums the following year, as insurers tried to adjust. So insurers that set prices more than 3 percent below a set target get a reimbursement from the government, and those that overprice by the same margin have to pay some of the windfall to the government. Importantly, the arrangement is temporary: it expires after 2016, by which time it’s assumed that insurers will know what they’re doing.
Obviously, this isn’t a “bailout,” since it protects underpricing insurers only on the margins, while also providing a check on profiteering. The Congressional Budget Office, moreover, has projected that over time, the risk-corridor program will produce an $8-billion profit for the government, because overpricing insurers will be paying back more than underpricing insurers collect.
Some smart conservatives acknowledge that risk corridors are a good idea. As Yevgeniy Feyman of the Manhattan Institute informed Forbes readers in January, “Any conservative reform plan for universal coverage will have to use similar methods of risk adjustment. … If you want insurers to participate more broadly in the individual market, you’ll need to offer a carrot to offset the unavoidable uncertainties.”
Nevertheless, Congressional Republicans couldn’t resist taking a swipe at this little-understood provision in the ACA, and Democrats weren’t sufficiently attentive, or caring, to call them out on it. The year-end spending bill forbids the Dept. of Health and Human Services to use any outside government funds to pay out adjustments to insurers. On the face of it, the government can only use surplus coming in from overcharging insurers for that purpose. (That’s the interpretation healthcare expert Tim Jost gives to Dylan Scott of Talking Points Memo.)
For the moment, that makes the provision little more than a symbolic swipe at Obamacare. But that could change, and the CBO projections could be wrong. In that event, the Republicans’ little act of vandalism could end up costing ordinary citizens money. Nice work, GOP. Extra points for pulling it off in the dark.
By: Michael Hiltzik, The Los Angeles Times (TNS); The National Memo, December 16, 2014
“Who Knew?”: Obamacare Is Such A Disaster That Even More Insurers Want To Be Part Of It
There are still plenty of days when Obamacare looks bad. Tuesday wasn’t one of them.
The Department of Health and Human Services announced that more insurers were joining the Affordable Care Act’s new marketplaces—you know, the places where people can buy coverage on their own and, depending on their incomes, qualify for subsidies. How many more insurers are participating? Quite a few, it turns out. According to HHS, the net increase is more than 25 percent. That should translate to more options for people buying coverage. The increased competition should also help keep premiums relatively low.
The data is preliminary, based on 44 states for which HHS had information. And of course the sheer number of insurers offering coverage is just one sign of how the law is doing. If you’re actually buying insurance, you don’t simply want choices. You want good choices. You want to know that the insurance will give you access to doctors and hospitals when you need them. You want to know that the coverage pays your bills adequately. And so on.
Still, Obamacare critics hadn’t predicted the markets would evolve this way. On the contrary, they expected that young and healthy people would stay far away from the new marketplaces, because the new coverage would be pricier than what they were paying before. Without enough business, the argument went, insurers would get skittish and withdraw. At best, the marketplaces would all become oligopolies and monopolies, with just a handful of insurers continuing to sell policies. At worst, the whole scheme would fall apart. That quite obviously isn’t happening.
Trouble could still arise. By design, Obamacare includes a series of provisions designed to insulate insurers from major losses in the first three years. I usually describe them as “shock absorbers.” Many other policy wonks refer to them as the three Rs, for reinsurance, risk corridors, and risk adjustment. Two of the three, risk corridors and reinsurance, are temporary measures set to expire in 2016. More knowledgeable critics of the law, like Bob Laszewski and Megan McArdle, have warned that more insurers could abandon the market or at least jack up their premiums once those measures expire.
I can’t tell you with certainty whether they are right or wrong. Always in motion is the future, as a famous prophet once said. But keep in mind that gloomy, even dire, predictions about Obamacare’s marketplaces are nothing new. One of my favorites was an op-ed that ran in the Wall Street Journal at the end of last year. The author was John Cochrane, a professor of finance at the University of Chicago. The headline was “What to Do When Obamacare Unravels”—not “if,” mind you, but “when.”
At the time, with unexpected plan cancellations and the website problems very much on people’s minds, betting against the program working probably seemed like a good idea. Who wants to make that kind of bet now?
By: Jonathan Cohn, The New Republic, September 24, 2014
“The Incompetence Dogma”: So Much For Obamacare Not Working
Have you been following the news about Obamacare? The Affordable Care Act has receded from the front page, but information about how it’s going keeps coming in — and almost all the news is good. Indeed, health reform has been on a roll ever since March, when it became clear that enrollment would surpass expectations despite the teething problems of the federal website.
What’s interesting about this success story is that it has been accompanied at every step by cries of impending disaster. At this point, by my reckoning, the enemies of health reform are 0 for 6. That is, they made at least six distinct predictions about how Obamacare would fail — every one of which turned out to be wrong.
“To err is human,” wrote Seneca. “To persist is diabolical.” Everyone makes incorrect predictions. But to be that consistently, grossly wrong takes special effort. So what’s this all about?
Many readers won’t be surprised by the answer: It’s about politics and ideology, not analysis. But while this observation isn’t particularly startling, it’s worth pointing out just how completely ideology has trumped evidence in the health policy debate.
And I’m not just talking about the politicians; I’m talking about the wonks. It’s remarkable how many supposed experts on health care made claims about Obamacare that were clearly unsupportable. For example, remember “rate shock”? Last fall, when we got our first information about insurance premiums, conservative health care analysts raced to claim that consumers were facing a huge increase in their expenses. It was obvious, even at the time, that these claims were misleading; we now know that the great majority of Americans buying insurance through the new exchanges are getting coverage quite cheaply.
Or remember claims that young people wouldn’t sign up, so that Obamacare would experience a “death spiral” of surging costs and shrinking enrollment? It’s not happening: a new survey by Gallup finds both that a lot of people have gained insurance through the program and that the age mix of the new enrollees looks pretty good.
What was especially odd about the incessant predictions of health-reform disaster was that we already knew, or should have known, that a program along the lines of the Affordable Care Act was likely to work. Obamacare was closely modeled on Romneycare, which has been working in Massachusetts since 2006, and it bears a strong family resemblance to successful systems abroad, for example in Switzerland. Why should the system have been unworkable for America?
But a firm conviction that the government can’t do anything useful — a dogmatic belief in public-sector incompetence — is now a central part of American conservatism, and the incompetence dogma has evidently made rational analysis of policy issues impossible.
It wasn’t always thus. If you go back two decades, to the last great fight over health reform, conservatives seem to have been relatively clearheaded about the policy prospects, albeit deeply cynical. For example, William Kristol’s famous 1993 memo urging Republicans to kill the Clinton health plan warned explicitly that Clintoncare, if implemented, might well be perceived as successful, which would, in turn, “strike a punishing blow against Republican claims to defend the middle class by restraining government.” So it was crucial to make sure that reform never happened. In effect, Mr. Kristol was telling insiders that tales of government incompetence are something you peddle to voters to get them to support tax cuts and deregulation, not something you necessarily believe yourself.
But that was before conservatives had fully retreated into their own intellectual universe. Fox News didn’t exist yet; policy analysts at right-wing think tanks had often begun their careers in relatively nonpolitical jobs. It was still possible to entertain the notion that reality wasn’t what you wanted it to be.
It’s different now. It’s hard to think of anyone on the American right who even considered the possibility that Obamacare might work, or at any rate who was willing to admit that possibility in public. Instead, even the supposed experts kept peddling improbable tales of looming disaster long after their chance of actually stopping health reform was past, and they peddled these tales not just to the rubes but to each other.
And let’s be clear: While it has been funny watching the right-wing cling to its delusions about health reform, it’s also scary. After all, these people retain considerable ability to engage in policy mischief, and one of these days they may regain the White House. And you really, really don’t want people who reject facts they don’t like in that position. I mean, they might do unthinkable things, like starting a war for no good reason. Oh, wait.
By: Paul Krugman, Op-Ed Columnist, The New York Times, June 26, 2014
“Inventing A Failure”: Republican Lies, Damned Lies And In This Case, Bogus Statistics
Last week, House Republicans released a deliberately misleading report on the status of health reform, crudely rigging the numbers to sustain the illusion of failure in the face of unexpected success. Are you shocked?
You aren’t, but you should be. Mainstream politicians didn’t always try to advance their agenda through lies, damned lies and — in this case — bogus statistics. And the fact that this has become standard operating procedure for a major party bodes ill for America’s future.
About that report: The really big policy news of 2014, at least so far, is the spectacular recovery of the Affordable Care Act from its stumbling start, thanks to an extraordinary late surge that took enrollment beyond early projections. The age mix of enrollees has improved; insurance companies are broadly satisfied with the risk pool. Multiple independent surveys confirm that the percentage of Americans without health insurance has already declined substantially, and there’s every reason to believe that over the next two years the act will meet its overall goals, except in states that refuse to expand Medicaid.
This is a problem for Republicans, who have bet the ranch on the proposition that health reform is an unfixable failure. “Nobody can make Obamacare work,” declared Eric Cantor, the House majority leader, a couple of weeks ago (when it was already obvious that it was working pretty well). How can they respond to good news?
Well, they could graciously admit that they were wrong, and offer constructive suggestions about how to make the law work even better. Oh, sorry — I forgot that I wasn’t writing jokes for the White House Correspondents’ Dinner.
No, they have in fact continued to do what they’ve been doing ever since the news on Obamacare started turning positive: sling as much mud as possible at health reform, in the hope that some of it sticks. Premiums were soaring, they declared, when they have actually come in below projections. Millions of people were losing coverage, they insisted, when the great bulk of those whose policies were canceled simply replaced them with new policies. The Obama administration was cooking the books, they cried (projection, anyone?). And, of course, they keep peddling horror stories about people suffering terribly from Obamacare, not one of which has actually withstood scrutiny.
Now comes the latest claim — that many of the people who signed up for insurance aren’t actually paying their premiums. Obviously this claim is part of a continuing pattern. It also, however, involves a change in tactics. Previous attacks on Obamacare were pretty much fact-free; this time the claim was backed by an actual survey purporting to show that a third of enrollees hadn’t paid their first premium.
But the survey was rigged. (Are you surprised?) It asked insurers how many enrollees had paid their first premium; it ignored the fact that the first premium wasn’t even due for the millions of people who signed up for insurance after March 15.
And the fact that the survey was so transparently rigged is a smoking gun, proving that the attacks on Obamacare aren’t just bogus; they’re deliberately bogus. The staffers who set up that survey knew enough about the numbers to skew them, which meant that they have to have known that Obamacare is actually doing O.K.
So why are Republicans doing this? Sad to say, there’s method in their fraudulence.
First of all, it fires up the base. After this latest exercise in deception, we can be fairly sure that Republican leaders know perfectly well that Obamacare has failed to fail. But the party faithful don’t. Like anyone who writes about these issues, I get vast amounts of mail from people who know, just know, that insurance premiums are skyrocketing, that far more people have lost insurance because of Obummercare than have gained it, that all the horror stories are real, and that anyone who says otherwise is just a liberal shill.
Beyond that, the constant harping on alleged failure works as innuendo even if each individual claim collapses in the face of evidence. A recent poll by the Kaiser Family Foundation found that a majority of Americans know that more than eight million people enrolled in health exchanges; but it also found a majority of respondents believing that this was below expectations, and that the law was working badly.
So Republicans are spreading disinformation about health reform because it works, and because they can — there is no sign that they pay any political price when their accusations are proved false.
And that observation should scare you. What happens to the Congressional Budget Office if a party that has learned that lying about numbers works takes full control of Congress? What happens if it regains the White House, too? Nothing good, that’s for sure.
By: Paul Krugman, Op-Ed Columnist, The New York Times, May 4, 2014
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