“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
“An Obvious Agenda”: Misleading Information, Sloppy Media Coverage Are Confusing The Public About Obamacare
Not confused enough yet about how much health insurance might cost some of us next year when the consumer protections in Obamacare kick in? Just wait. It’s likely you’ll soon be far more confused — and alarmed — than you already are.
Take, as an example, the CNNMoney story from last week, headlined, “Where Obamacare premiums will soar.” The subhead was equally scary: “Get ready to shell out more money for individual health insurance under Obamacare … in some states, that is.”
The first thing you should keep in mind when you read such stories is that very few Americans will be affected by how much insurers will charge for the individual policies they’ll be selling in the online health insurance marketplaces beginning Oct. 1. The CNN story doesn’t mention, as it should have, that in a country of 315 million people, only 15 million — less than five percent of us — currently buy health insurance on our own through the so-called individual market because it’s not available to us through the workplace.
Although the CNN story focused exclusively on the individual market, nowhere in the story was it explained that, according to the U.S. Census Bureau, the vast majority of Americans — about 55 percent of us — are enrolled in health insurance plans sponsored by our employers. Another 32 percent of us are enrolled in Medicare, Medicaid and other public programs. That means that almost 9 out of 10 of us will not be affected at all by rates insurers will charge next year in the individual market.
The Americans who will be affected most by Obamacare are the millions who are uninsured because they either cannot buy coverage at any price today as a result of pre-existing conditions or they cannot afford what insurers are charging.
Although the CNN story didn’t mention that one of the main reasons for Obamacare was to make it possible for the uninsured to at long last buy affordable coverage, it is the uninsured who will be most directly affected by the reform law, and most likely to benefit. That’s because insurers next year will no longer be able to refuse to sell coverage to people who’ve been sick in the past. And because most people shopping for coverage on the online marketplaces will be eligible for federal subsidies to offset the cost of the premiums.
Not until deep in the CNN story are we informed that “Americans with incomes up to $45,960 for an individual and $94,200 for a family of four will be eligible for federal subsidies.” That’s a huge point to bury, especially considering that the median household income in this country is still just around $50,000. It’s just a small percentage of folks buying coverage through the online insurance marketplaces that will have to pay the full premium price on their own.
Below the headline of the CNN story was a startling graphic showing the states of Ohio and Florida with the numbers 41 percent and 35 percent right below them, leading one to believe that all residents of those states would see their health insurance premiums skyrocket.
As I did my own research of those claims, I found that not only did those numbers apply to just the individual market, but they did not take into account the subsidies that will be available. So not only will very few Ohioans and Floridians see their premiums increase by that much, many if not most will pay less than they do today thanks to the sliding-scale subsidies.
I also found that officials in those states were being disingenuous in the way they calculated their “Obamacare” figures. Ohio and Florida and many other states permit insurers to sell policies today that are so inadequate they will be outlawed beginning Jan. 1. The reason those kinds of policies are being outlawed is because, even though they are profitable for insurers that sell them, people who buy them often find out when it’s too late — after a serious illness or accident — that their policies are essentially worthless.
As The Miami Herald noted in a story about the projected rates announced recently by Florida’s Office of Insurance Regulation, the source for the CNN graphic, “The OIR compared ‘apples to oranges’ by failing to factor into its projections the fact that statewide averages for pre-Obamacare premiums included a wide variety of low-value plans — including plans with extremely limited benefits, such as no prescription drug coverage; and high-deductible plans, where the insured first must pay hefty out-of-pocket costs before the insurer begins to cover services.”
Considering all the intentionally misleading information we are being subjected to about Obamacare from politicians and special interests with an obvious agenda, it will be vitally important for reporters to be more responsible in their reporting. Sensational media stories with attention-grabbing headlines but inadequate analysis will only add to Americans’ confusion about a law that in reality will help the vast majority of us.
By: Wendell Potter, The Center for Public Integrity, Originally Published on August 12, 2013
“Purposeful Republican Misrepresentation”: Read This Before You Believe The Obamacare Premium Spike Hysteria
While some states are reporting lower than expected health care premiums in the exchanges established by the Affordable Care Act, a growing number of Republican-controlled states — like South Carolina, Ohio, Indiana, Florida and Georgia — are garnering screaming headlines about huge premium spikes under the law.
Calculating premium rates is a complicated and tedious task that will vary greatly among states and is open to interpretation and manipulation by both supporters and opponents of President Obama’s health care law. Generalities are particularly hard to draw, as the law will impact Americans differently: the new regulations will lead some younger people to may pay more than they’re contributing now, but will save older and sicker people hundreds, if not thousands of dollars a month.
Still, since Republicans are politically motivated to portray the proposed premium increases in a negative light and the media is far more interested in sensational claims about Obamacare failing, coverage of the new rates often leads readers with the mistaken perception that the law is coming off the tracks. Below is a short guide that will help you identify if someone is misrepresenting how much premiums will increase under Obamacare:
1. Do the premiums account for subsidies?
Most articles about premiums for health insurance in the exchanges relegate information about the Affordable Care Act’s tax credit subsidies to the lower two thirds of the piece, thus presenting the top rates as the actual amount families and individuals will be required to pay.
In reality, the number of applicants who are eligible for sliding-scale tax credits will vary — the credits are available to people making less than four times the poverty line — but the Congressional Budget Office (CBO) estimates that out of the 7 million Americans expected to enroll in coverage in 2014, 6 million will be eligible for subsidies. Those with incomes up to 400 percent of the Federal Poverty Line (FPL) will also see reduced the out-of-pocket limits.
Maryland officials, for instance, project that three-fourths of enrollees will receive assistance. In 2014, the average subsidy will be $5,510 and will increase in the years ahead.
2. What is the state comparing the new premiums to and does it break down the increases by the available levels of coverage?
While states like New York or California have already enacted strict regulations that mirror many of the new rules in the Affordable Care Act, others (like Indiana or South Carolina) allow insurers to sell skimpy bare-bones high deductible plans that provide little actual coverage.
Comparing the comprehensive plans that will be available in the exchanges (and the individual market) to the existing coverage is like likening a Lexus to a bicycle — yes, the car is more expensive, but it is in a whole different category of transportation. Under the law, all new insurance plans have to offer essential health benefits like prescription drug and mental health services.
3. Are cheaper coverage options mentioned?
Last month, state officials in Indiana announced that premiums for individual policies would be 72 percent higher than the premiums people currently play. But a closer look at the data revealed that the state wasn’t issuing actual premiums, but calculations for “allowed cost” or “the cost of insurance before calculating how much individuals would pay out-of-pocket, because of co-payments and deductibles.” The actual premiums turned out to be much lower.
What’s more, the numbers were averages of all plans in the exchange — from bronze plans that cover 60 percent of health care costs to platinum plans, which pay for 90 percent — and were not representations of the prices actual families will pay. Past experience in Massachusetts shows that consumers are very price conscious and will gravitate towards the cheaper bronze or silver plans. (In Massachusetts, 84 percent enrolled in bronze or silver policies.)
A catastrophic plan will also be available to those up to age 30 in the individual market. In Nevada, this coverage will be available for less than $100.
4. Has the state done all it could to reduce premiums?
Approximately two dozen states allow the state insurance department or commission “the legal power of prior approval, or disapproval, of certain types of rate changes” and under the Affordable Care Act, the federal government has offered grant funding “to help with rate review activities.” States like Maryland — which has some of the strongest rate-setting laws in the country — claims to have used its authority to deny rate increases to reduce the proposed premiums by “more than 50 percent.” Oregon regulators also slashed carriers’ rate requests by as much as 35 percent.
By: Igor Volsky, Think Progress, August 5, 2013
“Kill The Law, Kill The Patient”: The Most Insane Conservative Anti-Obamacare Gambit Ever
In a last-ditch effort to stop Obamacare, Tea Party groups are trying to sabotage the healthcare law in a way that could leave young people without coverage and increase insurance premiums for everyone else. It assumes that the end of “repealing Obamacare” justifies the means of potentially years of worse health.
The gambit, as explained by Sarah Kliff of the Washington Post, is to convince young people to eschew the Affordable Care Act’s health insurance exchanges and the subsidies they offer in order to destabilize the insurance risk pools. And now the leader of the effort is talking to Salon about the idea.
First, some background. The “plan,” such as it is, works like this: Young people tend to be healthier and thus cheaper to insure, so they essentially subsidize the cost of older and sick people. If enough young people don’t sign up, and the pool is mostly older and sick people, costs will skyrocket. A price “death spiral” is health policy experts’ biggest fear with the law, but it’s exactly what the conservative groups want to artificially induce, thus dooming the law.
To that end, conservatives are trying to rally young people to skip the healthcare exchange and pay the fine for violating the individual mandate to have health insurance. They’re making their case with GIFs, Op-Eds and a campaign to burn Obamacare draft cards (which don’t actually exist, but can be downloaded from FreedomWorks’ website for later incineration). Americans for Prosperity is even considering setting up kiosks at Universal Fighting Championship matches and college football games to tell people not to enroll.
But, if this gambit is successful, wouldn’t that lead to millions of young people living without health insurance, and older and sick people paying higher health insurance premiums? And since Obama will never repeal his signature law, we’re talking about at least three years of intentionally inflicted misery, all for a shot at repealing Obamacare sometime in the future and replacing it with something that doesn’t even exist yet. What about the human toll?
We asked Dean Clancy, the vice president of FreedomWorks who is spearheading the effort. “Yes, we would like to hasten the collapse of the exchanges, but the purpose is not to drive up anybody’s insurance. The purpose is to get this law defunded or delayed so we can get to a patient-centered system,” Clancy said in a telephone conversation Thursday evening. “Without young people, Obamacare can’t work.”
Regardless of intention, wouldn’t it have the effect of driving up premiums? “I would not say it will drive up premiums for older Americans, I would say it will allow premiums to rise,” he said. “It would allow premiums to rise faster than they otherwise would if everybody bought the overpriced coverage, including the younger, healthier people.”
And what about young people who currently lack insurance – 90 percent of whom will qualify for subsidies in the Obamacare exchanges — what should they do? “You can get coverage outside the exchanges,” Clancy said, pointing to catastrophic care plans, healthcare savings accounts, or even Medicaid.
Even without the subsidies, which are only available through the exchanges, Clancy said, it would still be cheaper for young people to pay the fine and go their own way. “We encourage people to go for a health savings account with a high deductible policy, and to pay cash for repeat medical expenses. It’s a great way to save money and helps the system be more efficient,” he said. Plus, there’s always free-riding: “And they have to take you when you get sick, that’ll be in the law now.”
What if you get in a car accident or something and don’t have time to sign up for insurance? A pause as he consulted with the communications director, who was also on the call. “In that case, you may incur some costs,” Clancy acknowledged. “You may have to deal with, as people do today who don’t have funds available, paying it back in installments, or uncompensated care, or you can sign up for Medicaid.” In other words, you’re on your own. Most uninsured people can’t afford medical bills.
“Just to be clear, we’re telling people: ‘Do what you think is best for you,’” he added. “But understand that if Obamacare continues, you’re going to have to pay more and more to get less and less.”
For Judy Feder, a prominent health policy expert at Georgetown who supports the health reform law, this approach is “crazy.” “It’s not even killing the patient to save the patient — it would stick with killing the patient. They just want to kill the law, which doesn’t save anybody,” she said.
It’s hard to overstate how nihilistic this plan is. If the scheme succeeds — which it will not, since more than enough young people are saying they’ll purchase insurance through the exchange — not only would some people lack good health coverage they’d otherwise be entitled to, but costs would be higher on everyone else. “It is as outrageous as you say it is,” Feder confirmed.
This is basically the “Cloward–Piven strategy” Glenn Beck always rants about, but 1) applied to healthcare instead of the economy, and 2) real.
By: Alex Seitz-Wald, Salon, August 2, 2013
“Fostering Public Ignorance”: Health Care Reform Drives Republicans Stark Raving Mad
If insanity is defined as doing the same thing over and over and expecting a different result, it’s tempting to observe that congressional Republicans have gone stark, raving mad. My own GOP congressman, Rep. Tim Griffin, recently delivered himself of an opinion column boasting about having “voted more than 30 times to repeal all or parts of Obamacare.”
Only in politics does somebody expect praise for sheer futility.
Characteristically, Griffin’s column began by misrepresenting Senator Max Baucus. No, the retiring Montana Democrat didn’t call Obamacare a “train wreck.” In context, Baucus was complaining about Congress’s refusal to adequately fund programs helping people understand the law. With so much disinformation out there, he feared that public ignorance would lead to citizens initially missing out on its benefits.
But then fostering public ignorance is the whole GOP game plan at this point. Having been defeated in the House and Senate, failing to have Obamacare declared unconstitutional by the Supreme Court, and being rejected by voters in the 2012 presidential election, disinformation and sabotage are all they’ve got left.
In that spirit, Griffin quoted The Washington Examiner, one of those tycoon-funded right-wing propaganda publications reporting that “cost estimates from 17 of the nation’s largest insurance companies indicate that health insurance premiums will grow an average of 100 percent under Obamacare, and that some will soar more than 400 percent.”
Yeah, well the results are starting to come in. In California and New York, the nation’s two most populous states that have set up health care exchanges, premiums have dropped sharply below Congressional Budget Office projections.
According to the New York Times, “State insurance regulators say they have approved rates for 2014 that are at least 50 percent lower on average than those currently available in New York. Beginning in October, individuals in New York City who now pay $1,000 a month or more for coverage will be able to shop for health insurance for as little as $308 monthly. With federal subsidies, the cost will be even lower.”
Similar savings have been achieved in California. They can be expected anywhere that large numbers of Americans can be persuaded to buy into the program and quit playing health care roulette.
But then that’s how insurance works—auto insurance, life insurance homeowners’ insurance, all insurance. By spreading the risk, you lower the cost to individual customers.
That’s the basic insight that led Benjamin Franklin to found the Philadelphia Contribution for Insurance Against Loss by Fire back in 1752. The more people purchase private health insurance through Obamacare, the lower their premiums and the lower the eventual cost to taxpayers.
Not to mention the enormous gain in personal freedom to individuals who can no longer be denied coverage due to “pre-existing conditions,” bankrupted by unexpected medical conditions, or forced to keep a job they dislike for fear of losing health insurance. Under Obamacare they can take it with them.
A certain kind of Republican, however, still doesn’t get it. Here’s GOP patriarch Ronald Reagan in 1961 inveighing against the dangers of “socialized medicine.” Unless Americans rejected it, he predicted, “one of these days you and I are going to spend our sunset years telling our children and our children’s children what it once was like in America when men were free.”
And what was Reagan talking about? Medicare. Should it be enacted, he warned, the plan to provide for Grandma’s medical bills would lead to government seizure of all doctors’ offices and hospitals. An all-powerful state would dictate where Americans would live and what their jobs would be.
Of course the Gipper was only an actor, reading a tycoon-approved script. After he became president he vowed to protect Medicare, already one of the most popular and successful government programs in U.S. history—along with Social Security, another threat to freedom as the scripted Reagan saw it.
Some still do. A local Republican politician of my acquaintance once suggested that if I liked Obamacare so much I should leave the country. I responded that as the losing party, maybe he should emigrate.
And good luck finding a country without universal health insurance and with indoor plumbing.
It’s true that with Red State politicians dragging their feet and Republican congressmen whose offices routinely assist constituents to work out Medicare and Social Security problems telling reporters they’ll refuse to help with Obamacare, the short-term rollout could be bumpy.
Over time, however, the Republican right is setting itself up for epic failure. Partisan passions aside, people want and need reliable health insurance. Doctors, hospitals and pharmaceutical companies need it as well.
This too: never mind the politicians. Health insurance companies are going to market Obamacare bigtime. Since the law mandates that 80 percent of premiums must be spent on benefits, the only way the insurance industry can enhance profits is by finding more customers.
It’s the American way.
By: Gene Lyons, The National Memo, July 24, 2013
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