July 1, 2012

Obamacare: the good, the bad, the unpredictable & the dangerously unknown

Sam Smith

If you’re having a hard time figuring out what the real status of Obamacare is, don’t feel badly What you are seeing in the current news coverage and debate is another reflection of of the dysfunctional state of our leadership class, a dysfunction driven in no small part by the fact that our political debates have become increasingly controlled by a post grad elite – lawyers, MBAs, economists, and products of journalism school -  to a degree never before known in American history. This elite has replaced conscience with complexity, explicit goals with fuzzy projections, facts with verbiage, plain language with legalistic code, doing things with data, and progress with process.

For example, in recent years the number of lawyers in the Senate has varied from 54 to 60 - or nine to ten times the percentage found in the American workforce.

Throughout history, good politics has depended on high social intelligence and wisdom, connections with a constituency, and the ability to understand and respond to the needs of the average citizen. As our politics has increasingly been dominated by a grad school elite, it has become ever more distant from those it is meant to serve.  Further, the training of this elite has tended to compartmentalize its thoughts into the boxes and biases of specific specialties, leaving it uncomfortable or incompetent in dealing with the holistic implications of politics.
                                                                                            
If you think this is an exaggeration, go back and read about the battle for a minimum wage, Social Security, Medicare, Medicaid or civil rights. The public knew what they were going to get and how they were going to get it. This is no longer the case.
                     
Or consider the fact that our current depression has been greatly prolonged by economic theories acceptable to the country’s academic, political and media elite but which are in direct contradiction to empirical evidence.

What was once a government of laws has become a government of incoherent contracts and language not unlike that you avoid reading on your computer in order to get your new software going.

We are a nation collapsing from the top. Most Americans live in oases of still relative sanity but are controlled by an elite that has lost its capacity to converse with, explain to, or lead the rest of the land.

Further, the liberal part of this leadership class has increasingly become indifferent to, or contemptuous of, state and local power, despite the fact that Americans have a much higher opinion of the local than they do of Washington. Liberals also once had quite a different view – after all, power decentralization was a major value of the left in the 1960s – and even Washington had a better idea of how to handle the matter. As I noted once:

The Federal Boating Act of 1958 was an early and benign example of what I came to think of as federal greenmail as Washington increasingly began using the budget as a means of getting states to give up their 10th Amendment authority over matters "not delegated to the United States by the Constitution, nor prohibited by it to the States."
The boating act was quite mild by today's standards. A Coast Guard history said of it: "Among other benefits, this act made states essential partners in this cooperative effort. Most of the states quickly enacted boating safety laws involving boat numbering, equipment, and operation. These laws were typically uniform, making it easier for boaters to be in compliance when traveling from one state to the next.”
Under today's rules the options given the states would have been early eliminated in favor of hundreds of pages of federal regulations. Over the following decades the use of greenmail would explode .

The liberal obsession with federal control has reaped not only bad legislation but much of the ill will that makes liberalism such a weak part of today’s American political scene.

For example, liberals love the commerce clause of the Constitution because, in their eyes, it permits them to do whatever they want on the false grounds that they are regulating interstate commerce.

In fact, the Atlantic Wire points out that Barack Obama opposed Justice Roberts’ nomination partly on this ground:

In 2005, Sen. Barack Obama spoke in opposition to Roberts' nomination, saying he did not trust his political philosophy on tough questions such as "whether the Commerce Clause empowers Congress to speak on those issues of broad national concern that may be only tangentially related to what is easily defined as interstate commerce." Today, Roberts did what Obama predicted he would do.

In other words, Obama was afraid that under Roberts, Congress would not be able to use the commerce clause casually and carelessly. He was right, because as Justice Roberts pointed out in the Obamacare case:

Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority. Congress already possesses expansive power to regulate what people do. Upholding the Affordable Care Act under the Commerce Clause would give Congress the same license to regulate what people do not do. The Framers knew the difference between doing something and doing nothing.

Of course, using “tangentially related” arguments is much of what Washington is about these days. The Senate even sneakily got Obamacare going by making it an amendment to a House bill, thus circumventing the constitutional requirement that revenue and tax bills originate in the House.

This does not, however, mean that even in a dysfunctional culture, good can’t and doesn’t happen and it has with Obamacare. But it is randomly and corruptly blended with the evil and the incompetent and the dangerously uncertain. The elite’s two main political divisions want us to choose between loving Obamacare and hating it. But we owe nothing to them and the wise choice – painful as it may be – is to sort through the mess and find the good and the bad and treat them as independent satisfactions and problems. Here, from various sources, is some assistance in this effort
  
The good


Health insurance providers can't cancel your coverage once you get sick – a practice known as "rescission" – unless you committed fraud or intentionally withheld facts about your health when you applied for coverage.

Youth can be covered under a parent's plan until they turn 26.

Children with pre-existing conditions cannot be denied coverage.

Health insurance providers may not place a lifetime maximum on benefits.

Insurers are required to give consumers rebates if they spend less than 80 to 85 percent of premium dollars on medical care.

Health plans created after Sept. 23, 2010, are required to cover certain preventative services without requiring copays, deductibles and coinsurance.

The law expands Medicare's coverage of preventive services, such as screenings for colon, prostate and breast cancer, which are now free to beneficiaries. Medicare will also pay for an annual wellness visit to the doctor.

If you are older than 65, the law is narrowing a gap in the Medicare Part D prescription drug plan known as the "doughnut hole."

Starting Aug. 1, employers must provide health insurance plans that offer birth control as part of their preventative services.

And what’s coming in 2014:

Adults with pre-existing conditions will not be denied coverage (this already applies to children).

People who don't qualify for Medicaid but still can't afford insurance may be eligible for government subsidies. The subsidies would be used to help pay for private insurance sold in the state-based insurance marketplaces, called exchanges, slated to begin operation in 2014.

Applicants will not be rejected for insurance because of health status once the exchanges are operating in 2014.

If a state does decide to expand Medicaid, people with an income at or below 133 percent of the federal poverty level would be eligible to receive coverage.


Insurers have less ability to change the amount customers have to pay for their plans.

Insurers can't just drop customers once they get sick.

Insurers need to have an appeals process for when they turn down a claim, so customers have some manner of recourse other than a lawsuit when they're turned down.

If any state can come up with their own plan, one which gives citizens the same level of care at the same price as the PPACA, they can ask the Secretary of Health and Human Resources for permission to do their plan instead of the PPACA. So if they can get the same results without, say, the mandate, they can be allowed to do so. Vermont, for example, has expressed a desire to just go straight to single-payer (in simple terms, everyone is covered, and medical expenses are paid by taxpayers).
  
Uncertainties and confusion

Now, here’s where it get complicated. . . . .

We do not know what plans insurance companies have to work around the bill in order to earn more money. The measure is dependent upon de facto subsidies to these companies through such means as the mandate and therefore the insurance industry’s manipulations are critical to the bill’s costs.

The rules for expansion of Medicaid require payments from state budgets which more than a few states don’t want to have to come up with. How much of this is verbiage and how much is reality remains to be seen, but to the extent that states don’t participate, it’s a problem. As Elsbeth Reeve in Atlantic Wire noted:

As Margot Sanger-Katz writes in National Journal, if states refuse to expand Medicaid, there's no other provision in the Affordable Care Act to cover the very poor. "The decision puts these poorest residents in a difficult position. They’ll be required to buy insurance but ineligible for Medicaid," she writes. Daniel Hawkins at the National Association of Community Health Centers tells her, "you are effectively consigning them to health insurance hell.”

The Supreme Court ruling that the mandate is a tax puts the Obama campaign in a difficult political situation. As Talking Points Memo put it:

"Frankly, to be able to tell you your taxes have been raised by this bill and you didn't know that, as opposed to trying to explain Congress's powers under the commerce clause, it's easier," a senior Romney adviser told The Huffington Post. Even analysts at liberal economic think tanks have said that the Affordable Care Act amounted to a $525 billion tax increase.

And what happens if this bill helps to produce not only a victory for Romney but a GOP Senate as well? (The media has been badly underrating the danger of the latter). Because the measure is a tax bill, it would not be subjected to the current filibuster rules. (Also unmentioned by the media, incidentally, is that a GOP Senate could do away with the filibuster rule in its initial organization the session). It is conceivable that the entire bill will be repealed, thanks in no small part to particularly unliked provisions such as the individual mandate.

What about the provision under which doctors pay will be determined by the quality of their care? This opens the door for extensive controversy, anger and problems.

Employers with more 50 or more workers are required to have health insurance, but what if some break up their firms into smaller operations? And what if smaller firms drop their health plans? And what if large firms change the nature of their health insurance? How many will be hurt and in what ways?

How will millions of Americans know what to do about this bill and when? This is a bill written for bureaucrats and insurance companies, not ordinary citizens,

And here are some of the people the individual mandate will be subsidizing:


Bad things

The individual mandate has been portrayed in the liberal media as largely affecting people who don’t have insurance as a matter of choice. This is highly unlikely. Although there has been an striking lack of analysis of this constituency, it is likely that a majority is made up of people who can’t afford healthcare (or the individual mandate version), people laid off by firms, and minorities in jobs without healthcare. The Obamacare backers have seemed totally indifferent to this.
 
Ida Hellander, MD- The individual mandate compels people to pay a penalty — the greater of up to $695 per individual and $2,085 per family or 2.5 percent of family income — if they don’t have other coverage and fail to purchase an expensive and defective private health insurance product.

While the mandate may be “constitutional,” it is terrible health policy. Briefly, the main problems include:

The coverage under the ACA is so skimpy, with so much cost-sharing, it won’t prevent medical bankruptcy.  It’s really “underinsurance.” The coverage is unaffordable. In Massachusetts, where a mandate plan has been in effect since 2006, the cheapest policy for a 55-year-old is $5,000 and carries a $2,000 deductible. It costs $7,000 before even a penny of coverage kicks in. The burden of the mandate falls on working and middle-income families, who make too much for Medicaid but too little to afford private coverage, even with the tax subsidies. It enriches the private insurance industry with $447 billion in taxpayer subsidies. It maintains the administrative complexity of the current system with over $400 billion squandered on administrative waste The vast majority of the uninsured are in working families. Hence, they are already paying taxes to support Medicare (which pays for medical training and other necessary health infrastructure), Medicaid, and other health programs. It doesn’t lead to anything even close to universal coverage. ACA leaves at least 26 million uninsured.

There are innumerable factors that have not been calculated but could make a BIG difference. Take for example, this story by Greg Kauffman of the Nation:

Since August 2011, 89,000 children in Pennsylvania have lost their Medicaid coverage, including many with life-threatening illnesses who were mistakenly deemed ineligible. The state currently hasn’t a clue whether many of these children have any health care coverage at all. In late summer, the Pennsylvania Department of Welfare began notifying hundreds of thousands of families by mail that they had ten days to provide necessary documentation in order to keep their children enrolled in Medicaid. If the family missed the deadline—or even if they met it but DPW failed to process the paperwork within the  ten days—they were dropped from Medicaid.

How many more such stories are waiting out there?

The individual mandate offers no benefit to patients or the public that could not more cheaply and fairly be executed by a public program. There is, in fact, no justification for the mandate other than as a subsidy of private insurers  who are, in this case, totally unncessarey. 

NPR: If you are covered under a private Medicare Advantage plan, the law changes portions of the plan, cutting payments to some of those plans. Critics say that could mean the private plans may not offer many extra benefits that you may have previously enjoyed, such as free eyeglasses, hearing aids and gym memberships that they now provide.

MarciaAngell, MD - Obamacare is simply incapable of doing what it is supposed to do -- provide nearly universal care at an affordable and sustainable cost. The problem is that three years ago, in his futile efforts to win over Republicans (remember the embarrassing courtship of Olympia Snowe?), Obama gutted the law before it was even passed. He made the private insurance companies the linchpin of the new system, and promised them millions of additional customers and billions of taxpayer dollars. He also did nothing to rein in the profit-oriented delivery system that rewards providers on a piecework basis for doing tests and procedures. So with all the new dollars flowing into the system and no restraints on the way medicine is practiced, the law is inherently inflationary.

Although there are some provisions to curb the worst abuses of the insurance companies, such as excluding people with preexisting conditions, there is nothing in the law that would stop insurers from raising premiums. A senior executive of the industry's trade association, America's Health Insurance Plans, told me privately that that's exactly what the companies will do if regulations cut into their profits. Thus, costs under Obamacare will almost certainly rise even faster than at present. No reform can work well or very long if its costs are unsustainable…

Many of the uninsured who are subject to the mandate to purchase private insurance will choose to pay the penalty/tax instead. That will lead the insurance companies to raise their premiums, demand that the penalties be greater, or both. Deductibles and co-payments will increase to the point that many people will have insurance they can't afford to use. (This is the case in Massachusetts.) ….

Obamacare partially offsets the costs of federal subsidies to insurance companies and Medicaid costs by cutting Medicare reimbursement to providers. That means hospitals and other health facilities will take a hit, and many are already struggling…

On July 22, 2009, Obama said in a press conference, "Now, the truth is that unless you have what's called a single-payer system in which everybody is automatically covered, then you're probably not going to reach every single individual." Bingo. Too bad he didn't hang on to that insight, and use his rhetorical skills to make the case strongly to the American public. If he had fought for single-payer health care at the beginning of his administration, while he had both houses of Congress, and mobilized public opinion behind it, he might have made it.

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Finally, perhaps the best thing about the bill is that it makes Medicare for all seem simple, sensible and sweet.

6 comments:

Rob Burns said...

Great summary of the issues surrounding ACA.

One thing concerns me that few have mentioned. I assume that those who pay the tax penalty for failure to carry insurance will still be uninsured (though presumably helping with medicaid funding for those who qualify). So we will penalize those who cannot afford health insurance and still leave them uninsured. With healthcare costs in the US approaching double that of other countries, the income needed to enjoy the luxury of healthcare insurance coverage is all that much higher. Enjoying an income 40% above the federal poverty level does not leave a lot of disposable income to pay these exorbitant health care insurance premiums.

Am I misunderstanding the bill?

KM said...

A very helpful summary of both the good and the bad. It was good to note the inaccuracy of the liberal gloating over "freeloaders" and the difficult reality that remains for most of working America who aren't adequately covered through work but don't qualify for assistance.

One other problem in keeping the for-profit insurers in the game is that their business remains the denial of payments. Coverage means very little when significant expenses are actually incurred.

Anonymous said...

A realistic summary of the bill would have at least mentioned the likely outcome that, given the relatively small penalty to employers who fail to provide health insurance, many,or most, will drop the benefit and pay the penalty, instantly creating millions of customers for the health insurance industry. Secondly,when unemployed and destitute student loan debtors default, the IRS seizes their tax refunds until such debts are satisfied. It should be obvious the IRS will seize tax returns of the noncomplient uninsured. Many poor families live from tax refund to tax refund, using such funds to pay delinquent rent and utility bills, deferred auto repairs or health needs. This bill will result in thousands, if not millions, of new homeless. To sunm up, it will cause many workers to lose their health insurance and it will drive many others into the streets. This is why the word liberal is generally understood to mean idiot asshole.

Anonymous said...

A single payer system, successful and far more inexpensive in other countries, is the way forward if the debate were merely about best serving the people as a whole. But the best interests of the people are not on the table here. The contempt with which the elites seem to hold the majority may eventually lead to a very sudden "off with their heads" disruption. The elites' certainty that the full apparatus of state security and control is forever theirs is not a proposition backed by history. Why are these grad school geniuses so short-sighted all of a sudden?

Anonymous said...

Interesting summary but no mention of how according to one count, the Secretary of Health under Obamacare gains 1,968 new powers because the bill states over and over that the Secretary will determine this and that:
http://www.gather.com/viewArticle.action?articleId=281474978982886

In other words, much of Obamacare has yet to be determined by a single powerful bureaucrat.

This has a chilling effect on business.
http://www.realclearpolitics.com/articles/2011/12/21/obamacare_abominations_112485.html
ObamaCare Abominations By John Stossel

Anonymous said...

I'm very sorry to vote for Obama. When he said that do you want a change and I said yes but that change was not what i want, sorry so much now :(