Obamacare

Outside Liberal La La Land, Obamacare is Sputtering

It's not easy to make medical socialism work

|

This month, the Supreme Court may well deliver a fatal blow to ObamaCare in King vs. Burwell, by ruling that the health insurance subsidies handed out through federal exchanges in 36 states are illegal. Many liberals seem to think that the only thing preventing the president's crowning domestic achievement from becoming a rip-roaring success is this largely specious and semantic lawsuit. But here's the thing: ObamaCare is teetering due to its own internal contradictions that have nothing to do with the lawsuit.

ObamaCare's supporters would like everyone to believe that with Healthcare.gov now functioning, everything is just fine and dandy. Contrary to what the conservative press (which I guess would include me) has been saying about the many problems of ObamaCare, Vox's Ezra Klein declared last September that "in the real world, it's working." In February, his fellow Voxland inhabitant Sarah Kliff rattled off eight ways in which the law had proved its critics wrong.

But has it? Not really.

For starters, the exchanges have enrolled about 3 million fewer people than the Congressional Budget Office projected in 2010. And far fewer of the enrollees are from the ranks of the uninsured than hoped. Medicaid enrollment is lower too, for the simple reason that states refused to expand the program.

The core of President Obama's sales pitch to America was that the program, which he called the Affordable Care Act, would "bend the health care cost curve" and save an average family $2,500 on their premiums each year. How would it accomplish this feat? Essentially, he said, by forcing uninsured "free loaders" who show up in the emergency room to obtain free care to either buy (subsidized) coverage on the insurance exchange or sign up for the expanded Medicaid program. The point was that if they had coverage, they'd get cheaper care sooner in a doctor's office rather than more expensive care later in a hospital emergency room.

Things don't seem to be working out that way. ObamaCare is indeed bending the cost curve—but up, not down. There is no better evidence of this than the recent rate filings by insurance companies.

Every year, companies selling coverage through ObamaCare's exchanges have to ask state regulators to approve their premiums for the following year—a practice more appropriate for the Soviet Union than an allegedly free-market economy. And this year, according to several news reports, some are requesting increases of over 50 percent.

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6 percent in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3 percent increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4 percent across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25 percent.

Some states are even higher.

No doubt, these are just opening bids that regulators will bargain down. And in some states (such as Michigan, where I live) the hikes are in the high single-digit territory (that this seems like good news is pretty sad in itself). Still, it seems clear, many families are going to end up paying a lot more for their plans than their pockets can stand.

Why is this happening?

There are many reasons: One is that insurers are anticipating the cost of having to absorb pricey drug therapies such as Sovaldi, a new generation cure for Hepatitis C. There is also pent-up demand from the years of economic downturn when people were foregoing care because they couldn't afford the co-pays and deductibles.

But the biggest culprit by far that companies cite is that the exchange population is weighted too heavily toward

Obamacare Socialism
American Life League / Foter / CC BY-NC

riskier and older patients with multiple chronic conditions than what is needed to hold rates steady. Washington Examiner's Philip Klein reports that carriers needed 40 percent of their enrollees from the crucial 18-to-34 demographic, but they have only 28 percent.

What's more, these hikes are likely just a prelude to far bigger ones in future years. Why? Because two programs—risk corridor and reinsurance—that were meant to "stabilize" rates in ObamaCare's first few years so that insurers could obtain the right mix of enrollees are set to expire next year. (The risk corridor program slaps a fee on insurance companies that have lower-than-expected medical losses, and compensates those that have more. The reinsurance program imposes a fee on insurance policies and funnels it to insurers with high-risk individuals.) With these programs gone, the challenge of maintaining a balanced risk pool will become even harder.

The expanded Medicaid program is no picture of robust health, either. It has produced no cost-saving decline in emergency room visits, nor has it contributed to hospital profitability, as was hoped.

Three-quarters of ER doctors surveyed in March by the American College of Emergency Physicians said that ER visits to their hospitals had increased in the last year. Why? It could be that many hospitals have shut down (which itself would be a terrible sign), causing those still in business to pick up the slack. But the bigger reason is that Medicaid reimbursement to physicians is so low that they turn away Medicaid patients, consigning them to ERs, just as before.

But that still at least means that hospitals seeing these new Medicaid patients are getting compensated, right?

Yes and no. Their expenses due to uncompensated care have gone down 13 percent since last year, saving them a total of $9 billion. But that doesn't seem to have much to do with ObamaCare. Why? Because that number has declined both in states that opted for a Medicaid expansion and those that didn't, according to a Moody's Investors study. However, hospitals in states that expanded Medicaid also incurred $28 billion in added costs, of which only half was reimbursed—leaving them about $5 billion in the hole. It's possible that the hole would be even bigger without Medicaid (because hospitals would have to swallow more uncompensated care costs)—or it's possible that because the previously uninsured now have coverage, they are even quicker to go to the ER.

So, to recap: ObamaCare has fallen short of its enrollment target, hiked insurance premiums, failed to cut down on ER visits, and flopped in its attempt to improve hospitals' bottom line.

But its real problem is the lawsuit? Maybe treatment for delusions is covered under ObamaCare!

This column originally appeared in The Week

NEXT: Senate Appropriations Committee Approves Ban on Federal Meddling With Medical Marijuana Laws

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. This has something to do with immigration and India’s recent election, right?

    Just guessing….

    /Dalmiatown

    1. Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go? to tech tab for work detail,,,,,,,

      ????????????? http://www.pay-buzz.com

      1. SPAMMMMMMMMM

        No really.

  2. “Come see the contradictions inherent in the system!”

    1. “Help! Help! I’m bein’ misrepresented!

      You saw him misrepresentin’ me, didn’t you?”

  3. The second people actually start to realize how much medical care costs, I can guarantee prices are going to drop. As it is now, people only see the 50 dollar co-pay and think that’s all it is.

    Same thing with taxes. If we no longer did withholdings, and everyone had to cut a check to the IRS every year for 3 months (or more) of their labor a year, I can guarantee woodchipper sales would go through the roof.

    /insert disclaimer here

    1. And this is why it will NEVER happen. I love the idea, too, but everyone knows what it will produce. Which is why it will never happen, even under a libertarian (or Libertarian) regime.

  4. The simple thing that gets me about the claims of Obamacare supporters is they pretty much claim it started working instantaneously. Like the second enrollment started, everything got better. That kind of claim is just unrealistic on the face of it. Either they’re claiming fairly meaningless things as successes (e.g., “people can sign up” = SUCCESS!), or a miracle has happened and the entire healthcare industry suddenly pivoted as one the day signups began. My prediction is that a few years down the road, America’s healthcare will look remarkably like it did before in terms of costs and results, but Obamacare supporters will still be crowing about how the chocolate ration is bigger than ever.

  5. “[…]The point was that if they had coverage, they’d get cheaper care sooner in a doctor’s office rather than more expensive care later in a hospital emergency room.[…]”

    Yeah, and New Soviet Man, too!
    I used the ER for my primary care until my provider woke up to that tactic and made it expensive. I did it, like many others, because it was convenient; no appointment required.

    1. The market has provided an alternative to that, at least in my area. There are clinics that take you for minor things without appointment and at relatively low cost.

      1. Yeah, the walk-in clinics here in south florida post their fixed rates for cash customers right on the wall. $99 for a walk-in sick visit, etc. Just like going to McDonalds for a meal.

        But nobody is uninsured any more, so why do they still post those rates? Curious.

        1. We also have, in the Kansas City area, a number of low-cost clinics, like the ones you are describing. They are very conveineint.

          We also have a lot of medical practices setting up that DO NOT take insurance — you pay a monthly fee, per adult and child, and much of your medical care is covered. It is interesting.

          1. A friend of mine in Massachusetts who is a D.O. is leaving the hospital she works at as an internist and starting a practice that does something like this. They take patients on a cash annual basis. They limit the number of patients they have and offer concierge level service (like, you get your doc’s cell phone number.)

            Will be interesting to see how it works.

        2. Not everyone is insured. A guy my mom works with refused the employer provided med. insurance because, “no one is going to force [him] to purchase anything!” He paid a $400 penaltitax.

          Have you met the yearly deductible? You pay 100% of charges until you meet the deductible. So, knowing the visit will cost you $99 is pretty important information if you haven’t met the deductible.

          Also, is the clinic in network or out of network? After meeting the deductible you pay a portion of the charges. So knowing the % out of the $99 you will pay is important.

          1. That’s a fair point, except you don’t pay the posted rates if you have insurance. It might be less. Or it might be more. The rates are negotiated by the insurance company. Since I have had high deductible plans since around 2000, I’ve seen both occurrences.

            Also interestingly, most of the walk-in clinics seem to be in-network for almost every plan. They must really bend over to make sure they can take any insurance.

            1. QHP networks are required (wherever possible) to include providers “suitable for low-income, medically-underserved individuals”. I wonder if these walk-in clinics satisfy that requirement.

      2. I’m on an HMO plan, and the med center now has a couple of walk-in options, but they are priced higher than the co-pay to see my PCP, and the difference is high enough to discourage my former practice. Those guys ain’t dumb; they’ve fiddled with the co-pays to get folks to use the facilities efficiently.
        I still maintain that the former ad-hoc ‘socialized medical care’, where the ERs treated folks and the rest of us paid for in in increased costs was ‘way cheaper than what O-care is costing now and much, much cheaper than what it’ll cost when it gets ‘fixed’.

  6. Is it okay to say that the bill should go through the wood chipper?

  7. You want to see rates rise? Just wait until the so-called Cadillac tax kicks in in 2017, after Obama’s gone, and the tax get passed onto policyholders. As Jonathan Gruber admitted, over time, every insurance plan will be a “Cadillac” plan and the taxed accordingly — with the tax being rolled into the premium.

    1. after Obama’s gone

      Yep. Whichever Republican wins the White House is totally going to do this to the working people of America! It’s just proof that Obamacare would totally have worked if the evil Republicans hadn’t come in and ruined it for the working class!

      1. That’s why the Republicans need to lose 2016.

        Of course, the Democrats will try to push off the Cadillac Plan tax or blame the Republicans if it stays in place.

  8. I have to go through the exchange. We are plunking down a good $20k per year for healthcare for a family of 5 between premiums (~ $1,500/month) and the deductible ($7,500). And it is still very tough finding in-network specialists because apparently the policies didn’t pay enough, or were too much of a hassle. Calling a specialist it is really common to hear “we don’t take any of the exchange plans”. This from places that take medicare and medicaid.

    And we are already being warned that big increases are coming next year. Between taxes and insurance I could have a second family living fairly comfortably somewhere in the midwest.

    And no, the troubles didn’t end with the signup. I’ve had a continual stream of issues for the entire time. Lately they’ve managed to screw up one of our birthdays, so everything keeps getting denied. A half dozen phone calls, several hours on the phone and two IT tickets later…. well, we are still waiting for them to change the birthdate 2 and a half months into the ordeal. And this is not even remotely an isolated incident.

    1. My experience with it was pretty horrendous. Getting hassled to provide documents I’ve already provided, having my premium increased… And after I get all of this fancy health insurance that I’m forced to have, I injure my shoulder. I payed myself for physical therapy, since insurance would make me go to the doctor for a script, which would cost out of pocket, and pay more of my own money each PT appointment anyways. The guy on the phone at kaiser told me it would probably be cheaper to not use insurance and just pay cash. It was actually far cheaper to walk into the PT office and say, ‘I want an appointment, I’m paying cash’.

      1. Oh, I forgot about that. My wife has been “prove you are a citizen” requested 3 times. Because they keep getting her name wrong in the system. How? I don’t know. But they aren’t bright enough to match her by SSN and name and address and birthdate if there is one letter wrong in her first name. So they insist she send in a copy of her Social Security Card. ‘Cause that’s a great proof of citizenship. The thing isn’t even laminated, for crying out loud.

        The same thing has happened to two of my kids. So I’m sending in docs every few months too.

  9. At this point, Obamacare’s actual failures don’t matter. It’s all about narrative and team.

    It’s so great, they’ve delayed implementing the core measures until 2016…

    1. Obamacare was a gift to the American people, and as with all gifts, it’s really only the thought that counts.

  10. Although this is probably still regarded as tinfoil hattery, I can’t shake the suspicion that Obamacare is going exactly as planned and that the progs will be springing up and saying “see, we told you that we have to get those evul capitalists out of the picture…only single payer will save us!”

    1. Is it really a conspiracy theory when Harry Reid said it himself? We all know its coming – especially if there is a Republican in office next.

      1. Why? Can you detail how you expect it to be different with a Dem as opposed to a Rep? I would be interested to see where the difference (if any) lies.

      2. Why? Can you detail how you expect it to be different with a Dem as opposed to a Rep? I would be interested to see where the difference (if any) lies.

      3. Obama did say that the plan was to transition to single payer via mandated insurance with subsidies. He laid the whole thing out back when he was a candidate for senate – at some fundraiser if I recall correctly. The plan was to slowly kill off the private insurance market and then contract down to single payer. He had a timeframe of 17 years at the time.

        1. I don’t remember anything like that. Obama has said that if he had his ‘druthers he would prefer single-payer, but I’m almost certain that he has never publically described the ACA as a bridge to single-payer.

          I wonder if you aren’t thinking of Jonathan Gruber. In several of the ‘Grubergate’ videos he talked about how the ‘Cadillac tax’ would over time affect more and more employer-sponsored plans, which would help eliminate the tax exemption for ESI altogether (something almost all economists, left and right, would like to see). He even mentioned a timeframe of about 20 years, starting in 2011, after which most plans would affected by the Cadillac tax. That wouldn’t lead to single-payer immediately, of course, but eliminating the ESI tax exemption is probably a necessary step in that direction.

          http://www.cnn.com/2014/11/18/…..e-promises

          1. No. This was long before Obamacare was a gleam in anyone’s eye. He was talking about how to get to his preferred single payer system. He didn’t think the people were ready for single payer, so you had to bring them along one step at a time.

            It was a response to a question about single payer healthcare to a not-yet-a-presidential-candidate Obama at a fundraiser. I’m not sure, but I think he was speaking in the early 2000’s when he was the rising star for the dems – circa the time of his big DNC prime-time speech. Anyway, the room he was speaking to was full-bore in favor of single-payer healthcare. They wanted to know that he was on board. He gave them the analysis that it wasn’t going to happen the way they thought it was. It was a rare candid moment from the Rorschach candidate.

            1. There’s a reason this supposedly market based plan is supported by virtually everyone who used to advocate “single payer”.

  11. My best friend’s step-mother makes $85 hourly on the computer . She has been fired from work for nine months but last month her pay check was $17089 just working on the computer for a few hours. see it here
    LINK HERE?????? http://www.BuzzReport20.com

  12. No, no. All those “problems” were simply the result of cold weather during the first quarter of 2015.

    The cold weather was a result of global warming.

    Global Warming is caused by everyone who is not a liberal.

    Therefore, Obamacare’s failures are Bush’s fault.

    1. lol good show

  13. Reality is real. Whodathunkit?

  14. ***This is just a drill***

    It’s really depressing that a magazine with the name Reason promotes all these Faux News Koch lies. Everybody knows that Obamacare is the best thing to happen to this country since the New Deal.

    The President works really hard to make this country a better place for everybody, then you go posting these “facts”. The real fact is that if you don’t like Obama and progress then you’re just a racist treasonous Republican.

    We should all be praising our country’s dear leader,President Obama. Just look around you. If a Republicant was president do you think America would be as awesome as it is today.

    ***That was just a drill.***

    How does one counter arguments like these? The progs have this monster grip on pop-culture.

    1. The first step is to buy a woodchipper.

    2. Kind of trolling don’t you think?

    3. This is a good question. I think the useful examples show that it takes a nice dose of socialism/fabian socialism for the lies to be revealed.

      See 70’s Britain. It got so bad they elected Thatcher.

      See Venezuela now. Most people there have figured out its not a conspiracy of kulakos and wreckerenos that they don’t have toilet paper.

      I think most people’s mental model of economics is set up to be pro-socialist, thus, even after Thatcher is elected, there is reversion to socialistic thinking.

  15. Can you please give sources other than WSJ. I don’t want to subscribe to the WSJ. Basically this article is ad for WSJ trying to get people to subscribe to read your sources.

    1. The WSJ piece is about a report from Moody’s Investors. I tried pasting Ina few links, but they were rejected (“words longer than fifty characters). Try a Google search:

      Moody’s Investors Medicaid expansion uncompensated

      You are looking for links dated early June, so restrict the search to the last month.

  16. Oh for f^%k sake, really? I live in a nation that has ‘socialist’ healthcare (AKA Canada, which I will admit I support greatly as it helped me with affording treatment for my Crohn’s Disease), and Obamacare isn’t even close to being socialist.

    1. Uh, just because there are different forms of socialist doesn’t mean this system doesn’t qualify. 16% on medicare, 16% on medicaid and 8% on subsidized insurance. That’s a pretty healthy percentage of the population getting their healthcare directly from the government or with a government check (and a mandate to go with the check).

      1. Medicare people paid into the system for their entire working lives and then have to pay premiums, and don’t have everything, completely paid for, just like private insurance – Medicare denies more treatments than most private insurers do.
        Medicare is not getting your healthcare directly from government.

    2. It is. Google “socialized costs.” Then Google “concentrated benefits and dispersed costs.”

    3. Shorter Andrew: “I got mine, so fuck everybody else!”

      1. Maybe not shorter but: Someone else paid for my medical care – don’t complain if you can’t get the same deal.

  17. “Eventually, Socialism runs out of Other People’s Money!”

  18. I get a kick out of all of these people who think Obamacare will be repealed. Hillary will be our next president and she will bring the senate with her.

    IT’S ALL OVER FOLKS! And the socialists won. Panama, here I come. FUCK the USA.

    1. Unless someone is watching out for the presidential-year election fraud, you are right.

  19. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.netcash5.com

  20. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.netcash5.com

  21. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.netcash5.com

Please to post comments

Comments are closed.