compiled & edited by Daniel Hagadorn
P. J. O’Rourke once remarked that if you think healthcare is expensive now, wait until you see what it costs when it’s free.
Last week, the Secretary of Health and Human Services (HHS), Kathleen Sibelius, defended Obamacare’s track record on MSNBC’s Morning Joe, saying, “What we’re seeing is costs really come down for the first time in a very long time.”
Her unconvincing assertion came as eHealth, Inc., America’s first and largest private online health insurance exchange, released their “Cost of Comprehensive Health Benefits” report which “found the average monthly premiums for individual and family health insurance plans are 47% higher than average when they cover a comprehensive list of eight health benefits compared to 2012.”
As an eHealth representative simply explained, “The benefits in these plans will cost customers more.”
Technically, President Obama has kept his oft-repeated promise that people could keep their plans if they liked them. Of course, after massive premium increases, it seems pretty clear that people will “unlike” their plans in droves. Oh, and keep in mind that when people lose their jobs, they typically lose their insurance as well—even if they “liked” their plan.
The main cogs of President Obama’s “health care savings machine”—a.k.a. Obamacare—don’t begin operation until 2014, when state-based exchanges will be established (supposedly) as a marketplace for consumers to purchase the tightly regulated, subsidized coverage.
So is Obamacare really failing? Let’s count the ways:
1) Obamacare created temporary “high risk” pools to offer those with pre-existing health conditions an opportunity to receive immediate insurance coverage.
- According to the Congressional Budge Office (CBO), these pools are undersubscribed and way over budget. The CBO report estimated that the $5 billion allocated to these pools could enroll 200,000 consumers, with enrollment increasing to just over 400,000 subscribers. Unfortunately, as of July 2012, only 77,877 have signed up and the program is already dangerously over budget as nearly 25% of these state-based risk pools are in need of cash.
2) The CLASS Act, which was designed to provide consumers with government-financed long-term care insurance, has been discarded.
- Oops, that rips an $86 billion dollar hole in Obamacare’s cost estimates. This development is not exactly surprising since the CLASS Act was never financially viable and its costs would have exceeded revenue the moment it reached full operation.
- “Fortunately”, since the program collected money five years before it was required to begin paying benefits, “magic government math” allowed President Obama to capture that revenue to finance Obamacare. In abandoning the measure, even HHS Secretary Kathleen Sibelius admitted the scheme was “unsustainable.”
3) The countless regulations Obamacare places on insurers has proven so unworkable that the Obama administration has been forced to issue 1,231 waivers.
- These exemptions are granted when (1) the Obamacare rules are projected to raise healthcare premiums more than 10%, or (2) create a “significant decrease in access to healthcare benefits.”
- It should be noted that these waivers are not issued with anything approaching consistency. Organizations and/or businesses that have been granted preferential treatment are over-represented by plans offered by unionized businesses and other political allies of the Obama administration.
4) In a supreme display of irony, the Affordable Care Act (Obamacare) has not even settled on how to define “affordable”, which has created the possibility that millions of middle class families will be priced out of coverage.
- According to a recent editorial in the New York Times, “the people left in the lurch would be those who had lower incomes but were not poor enough to qualify for Medicaid.”
- “Luckily”, because of how Obamacare defines what’s “affordable” to these families, many working-class people would be unable to afford the family coverage offered by their employers, BUT would not qualify for subsidies provided by the law. In other words, they are being forced to choose between a rock and a hard place to keep their family healthy.
5) The centerpiece of Obamacare’s efforts to contain healthcare costs was the creation of Accountable Care Organizations (ACOs)—which is adorned with so much bureaucratic red tape that major provider groups have refused to participate.
- These ACOs would have consolidated doctors into employees of large systems, and then paid these systems lump sums of money to take care of groups of patients. A letter from 10 major medical groups—that previously operated similar programs—said, “it would be difficult, if not impossible” to accept the financial design created by Obamacare.
- In another rebuke, the prestigious American Medical Group Association conducted a survey and reported that 93% of their members would not enroll as ACOs in the proposed program.
The United States remains in a difficult economic climate and medical utilization trends are in full decline. So the cost of healthcare coverage is experiencing a similar decline? Ah, not exactly.
- Since Obamacare was passed, insurance premiums have risen considerably faster than (1) overall inflation and (2) the growth of GDP.
- The regulations went into effect without providing offsetting incentives to get people into the insurance pool to help absorb the costs.
It is interesting to note that President Obama has emphatically denied that the unpopular Affordable Care Act is a tax. What makes this denial even more interesting is that his administration has designated the IRS as their “collection agency” to ensure that Americans “enjoy” better health care. Though certainly upsetting, perhaps it is naive to be surprised by Obamacare’s systemic problems considering the inexcusable manner in which our veterans are already being treated by government healthcare.
The torturous logic and reflexive blame-shifting employed by President Obama in defending his disastrous signature healthcare program is beginning to sound like someone arguing in the alternative: “I didn’t break into that house, and if I did, I didn’t steal the TV, and if I did, I only got twenty bucks for it.”
SOURCE: Scott Gottlieb, M.D. is an American Enterprise Institute (AEI) Resident Scholar and practicing physician. He previously served in senior positions at the Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS).