ObamaCare’s impact on health costs.
In 2011, analysts were speculating that Assurant Health might exit the insurance business, the Milwaukee Journal Sentinel reported last week. So the recent news that Assurant’s parent company was looking to “sell or shut down” the insurance carrier by year’s end was not a total surprise. The issue now is whether its demise holds larger lessons about Obamacare’s impact on insurance markets.
One analyst called Assurant, which reported operating losses of nearly $64 million in fiscal 2014 and $84 million in the first quarter of fiscal 2015, a “casualty” of the law. The Affordable Care Act “required health plans to cover a package of basic benefits and required health insurers to spend at least 80 cents of every premium dollar on medical care or quality initiatives,” the Journal-Sentinel reported. Simply put, the law made health insurance more like a regulated utility—with plan designs, benefits, and overhead costs strictly regulated.
Obamacare supporters generally argue that these regulatory changes eliminate the potential for customer confusion or the sale of “substandard” insurance products. But further Journal-Sentinel reporting underscores a complication of that approach:
In its next Obamacare-related decision, the Supreme Court will decide whether employers in states that chose not to establish their own Obamacare exchanges can be forced to pay penalties for not offering insurance the government deems acceptable.
The case is somewhat complicated and based on textual questions and legislative history. But if the court rules that the phrase “established by the state” means what it looks like it means, this will bring a small dose of chaos to up to 37 states that now rely on the federal exchange — the infamous healthcare.gov.
A majority of those who bought insurance from the federal exchanges in those states would no longer be eligible for the subsidies that have made the high price of Obamacare insurance less unpalatable for Americans of modest means. And the employer fines that are currently triggered when employees who aren’t offered qualifying health insurance obtain subsidies to purchase it on the exchange would go away.
Waste: After spending billions on state-run ObamaCare exchanges, the federal government is only now writing clear rules on how that money can be spent, while half of the exchanges head toward bankruptcy.
state-run exchanges were supposed to form the beating heart of ObamaCare. And the Obama administration dumped almost $5 billion in an effort to make it a reality.
The results have been a disaster.
Of the 37 states that received $2.1 billion in grants to establish an exchange, only 17 did so, and they got an additional $2.7 billion from the feds.
Of those 17, two went bankrupt in the first year. One of them, Oregon, had received a $60 million “early innovator grant.” Residents of those states now use the federal Healthcare.gov site.
A memo from Health and Human Services’ Inspector General Daniel Levinson warns that some of the remaining may be violating federal law in an effort to stay afloat.
The Affordable Care Act (ACA) changed the American health care system in myriad ways. The primary objectives of the ACA were to expand insurance coverage while reducing the cost of insurance, and to rein in the increasing cost of health care. Whether these goals are being achieved and at what cost to the budget and to the healthcare stakeholders are important considerations. Five years after passage of the ACA, this report attempts to synthesize many of the studies and cost estimates which have been produced in order to answer these questions.
The number of uninsured individuals has decreased, but not by as much as the Congressional Budget Office (CBO) originally predicted.
· 15 million: fewer uninsured individuals since 2010
· 35 million: individuals still without insurance
· 12 million: more people enrolled in Medicaid since 2010
· 11 million: individuals have insurance through a state or federal exchange
· 7.7 million: individuals receiving subsidies for coverage through an exchange
The cost of expanded insurance coverage is being felt at the individual, state, and federal level.
· $300: average increase in annual deductibles for ESI from 2010-2014
· $5,730: average annual cap on out-of-pocket expenses for plans purchased through the exchange in 2014; $2,719 more than the average for ESI plans
· $43 billion: projected individual mandate penalties over the next 10 years
· $167 billion: mandate penalties paid by employers over the next 10 years
· $42.6 billion: cost of ACA regulations implemented thus far
· $1.2 trillion: federal cost for ACA coverage provisions over the next 10 years
The growth in total health expenditures has also returned to pre-recession rates, demonstrating no bend in the cost curve.
· $3.15 trillion: national health care expenditures in 2014
· 17.9: percent of GDP spent on health care in 2014
Two Republican committee chairmen are pressing the Obama administration to improve its oversight of how state-run ObamaCare marketplaces use federal dollars, citing an inspector general report on potential violations of law.
Sens. Orrin Hatch (R-Utah) and Chuck Grassley (R-Iowa) wrote to the head of the Centers for Medicare and Medicaid Services (CMS) on Monday asking for the agency to issue clarifying guidance on how the federal dollars can be spent.
State-run ObamaCare marketplaces received federal funds to help set themselves up, but after Jan. 1 of this year, they marketplaces are supposed to be self-sustaining. They are now prohibited by law from using federal funds for “operating expenses.” They can only use the money for “design, development, and implementation.”
The problem is that the definition of these two categories can be unclear, as noted by an HHS Inspector General report late last month. The senators want clearer definitions from CMS.
State-based marketplaces (SBMs) “cannot be allowed to use hard-earned taxpayer dollars for expenses that are statutorily prohibited,” the senators write.
Three-quarters of emergency physicians say they’ve seen ER patient visits surge since Obamacare took effect — just the opposite of what many Americans expected would happen.
A poll released today by the American College of Emergency Physicians shows that 28% of 2,099 doctors surveyed nationally saw large increases in volume, while 47% saw slight increases. By contrast, fewer than half of doctors reported any increases last year in the early days of the Affordable Care Act.
Such hikes run counter to one of the goals of the health care overhaul, which is to reduce pressure on emergency rooms by getting more people insured through Medicaid or subsidized private coverage and providing better access to primary care.
A major reason that hasn’t happened is there simply aren’t enough primary care physicians to handle all the newly insured patients, says ACEP President Mike Gerardi, an emergency physician in New Jersey.
This tax season, millions of Americans are feeling the impact of the ACA on their tax return for the first time. Those who failed to obtain minimum essential health insurance coverage last year will have had to send the Internal Revenue Service (IRS) a check for $1,130, on average.1 Setting aside the impact on these millions of people’s wallets, this figure is also worth noting because it highlights the ineffectiveness of the individual mandate. Yes, the estimated 6.3 million people paying the penalty didn’t buy health insurance, but neither did the more than 30 million who qualified for an exemption from the mandate.2 If the mandate were 100 percent effective, everyone would have health insurance. However, there were still tens of millions of people uninsured in the U.S in 2014.
Sen. David Vitter (R-La.) has a simple question: How and why did Congress qualify as a “small business” eligible for special taxpayer subsidies under the Affordable Care Act (ACA)? For anyone in a real small business — private employers who get no such subsidies — the very idea is absurd. But getting a straight answer is as difficult as getting Lois Lerner’s IRS emails.
In search of answers, Vitter proposed subpoenaing documents from the District of Columbia Health Benefits Exchange Authority. But his colleagues on the Small Business and Entrepreneurship Committee recently voted (14 to five) to block the effort. They’ve tried to justify their lack of curiosity by calling the proposed subpoena an unnecessary “distraction” or an invitation to a “protracted” legal fight. But these are rather obviously lame excuses.
With Milwaukee-based Assurant Health continuing to bleed red ink, its parent company announced in a Tuesday news release it will either sell the health insurer or exit the health insurance business.
Assurant Health’s product lines include Time Insurance and John Alden. The company has more than 1,000 employees at its downtown Milwaukee offices, 501 W. Michigan St.
The impact on those employees will depend on whether the company is sold and the business strategy of a buyer.
“It’s premature for us to comment on possible outcomes,” said Assurant Inc. spokeswoman Vera Carley of impact on employees.
Republicans are being ridiculed by the right and the left for weighing ideas that would rescue ObamaCare health insurance policies for people in 37 states if the petitioners prevail in King v Burwell.
“Republicans Are Now Trying To Pass Obamacare Extension To Save Their Own Asses,” writes Allen Clifton in Forward Progressives. “GOP Gets Ready to Save the Day If the Court Strikes Down Obamacare Subsidies,” says Rush Limbaugh.
If the Supreme Court decides against the Obama administration in the case, leaders in Congress are indeed determined to pass legislation to protect coverage for an estimated six million people. ObamaCare has so distorted the market for individually-purchased and small group health insurance that Congress has little choice but to throw them a safety net.