The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers
Another bombshell could soon drop on the Affordable Care Act insurance exchange market, and it might come at a highly vulnerable moment for ObamaCare.
Rosemary Collyer, U.S. District Judge for the District of Columbia, is expected to soon issue her ruling in U.S. House of Representatives v. Burwell, a case in which House Republicans claim the Obama administration is illegally funding the ACA’s cost-sharing subsidies without a congressional appropriation.
If, as some legal observers believe is possible or even likely, the George W. Bush-nominated Collyer decides against the administration, it would further rattle insurers who are facing multiple difficulties in the exchange business. UnitedHealth Group announced last week that it was pulling out of most exchanges because of its financial losses. Such a ruling would be a shock, even though it surely would be appealed, and the case could ultimately reach the Supreme Court.
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Even before President Obama leaves office, ObamaCare has begun unraveling.
The law was passed over the objections of a majority of Americans, it is still opposed by a majority of Americans — and their opposition has been vindicated. Last week, UnitedHealth Group announced that, after estimated losses of more than $1 billion for 2015 and 2016 under ObamaCare, the company was pulling out of most of its ill-fated exchanges. In fact, commercial insurers across the country are hemorrhaging money on ObamaCare at alarming rates.
The president promised these insurers taxpayer bailouts if they lost money, but Congress in its wisdom passed legislation barring the use of taxpayer dollars to prop up the insurers. Without the bailouts, commercial insurers are being forced to eat their losses — while more than half of the ObamaCare nonprofit insurance cooperatives created under the law failed.
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A potential shakeup in Arizona’s Affordable Care Act marketplaces is resurrecting President Barack Obama’s 2010 health-care law as a political issue in this year’s U.S. Senate race.
The developments mean customers will have fewer subsidized plans to pick from next year, and in some rural counties, they could have no options at all. UnitedHealthcare, the national insurance giant, on Tuesday signaled that it intends to abandon Arizona’s Affordable Care Act marketplace in 2017. Blue Cross Blue Shield of Arizona, the only other insurer to offer plans in all of Arizona’s 15 counties, also is considering pulling out of some areas.
Arizona voters could face a stark choice on the issue in November.
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The Mercatus Center at George Mason University released a new working paper on the Affordable Care Act. The study, authored by Brian Blase of the Mercatus Center, Doug Badger of the Galen Institute, and Ed Haislmaier of the Heritage Foundation contains two key findings:
First, insurers incurred substantial losses overall despite receiving much larger back-end subsidies per enrollee through the ACA’s reinsurance program than they expected when they set their premiums for 2014. Second, it is estimated that in the absence of the reinsurance program, insurers would have had to set premiums 26% higher, on average, in order to avoid losses—assuming implausibly that the overall health of the risk pool would not have worsened as a result of the higher premiums. The findings raise serious questions about the ACA’s future, particularly when the reinsurance program ends and premium revenue must be sufficient to cover expenses.
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The conservative Republican Study Committee (RSC) on Friday submitted its recommendations for a Republican replacement for ObamaCare as it seeks to shape a plan being formed by a group of House chairmen. The recommendations come from the RSC’s already-existing legislation, the American Health Care Reform Act, which would completely repeal ObamaCare and replace it with a new system.
“This bill relies on conservative principles and increased state flexibility to transform our top-down health care system into one that creates competition, growth and increased access for all Americans,” the group said in a statement.
The proposal would replace ObamaCare’s refundable tax credits with a tax deduction, which tends to provide less help to low-income people by reducing the taxes people owe rather than allowing for the possibility of getting money back in a refund.
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During the healthcare debate of 2009 and 2010, conservatives screamed a simple fact from the rooftops: ObamaCare will not work. No one wanted to listen then, but their warnings are now coming into fruition.
ObamaCare, as constructed, attempted to fix a dysfunctional health care payment system by creating an even more complicated system on top of it, filled with subsidies, coverage mandates, and other artificial government incentives. But its result has been a system that plucked Americans out of coverage they like and forced them to pay more for less.
Now the insurers are beginning to realize that in spite of all the subsidies and mandates working in their favor, and despite all of the cost-cutting they have had to do at the expense of consumers, they just can’t make money in this system.
Beginning next year, the annual out-of-pocket limits for all health plans sold in the (Obamacare) health insurance exchanges will be $7,150 for an individual and $14,300 for a family. To put those numbers in perspective, a $10-an-hour employee only earns about $20,000 a year.
One way to help families meet the burden of these medical expenses is with a Health Savings Account. But because the requirements for HSAs are so rigid, roughly four out of five plans sold in the exchanges are incompatible with them. One of the most nettlesome rules is the requirement that HSA plans cover only “preventive care” below the deductible. To compete for customers, especially young healthy enrollees, the insurers believe they need to make more services available with a minimum of out-of-pocket costs.
Things are about to get much worse. New rules and regulations, which become mandatory in 2018, will impose minimum and maximum deductibles and out-of-pocket limits that are inconsistent with the HSA rules.
A new note from JPMorgan economist Jesse Edgerton looks at what is happening with Americans who are working part-time for “economic reasons” — or Americans involuntarily working part time. As you can see in the above chart — the red line — the numbers remains elevated despite big declines in the U-3 and U-6 jobless rates. Edgerton:
There has been little recent relationship between the number of “extra” part-time workers and the level of U3 unemployment, questioning the idea that driving U3 down further will reduce involuntary part-time employment. . . In a note last year, we pointed out that the shift strikingly coincided with the passage of the ACA, which included an employer mandate to provide health insurance to employees working 30 or more hours per week. . . passage of the ACA preceded a large and unprecedented shift from workers working more than 30 hours per week to just under 30 hours. We continue to believe that the ACA can explain a significant number of the “extra” involuntary part-time workers.
The Republican Study Committee submitted their recommendations for health reform to the House Republican Health Care Reform Task Force on Friday, pointing to several provisions of an already-introduced bill to guide its proposals.
“The Republican Study Committee has led the way on a comprehensive repeal and replace strategy for ObamaCare,” the group says of its recommendations. “Currently, the American Health Care Reform Act, H.R. 2653, is the most cosponsored ObamaCare alternative in the House. This bill relies on conservative principles and increased state flexibility to transform our top-down health care system into one that creates competition, growth and increased access for all Americans.”
Presidential candidate Donald Trump has said he wants to repeal the Affordable Care Act and yet still “take care of everybody.” He has said repeatedly that he is different from other Republicans in this regard, implying that other GOP politicians don’t want Americans to get needed health services. Of course, Trump has never bothered to back up this slander with any evidence (and the media haven’t bothered to ask him for it).
Trump is apparently unaware of the plans to replace Obamacare sponsored by Rep. Tom Price and by Sen. Richard Burr, Sen. Orrin Hatch, and Rep. Fred Upton. These plans would insure as many Americans as are enrolled today under the ACA at a fraction of the cost.