The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers
King vs. Burwell is on the horizon. If the plaintiffs are successful, so goes the theory, subsidies end in 37 exchanges operated by the Department of Health and Human Services and serviced by HealthCare.gov. Coverage gets more expensive, and people won’t be able to afford their policies.
But, this outcome was foretold all the way back in the Senate mark-up of the proposed ACA legislation. Purposely requiring subsidies in state-run exchanges remains the incentive for states to set them up. The administration did not expect so many states elected not to set up their own exchanges, and it is now a big problem. As was noted in 2009 by critics of the bill, if states don’t hand out subsidies, people won’t be able to afford to buy coverage.
In the health savings account industry, the problem is compounded. The ACA law also created a perpetual rule change engine. For example, every year HHS issues what’s called the Letter to Issuers letter to Federal-facilitated Marketplaces (FFMs), in which it discusses all of the fixes that need to be made to exchange operations. This year, HHS has proclaimed that we would all be better off if out-of-pocket maximums (OOPM) for “other than self-only coverage” were restricted to the OOPM for individuals or $6,850 for 2016.
During the 2008 financial crisis, “too big to fail” became a familiar phrase in the U.S. financial system. Now the U.S. health-care system is heading down the same path with a record number of hospital mergers and acquisitions—95 last year—some creating regional monopolies that, as in all monopolies, will likely result in higher prices from decreased competition.
Normally, market competition is good for consumers. More competition generally means competitors are battling each other to lower their prices and/or raise the quality of their goods. But when it comes to Obamacare, the market is working backwards, at least for people receiving health insurance subsidies through the exchanges. The more competitive the marketplace, often the more people have to pay for insurance.
How did this happen?
The Affordable Care Act, aka Obamacare, created a series of exchanges where people can shop for health insurance if they don’t already receive it from the government (e.g. Medicare or Medicaid) or from their employer. The exchanges are a pro-market approach to healthcare reform. But they aren’t a simple market, by any means. In part, they are complicated because most people purchasing insurance through the exchanges receive subsidies. If you earn less than 400% of the federal poverty limit, you’ll probably qualify.
My son Benjamin has a serious growth hormone deficiency. He’ll be 13 years old in May but could easily pass for a boy of 8 or 9. In fact, many 8- and 9-year-olds are taller than him. He’s a full head shorter than all of his pals in seventh grade.
Although his mother and I don’t have medical degrees, we medical degrees, we had Benjamin’s diagnosis pegged when he was 3 years old and still wearing clothing for an 18-month-old.
Several trips to his pediatrician along with a couple simple tests to assess Benjamin’s bone age confirmed with data what we could see with our own eyes. Our boy wasn’t just in the bottom percentile in average height for kids his age – he was in the sub-basement
Doctors in the United States appear as bitterly divided over the Affordable Care Act as the general public.
The Affordable Care Act (ACA), also called Obamacare, has been a lightning rod since it was signed into law in 2010.
Five years after its enactment, the healthcare reform legislation still divides the American public. In a Gallup poll taken in early April, 50 percent of people surveyed said they disapprove of the act while 44 percent said they approve.
So, perhaps it’s no surprise that America’s 1 million doctors appear to be as split on Obamacare as the general public.
The Physicians Foundation released a survey last fall in which 20,000 doctors responded by email to an array of questions.
Of the respondents, 46 percent gave Obamacare a D or F grade, while 25 percent gave it an A or B grade.
In addition, two-thirds of those responding said they did not accept health insurance plans offered through the Affordable Care Act’s online insurance exchanges.
Those who oppose Obamacare say the survey is an accurate reflection of the country’s medical profession.
Those who support the law are quick to point out the survey was not a scientific poll. They say people who respond to email queries tend to be more critical than the general population.
House Committee on the Education and the Workforce
Subcommittee on Health, Employment, Labor, and Pensions
“Five Years of Broken Promises:
How the President’s Health Care Law is Affecting America’s Workplaces”
Tuesday, April 14, 2015
Mr. Chairman, Mr. Ranking Member, Members of the Committee,
My name is Tevi Troy, and I am the President of the American Health Policy Institute, adjunct fellow at Hudson Institute, and a former Deputy Secretary of the U.S. Department of Health and Human Services, as well as a former senior White House Domestic Policy Aide. The American Health Policy Institute is a 501(c)3 think tank dedicated to studying the issue of employer sponsored health insurance and highlighting the challenges employers face in offering care to their employees and their dependents. In addition to publishing a variety of studies on employer sponsored health insurance, the Institute also examines employer responses to these challenges and shares best practices from the most successful of these responses. These roles give the Institute a unique perspective on developments in employer sponsored health insurance, and enable it to make recommendations to both policymakers and business leaders regarding
Repealing the ACA’s individual mandate would result in 7 million fewer insured Americans in 2025 but would reduce federal spending on financial assistance by $191 billion, American Action Forum President Douglas Holtz-Eakin, who backs axing the mandate, told the House Ways and Means health subcommittee Tuesday.
Has the effort peaked to sign up uninsured Americans for coverage? The announcement that the nonprofit organization Enroll America is laying off staff and redirecting its focus in the face of funding cuts comes amid inconsistent sign-ups during the second Affordable Care Act open-enrollment period and concerns about affordability.
A recent New York Times analysis compared Kaiser Family Foundation estimates of potential enrollees with sign-up data from the Department of Health and Human Services. While some states that signed up few people in 2014 recovered during the 2015 open enrollment, other states lagged: “California, the state with the most enrollments in 2014, increased them by only one percentage point this year, despite a big investment in outreach. New York improved by only two percentage points. Washington’s rates are unchanged.”
Most states could not post consistent gains in both open-enrollment periods. An official from Avalere Health, a consulting firm, told the Times that she was “starting to wonder if we’ve overestimated the whole thing.”
New analysis from Avalere finds that while exchanges have succeeded in enrolling very low-income individuals, they continue to struggle to attract middle and higher income enrollees.
Specifically, as of the close of the 2015 open enrollment period, exchanges using HealthCare.gov had enrolled 76 percent of eligible individuals with incomes between 100 and 150 percent of the federal poverty level (FPL) or $11,770 to $17,655. However, participation rates declined dramatically as incomes increase and subsidies decrease. For instance, only 16 percent of those earning 301 to 400 percent FPL picked coverage through an exchange, even though they may be eligible for premium subsidies.
“People receiving more generous subsidies are expected to enroll in the exchanges at higher rates. However, participation levels decline as incomes increase, even among individuals who would be eligible for both premium subsidies and cost-sharing reductions,” said Elizabeth Carpenter, director at Avalere.
During the recent oral argument in King v. Burwell — the Supreme Court case deciding if providing subsidies to buy health insurance in the 36 states utilizing federal health care exchanges is allowed under the Affordable Care Act (ACA) — Justice Kennedy suggested that disallowing subsidies might be unconstitutionally coercive because “states are being told either create your own exchange, or we’ll send your insurance market into a death spiral.” Are “death spirals” real, or just a way to frighten the public?
The death spiral will purportedly happen like this: disallowing federal exchange subsidies will make insurance less affordable for the 87% of federal exchange enrollees currently receiving subsidies. These people will no longer be required to buy insurance since the ACA’s individual mandate only applies to individuals who have access to affordable insurance. Since the ACA imposes community rating, requiring roughly the same premium for all individuals in a given plan with only small adjustments for their risk characteristics, and guaranteed issue of insurance regardless of the enrollee’s health, the old and unhealthy will continue to buy coverage but the young and healthy will forego coverage. The resulting higher risk pool of enrollees will increase the average cost of individuals remaining in the non-group insurance market, both on and off the exchanges, resulting in increased premiums that will drive out more low cost, healthy patients eventually destroying the market.
Two economic simulations predict that “adverse selection,” where healthier people leave the insurance market and sicker people stay in causing premiums to rise, will occur if the King plaintiffs prevail. The Urban Institute predicted discontinuing federal exchange subsidies would result in premium increases of 35% and enrollment declines of 69% in the individual health insurance market. The Rand Corporation made similar predictions.
But it is hard to reconcile these forecasts with studies of earlier state insurance market “reforms” that created market conditions similar to those that would result if federal exchange subsidies are disallowed. These studies suggest adverse selection would be minimal and would not lead to a “death spiral,” that is, it would not lead to a self-reinforcing cycle of adverse selection in which each time premiums rise, more people exit, leading to a sicker, more expensive risk pool and market collapse.