Category Archives: Obamacare

Health Insurance Costs for Colorado Mountain Residents

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There was a disturbing article in the Denver Post about the cost of health insurance in the Colorado high country. Health insurance premiums in one western Colorado region jumped 25.8 percent this year for people buying their own policies. That percentage increase sounds huge, but it seems small when quoting actual costs. One woman’s premium increased by more than $300 to $1828 per month, or nearly $22,000 per year. And it gets worse. The policy contains a $4,000 deductible for each her and her husband. Health care costs are significantly higher in the mountain communities compared to the metro areas and there are fewer insurers, which results in little if any competition.

Many people are obviously going to have to consider going uninsured, even though there are IRS penalties for being uninsured imposed by the Affordable Care Act, or “Obamacare.” The Act required the creation of geographical ratings within each state, and the mountain areas are locked into a high rating. Federal approval is required to revise them. One person is paying $1,590 a month for health insurance while an identical plan in Denver would cost $851. People are being forced to consider moving to Utah or Denver. Some are actually wishing they were older so they can be on Medicare. One woman commented, “It’s the first time I’ve heard 60-year-olds saying they wished they were 65.”

I didn’t find a proposed solution to the problem for people who don’t want to move or somehow find a way to quickly become 65. The term “Affordable” is misplaced for some of our citizens.

Another Unintended Consequence of Obamacare

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The commentary posted last week was about the financial burden being placed on States by Obamacare. The article titled “Electronic care: Why doctors quit,” by Charles Krauthammer describes an even more important unintended consequence. Doctors who have small practices, often the doctors in rural communities, don’t have the financial resources or technology support to comply with the law. They are retiring because the law requires so much of their time is used for regulatory compliance rather than providing health care. According to the article, the law has created “…a deep erosion of their autonomy and authority, a transformation from physician to ‘provider’.”

The article says virtually every doctor expresses bitterness about the electronic health records (EHR) mandate that produces “…nothing more than ‘billing and legal documents’—and degraded medicine.” One doctor observed that “…introduction of the electronic medical record into our office has created so much more need for documentation that I only see about three-quarters of the patients I could before, and has prompted me to seriously consider leaving for the first time.” Medical practices that hadn’t gone electronic by January 1st have had their Medicare payments cut by one percent. That penalty increases to three to five percent in future years.

What has Obamacare accomplished? Many more people have Medicaid, and that means it takes weeks or months to get an appointment at one of the few places that still accept it. Fifty year old women had their health insurance declared “non-compliant” because they didn’t have maternity coverage. Obamacare has accomplished spending $27 billion on “going paperless,” although the promised $77 billion in savings is nowhere to be found. None of this will make an impression on those who believe government should be in charge of our lives because we and those who have the archaic attitude that they want to own a profitable business can’t be trusted.

Unintended Consequences of Obamacare

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This posting only focuses on one unintended consequence, but it is certainly important to the budgets of state governments. According to an article by Carala K. Johnson of the Associated Press, “A tax on health insurers is helping pay for President Barrack Obama’s health care law, but it’s proving costly to state governments—as much as $13 billion in less than a decade.” The Health Insurance Provider’s Fee was supposed be covered by insurance companies because they would earn a windfall from Obamacare.  Those who wrote the law believed those companies should pay for the expansion of coverage, but they apparently didn’t know how business works. The insurance companies raised prices to cover the costs of the new tax instead of just absorbing the cost. Businesses tend to continue to stay in business by making profits from their activities. Expecting the insurance companies to simply absorb additional costs was, to be kind, both naïve and silly.

The price increases passed on by the insurers affected state Medicaid programs, and they have had a huge impact. “State governments pay insurers for the tax; the insurers then pay the tax to the federal government. The federal government then reimburses part of the costs to the state. It might sound absurd, but it’s not amusing to state governments, which lose 54 cents for each dollar of insurance tax.” Another strange and detrimental impact of the law is that the health care tax is not deductible for insurance companies, so state governments must provide additional funds to cover that additional cost.

I find the false economics isn’t the saddest part of the story. One of my doctors made the comment that insurance provided by Medicaid “is a myth.” He explained that people think they have Medicaid insurance, but find that a limited and shrinking number of medical practices accept Medicaid patients. The result is that a person with Medicaid coverage must wait many weeks or even months for an appointment. Not a good thing if you have a medical need. The outcome is that people who have Medicaid aren’t getting health care and the States are paying penalties. Maybe we should be thinking about a better way of solving the problem. Maybe businesses that have a reputation for finding competitive solutions to problems could be lured in by the promise of profits.

As an aside, I’ve heard one of the best parts of Obamacare is the allowing children to remain on their parent’s plans until age 26. If that’s such a great idea, why not 36, 56, or until the parents are no longer around? (Just kidding, maybe?)

Explanation for how the Affordable Care Act (AKA Obamacare) Became Law

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Charles Krauthammer wrote an editorial describing how recently released videos of MIT professor Jonathan Gruber, an architect of Obamacare, describing how Obamacare was written deceptively to allow it to become law. Gruber explained, “Lack of transparency is a huge political advantage. Basically call it the stupidity of the American voter or whatever, but basically that was really, really critical to getting the thing to pass. Gruber also explained that the authors of the bill realized they had to manipulate the nonpartisan Congressional Budget Office that is responsible for issuing cost estimates on any legislative proposal. “This bill was written in a tortured way to make sure CDO did not score the mandate as taxes. If the CBO scored the mandate as taxes, the bill dies.” The President even insisted in his speeches in favor of the law that what must be paid to the government if you fail to buy health insurance was not a tax. We all know that the Supreme Court declared the law constitutional because it was a tax.

There were numerous broken promises. One that was repeated on numerous occasions by the President was that “If you like your doctor, you can keep your doctor. Period. If you like your insurance, you can keep your insurance. Period. Then people learned their doctors often weren’t included in the government-approved coverage. People who had shopped for tailored health insurance were told they could not keep their insurance because it was substandard. Thus a fifty year old woman with no children remaining at home was told her insurance did not meet government standards because it did not include maternity benefits or pediatric dental coverage. Continue reading →

Health Care Outsourcing

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I recently posted a blog about indications some of the technology and call center jobs that had been outsourced to India are being pulled back because of quality problems related to communication problems. Don Lee of the Los Angeles Times has an article describing how some healthcare companies have begun to shift clinical services and even decision-making on medical care to primarily India and the Philippines. The practice is not new, but the health care law commonly called “Obamacare” is encouraging more jobs to leave the U.S. The new law requires that 80-85 percent of insurance premiums to be spent on medical care. That requirement, which I understand was put into the law to control insurance company profits, will have the unintended consequence of insurance companies reducing as many jobs as possible with outsourcing.

Jobs that had been previously outsourced involved medical activities such as reading X-rays and other diagnostic tests. Task now being outsourced include “pre-service nursing” to evaluate patient needs and to determine treatment methods. WellPoint, owner of Anthem Blue Cross, has formed Radian Services as a separate business unit to set up the outsourcing. A WellPoint spokesperson said there had been 925 jobs outsourced. The explanation why the outsourcing was being done through a separate business unit is that “…it has the technical expertise and can ensure compliance with laws.” My reaction to that quote is that the real reason is to protect WellPoint from lawsuits that might or are likely to be filed when someone has problems with their medical care.

The article says that companies can save 30 percent of labor costs by outsourcing jobs to the Philippines. However,  having medical treatment decisions made overseas sounds risky considering that companies are returning call center and computer work for quality reasons.  It isn’t surprising that nursing organizations are cautious. Patient privacy is also a concern because people’s medical information is being sent to other countries. I didn’t find the quote that “…nearly all countries have laws for protecting patient privacy…” to be all that reassuring.

One person who had processed medical claims for WellPoint was laid off after a colleague went to the Philippines to do training on how she did her job. I doubt that person would be too impressed that the part of a new law designed to control insurance company profits contributed to the decision to have the work done more cheaply in the Philippines.

Health Care Law Status

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The legal battle about the constitutionality of the Affordable Care Act, which is commonly called “Obamacare,” has reached the Supreme Court. An article in the Washington Post by Robert Barnes leads with the Obama administration telling the Supreme Court, “Congress was ‘well within’ its constitutional powers when it decided that the way to resolve a crisis in health-care costs and coverage was to mandate that Americans obtain insurance or pay a fine…”  Lower courts have been just about evenly “…split on whether the Constitution gives Congress the power to require individuals to buy something they may not necessarily want.” Two judges wrote, “We are unable to conceive of any product whose purchase Congress could not mandate…” if the individual mandate is ruled constitutional.

There are many who do not believe the Supreme Court will actually rule on that issue at this time of high political drama, and the Obama administration is maneuvering separately to disarm some of the arguments against the law. Robert J. Samuelson wrote in the Washington Post that Health and Human Services secretary Kathleen Sebilius is doing what she can to make Obamacare disappear as a liability for the President. She has decided to delegate the final decision on defining “essential health benefits” for minimum health insurance coverage to the states. That decision is crucial to answering the question of how 35 million Americans who are currently uninsured will receive subsidized health insurance by 2016. Millions more who receive coverage in individual and small group insurance markets also will be affected.

Sebelius has disarmed the criticism that Obamacare imposes “one-size-fits-all” by requiring each state to define “essential health benefits.” However, the question of how broad the coverage that is required has been scattered to 51 debates. The two goals will obviously be broad and affordable coverage, and those two goals are in direct conflict. Broader coverage will increase the cost to government to pay for the subsidies. Many expect that employers could begin to freeze raises and cost of living increases to cover their costs for the new health insurance benefits that will be required.

The states apparently can base their decision on ten existing plans. “The choices include, for example, ‘the largest plan by enrollment in any of the three largest small group insurance products in the state’s small market group’.” I have no idea what that means but hopefully the 51 states have a better understanding of that and the other nine possibilities. The “good news” is that states that can’t figure out what to do can be granted waivers beginning in 2017, and perhaps that would be the best approach.

The best article I’ve read to try to understand this issue is titled “Dissecting the Health Care Case, Election-year debate makes this term a mirror of the New Deal era” by Mark Walsh. I suggest you clink on the link to this article and read the second page. My quick summary is that the Court might (or is likely to) rule that the current challenge is premature. “Under this view, the law’s individual mandate may not be challenged until individuals who refuse to buy health insurance have to pay a penalty.” One Court of Appeals threw out a challenge to the health care law on that basis. The Supreme Court did not take up that ruling, but “…it did accept the Obama administration’s suggestion to consider the Anti-Injunction Act issue.”  The issue will be argued for one hour on March 26.

There are strong opinions on both sides of the issues, and I believe the key is whether Congress can mandate that individuals must buy something. However, as the article describes, there are politics involved beyond what is constitutional. The Supreme Court ruled some of Franklin Delano Roosevelt’s New Deal laws unconstitutional. My personal favorite was a ruling in Schechter Poultry Corp v. United States in which the Court ruled that (simplistically) the poultry processor had not intentionally sold unhealthy chickens. However, the Court began to uphold his programs in 1937 to stave off FDR’s court packing plan to gain friendly rulings.

I believe the best thing government can do is to get out of the way, and laws that sound as if they are based on good intentions are generally destructive. Obamacare has already distracted the country from the most important issue, and that is how to create a better economy that will employ more people. I also believe the law has already been detrimental in discouraging entrepreneurs from having the courage to launch new businesses. I know I would question my sanity if I decided to begin a new business with the uncertainty of both Obamacare and Dodd-Frank standing ready to crush it with both costs and bureaucracy.

Back to the likely outcome of the Supreme Court and Obamacare, Professor Lucas A. Powe Jr., a Supreme Court historian, writes, “I cannot imagine that John Roberts intends to go down in history as the chief justice who struck down one of the most significant statues in American history.” My prediction is that the Supreme Court will avoid such a contentious ruling by accepting that the current challenges are premature. The Anti-Injunction Act requires that a challenge is not allowed until “…individuals who refuse to buy the health insurance have to pay a penalty.”

What does all of this mean? Elections matter and the American people elected a President and dominantly Liberal Congress based on anger and fear in 2008. Laws that were intended to “protect and serve” were passed and signed, and now we must deal with the consequences.