#ObamaCare Update: premium increases, paperwork troubles, competition lowers prices, Congress exempt from own rules

From a recent NCPA Washington Update:

As the implementation of Obamacare moves forward, more people are buying insurance and many of the early problems that plagued the website seem solved. But public approval ratings remain dismal. Maybe it is the complex labyrinth of paperwork. Or the rising cost of premiums. Many businesses are still coping with the effects of the new health care law, while many individuals are still trying to send the right documents to the government.

It turns out that health insurance premiums tend to be more affordable in states with more competition among insurance companies. That is a predictable outcome based on what we learned in Econ 101. Another predictable conclusion: Congress will always try to play by their own rules. You may remember that the Obama Administration exempted Congress from a provision in the law that requires members of Congress and their staff to purchase health insurance in the Obamacare exchange without a taxpayer subsidy. That’s why Rep. Phil Gingrey (R-GA), Sen. David Vitter (R-LA) and other Republicans opposed the exemption. Now there are a group of Democrats who are introducing legislation that would require Congress to play by the same rules as everyone else. Just in time for the election.

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#ObamaCare harms small business

At Forbes.com, John C. Goodman writes:

In about a year and a half, the ObamaCare employer mandate kicks in. Firms with 50 or more employees will be required to provide expensive health insurance for their workers and their dependents or pay a fine of $2,000 per employee. What difference will that make? …

Something similar already exists in France, where firms that hire a 50thworker become subject to a 3,200 page labor code that makes it difficult to fire employees or reduce their hours or their pay during down turns. How are French employers responding? They are remaining small. In France there are more than twice as many companies with exactly 49 employees as there are with 50 or more.

More here.

See also: The Effects of the Affordable Care Act on Small Business.

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Obamacare Enrollment is Mostly Medicaid Expansion – program delivers lousy care & much fraud

Obamacare Enrollment is Mostly Medicaid Expansion,” writes John R. Graham.  This is bad news, considering the poor quality of medical care available to Medicaid enrollees and the rampant fraud.

See also:

The Medicaid Mess: How Obamacare Makes It Worse, by Avik Roy, Senior Fellow, Manhattan Institute

What Medicaid Fraud Looks Like: Mansions, Sports Cars, Klingon Battle Swords, and 30,000 Dubious Claims, by Peter Suderman, Reason.

 

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#ObamaCare predictions from ~2010: Whose #ACA calls were correct?

Charles Blahous of the Mercatus Center and Hoover Institution describes how the ObamaCare he made in 2010 have proved correct, and the predictions of Obamacare supports have proved false. The predictions include:

  1. States will make a variety of decisions with respect to expanding Medicaid.
  2. Expanding Medicaid will cost the states money, in part because of the “woodwork effect.”
  3. The ACA will significantly worsen the federal budget deficit.
  4. Expanding health insurance coverage will increase health service consumption and costs.
  5. There was a substantial risk that cost savings projected for several ACA provisions would not fully materialize.

Read more: I Was Right About the ACA | e21 – Economic Policies for the 21st Century.

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Left on #ObamaCare: high insurance premiums don’t matter, as other people will pay for it

At Forbes, Avik Roy writes:

Over the past twelve months, there has been an energetic debate among health policy researchers about the extent to which Obamacare will increase the underlying cost of individually-purchased health insurance: what observers have come to call “rate shock.” Yesterday, the Manhattan Institute published the most comprehensive study yet on the topic, analyzing premium data from 3,137 U.S. counties, and finding an average rate hike of 49 percent. In response, left-wing bloggers are trying out a new talking point: that rate shock doesn’t matter, because taxpayer-funded subsidies will bear the higher costs.

There are a number of reasons why the underlying cost of health insurance matters.

Read more: Left: Obamacare Rate Shock Doesn’t Matter, Because Other People’s Money Will Pay For It – Forbes.

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Washington Post features Americans opting out of Obamacare

Sean Parnell of the Self-Pay Patient blog writes:

Nearly two and a half months ago, I posted here that a reporter had contacted me and waslooking for people to interview who had chosen to opt out of Obamacare. Several dozen of you responded, and I was able to pass along your information for her to include in her article.

The article finally ran last week in the Washington Post  (her editor had bumped it until after the end of Obamacare’s open-enrollment period, hence why it’s only now coming out), and I’m pleased to say I think the reporter did a good and fair job explaining what some Americans are doing.

More: Washington Post features Americans opting out of Obamacare.

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As Expected, #ObamaCare Motivates Insurers to Shun the Sickest People

John R. Graham writes:

A patient with HIV/AIDS can expect to pay over $1,000 out of pocket for medicines, if he buys a policy on the ObamaCare health insurance exchange in Florida.

“woman-in-hospitalAffordable”? Surely not. This perceived injustice has caused legal activists to file a lawsuit against four insurers, which offer plans in the Florida exchange, alleging discrimination.

Readers of this blog know that we have long warned against this consequence of ObamaCare. Insurers are not allowed to charge premiums appropriate to applicants’ expected medical claims. …

An ObamaCare Silver policy must pay 70 percent of expected medical costs, while covering 100 percent of “preventive care” (as defined by the federal government). However, the plan is designed for the average patient. So, it is easy for a health plan to design a plan that imposes very high medical maintenance costs on very sick, chronically ill people. High co-payments or co-insurance for prescriptions is one obvious method.

Our prediction: There will be many more such lawsuits.

Read more: As Expected, ObamaCare Motivates Insurers to Shun the Sickest People | John Goodman’s Health Policy Blog | NCPA.org.

In February, Graham blogged about this article from The Hill, which reports: “Consumers who use specialty medications may face higher costs on ObamaCare’s marketplace plans, many of which include co-insurance rather than copayments for the drugs, a new analysis warned.”

Last week, Graham illustrated one more example of insurers avoiding sick patients, this time in relation to how insurers use ObamaCare subsidies:

[P]lans apply more of the subsidy to the deductible, somewhat less likely to apply it to specialist charges, and much less likely to apply it to the most expensive tier 4 drugs on the formulary. What this means is that generally healthy patients who go to see their primary-care physician occasionally, but need no specialist care or specialty prescriptions, are most likely to benefit from the cost-sharing reductions. Those who need specialist care and, especially,  tier 4 drugs will be less likely to benefit.

Back in 2010, Peter Suderman wrote about how insurers tailor their plans to attract the healthy & avoid the sick:

Indeed, because insurers will be limited in terms of how they can charge based on health risk factors, the new rules may encourage plan providers to avoid investing in resources that help the sick.

For example, a 1997 New England Journal of Medicine study looked at billing records for elderly Americans participating in Medicare HMOs in Florida. The study found that, despite exchange-like regulations guaranteeing access to any HMO plan and prohibiting insurer cherry picking (or “medlining,” as it’s sometimes called), insurance companies managed to lure in the healthiest—and cheapest—patients, while leaving the sickest, most expensive patients on publicly funded Medicare.

As does John Goodman, writing about community rating:

When premiums are regulated so that they cannot reflect expected costs, four things will happen:

  1. On the buyer side, people who are under-charged will over-insure and people who are over-charged will under-insure. This is basic economics. If the price you are asked to pay is artificially low, you will buy more than you otherwise would; if the price is artificially high, you will buy less. If you are sick and require a lot of medical care but can pay the premium ordinarily charged to a healthy enrollee, for example, you will likely choose the richest plan you can find.
  2. In order to avoid attracting high cost enrollees, health plans will respond by scaling back their benefits and their provider networks until the richest plans look pretty much like every other plan. In the individual market today, in most states you can buy a BlueCross plan that covers almost all doctors in your area and practically every hospital, including all the best hospitals. I predict those plans will never see the light of day inside the (ObamaCare) health insurance exchanges. See Monday’s Health Alert on the race to the bottom with respect to access to care.
  3. At the same time, health plans will seek to attract the healthy. Of course, to a certain extent they are doing that today. But with an electronic exchange in which healthy people tend to buy on price and sick people tend to buy on benefits and software that makes it easy to do those things, the insurers will be even more pressured to reconfigure their offerings to make them more attractive to the healthy and less attractive to people who need medical care.
  4. Finally, the perverse incentives do not end at the point of enrollment. They continue. Health plans will have perverse incentives to over-provide to the healthy (to keep the ones they have and attract more of them) and to under-provide to the sick (to avoid attracting more of them and encourage those they have to go elsewhere).

See also this Reuters article: “Chronically ill facing high drugs costs under U.S. health law“:

Insurers say they had to move toward greater cost-sharing due to higher prices for new drugs, some of which can cost more than $100,000 annually per patient.

Researchers also say the higher rates help insurers bankroll low monthly premiums to attract healthy young enrollees.

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