Making Funeral Plans for ObamaCare

 

 

The eulogies are being written. The arrangements for the burial are in full swing. All that’s left to determine is when death arrives. Loved ones are in full denial but most people will not miss the departed one.

I’m referring to ObamaCare, of course. The latest news from the “doctor” is more bad news. Aetna is pulling out of the ObamaCare exchanges in 2018.

The Wall Street Journal editorial board reported this news recently. Aetna announced its withdrawal from individual market plans in Nebraska and Delaware, the last of its participation in the ObamaCare exchanges. In 2018 Aetna will have zero plans to offer on the exchanges. The prior week Aetna left Iowa and Virginia, making it a clean sweep of its last remaining four state participation. Even though the company is doing well in its other business, Aetna expects losses of about $200 million from ObamaCare this year. The company previously reported losses of nearly $700 million between 2014 and 2016.

Aetna is far from alone. Humana also left the exchanges completely as did United Health Group. Anthem is teetering on the brink of withdrawal, too. Despite the generous subsidies from the government and mandates to purchase insurance, these companies are still losing millions.

The WSJ editorial board says the Aetna withdrawal is especially noteworthy since they led the ObamaCare cheering section in 2009 and 2010, even expressing their opinion that temporary losses were acceptable in support of the long-term mission of universal coverage.

Blue Cross/Blue Shield is the last of the big insurers to remain in the exchanges but not without substantial price increases. In Maryland, CareFirst Blue Cross Blue Shield is requesting average premium increases for 2018 as high as 58.8% and admits “we think we are in the beginning of a spiral” when prices must increase so rapidly that the market collapses.

Democratic response has been predictable. Here’s how the WSJ editorial board described it:

“In a hilarious letter Tuesday, all 48 Senate Democrats instructed Republicans ‘to discourage the ongoing effort by the Administration to destabilize the healthcare marketplace, which could lead to rising insurance premiums for all.’ Could? ObamaCare is already doing a fine job of raising costs and reducing choices.”

“Liberals are hailing Blue Cross Blue Shield of Tennessee’s decision to sell coverage in the 16 counties around Knoxville, a region that Humana, the only insurer this year, will leave in 2018. That averted a crisis, but the company advised regulators that it would require “a higher-than-average margin” to participate. Insurance isn’t worth much if nobody can afford it.”

 

ObamaCare has a fatal disease – it costs too much and provides too little. The only question is what will replace it and when? Democrats are putting all their eggs in the basket of single-payer healthcare – socialized medicine. Republicans want to preserve freedom to choose your doctor, your insurance, and your medical treatment. The voters will ultimately decide.

Is Lack of Health Insurance Fatal?

 

In my forty-two years of medicine I have never seen a death certificate that read “Cause of Death: No health insurance.” Yet Democrats are claiming this will be the outcome if the American Health Care Act (AHCA) is passed.

Here are some recent quotes of Democrats and the liberal media:

  • Bernie Sanders (D – VT)“The Republican health plan will kill people.”
  • Political dig. – “The Republican Party is the party of death.”
  • The Washington Post – ““Repealing ObamaCare will kill more than 43,000 people a year.”
  • Julia Belluz at VOX – “If 24 million people lose insurance, we’ll see more than 24,000 extra deaths per year. There’s no question that the fate of the Affordable Care Act is a matter of life and death.”
  • Michael Jeffries, The Boston Globe“House Republicans are consigning thousands of people with serious illnesses to death by making them uninsurable in an era of unaffordable treatment.”
  • Charles Blow, The New York Times – “Nearly 45,000 annual deaths are associated with lack of health insurance. The latest Republican health bill poses a “death threat” . . . for many Americans.”

 

Where do they come up with this stuff?

Some of this rhetoric is simply hysterical reactions to any changes to ObamaCare that threaten their beloved government control of healthcare. But some of it is based on repetition of faulty research and journalism in the past.

Glenn Kessler, The Washington Post fact checker, gave Senator Sanders Four Pinocchios (the highest possible criticism) for his statement. John C. Goodman and Linda Gorman, writing in Forbes say, “We’d like to give all these writers two dozen Pinocchios. Every claim they are making is based on “fake research” that has been thoroughly discredited by independent scholars.”

They point out that these scare tactics were also used to justify the original passage of ObamaCare. For example, “Dying for Coverage,” a report by Families USA, made the astounding claim that six people died every day in Florida because they are uninsured. Eight died every day in Texas, nine in California, and four in New York.

Fake Research Promoted

Goodman and Gorman say their research shows the fake research began over two decades ago and the false claims of that research have been promoted again and again by those seeking to justify their political agendas.

The chain began with a paper by Peter Franks et al. published in The Journal of the AMA in 1993. In the early 1970s, people were interviewed once to determine their health insurance status. In 1987, they were surveyed to see who was alive and who was dead. The researchers made the implicit assumptions that someone who was uninsured in the early 1970s remained uninsured until 1987 and that someone with private insurance was continuously covered over the same time period.

The authors made no attempt to determine the causes of death. Auto accident fatalities, gunshot victims, suicides – all these were implicitly assumed to be affected by whether people had health insurance. Armed with these assumptions, the authors bogusly concluded that being uninsured increased the probability of death by 25%.

It is well-known that being uninsured is like being unemployed. It happens to nearly everyone for brief periods of time. Most people who are uninsured regain insurance within one year and rarely remain uninsured for two decades. Furthermore, the authors made no attempt to correlate causes of death with absence of insurance.

This fake research was used by the Institute of Medicine in 2002 to calculate that 18,000 deaths a year in the U.S. are attributable to lack of health insurance using the Franks study data. The Urban Institute also promoted this claim in 2008, again using the Franks study as its basis. Then Families USA applied The Urban Institute data and the Institute of Medicine data to come up with its bogus claims.

New Research

Economists June O’Neill, former Director of the Congressional Budge Office, and her husband, Dave O’Neill, both highly respected economists, have done recent research that refutes these bogus claims. They concluded that uninsured people with lower-incomes were only 3% more likely to die over a 14-year period than those with health insurance and being uninsured had no statistically significant effect on anyone else. Other studies by Card et al. found that “any plausible effect of insurance on health status in the general population will likely be small and perhaps non-existent.”

Further evidence is continually being gained by the ongoing Oregon Health Experiment, which began in 2008, and has thus far concluded that enrolling the uninsured on Medicaid has no significant impact on healthcare outcomes. In fact, it agrees with the growing literature that suggests those on Medicaid do worse than even the uninsured, let alone the privately insured, with respect to morbidity and mortality. It is no exaggeration to say that being on Medicaid may be worse than having no insurance at all.

Yet the same voices that are shouting these false predictions of people dying if they lose health insurance want everyone to be covered by Medicaid!

 

How Good is the GOP Healthcare Plan?

 

Democratic responses to the new healthcare bill (AHCA) have ranged from strongly opposed to over the top predictions that millions will die if the bill passes the Senate. Strangely, none of these same opponents of the bill make the same claim about ObamaCare , which is imploding fast and will soon leave the same millions without health insurance.

In recent posts I have tried to give you information about the bill, direct from the government website House.gov and from local Congressman Dan Webster (Webster.house.gov). These sources allow you to make your own judgments.

Today, I’ll discuss the strengths and weaknesses of the bill. While there is much to like about the bill, and it is a huge improvement over ObamaCare, there are ways in which the Senate could improve it.

Things to Like

The AHCA goes a long way toward correcting all of the government regulations that have made ObamaCare so onerous for millions of Americans. It eliminates most of the mandates that have driven up the price of health insurance without providing better healthcare. These regulations are eliminated:

  • Age based community rating ­– This took the pre-ObamaCare insurance standard of 5:1 or 6:1 pricing based on age and medical conditions and changed it to 3:1. That means the young and healthy had to pay much more than the cost of their coverage while the old and sick paid much less than the actual expense. While the old and sick liked this, the young and healthy refused to enroll for such poor value insurance – resulting in everyone’s premiums skyrocketing. The AHCA will go back to a 5:1 ratio, which is fairer and should encourage more young and healthy people to enroll – which lowers the prices for everyone.
  • Actuarial Value – ObamaCare established actuarial value mandates which force everyone to buy coverage with generous financial payouts, raising premiums and driving out the healthy. These are eliminated.
  • Essential Health Benefits – ObamaCare forced insurers to sell policies with coverage not everyone needed – like maternity care for men and prostate exams for women. This artificially drove up the price of premiums. The AHCA allows states to request waivers of these mandates if they can show it will lower premiums. There’s no doubt it will.
  • Preserve guaranteed issue and 1:1 gender rating – The AHCA preserves guaranteed issue meaning no one can be refused coverage. It also preserves 1:1 gender rating, which means men and women must be charged the same prices. Those with pre-existing conditions that would drive up their insurance premiums will get subsidized insurance through state-run high risk pools. These are generously funded with $138 billion.
  • Eliminate the Individual Mandate and Employer Mandate – No longer can the government tax you for failure to purchase something – in this case health insurance. No longer will employers have to stop hiring lest they have to pay benefits they can’t afford. No longer will employers force people into part-time hours because they can’t afford to give full-time hours that will mean they must pay for health insurance. This should get the economy going.

 

Things That Could Be Better

The AHCA provides a flat tax credit to purchase health insurance. That means it is not means-tested – does not vary with income. There are pros and cons to this approach. The pro is that it greatly simplifies enrollment since income does not need to be verified. (This was the main reason the ObamaCare exchanges had such a difficult time during the initial enrollment.)

The con of this approach is that low-income Americans do not get as much help as they need and higher-income Americans get help they don’t need. Those just above the federal poverty line who don’t qualify for Medicaid will be most adversely affected.

To solve this problem, Avik Roy, healthcare economist writing in Forbes, recommends means-tested tax credits instead. This will provide more help for lower-income people and less for those with higher-incomes. It will complicate the enrollment process but is more politically popular.

Roy also criticizes the AHCA because it does not reform the unlimited tax break for employer-provided coverage that drives the cost of coverage up for everyone. ObamaCare tried to fix this problem with the so-called “Cadillac Tax” but the AHCA pushes implementation of this back to 2023.

Medicaid Reform

Medicaid is certainly in need of reform. There are now 72 million Americans on Medicaid, thanks to the addition of about 15 million since ObamaCare. Rather than improve healthcare for these newly insured, a strong argument can be made that they are worse off than they were when they were uninsured. Numerous studies have shown healthcare outcomes are worse for those on Medicaid than those who are uninsured.

The AHCA seeks to reform Medicaid by repealing the expansion of Medicaid, which puts the program on a more sustainable future trajectory. It gives states the option to take federal Medicaid funds in the form of block grants and then allows them to develop their own state programs to better address the needs of their population.

Roy applauds these reforms but believes they don’t go far enough. He says, “By repealing ObamaCare’s Medicaid expansion and replacing it with a flat tax credit that doesn’t provide enough assistance to the working poor, millions with incomes above the poverty line are going to lose their insurance.” Once again, he says the solution is a means-tested tax credit that will smooth the transition from Medicaid to purchasing private insurance.

In summary, the AHCA goes a long way toward solving the problems of ObamaCare but there are still some issues that may need improvement before it can pass the Senate. A means-tested tax credit rather than a flat-tax credit is probably the most important change that is needed. I don’t expect Senate Democrats to approve of anything the Republicans propose but the political argument will be strengthened by such changes.