With Obamacare’s Reality, Time to Spread the Blame

With Obamacare’s Reality, Time to Spread the Blame
December 17, 2013

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

Consumer Power Report #401

This New York Times piece on canceled policies for Big Apple professionals contains a doozy of a line:

Many in New York’s professional and cultural elite have long supported President Obama’s health care plan. But now, to their surprise, thousands of writers, opera singers, music teachers, photographers, doctors, lawyers and others are learning that their health insurance plans are being canceled and they may have to pay more to get comparable coverage, if they can find it …

It is not lost on many of the professionals that they are exactly the sort of people -- liberal, concerned with social justice -- who supported the Obama health plan in the first place. Ms. Meinwald, the lawyer, said she was a lifelong Democrat who still supported better health care for all, but had she known what was in store for her, she would have voted for Mitt Romney. It is an uncomfortable position for many members of the creative classes to be in.

“We are the Obama people,” said Camille Sweeney, a New York writer and member of the Authors Guild. Her insurance is being canceled, and she is dismayed that neither her pediatrician nor her general practitioner appears to be on the exchange plans. What to do has become a hot topic on Facebook and at dinner parties frequented by her fellow writers and artists. “I’m for it,” she said. “But what is the reality of it?”

This sort of experience, highlighting the reality of Obamacare, is leading to efforts like this from Ezra Klein to spread the blame for what’s going on.

Republicans have zeroed in on two things that people really will hate about insurance under Obamacare: The high deductibles and the limited networks. … “As consumers dig into the details,” Robert Pear reports in the linked article, “they are finding that the deductibles and other out-of-pocket costs are often much higher than what is typical in employer-sponsored health plans.”

What’s confusing about this line of attack is that high-deductible health-care plans – more commonly known as “health savings accounts” – were, before Obamacare, a core tenet of Republican health-care policy thinking. In fact, one of the major criticisms of Obamacare was that it would somehow kill those plans off. “Obamacare may be fatal for your HSA,” warned the Heritage Foundation on 2010. “Health Savings Accounts Under Attack” blared Red State.” … Now that those high deductibles are here, Republicans have decided that they are, if anything, too high. Just one more broken promise.

Later in the post, he quotes Avik Roy, who offers a thorough encapsulated response to the whole thing:

Giving consumers the choice of narrower physician networks and higher deductibles, in exchange for lower premiums, is a good thing. … The problem with Obamacare is that people are trading narrower networks and higher deductibles for higher premiums. And that’s because of all the other stuff that Obamacare does to the insurance market.

… but then Ezra just moves on. Of course, suggesting that the Bronze plans available in the exchanges are equivalent to consumer-driven health plans (CDHPs for short = a high deductible plan + an HSA, which are of course not the same thing) is laughable given the regulatory requirements those plans must still abide by. The reason for the right’s skepticism about CDHPs surviving under Obamacare is that the administration has already taken so many steps to undercut them – such as removing the ability to purchase over-the-counter medicine, etc. with them, a pointless little bit of undermining that made them a lot less useful for families during cold season and will make for a lot more wasteful doctor’s visits to get a prescription.

There was an easy opportunity for the admin to gut HSAs through the cost-sharing requirements and the actuarial equivalency threshold. Many high-deductible plans just made the threshold under the feds’ interpretations – some didn’t, and some just got more expensive. The potential for further gutting is still there. HSAs are still under occasional attack, but their popularity – and the popularity of CDHPs – has exploded across the marketplace, for obvious reasons. The problem is if the government takes steps that make the plans too expensive, or pushes insurers to purposefully price the plans in ways that are unattractive to make “comprehensive” coverage look more appealing, which is already happening: “According to the analysis, in almost two-thirds of 2,511 counties covered by the federal exchange, the highest monthly premium quoted for a bronze plan tops the lowest one for a silver plan.”

I don’t think this is so difficult to understand. People who favor free markets in health care want a transparent marketplace where people can choose lower premiums and narrower networks and higher deductibles if they want, or choose to spend more to get more – not to spend more to get less, and not to spend anything at all due to governmental force. That’s not what we’re seeing under Obamacare, and it’s the employer-backed marketplace that will feel the pain next.

Of course, if Obamacare were a success, its supporters wouldn’t be looking to spread the blame … and the latest delays are one more indication that the administration is concerned they’ll end up with fewer people insured next year than were last year … and that’s a harsh reality for everyone.

-- Benjamin Domenech


IN THIS ISSUE:


WHITE HOUSE FORCES INSURERS TO COVER UNPAID PATIENTS AT A LOSS

Of all of the last-minute delays, website bungles, and Presidential whims that have marred the roll-out of Obamacare’s subsidized insurance exchanges, what happened on Thursday, December 12 will stand as one of the most lawless acts yet committed by this administration. The White House--having canceled Americans’ old health plans, and having botched the system for enrolling people in new ones--knows that millions of Americans will enter the new year without health coverage. So instead of actually fixing the problem, the administration is retroactively attempting to force insurers to hand out free health care--at a loss--to those whom the White House has rendered uninsured. If Obamacare wasn’t a government takeover of the health insurance industry, then what is it now?

On Wednesday afternoon, health policy reporters found in their inboxes a friendly e-mail from the U.S. Department of Health and Human Services, announcing “steps to ensure Americans signing up through the Marketplace have coverage and access to the care they need on January 1.” Basically, the “steps” involve muscling insurers to provide free or discounted care to those who have become uninsured because of the problems with healthcare.gov.

HHS assured reporters that it would be “urging issuers to give consumers additional time to pay their first month’s premium and still have coverage beginning January 1, 2014.” In other words, urging them to offer free care to those who haven’t paid. This is a problem because the government has yet to build the system that allows people who’ve signed up for plans to actually pay for them. “One client reports only 15 percent [of applicants] have paid so far,” Bob Laszewski told Charles Ornstein. “So far I’m hearing from health plans that around 5 percent and 10 percent of consumers who have made it through the data transfer gauntlet have paid first month’s premium and therefore truly enrolled,” said Kip Piper.

“What’s wrong with ‘urging’ insurers to offer free care?” you might ask. “That’s not the same as forcing them to offer free care.” Except that the government is using the full force of its regulatory powers, under Obamacare, to threaten insurers if they don’t comply. All you have to do is read the menacing language in the new regulations that HHS published this week, in which HHS says it may throw otherwise qualified health plans off of the exchanges next year if they don’t comply with the government’s “requests.”

“We are considering factoring into the [qualified health plan] renewal process, as part of the determination regarding whether making a health plan available … how [insurers] ensure continuity of care during transitions,” they write. Which is kind of like the Mafia saying that it will “consider” the amount of protection money you’ve paid in its decision as to whether or not it vandalizes your storefront.

There are other services HHS is asking insurers to offer for free. The administration is “strongly encouraging insurers to treat out-of-network providers”--i.e., costly ones--“as in-network to ensure continuity of care” and to “refill prescriptions covered under previous plans during January.” But the issue of unpaid premiums looms largest.

SOURCE: Forbes


MEDICAID CAN BILL YOUR ESTATE AFTER YOU’RE DEAD

It wasn’t the moonlight, holiday-season euphoria or family pressure that made Sofia Prins and Gary Balhorn, both 62, suddenly decide to get married. It was the fine print.

As fine print is wont to do, it had buried itself in a long form -- Balhorn’s application for free health insurance through the expanded state Medicaid program. As the paperwork lay on the dining-room table in Port Townsend, Prins began reading.

She was shocked: If you’re 55 or over, Medicaid can come back after you’re dead and bill your estate for ordinary health-care expenses.

The way Prins saw it, that meant health insurance via Medicaid is hardly “free” for Washington residents 55 or older. It’s a loan, one whose payback requirements aren’t well advertised. And it penalizes people who, despite having a low income, have managed to keep a home or some savings they hope to pass to heirs, Prins said.

With an estimated 223,000 adults seeking health insurance headed toward Washington’s expanded Medicaid program over the next three years, the state’s estate-recovery rules, which allow collection of nearly all medical expenses, have come under fire.

Medicaid, in keeping with federal policy, has long tapped into estates. But because most low-income adults without disabilities could not qualify for typical medical coverage through Medicaid, recovery primarily involved expenses for nursing homes and other long-term care.

The federal Affordable Care Act (ACA) changed that. Now many more low-income residents will qualify for Medicaid, called Apple Health in Washington state.

But if they qualify for Medicaid, they’re not eligible for tax credits to subsidize a private health plan under the ACA, which requires all adults to have health insurance by March 31.

Prins, an artist, and Balhorn, a retired fisherman-turned-tango instructor, separately qualified for health insurance through Medicaid based on their sole incomes.

But if they were married, they calculated, they could “just squeak by” with enough income to qualify for a subsidized health plan -- and avoid any encumbrance on the home they hope to leave to Prins’ two sons.

“We’re happy to be getting married,” Prins said last week. “Unfortunately not everyone has such an elegant solution to the problem.”

For Washington state, the solution has been much more complicated. Over the past month, as lawmakers began hearing from worried and angry constituents, state officials began exploring what it would take to fix this collision of state rules with the ACA.

Late Friday, Gov. Jay Inslee’s office and the state Medicaid office said they plan to draft an emergency rule to limit estate recovery to long-term care and related medical expenses. They hope to be able to change the rules before coverage begins Jan. 1.

SOURCE: Seattle Times


A GUIDE TO OBAMACARE’S DELAYS

The first important day is next Monday, Dec. 23. That’s the last day that insurers are required to accept enrollments for coverage that begins on Jan. 1. In practical terms, this means that a shopper needs to click “enroll” by midnight that Monday in order to gain a policy that starts the next month.

That isn’t, however, the only necessary step: That same shopper also needs to pay for their insurance plan in order for the benefits to kick in. And that payment is due to the insurance plan by Dec. 31. This is a more recent development: Up until last week, it was the insurance company that got to decide the last day it would accept payment. But under new rules proposed last week, the health plans are now required to accept payment through the end of the month.

Plans are, however, allowed to extend that deadline later if they so choose. This means they would accept payment for a January plan even after the new year had started. Officials at Health and Human Services say Aetna, for example, has agreed to accept payments through Jan. 8.

And, to put all of this in context, none of this is a final deadline for gaining coverage under the health-care law -- nor will you be slapped with a penalty if you’re found roving the streets on New Year’s Day without an insurance card in hand. Open enrollment on the exchange runs through the end of March. The White House has previously announced that as long as you’ve signed up for coverage by March 31, you will not face a penalty for going without a plan in the winter.

In future months, shoppers will need to sign up by the 15th in order for it to take effect the following month. In January, for example, shoppers will need to enroll in coverage by Jan. 15 for it to take effect in February. If they decide to buy on Jan. 16, the coverage won’t kick in until March.

That’s, at least, where things stand right now. But as we’ve learned lately, Obamacare’s deadlines are not set in stone -- and are certainly subject to change.

SOURCE: Washington Post


UTAH INVESTIGATES ARKANSAS MEDICAID OPTION

Utah is edging closer to an Arkansas-style alternative to expanding Medicaid.

A Legislative Health Reform Task Force on Thursday revisited, tweaked and approved three expansion scenarios for recommendation to the full Legislature.

Still on the table: Doing nothing and keeping Medicaid eligibility rules as they are now. But in a surprise twist, lawmakers ditched previously favored partial expansion strategies in favor of giving low-income Utahns public dollars to buy private insurance.

Two plans are being pitched. Both would allow the state to cover the same number of Utahns who would have been eligible for Medicaid under a full expansion -- 111,000 adults earning up to 138 percent of the poverty level, or $32,000 for a family of four -- without growing the government program.

They also would strengthen the private insurance market and eliminate the risk of “crowd-out,” or privately insured low-wage workers migrating to Medicaid, said the task force chairman, Rep. Jim Dunnigan, R-Taylorsville.

One option would be to use public dollars to buy private insurance for residents with incomes under the federal poverty level. Those earning at least the poverty level or up to 138 percent of that amount would shop with federal subsidies on the federal health exchange, www.HealthCare.gov.

Another would be to use public dollars to buy private insurance for the full expansion population, those earning up to 138 percent of poverty.

This latest policy menu drew little debate and only one no vote, from Democratic Rep. Rebecca Chavez-Houck, of Salt Lake City, who fears it will delay coverage by months and maybe a year.

Utah Republican Gov. Gary Herbert isn’t expected to make a decision about expanding Medicaid until January, a call that must be approved by the Legislature. Any bill passed by lawmakers likely wouldn’t take effect until May, and then there’s the matter of securing federal approval.

Dunnigan, however, came away Thursday from an early morning conference call with the Obama administration confident that the second option would not only win favor with the feds -- they would fully fund it.

SOURCE: Salt Lake Tribune


AN OVERVIEW OF MEDICAID

Often called an afterthought to the Medicare program, Medicaid was signed into law under Title XIX of the Social Security Act. Unlike Medicare, which was created to provide health care coverage to those over the age of 65, Medicaid’s intent was the provision of care for individuals of any age who were financially limited. In 1966, Medicaid provided health insurance to 10 million beneficiaries. Currently with approximately 57 million people enrolled, Medicaid has evolved into the largest health insurance provider in the United States.

This policy brief will provide an overview of the Medicaid system, its budget implications at the state and federal levels, and the implications of the Patient Protection and Affordable Care Act (ACA) for states’ Medicaid programs.

Though the income threshold varies by state, an individual or family applying for Medicaid cannot exceed a certain income threshold, which is calculated in relation to a percentage of the Federal Poverty Level (FPL). Today, the FPL ranges from $11,490 for a family of one to $39,630 for a family of eight. For example, consider a pregnant woman comprising a family of one and fitting categorically into one of Medicaid’s mandatory eligibility groups. In 2013, the median (across 50 states and the District of Columbia) Medicaid threshold for this individual was 185 percent of the FPL. Therefore, she would be eligible for Medicaid if she earned less than $21,257.

It is important to note that states may offer a greater number and additional types of services offered that go above and beyond what is mandated by the Department of Health and Human Services (HHS). Through Section 1115 of the Social Security Act, the federal government has encouraged states to tailor the Medicaid program to their unique political and economic environments. Building upon Section 1115 of the Social Security Act, the Health Insurance Flexibility and Accountability (HIFA) demonstration initiative gives states enhanced “waiver flexibility to streamline benefits packages, create public-private partnerships, and increase cost-sharing for optional and expansion populations covered under Medicaid.” Contingent on approval by the HHS Secretary, leaders are empowered to develop a unique program that meets their states needs.

SOURCE: Mercatus Center

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)