Obamacare Is Affordable, So Long As It’s Outside Obamacare

Obamacare Is Affordable, So Long As It’s Outside Obamacare
March 6, 2014

Benjamin Domenech

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

Consumer Power Report #409

So it turns out that there are cheap and plentiful insurance options available to the American people… if only they are looking for them outside the Obamacare exchanges. Here’s the Washington Examiner’s report:

A new and comprehensive comparison of health insurance options offered by Obamacare versus private websites finds that President Obama’s program offers less choice and higher prices than promised by the White House and leading Democrats.

Adding to the list of broken health care promises, the study from the National Center for Public Policy Research found that there were more and cheaper options available on websites outside the health insurance exchange in 2013 than on healthcare.gov and state Obamacare exchanges.

The report, “Obamacare Exchanges: Less Choice, Higher Prices,” looked at options available for a 27-year-old single person and a 57-year-old couple in metropolitan areas across 45 states.

The report found that a 27-year-old male had about 10 more policies to choose from on eHealthinsurance.com and finder.healthcare versus the exchange. The older couple had about nine more policy choices.

Ditto for the cost findings, with the 27-year-old male having access to 32 policies that cost less than the cheapest Obamacare offering, and the 57-year-old couple access to 29 cheaper policies.

“In general, consumers had substantially more policies to choose from on private websites such as eHealthinsurance.com and Finder.healthcare.gov than they presently have on the exchanges,” said the study.

The study is available here. What’s really telling about this assessment is how it puts into perspective the Obama administration’s latest unlawful alteration of the ACA, which takes the form of allowing tax subsidies to be available outside the exchanges. Seth Chandler weighs in on why this time, insurers may have standing to sue:

The Obama administration has made a habit in its implementation of the Affordable Care Act to exploit the law of “standing.” … With the latest lawless action, however, the Obama administration may have gone too far. Insurers who sold off Exchange will be hurt by the cost sharing reductions. The reason is “moral hazard.” The idea of moral hazard is that the more generous an insurance policy is the greater the frequency with which insureds encounter covered events. In the health insurance arena, people with lower co-pays and deductibles go to the doctor more. Indeed, the major reason for co-pays and deductibles is precisely to induce insureds to be judicious in their use of expensive medical services. Moral hazard is one of the major reasons that platinum policies cost more than bronze ones.

When cost sharing reductions imposed on off-Exchange insurers effectively convert their silver policies into silver-plus, gold-plus and platinum-plus policies, those insurers end up paying more in claims. And, while insurers selling policies on the Exchanges could have taken the induced demand created by cost sharing reductions into account in pricing their policies, there may well be insurers who sold only off the Exchange who, of course, did not take this additional moral hazard into account. Those insurers never dreamed that the government would reduce the amount its insureds would owe in cost sharing. Such insurers should have a strong case for standing in bringing a declaratory judgments to challenge the new guidance or, perhaps, in refusing to honor the demand for cost sharing reductions. Such insurers will, of course, need to be willing to take the political heat that may come from taking on an Executive Branch that more than ever is regulating their products.

Michael Cannon has more:

President Obama’s crimes are not victimless. Just as offering unauthorized subsidies through federal Exchanges will trigger illegal penalties against employers, offering unauthorized subsidies to people who purchase coverage outside their state-established Exchanges will likewise trigger illegal taxes against employers. Employers in Maryland, Oregon, and other affected states may want to lawyer up.

The point of the administration’s activity is obvious: subsidize as many people as possible to create as much difficulty for repeal in 2017. They had the exchanges for that – but now that they’ve failed, they’ll drive those subsidies further before scaling back to the coverage they prefer.

-- Benjamin Domenech


IN THIS ISSUE:

  • Arkansas House Moves Toward Fifth Vote on Medicaid
  • Obamacare to Increase Costs of Employer Sponsored Insurance
  • Higher Drug Prices in Obamacare Plans
  • Major Medicare Advantage Cuts Incoming
  • Oregon Health Exchange Emails Released
  • Reconsidering Telemedicine
  • Drug Approval and Reciprocity

ARKANSAS HOUSE’S FIFTH VOTE APPROVES MEDICAID EXPANSION

The Arkansas House today approved, on its fifth vote, on the federally funded expansion of Medicaid under President Obama’s Affordable Care Act. Needing 75 of the 100 House votes, it passed 76-24.

Rep. Kim Hammer of Benton spoke for the bill. His switch was an early sign approval may be in the offing, but opponents were offering stem-winding speeches against the dangers of government health care. He said he remained opposed to the concept. And he said he’d vote it down in January if it didn’t live up to proponents’ promises. But he indicated it would hurt people to take it away. But his vote brought the previous count of 73 supporters to 74. In the final vote, two previous supporters of the original legislation who’d been nays this session -- Reps. Les Carnine and Mary Lou Slinkard -- joined the winning margin…

Opponents had already won an amendment to prohibit advertising or otherwise promoting the program. In another potential concession, the administration hd agreed to a rule change that would limit the enrollment period for the private insurance each year. This would have created a program that couldn’t be advertised with a shortened enrollment period that also couldn’t be advertised beyond no-cost posting in government offices. Earlier amendments included a requirement of co-pays for even the poorest participants. It’s unclear if that offer remains a part of the final workout. As it turned out, the new idea on limited enrollment period wasn’t part of the deal, Rep. John Burris tells me. The earlier concessions remain, but no more.

SOURCE: Arkansas Times


NEW OBAMACARE DELAY TO HELP MIDTERM DEMS

The Obama administration is set to announce another major delay in implementing the Affordable Care Act, easing election pressure on Democrats.

As early as this week, according to two sources, the White House will announce a new directive allowing insurers to continue offering health plans that do not meet ObamaCare’s minimum coverage requirements.

Prolonging the “keep your plan” fix will avoid another wave of health policy cancellations otherwise expected this fall.

The cancellations would have created a firestorm for Democratic candidates in the last, crucial weeks before Election Day.

The White House is intent on protecting its allies in the Senate, where Democrats face a battle to keep control of the chamber.

“I don’t see how they could have a bunch of these announcements going out in September,” one consultant in the health insurance industry said. “Not when they’re trying to defend the Senate and keep their losses at a minimum in the House. This is not something to have out there right before the election.”

The White House and the Department of Health and Human Services on Monday both said they had no updates to announce.

Late last year, the administration was grappling with the beleaguered HealthCare.gov and millions of canceled health plans in the individual market.

Republicans noted President Obama had repeatedly promised that no one would lose their health plan if they wanted to keep it.

Obama subsequently called on states and the insurance industry to allow people to keep their existing plans for an additional year. While many states agreed, it left the administration with a dilemma.

A one-year moratorium pushed the deadline beyond the midterm election, but insurers must send out cancellation notices 90 days in advance. That would mean notices in the mail by Oct. 1, five weeks before voters go to the polls.

The administration’s decision to pursue another extension was confirmed by insurance sources who predicted a public announcement would be “imminent.” It is unclear how long the extension will be, though one source believed it could last to the end of Obama’s second term, and perhaps beyond.

This issue is sure to be discussed during the 2016 presidential race, in which Hillary Clinton is expected to run.

SOURCE: The Hill


BUDGET ALLOTS 5.5 BILLION FOR INSURER BAILOUT

The White House’s 2015 budget proposes spending $5.5 billion next year on an ObamaCare program that Republicans have labeled a “bailout” of the insurance industry.

The Affordable Care Act creates a temporary pool of money, known as risk corridors, to pay insurers who enroll a higher-than-expected number of sick patients through 2016.

ObamaCare transfers the money from lower-risk plans to higher-risk plans to keep premium prices stable in the early stages of the law. At least some of the risk corridor payments will be funded by the insurers themselves, as the law requires companies with better-than-expected results to contribute to the pool.

But Republicans say the government is likely to be on the hook for some of the payments, which they say would be tantamount to a taxpayer bailout of the insurance industry.

A spokesperson for the Office of Management and Budget said the administration would operate the program in a “budget neutral manner, with payments in equaling payments out.” An appendix to the budget says the administration expects collections from the program to equal obligations.

“The temporary risk corridor provision in the Affordable Care Act is an important safety valve for consumers and insurers as millions of Americans transition to a new coverage in a brand new Mmarketplace,” the spokesperson said.

SOURCE: The Hill


OBAMA CONSIDERED SCRAPPING HEALTHCARE.GOV

Last Oct. 17--more than two weeks after the launch of HealthCare.gov--White House chief of staff Denis McDonough came back from Baltimore rattled by what he had learned at the headquarters of the Centers for Medicare and Medicaid Services (CMS), the agency in charge of the website.

McDonough and the President had convened almost daily meetings since the Oct. 1 launch of the website with those in charge--including Health and Human Services Secretary Kathleen Sebelius, CMS administrator Marilyn Tavenner and White House health-reform policy director Jeanne Lambrew. But they couldn’t seem to get what McDonough calls “actionable intel” about how and why the website was failing in front of a national audience of stunned supporters, delirious Republican opponents and ravenous reporters.

“Those meetings drove the President crazy,” says one White House senior adviser who was there. “Nobody could even tell us if the system was up as we were sitting there, except by taking out laptops and trying to go on it. For Denis, going to Baltimore was like leaving Washington and visiting a war zone.”

But not even a trip to the war zone produced good intel. According to notes from a meeting in one of CMS’s three war rooms (yes, things were so uncoordinated that there were three), those assembled discussed the fact that “we heard that the capacity”--the number of possible simultaneous users--“was 100,000 people, and there are 150,000 people on it.” Yet five days later, White House chief technology officer Todd Park would tell USA Today that the capacity was 50,000 and that the website had collapsed because 250,000 people tried to use it at the same time. Park, a highly successful--but, for this job, disablingly mild-mannered--health care tech entrepreneur, had been kept out of the planning of the website. In fact, the site’s actual capacity at the time was “maybe a few thousand users,” according to a member of the team that later fixed it.

What McDonough was able to pry out of the beleaguered crew at CMS on his Baltimore visit was that even on Oct. 17--by which time the site’s failure was the subject of daily headlines and traffic had collapsed--only 3 in 10 people were able to get on at all. And of the lucky third that did, most were likely to be tossed off because there were so many other bugs.

Unknown to a nation following the fiasco, McDonough’s assignment from the President had boiled down to something more dire than how to fix the site. As the chief of staff remembers his mission, it was “Can it be patched and improved to work, or does it need to be scrapped to start over? He wanted to know if this thing is salvageable.”

Yes, on Oct. 17, the President was thinking of scrapping the whole thing and starting over.

SOURCE: Time


A SHEAF OF OBAMACARE ALTERNATIVES

Moreover, on the eve of the president’s latest State of the Union Address, three Senate Republicans released an Obamacare alternative proposal. The Patient Choice, Affordability, Responsibility, and Empowerment Act (CARE) sponsored by Republican Senators Richard Burr (NC), Tom Coburn (OK), and Orrin Hatch (UT) seeks to execute the same goals as Obamacare: lower health care costs, fix the pre-existing condition dilemma, and reduce the number of uninsured Americans. A key difference, however, is that the CARE Act operates on incentives, not mandates. Carrots, not sticks. It does this by injecting consumer-driven principles and patient choice into the health care delivery system…

[I]f the ideas outlined above cannot disabuse the liberal claim that Republicans have no Obamacare alternatives, an entire conference devoted to Obamacare alternatives was held last week in Washington, D.C. A multitude of consumer-driven alternatives were presented, each with their own nuances.

For instance, John Goodman, president of the National Center for Policy Analysis, suggests that everyone receive a universal tax credit for the purchase of health insurance. Any tax credits not used for health coverage will be funneled to local safety net institutions providing services for which the uninsured cannot pay on their own.

Moreover, the 2017 Project would not auto-enroll anyone in a plan and would not limit the tax-exclusion for employer-sponsored insurance as the CARE Act would. The 2017 project would offer an age-adjusted tax-credit to individuals interested in purchasing health insurance through the individual market. A $900 tax credit would be available to every child, as well. And, for those who do not use the full tax-credit amount, the remaining portion could be deposited into a health savings account (HSA). Furthermore, this proposal enables states to allocate annual funds to run high-risk pools for individuals with costly, chronic medical conditions.

SOURCE: John Locke Foundation


A DALLAS BUYERS CLUB BILL

In the much-acclaimed movie Dallas Buyers Club, a man dying of AIDS smuggles illegal drugs from Mexico, defies the Federal Drug Administration and its jackbooted agents, and succeeds in prolonging his life, and the lives of others. The Hollywood screenplay is based on the true story of an AIDS patient who created and carried out the audacious scheme in the 1980's, when the virus was ravaging the gay community and people were desperate for access to life-saving drugs.

Thirty years later, medication to treat AIDS is legal and widely available, but there are many other drugs that people suffering from all kinds of terminal illnesses would like to gain access to but are being denied by an FDA bound to federal guidelines about health and safety. Enter the Goldwater Institute, a think tank devoted to the free market and libertarian principles of its namesake, the GOP’s 1964 presidential candidate, Barry Goldwater, and its “Right to Try” bill.

“I believe there is a fundamental right to save your own life. We shouldn’t be putting up government red tape,” says Christina Corieri, the healthcare policy expert who crafted the “Right to Try” bill that is popping up with bipartisan support in several state legislatures. Corieri hasn’t seen Dallas Buyers Club, but she did research on the AIDS crisis in the 1980's and the ACT UP (AIDS Coalition to Unleash Power) demonstrations at the FDA and many other locations, and how that helped create the Compassionate Use policies that drug companies have today for FDA approved drugs.

Looking into the FDA process and how someone might access drugs if they can’t get into a clinical trial is what prompted Corieri to seek legislation that would give the terminally ill drugs still in development that they could not otherwise get. Only three out of 40 percent of cancer patients who pursue clinical trials gain admission, and an expanded access application for drugs under investigation requires so much cumbersome paperwork from patient and doctor, that it’s prohibitive.

“Right to Try” is limited to drugs that have successfully passed Phase One, the first human trials for safety. Phases Two and Three test for side effects and efficacy, whether the drug actually works better than existing medicines, or is better than nothing, if nothing else is available.

“We haven’t seen a lot of pushback,” Corieri tells The Daily Beast. “It’s a visceral thing for people--male, female, young, old, Democrat, Republican--it’s your life, you have the right to fight for it.” The bill is up for a floor vote Tuesday in the legislature in Arizona, where the Goldwater Institute is based. If it passes both chambers, the Right to Try Act would go before Arizona voters on the November ballot. In Missouri, Colorado and Louisiana, the bill is moving through the legislative process, and lawmakers in states as disparate as Utah, Oklahoma, Massachusetts and California are expressing interest in what appears to be a fast-moving train that taps into a resurgent libertarian movement.

SOURCE: The Daily Beast

Benjamin Domenech

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