Poll: Workers Fear the Exchanges

Poll: Workers Fear the Exchanges
July 11, 2014

Benjamin Domenech

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

Consumer Power Report #427

A new poll conducted by the Morning Consult finds workers are very, very worried about being pushed into Obamacare’s exchanges.

In fact, a strong majority of workers are worried that their employers will stop offering health insurance altogether and move them into the Obamacare exchanges. Workers with employer-sponsored health plans largely have a negative view of what such a move would mean for their coverage, and would even consider looking for a new job under that scenario, the poll found …

Among likely voters, 63 percent said they’re at least somewhat concerned that their employers will shift their coverage to the federal exchanges, against 38 percent who said they’re not too concerned or not concerned at all.

Why would they be worried about this? Weren’t the exchanges supposed to be providing the subsidized insurance that insulated workers from price increases and provided a marketplace of options? Well, part of it is the technological failure of the exchanges to live up to their promise:

Months after the sign-up deadline, thousands of Americans who purchased health insurance through the Affordable Care Act still don’t have coverage due to problems in enrollment systems. In states including California, Nevada and Massachusetts, which are running their own online insurance exchanges, some consumers picked a private health plan and paid their premiums only to learn recently that they aren’t insured.

Others received a policy but then got married, had a baby or another “life event” that required their coverage to be updated, yet have been waiting months for the change to take effect. As a result, some of these people say they have put off medical treatments or paid out of pocket for health expenses. Some insurers say they will be reimbursed.

But others are likely hearing about the experience of their fellow citizens even in exchanges that are working decently, where the experience just isn’t matching expectations, with narrower networks and higher premiums. No wonder exchanges now anticipate more people will be dropping coverage:

Colorado’s health-care exchange is expecting nearly twice as many people to drop or decline to pay for their policies, resulting in $1 million less in revenue this fiscal year.

In April, the staff projected 13 percent of people will drop or not pay for policies in fiscal 2015, but now they are expecting about 24 percent to drop their policies, according to the latest model. Because Connect for Health Colorado collects a fee on every policy sold through the exchange, the new model expects revenue from that fee to drop from $7.9 million to $6.9 million this fiscal year.

And in fiscal 2016, the revised figures show dropped policies going from the 16 percent projected in April to nearly 22 percent, with a nearly $740,000 drop in revenue.

Exchange chief financial officer Cammie Blais said the staff is using the higher drop rate in more recent models because that is how national figures are tracking.

Dropped policies can be from people who stop paying their premiums but also from those who had a life event, such as getting a job that provides coverage. According to the revised estimates, Connect for Health expects 35,800 of its 152,200 individuals covered with exchange policies this fiscal year to drop coverage. Next year, it expects 37,400 of 175,000 to drop.

The real question is how significant these trends will be in the next open enrollment period, and whether they will be mitigated by those who are pushed into these exchanges by their employers. But workers should be encouraged that more liberals are openly considering the possibility of eliminating the employer mandate entirely. That likely would go a long way toward preventing workers from experiencing this dumping, allowing them to avoid the exchanges even as it becomes just the latest policy shift to lessen Obamacare’s impact on the employer-sponsored coverage experience.

-- Benjamin Domenech


IN THIS ISSUE:


THE WHITE HOUSE’S MEDICAID PROPAGANDA

As I have explained before, it is highly unlikely that Medicaid expansion would strengthen state budgets relative to non-participation, for several reasons. Among them:

1) The ACA makes federal subsidies available to individuals with incomes just above the poverty line who buy insurance through exchanges--but only if the individuals are not also eligible for Medicaid. Therefore, if these individuals are covered through the exchanges, the federal government will fund the entirety of their subsidies, whereas if Medicaid covers them, the states will pick up some costs. Hence, comparing state costs under Medicaid expansion with previous state costs for uncompensated care misses the point. What matters, at least for this population, is whether Medicaid expansion enables states to save money relative to their other option of simply letting the federal government subsidize coverage through the exchanges. It does not.

2) The White House’s qualifier that the states would only make a modest contribution for coverage of “newly eligible people” is technically correct but incomplete insofar as state decisions are concerned. The ACA’s outreach processes for coverage expansion will bring many previously-eligible individuals onto the rolls for the first time (fully one-third of the new Medicaid participants in poverty, according to CBO), the so-called “woodwork” population, for whom states must cover over 40 percent of costs on average. Thus states should expect to finance more than 20 percent of such coverage expansion over the long term. States are already reporting that these woodwork costs are exceeding their prior projections.

3) When people become insured, their health service consumption (including emergency room use) rises. Thus this is not simply a matter of states getting federal assistance in covering a fixed amount of health care services. Instead, the act of expanding coverage increases the total costs requiring financing.

SOURCE: Economics21


DEMOCRATS ARE WORRIED ABOUT OBAMACARE’S PREMIUM HIKES

Politico notes that Democrats have reoriented their Obamacare PR efforts toward defending against attacks that focus on higher health insurance premiums. The news, though, is not so much that Democrats are preparing to defend the law as that they are openly worried about the political effects of higher health insurance premiums.

“Most state health insurance rates for 2015 are scheduled to be approved by early fall, and most are likely to rise,” the piece says, “timing that couldn’t be worse for Democrats already on defense in the midterms.”

The party behind the health law probably should be concerned. The conservative Heritage Foundation has projected double digit rate increases in states such as Arkanas, Alaska, and Louisiana. And, as the report indicates, “although no state has finalized its rate, 21 have posted bids for 2015. Average preliminary premiums went up in all 21, though only a few by double digits.” These are unsubsidized rates, and some will likely be negotiated down.

It’s not clear how big the hikes will be, in other words, but so far it looks very much like the trend is toward somewhat higher rates in most places and significantly higher rates in a few areas, despite repeated administration promises that the law would lower the cost of health care. (“We end up saving $2 trillion … a lot of those savings can go back into the pockets of American consumers in the form of lower premiums,” Obama said in 2009.)

How will Democrats respond? House Minority Leader Nancy Pelosi’s communications director provides a hint, telling Politico that there’s a lot of “misinformation” and that “you have to make sure that members have the historical trends, they have the new information in a straightforward way. … It’s setting the proper context that’s so crucial here.” The context and the historical trends all seem fairly straightforward here: President Obama promised that the law would reduce premiums. Now, with the law’s coverage expansion taking effect, unsubsidized premiums for plans purchased on the exchanges look likely to rise.

SOURCE: Reason


HHS AUDIT FINDS SECURITY PROBLEMS WITH NM EXCHANGE

The final audit report was completed by June 17, 2014, but because it contains such specific information about vulnerabilities, it is not public, according to a letter sent from the Department of Health and Human Services’ Office of Inspector General (DHHS OIG) to the health exchange.

Mike Nuñez, the interim CEO of the New Mexico exchange, tells NRO, “The audit identified some high and critical issues that need to be addressed with our vendor.”

Michael Gregg, a cyber-security expert who has testified to Congress about weaknesses of Healthcare.gov says: “Vulnerabilities are typically mapped to the Common Vulnerability Scoring System (CVSS) and can be ranked low, medium, high, or critical. Vulnerabilities that have scored as high or critical [like in this instance] are a real concern and indicate serious problems. These are items that should be immediately addressed without delay. It’s also a real concern that these critical issues were not discovered earlier and that customer data has potentially been exposed for such a long period of time.”

The New Mexico health exchange launched as a hybrid, Nuñez explained: While the state ran the Small Business Health Options Program (SHOP) enrollment for around 125 employers, providing coverage for about 600 total residents, individuals within the state bought their coverage from HealthCare.gov, the federally run exchange, during the last enrollment period. New Mexico’s individual-enrollment marketplace is expected to open in November 2014.

“We operate the SHOP, and to the extent that we have personal information there, we would protect it,” Nuñez says. He added: “We haven’t had any occurrences of any breaches or anything like that, so our vendor is just responding to the audit, and that’s what we know so far. ... We are working to address the issues identified in the audit with our systems integrator and have every expectation of holding all of New Mexico citizens’ personal information in high regard and confidential.”

A DHHS OIG spokesperson said he could not comment on the details of the report. NRO has filed a request under the Freedom of Information Act for a redacted copy, which is pending.

SOURCE: National Review


INSURERS ASK CUSTOMERS TO CROSS THE BORDER FOR CARE

Before dawn on a Wednesday in January, Cesar Flores, a 40-year-old employed by a large retail chain, woke up at his home in Chula Vista, California. He got in his car and crossed the border into Tijuana. From there, he headed for a local hospital, where he got lab tests--part of routine follow-up to a kidney stone procedure. He had his blood drawn and left the hospital at 7:30. He arrived home before 10.

Uninsured Americans have long known that seeking medical care abroad is often more cost-effective than seeking it at home. Even after you factor in travel expense and time off work, you still often come out ahead. A hip replacement that would cost $75,000 for an uninsured patient in the U.S. is $9,000 in India. A heart bypass in the U.S. runs about $210,000; in Thailand it’s $12,000. According to Patients Beyond Borders, a company that facilitates medical tourism, those savings drove about 900,000 Americans to leave the country for medical procedures last year--a number they estimate is growing by 15 percent per year.

But Flores’s situation isn’t medical tourism as we know it. Flores has insurance through his wife’s employer. But his insurer, a small, three-year-old startup H.M.O. called MediExcel, requires Flores to obtain certain medical treatment at a hospital across the border. In part due to cost-pressures generated by the Affordable Care Act, other sorts of plans that require travel have the potential to expand. With this prospect looming, it’s important to ask: What’s the impact on patients? Are these insurance plans regulated? And, perhaps most importantly, are they ethical?

The phenomenon first took off in California because of its proximity to much less expensive Mexican providers and because of the cultural connections of the large Chicano population. In 1998, California became the first state to pass a law accommodating cross-border care. American employers wanted to provide health insurance for Mexicans working along the border, and it made sense to offer them care where they lived or felt most comfortable. California lawmakers weren’t trying to pioneer a cost-saving measure: The law requires that Mexican health plans be “exclusively for the benefit of Mexican nationals.”

SOURCE: The New Republic


VA MEDICAL STAFF STOLE MORPHINE FROM DYING PATIENTS

Vials of morphine were systemically stolen from a Department of Veterans Affairs (VA) Medical Center and replaced with water and saline so that dying veterans got the wrong treatments, a longtime VA nurse told The Daily Caller.

“A nurse taking care of hospice patients over the past year had been diverting vials of morphine,” said Valerie Riviello, a 28-year veteran nurse at the Albany Stratton VA Medical Center in Albany, New York. “Those patients that were dying in hospice were not getting their intended pain medication.”

Management became aware of the recurring theft without reporting it to higher levels of governance within the VA system, said Riviello, a Florence Nightingale Award winner for nursing.

The nurse detailed visible abuse of a machine that dispenses medication. Hospital staff need to punch in a code to get medicine from the machine. Vials of morphine were being replaced with other ingredients, including saline and water. Records continued to show the accurate number of withdrawals from the machine, but morphine was not getting to the patients. The abuse was not noticed by management for about a year, according to Riviello.

Albany Stratton VA Medical Center did not return a request for comment for this report.

Albany is not the only VA medical center that allegedly struggles with medicine theft. Insiders told TheDC that Oklahoma City’s inner city drug trade oozes with stolen goods from the Oklahoma City VA Medical Center.

SOURCE: Daily Caller


UNDERSTANDING RIGHT TO TRY PROPOSALS

The current process for pharmaceutical firms seeking Food and Drug Administration (FDA) approval for new medications is long and arduous. And patients seeking to use experimental drugs before FDA approval must go through an exemption process that can take several months, requiring physicians to file paperwork that takes almost 100 hours to complete. Even after this lengthy process, the decision to grant an exemption for the patient’s use of the experimental drug lies solely with the FDA.

To speed up this process and improve the access of terminally ill patients to potentially beneficial drugs, several states have introduced “Right to Try” laws that would allow patients to obtain experimental drugs without getting federal approval. Three states--Colorado, Louisiana, and Missouri--are on track to become the first to pass such laws. Arizona voters will consider a similar measure in November.

The Right to Try model was designed by the Goldwater Institute to address several concerns about patients’ use of experimental drugs. First, the model allows access only to medications that have passed basic safety testing (FDA Phase I). Second, access is limited to use by terminally ill patients who have exhausted other available treatments. Finally, a medication is made available only if the company manufacturing it chooses to do so. A patient’s request for access to an experimental drug would require a doctor to diagnose a terminal disease and declare the drug represents the patient’s best chance at survival with the patient providing informed consent, limiting the legal exposure of the manufacturer of the drug.

Critics of Right to Try claim providing experimental drugs to terminally ill patients creates a false hope. Supporters say any hope is better than the alternative of no hope, which is inevitable when no treatments are made available for terminal patients. Milton Friedman once noted the FDA drug approval process, done in the name of safety, has harmful consequences for both the health of the public and the economy: “The FDA has done enormous harm to the health of the American public by greatly increasing the costs of pharmaceutical research, thereby reducing the supply of new and effective drugs, and by delaying the approval of such drugs as survive the tortuous FDA process.”

According to the California Biomedical Research Association (CBRA), it takes an average of 12 years for a drug to travel from the research lab through the FDA to the patient. In addition, the FDA allows only five in 5,000, or .1 percent, of the drugs that begin preclinical testing ever to make it to human testing, and of those five, only one is ultimately approved for human use. Prior to passage of the 1962 Kefauver Harris Amendment, which added new requirements for proof of efficacy in addition to safety for approval of new drugs, the average time from the filing of an investigational new drug application to approval was seven months.

Right to Try laws allow patients, with the advice of their doctors, to choose what treatments to try. These laws take reasonable steps to ensure the drugs are reasonably safe and that drug manufacturers and patients work to manage legal risk. Legislators in other states should consider passing such laws.

SOURCE: Heartland Institute

Benjamin Domenech

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