Tuesday, February 18, 2014

February, 2014 The Unfolding Disaster Of Obama Care, Part 1: When Is A Customer Not A Customer,Tanning Tax, the Insurance Company Bailouts Begin

It is another month and that means another 30 days of Obama Care madness, insanity, idiocy, and negative impacts on Americans’ health. We have been writing about this legislation, possibly the worst piece of legislation ever enacted by Washington, for the past several years. Over the past six months, that writing has intensified in impact and length as we finally started to find out how bad this law really is.

We will continue that litany of badness over the next week or so as the disasters continue to fall out from the legislation. We will go through everything quickly in order to get it all in without going into a lot of in depth analysis. The summary of our past in depth analyses can be access at:

We suggest you read that post first in order to have an understanding, context, and perspective of what we will be reviewing this week and beyond.

That post also lists the initial Obama Care post in each series we have done over the past seven months or so. Yes, every month for seven months we have had to dedicate upwards of six posts a month just to document and analyze the total badness of Obama Care.

The following disasters unfolded just over the past four weeks or so:

1) According to statistics provided to the public on Wednesday, February 12, 2014, by the U.S. Department of Health and Human Services (HHS), Obama Care has now managed to “enroll” 3.3 million people via online health exchanges established under the law. Now 3.3 million may sound like a lot of people, it really isn’t because:
  • Since about five million Americans have already lost their current and preferred health insurance plans because of the legislation, getting 3.3 million Americans to sign up for Obama Care private company insurance policies via Obama Care exchanges still leaves the country with an incremental 1.7 million people or so newly uninsured.
  • While the five million Americans who have lost their current insurance coverage have actually lost it, the 3.3 million Obama Care people may or may not have actually signed up for actual insurance. The 3.3 million number represents the number of people who have chosen a plan, it does not represent the number that have actually completed the transaction to get insurance by sending in money  to the insurance companies.
  • The Obama administration claims that it does not know how many people have actually purchased insurance, just the number that have selected a plan, another indictment of a horribly implemented and designed information systems process. Could you imagine a company like Amazon telling its shareholders that it knows how many items were put in customers’ online shopping carts but it does not know how many actually went through the check out and purchase process?
  • The administration had initially proclaimed that it would get seven million real people enrolled in real Obama Care insurance programs by March 31, 2014. At the current rate, four months into the six month signup process, that seven million target is a long way off and highly unlikely to be attained, especially since interest in the whole process seems to be waning: according to HHS, 1.15 million people went Obama Care health insurance policy shopping in January, compared with 1.8 million who browsed a health exchange in December of 2013. 
  • That difference is a drop-off of more than 600,000 shoppers, especially distressing since December is a very busy month for most Americans with the holiday preparation taking up a lot of time and interest. If anything, one would have expected interest to gain momentum in January once the holidays were over.
  • A large number of those that have signed up for health insurance via Obama Care procedures have not gotten private market insurance policies but have been signed up for health insurance coverage via Medicaid. While it is great that these Americans are getting some health care attention, they contribute nothing to the Obama Care financial viability, further placing this legislation in the major economic loser category.
Simple numbers that tell a simple story: Obama Care is dying on the vine and killing off the health and health care insurance coverage of many Americans in the process.

2) The Washington Examiner recently took a different view and hard analysis of Obama Care numbers, both private industry policy signups and Medicaid signups:

- While the President and his political allies have been hyping the fact that 6.3 million Americans now have health insurance coverage via Medicaid, the health consulting firm Avalere and their analysis said to slow down since:
  • Only 1 to 2 million of the 6.3 million who signed up for Medicaid were pure new enrollees brought into the program by Obama Care. 
  • The remainder were people who were already eligible for Medicaid coverage and would have and could have signed up for Medicaid irrespective of Obama Care.
  • In addition, there were a bunch of other people who were already on Medicaid but were renewing their status but were still counted in the 6.3 million. 
Thus, Obama Care was responsible for less than a third of the new Medicaid enrollees at best and could have been responsible for only 15% or so of the new enrollees.

- The article quoted some good observations and basic insights from a Mr. Bob Laszewski who is identified as a health care specialist: "It's a surprise because of all the outreach and the fact that Medicaid is free — there is no premium paid by individuals. This really is perplexing — they can't give it away!"

- The article goes on to cite a McKinsey and Co. survey, that was also reported on by the Wall Street Journal, which found that just 11% of private insurance signups via the Obama Care exchanges were Americans who previously had no coverage. It states that other surveys found that only about one-quarter of new sign-ups were previously uninsured.

Whatever the right number is, all surveys are proving that a substantial majority of the sign up activity in Obama Care private coverage sign-ups is nothing more than a basic a churn operation: the Obama Care tenets are throwing people out of their existing policies and coverage which is forcing these same people to come to the Obama Care exchange websites to seek out new coverage. Those people are then reported as a gain for Obama Care, all one big merry go round with the same people jumping off and jumping back on.

- The article concludes by citing Congressional Budget Office (CBO) estimates that put the total number of uninsured Americans today at 57 million. Even if Obama Care worked perfectly, as forecasted by the CBO, an estimated 31 million Americans would remain uninsured when the law is fully in effect ten years down the road. 

Given that the actual, real sign ups have been far less than forecasted so far despite subsidies, the fact that even the almost free stuff (Medicaid) in Obama Care has been poorly received, and the fact that we are getting very close to the deadline for signups in March, 2014, there is only a very small chance that Obama Care will make its seven million estimate never mind reaching its overarching goal of getting EVERY American affordable health care insurance in ten years.

3) Forbes writer, Scott Gottlieb recently reported that Humana, a large health insurance company, will be receiving up to $450 million of taxpayer wealth from the bailout provisions written into the Obama Care legislation:

Now we have some hard numbers. Humana announced that it expects to tap the three risk adjustment mechanisms in Obama Care for between $250 and $450 million in 2014. This amounts to about 25 percent of the insurer’s expected exchange revenue. This money is needed to offset losses that the insurer will take as a result of slower enrollment in its Obama Care plans, and a skewed risk pool that weighs more heavily toward older and less healthy members than it originally budgeted.

Just what we and others have been saying for a long time: Obama Care enrollees are smaller in number than needed or projected by the Obama administration and the mix is all off in a negative way, resulting in older, sicker people getting health care coverage as a result of Obama Care.

This is resulting in a drag on insurance company profits and the need for the American taxpayer to bailout another industry. As if bailing out the auto, banking, insurance, and solar industries was not expensive enough.

4) Given that lobbyists, politicians, and health care industry reps helped to write the massive Obama Care legislation, it is not surprising that there have been a whole bunch of unintended consequences, all of which have been on the negative side. Another one recently came up in news reports that is as convoluted as the legislation itself.

Apparently, if you are a business owner who operates a indoor tanning booths, you have to pay a tax as stipulated by Obama Care. Not a bad idea if you believe that tanning booths cause skin cancer which drives up health care costs. That tax would most likely be passed on by the owners of the tanning beds and tanning businesses to their customers.

But what about gyms and exercise centers that provide tanning beds but whose main function and attraction is to provide their communities a place for people to come exercise and get healthy, a good thing for keeping health care costs down? Doesn’t matter to Obama Care. 

In that case, the owners of the gyms and exercise centers would have to pay the tax and in all likelihood would also pass that additional cost down onto their members, even those that do not use the tanning beds. This increases the cost of indoor exercising, an additional cost that could cause some gym members to cancel out of their memberships. This would quite possibly result in lower health levels and higher cost levels, the exact opposite of what Obama Care says it wants. The law of unintended consequences strikes again.

5) Continuing the tanning bed discussion along a different line of thought, remember how Obama promised that no one earning under $250,000 would pay more in taxes because of the Obama Care legislation? Well, if the tanning bed tax causes gym membership costs to go up, I would venture a pretty safe guess that most of the people helping to pay for that tanning bed tax earn less than $250,000 a year. Another broken promise from your President.

That will do it for today but there is sure to be more Obama Care madness and insanity to follow in the next several days.

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