October, 2014 Part 1 - The Unfolding Disaster That Is Obama Care - More Americans to Lose Their Policies, But Insurance Companies Might Get Bailed Out and More

Over the past few years, but especially over the past fourteen months, we have had to devote more and more posts each month to the unfolding disaster that is Obama Care. This legislation, without a doubt, is the worst piece of legislation ever passed, likely passed by the most inept and useless set of Washington politicians that this country has ever had to endure. The disasters from this law include at least the following downsides:

• It has and will continue to increase the national debt.
• It will leave tens of millions of Americans still uninsured ten years from now.
• It has restricted overall economic growth.
• It raised taxes on all Americans in dozens of ways.
• It has reduced the job growth rate in this country.
• It has turned many full time workers into part time workers or into unemployed workers.
• It has generally increased the cost of health insurance, both premiums and deductibles, over what was available in the insurance market before it was passed.
• The Constitution was violated any number of times when the Obama administration unilaterally and illegally changed components of the law without the permission of Congress or the American people.
• The American people were lied to over and over, directly by the President and Democrats in Congress, on the negative ramifications of the law.
• It has caused millions of American to lose access to the current insurance policies they had.
• It has caused millions of Americans to lose access to their preferred doctors, preferred hospitals, and in many cases, current medicine treatments.
• It has likely increased the volume of people visiting hospital emergency rooms.
• It has caused thousands of doctors to retire early or change professions in order to not deal with the bureaucracy and idiocy of the law.
• It has exposed the inability of the Federal government and various state governments to develop, launch, and operate any kind of successful program.
• It has exposed millions of Americans’ personal financial information to identity thieves.
• It never addressed, and thus, never resolved, the root causes of our escalating health care costs in this country.

I am sure that I omitted some of the negative ramifications of the legislation but you get the idea. To review past discussions of past disasters from Obama Care, enter ”the unfolding disaster that is Obama Care” in the search box above. To see what disasters have popped up over just the past month or so, read on:

1) An article in the Investors Business Daily that was written by Stephen Moore and published on October 1, 2014, highlighted the very real reality that insurance companies that took on Obama Care policies are likely going to receive taxpayer bailout funds as a result of the Obama Care legislation.

The bailout potential is legislation's controversial "risk corridor" program, which is supposed to provide financial "protection" against losses to insurers that sponsor exchange plans. The basis of the concept was to create a pool of funds from the profits of some insurers with ObamaCare plans to offset the losses of others. According to a 2013 analysis by the Society of Actuaries, the risk corridors program "provides a strong incentive for insurers to participate in the health insurance exchanges set up by the Affordable healthcare act.". 

In other words, the Federal government took a lot of the risk out of being an Obama Care policy provider. If a company screwed up its operations or financial results, they could always blame the legislation and get rewarded for not doing the job profitably.

Without these subsidized risk corridors and financial incentives to prop up the Obama Care plans, insurance companies will stop issuing Obama care plans and policies, and the entire program could be derailed.

Mr. Moore’s article goes on to compare this insanity to the insanity that was used to back up Fannie Mae and Freddie Mac in the real estate industry, a back up plan that cost the American taxpayer hundreds of billions of dollars. The Federal government guarantee on bad mortgages encouraged bad mortgages to be written by mortgage brokers since they could count on the government to make them whole on defaulted bad mortgages. 

The guarantee against losses on Obama Care enrollees encourages insurers to toss sound underwriting standards out the window, knowing that any bad policy decisions will be financially rewarded by the American taxpayer. Should be interesting to see how Obama and the Federal government try to spin this potential taxpayer hit where the lowly American taxpayer bails out big companies who are in cahoots with the Federal government. 

2) Casey B. Mulligan, an economics professor at the University of Chicago, recently wrote a piece on how the Obama Care legislation is turning the country into a country of part time workers, based on analyses done by the Mercatus Center at George Mason University. He ponts out three specific reasons why the law is causing more part time jobs to be caused vs. full time jobs to be caused or retained:

• Obama Care carries an explicit tax on full-time work.
• Obama Care carries an implicit tax on full-time work for those who are ineligible for the Obama Care’s health insurance subsidies.
• Obama Care carries an implicit tax that links the amount of available subsidies to workers’ incomes.

Based on these three factors, the Mercatus analysis and research found that the law will eventually reduce weekly employment per person by about 3 percent—translating to roughly 4 million fewer full-time-equivalent workers. 

The primary conclusion of their work is that Obama Care and its subsidy and tax structures create strong incentives to work less. It will create an environment that will put millions in a position in where working part time (29 hours or fewer, as defined by the ACA) will yield more disposable income than working their normal full-time schedule. Furthermore, it appears, based on their study, that women will be far more affected then men by this impact on full time employment.

Thus, another piece of freedom slips away. When government policy dictates whether or not you should work full time or part time, that is not a good policy. That choice should be left to the individual with government policy not having any influence on that freedom of choice.

3) David Hogberg’s writing has been referenced a number of times in this blog. Mr. Hogberg writes for Amy Ridenour’s National Center blog and specializes in health care and Obama care issues. His recent writing from October 10, 2014 took a look at how Obama Care was impacting health insurance coverage obtained from employers:

• His analysis was based on research work done by various branches of the Federal Reserve Board.
• The only piece of good news coming out of the research was that the percentage of businesses that are increasing the number of employees covered exceeds those that are covering fewer employees. 
• However, all of the other the other changes to employer plans was bad news for employees.
• The percentage of businesses that are increasing employee contributions, premiums, deductibles, out-of-pocket maximums and co-pays far exceed the percentage that are reducing them in every type of business. 
• As for range of services covered and size and breadth of the networks, the differences between the percentage of businesses that are reducing them versus increasing them aren’t as large, but they are still substantial.

So, costs are going up and quality is going down, offset by some increase in the number of employees covered. Not a good report card but not surprising, given all of the other analyses and realities we have reported about this heinous piece of legislation. Obama promised lower costs and higher quality care and like most Federal government endeavors, we got just the opposite: lower quality at higher cost.

4) All opinion polls about Obama Care show a strong majority of Americans who want the law radically changed or terminated altogether. Recent polling shows the same results with even Democratic voters more and more believing that this is a very bad piece of legislation:

• In May, only 6% of Democrats said Obama Care hurt them. But recent polling shows that 15% of Democrats polled said Obama Care hurt them.
• The poll found that only 27% of Democrats say Obama Care has helped them, a slight 4% increase since May. 
• Overall, more than one in five Democrats (21%) said in the long run Obama Care will “make things worse.”

Not a good sign when you core constituents are having growing doubts about the legislation. And that doubt could get larger by the November elections since in the next few weeks, insurance companies in thirteen states and DC are likely going to terminate hundreds of thousands of existing insurance policies as a result of Obama Care mandates that require these polices to fulfill extensive Obama Care requirements: “It looks like several hundred thousand people across the country will receive notices in the coming days and weeks,” said Jim Capretta of the Ethics and Public Policy Center.

In Virginia alone it is expected that 250,000 existing health policies on the chopping block…forcing people to seek alternative health care coverage in the middle of election season. And we already know what is likely to happen when these people look to buy Obama Care policies:

• Many of those forced out of their current plans and into Obama Care may not be able to keep their doctors or access their favored hospitals.
• They will likely face higher deductibles and out-of-pocket expense, making Obama Care an election issue on the eve of voting.

An other month and another set of disasters: perfectly good insurance policies getting cancelled for no good reason, businesses cutting back on insurance coverage for their employees, loss of freedom in deciding whether to work full time or part time, and other taxpayer bailout for big business highly likely. And we have just begun, more disasters tomorrow and the following days from the piece of legislation that never stops giving…bad news.

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