February, 2015, Part 2, The Unfolding Disaster That Is Obama Care: Medicaid Failure, Co-op Failure, and EWhoe Foods Success

Every month for the past two years or so we have had to dedicate numerous posts each month to cover the many, many unfolding disasters that have been spawned by the Obama Care legislation. This is easily the worst piece of legislation ever enacted by the Washington political class for so many reasons:

• First of all it will never work in reining in the high cost of health care in this country since it never addressed the underlying root causes of our high costs, mistakenly implementing a Rube Goldberg like health insurance solution for what is mostly a public health problem.
• It will add over a trillion dollars to the national debt even though Obama promised it would not add “a single dime” to the debt.
• It has stifled economic growth and job creation.
• It has increased taxes on every American, either directly or indirectly, despite Obama’s promise that it would not.
• It has forced upwards of seven million Americans to lose access to their preferred health insurance policies.
• It has caused millions of Americans to lose access to their preferred Doctors, hospitals, and current medical treatments.
• Nationally, it has increased the cost of health care premiums and deductibles as compared to before the legislation was passed.
• It has opened up millions of Americans to the real threat of identity theft since Obama Care’s data systems security protocols are woefully inadequate.
• Even those that have obtained health care insurance under Obama Care policies are finding that their choice of doctors and hospitals are extremely narrow and more narrow than before the legislation was passed, resulting in many policy holders not getting access to the premier doctors and hospitals in this country.’The legislation has made a shortage of primary care physicians even worse since it is forcing primary care physicians to either retire earlier of move on to over options.
• Tens years from now the Congressional Budget Office predicts that tens of millions of Americans will still be without health care insurance coverage, the primary reason for the legislation in the first place.
• It has burdened the failing Medicaid system with millions of more applicants without fixing the massive problems with the system, causing more and more doctors to discontinue taking Medicaid and in some cases, Obama Care patients, resulting in the cruel irony that “you finally have health insurance but you do not have health care.”
• It failed to deliver on the Obama promise that the average American family would see a $2,500 annual reduction in their health insurance costs.
• While the legislation was supposed to reduce the number of emergency room visits, it has actually increased the number of emergency room visits.
• While it was supposed to make people healthier, the legislation’s resultant hig co-pay levels and high deductible levels has forced many Obama Care patients to defer medical treatment because of the higher costs.

We could go on but you get the idea. This is a disastrous piece of legislation across multiple parameters. To get more details on each of the above disasters and explore other disasters of the legislation, just enter the phrase, “the unfolding disaster that is Obama Care” in the search box above.

So, let’s take a few days and take a look at the latest Obama Care disasters and fiascoes:

1) One of the supposed benefits of Obama Care is that more people would be able to enroll in the Federal government’s Medicaid program since Obama Care raised the maximum income level for being eligible for Medicaid. How this was thought to be a great idea is baffling since:

• Medicaid is just one of several Federal government social support programs that is hurdling towards fiscal insolvency. Adding more people to a sinking ship is never a good idea.
• Medicaid currently loses about $30-40 billion a year to criminal fraud and waste. Making it larger without reforming it will allow it to lose billions more each year to fraud and waste.
• Given that government reimbursements to Medicaid doctors is low and getting lower, adding more people to the Medicaid rolls is already shrinking the number of doctors accepting Medicaid patients, reinforcing the ultimate Obama Care irony, you now have health insurance but you cannot get health care.

Given this context of Medicaid failure, consider some thoughts that were written by U.S. Senator John Barrasso and included in an article on the Heritage Foundation website. The statistics cited are based on Obama Care results through the third quarter of 2014 but the conclusions still hold true five months later [note: Senator Barrasso is also a medical doctor]:

• As of the third quarter of 2014, Medicaid expansion was responsible for most of the increase in the number of Americans getting health insurance coverage as a result of Obama Care. The original estimate from the administration and the Congressional Budget Office was that only half of the newly insured would be via Medicaid but a far higher percentage ended up getting Medicaid coverage.
• He reaches this conclusion by noting through the first nine months of 2014, 5.8 million Americans obtained traditional health insurance policies via private companies and Obama Care but almost five million Americans lost their private insurance policies as a result of Obama Care, resulting in a net gain in privately insured Americans of only 900,000 or so.
• In the same time period, 7.5 million newly insured people got Medicaid health insurance coverage, meaning that about 89% of the newly insured were obtained strictly via Medicaid enrollments.
• Rather than only 900,000 incrementally insured via private policies, the original Obama Care plan and forecasts called for an incrementally privately insured number of 6 million people, 5 million more than actually happened.
• Conversely, the original plan and forecasts called for an additional six million more Medicaid insured people but the actual number was 25% higher or 7.5 million.
• Overall, the original plan called for 12 million incrementally insured Americans of which only 50% were Medicaid enrollees while in reality the incremental number in late 2014 was only 8.4 million, 30% below expectations, of which 89% were Medicaid enrollees vs. a forecasted percentage of only 50%.

Not surprising results since we have often previously talked about how badly the legislation missed its numbers and forecasts, about how poorly or deceptively the administration built its case for passage. Medicaid is not solution but it is what is happening as a result of the law. Medicaid is a financial drain on the Federal government’s revenues and American taxpayers’ wealth but it is coming to dominate the Obama Care experience.

The Senator nicely sums up the reality of the situation as follows: “Given the administration’s diminished expectation of only 9 million to 10 million exchange enrollees in 2015, and CBO's projection that the drop in workplace coverage will accelerate, Obamacare is likely to remain mostly an expansion of Medicaid for the foreseeable future.”

And an expansion of Medicaid is not a solution to ever higher healthcare costs in the nation.

2) We have previously discussed the reality that the second largest health insurance co-op in the nation, CoOpportunity in Iowa, went fiscally insolvent very quickly despite its size. Obama Care co-ops were supposed to act as a competitive balance in areas of the country that did not have a lot of private insurance competition in order to help keep insurance prices down.

Given that the Iowa co-op is already kaput, it is worthwhile to see how some of the other co-ops are doing:

• More 500,000 people who enrolled in private plans via Obama Care did so through co-ops.
• On average, each co-op received almost $109 million each from the American taxpayer via the Federal government to start operations, a total of $2.5 billion.
• The bottom line of the $109 million is that on average, it cost the American taxpayer a whopping $17,000 to enroll one person in an Obama Care insurance policy.
• Despite spending $2.5 billion of taxpayer money, the Heritage Foundation found that only one of the 22 funded co-ops it analyzed has been profitable so far [the financial status of the New Jersey co-op is not yet available].
• Forbes did an analysis and found that it cost about $4,600 to enroll a person for Obama Care on the Federal exchange, about one fourth the cost of enrolling via a co-op.

Bottom line: it does not look like this Obama Care idea is going to work either since the second biggest co-op has already gone belly up and they are far from cost competitive if it costs over $17,000 to enroll one person on average in an Obama Care policy. 

And the future does not look good either. The average per-person cost of enrollment in the Iowa CoOpportunity co-op was only $1,588.51 and it has already gone out of business. But most of the other co-ops have had average enrollment costs that are far higher than the Iowa co-op. For example, the Minuteman co-op in Massachusetts has had an average enrollment cost of over $85,000.

So much for reducing costs and increasing competition via the co-op route.

3) If the co-op idea is a failure, what could work? Well, the executives at Whole Foods are working on reducing their company health care costs and having some success in doing so. Their approach? The same thing we have been preaching for years, attack the root causes of high health care costs.

According to a recent Businessweek article, Whole Foods is attacking a root cause, the fact and reality that Americans for the most part are either obese or at least overweight. Obesity causes health care costs to skyrocket for a variety of diseases including heart disease and diabetes. Reduce the obesity level and health care costs have to come down since obesity related illnesses are curbed.

Thus, Whole Foods has undertaken the following steps:

• Creation of a week long clinic called Total Health Immersion provided for free for employees.
• The clinic includes medical testing, discussions with nutritionists, and healthy cooking classes.
• At some point, Whole Foods’ executives are planning on opening up the clinic concept to its customer base.
• They are also contemplating opening up another clinic concept based on the medical clinic that was created by Rosen Hotels and Resorts. 
• The Rosen medical clinic focuses on employee nutrition and preventive care which has helped the Rosen company reduce per-employee healthcare costs to about half the national average.

Imagine how inexpensive healthcare insurance would be if the country could reduce its health care bill by 50% like Rosen did. That is how you reduce health care costs, not by shoving millions of Americans into a broken and near bankrupt Medicaid program but still leaving the country obese and overweight.

So what did we learn today:

1. Medicaid accounts for most of the Obama Care “successes” despite being a broken program that provides inferior health care services to millions of Americans.
2. The Obama Care co-op process is turning into another expensive failure.
3. Some innovative companies are doing far more to attack high health care costs than Obama Care can even dream about accomplishing.

More unfolding disasters tomorrow.

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