Monday, July 13, 2015

July, 2015, Part 2: The Unfolding Disaster That Is Obama Care: Insurance Companies Get Richer, Co-Op Executives Get Richer, Americans Get Poorer

Every month for years now we have had to discuss how bad Obama Care is turning out to be under the continuing theme, “the unfolding disaster that is Obama Care.” This month is no different. As the legislation continues to march through America, driving up health care and health insurance prices as it serves as dead weight on economic growth, it cements it rightful place as the worst piece of legislation Washington has ever produced.

It never had a chance to be successful since it really never addressed the underlying root causes of our ever increasing health costs in the country:

  • Americans eat too much of the wrong kind of food, resulting in obscenely high obesity rates for the country.
  • Our food chain is infested with overdoses of high fructose corn syrup, salt, and other unhealthy additives.
  • Americans smoke too much.
  • Americans do not exercise enough.
  • The country is in serious need of health care tort reform.
  • Barriers to insurance company competition across state lines need to come down.
  • Obama Care never “followed the money” to find out who is actually profiting from the ever escalating healthcare costs in this country and how to get those factors under control.
  • Obama Care never got the immense amount of fraud and abuse in current government healthcare programs, Medicare and Medicaid, under control in order to save money to efficiently fund other government health care initiatives.
  • Obama Care never put serious research money towards curing the major diseases that drive high healthcare costs such as high frequency cancers and dementia type diseases.
You cannot resolve any problem unless you understand and address the underlying root causes. No difference here but with a big exception: Obama Care legislation never addressed these listed root causes and thus, has no chance of ever being successful.

For a few days, we will look at the latest disasters from Obama Care, including the gathering evidence that Obama Care policy holders are in for a big and ugly financial surprise in their 2016 costs along with some personal stories on how Obama Care is causing havoc with American families.

1) We know that the American taxpayer is making out financially as a result of Obama Care since the legislation costs more than promised to implement and will add untold hundreds of billions, if not trillions, to the national debt. We know that Obama policyholders are not making out financially since Obama Care policy costs are going to skyrocket in 2016, as we discussed yesterday. So is anyone making out financially well as a result of Obama Care?

Not surprisingly, it looks like insurance companies are making out well financially so far. Which should not come as a surprise since 1) the Federal company forced millions of Americans to become unwilling customers of those companies and 2) those companies are receiving taxpayer funded subsidies to support those new customers. 

Nick Sorrentino, writing for his Crony Capitalism website, recently wrote an article entitled, “Aetna CEO sees piles of taxpayer financed profits thanks to Obamacare” Highlights of his article include the following discussion points:
  • The Aetna stock price has more than tripled since Obama Care was passed, not a bad boost to stockholder wealth.

  • Sorrentino goes on to state: “A law which was not even supported by a majority of Americans but was forced through Congress on questionable procedural grounds. A law which has now financially addicted a good portion of the American people like it was designed to. Yep, good times for the health insurance companies.”
  • Aetna recently stated it would make more money than originally anticipated thanks to “attractive growth” from new enrolment generated by Obama Care exchanges.
Makes you wonder why all these insurance companies are asking for mega-rate hikes if Obama Care policies are such an “attractive growth” opportunity. Something is amiss here: Obama touts Obama Care, health insurance touts Obama Care, and Americans get stuck paying more for insurance than they would have without Obama Care. Guess who has the better lobbyists in Washington: insurance companies or common American citizens?

2) One aspect of Obama Care that we have previously discussed is the concept of Obama Care health co-ops. The purpose of these co-ops was to create an insurance entity that would compete with established insurance companies in areas of the country where there was not a lot of health insurance company competition. The theory being that these co-ops would provide a competitive counter balance to established insurance companies, keeping policy costs down.

As with just about every aspect of Obama Care, many of these co-ops have been failures so far. Many are under severe financial strain and some have already shut down, leaving their policyholder customers in a lurch.

One reason they might be in financial bad shape, and now also in legal risk, is a recent analysis by the Daily Caller News Foundation which found that some of these co-ops might be breaking the law by paying their top executives too much in salary. Eighteen of the 23 co-ops paid their top executives huge salaries ranging from $263,000 to $587,000, according to 2013 IRS tax filings. The high take-home pay for the “nonprofit” executives appears to violate both federal law and Obama Care rules prohibiting “excessive executive compensation.”

At the low end of $263,000, some of these co-op executives are making more than the members of Congress, the Supreme Court Justices, and the governors of all 50 states. Some of them are making more than the President despite the law that explicitly puts caps on the co-op executive salaries. Some of these salaries are two to four times higher than the $135,000 median executive healthcare pay reported in an October 2014 nonprofit CEO compensation study published by Charity Navigator. Charity Navigator is a group that tracks philanthropic and charitable organizations.

Under the Obama Care legislation, the co-ops were required by law to conduct salary surveys to “reflect the market rate for a similar position in your area.” Despite this requirement, only half of the co-ops conducted a review, according to their IRS forms. According to Elizabeth right, health and science director of Citizens Against Government Waste: “I think it’s pretty shocking that they’re making that much money and what’s even worse is that most of these co-ops are failing.” 

Wright has pointed out that the collapse in December 2014 of the Iowa-based Co-Opportunity Health as a prime example of Obamacare co-op mismanagement. Co-Opportunity received $177 million in federal start-up loans before state regulators took it over and declared it in “hazardous” condition. David Lyons, Co-Opportunity’s president and CEO received $261,000 in compensation. Stephen Ringlee, Co-Opportunity’s CFO, received $257,000, despite having failed in several previous startups. Clifford Gold, its COO, took in $288,00.

So now we know another group that is doing well as a result of Obama Care, so well in fact they are likely breaking the law: executives in mostly failing Obama Care co-ops.

3) As we often do, let’s finish up today’s update on the unfolding disaster that is Obama Care with some real life heart aches from real Americans who are suffering from the worst piece of Washington legislation ever written, as told to the website:

JEFF - NEW MEXICO: I have been insuring out daughter, Melissa, for the last several years. She was in college and needed something. We insured her with Presbyterian in NM. It started out as $119 a month with a $2500 deductible. They changed all their policies around and it started costing $149 a month but low and behold the deductible dropped to $1250. That was manageable and reasonable. Along comes "obamacare" and it hit the fan. The so-called covered everything necessary now was going to be $189 a month with a SIX THOUSAND FIVE HUNDRED DOLLAR DEDUCTIBLE! Who can afford that! I had to drop my daughters insurance and live in panic mode that something might happen before we could get her covered again. Then there was all those drops, exclusions, changes, delays! Who can follow all that? She now is covered by the state. Something i never wanted to happen but, you gotta do what ya gotta do and she did what she had to do.

HOWARD - NEW HAMPSHIRE: My wife just lost her primary care provider. He left his practice because he didn't have enough time to properly treat his patients. Too much time required for all of the new paperwork.

MIKE - INDIANA:  My wife loss her original insurance and then could renew at an 100% cost increase then she lost her doctor (most likely because of Obamacare).

RICHARD - MICHIGAN:  From NBC News: Richard Helgren, a Lansing, Mich., retiree, said he was “irate” when he received a letter informing him that his wife Amy's $559 a month health plan was being changed because of the law. The plan the insurer offered raised his deductible from $0 to $2,500, and the company gave him 17 days to decide. The higher costs spooked him and his wife, who have painstakingly planned for their retirement years. "Every dollar we didn't plan for erodes our standard of living," Helgren said.

Ultimately, though Helgren opted not to shop through the ACA exchanges, he was able to apply for a good plan with a slightly lower premium through an insurance agent.

He said he never believed President Obama’s promise that people would be able to keep their current plans: "I heard him only about a thousand times," he said. "I didn't believe him when he said it though because there was just no way that was going to happen. They wrote the regulations so strictly that none of the old policies can grandfather."

Insurance companies getting rich, health co-op executives getting rich, Americans getting poorer. Sounds about right for Obama Care. More horror stories tomorrow.

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