Thursday, August 13, 2015

August, 2015, Part 1, The Unfolding Disaster That Is Obama Care: Fake Poeple Get Insurance, Real Peopel Get Huge Premium Hikes, and More

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 health care 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 health care 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 health care 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.

Today and probably for the next 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) Obama Care information systems and data processing procedures have been a disaster from day one. Most of what was supposed to work at the beginning did not work, privacy of personal information was often non-existent and many called the security protocols an identity thief’s paradise.

Now, in addition to previous problems, the Government Accountability Office (GAO) has found a potentially additional data problem. According to the Associated Press, the GAO made up eleven fictitious people and attempted to put them through the Obama Care processes to see if these non-existent people could actually sign up for Obama Care policies and receive taxpayer funded subsidies. Here is what happened:
  • All eleven of the fictitious people actually were able to sign up for Obama Care policies even though their personas, documentation, and personal information were completely fraudulent.
  • In addition, all of them were automatically re-enrolled when the window for Obama Care policy sign ups came around last fall.
  • While six of those fake people eventually were sent termination notices by the Obama Care process, the GAO was able to get all but one reinstated by calling the Obama Care consumer service center.
  • But it gets better. The GAO was even able to get the monthly subsidies bumped higher during the call to get them reinstated.
Thus, the bottom line is that the Feds failed 91% of the time to identify fake people getting insurance via the Obama Care Federal exchange.That is almost as bad as the TSA failing to identify fake bombs and weapons 95% of the time when their procedures were recently tested.

Now, granted, a sample size of eleven is really small and is not statistically applicable to all Obama Care exchange enrollees. But given the problems Obama Care specifically and the Federal government in general has with building any kind of quality data processing system, I would lay odds that there are many, many other fake people enrolled in Obama Care policies and the American taxpayer is paying for the fraud in a very big way.

2) The Cato Institute has never been a big fan of Obama Care, namely because Cato is a big fan of minimal government and maximum freedom while Obama Care is the exact opposite. But Michael F. Cannon, writing for Cato in July, 2015, astutely pointed out that even Slate, a pro liberal, pro Obama, website is finally coming around to the realization that Obama Care might not be such a great financial situation that they might have hoped it would be.

He quoted the writer of the Slate article, Helaine Olen, with coming to the following realizations, realizations that we have been discussing in this blog for the past four years or so:
  • "Last week Oregon’s insurance commissioner, Laura Cali, announced that the state had approved a 25 percent premium increase for the largest health insurer on the state’s exchanges. The second largest insurer did even better: It received permission to boost its monthly charge to consumers by 33 percent."
  • "And that sounds like a relative bargain compared with Minnesota  and New Mexico, where the Blue Cross Blue Shield family is looking for increases of more than 50 percent. Even if the final numbers are lower than the asks, it seems quite likely these states will approve substantive premium increases."
  • "The problem is simple. As Trudy Lieberman reported this month in Harper's , the ACA made a decent stab at solving the problem of Americans lacking insurance. Unfortunately, the bargain struck to get the bill to a point where lobbyists for the hospital, insurance, and pharmaceutical industries to sign on, or at least not fight it, did not adequately address the issue of overall medical costs."
  • "And that’s where the consumer comes in. Someone is “it,” the party paying the bill. And that “it” is increasingly you, whether you receive insurance on the exchanges or from an employer."
“Did not address the issue of overall medical costs.” I love that quote since we have been beating that horse since day one. If you never understand the root causes of a problem, in this case high medical costs, you will never resolve the issue you are facing. A good starting point of the root causes are listed above, all of which got no or minimal attention in the entire Obama Care development process. 

And now Ms. Olen and Slate finally realize what many of us have been yelling about for so many years. Obama Care is a health insurance solution trying to resolve a public health issue and that is why it will eventually implode onto itself, possibly crashing the economy with it as high medical costs and now high government costs associated with Obama Care run rampant and unresolved.

3) One last piece of Obama Care insanity today, more to follow tomorrow. The best way to lower costs, under simple economic theory, is to have a wide array of competitors vying for the business of customers. High levels of competition make competitors more efficient and cost effective driving out costs in order to compete better in the marketplace and to keep a decent level of profitability. Product offerings improve and grow, costs to end users go down, and quality improves.

But if anything, Obama Care did the exact opposite. We have already discussed any number of times that hospitals, doctor offices, and other health care providers have been consolidating, buying each other up, and generally reducing the amount of competition. This is the exact opposite of what Obama Care was supposed to do. It was supposed to drive more competition and thus reduce costs to the end user. Instead, we have fewer competitors, and as we see above, costs are going up substantially, a reality now recognized even by Slate.

And now the consolidation and reduced competition has hit the insurance company industry big time. According to an article in Bloomberg by Megan McArdle that was summarized in the August 7, 2015 issue of The Week magazine, giant health care insurer Anthem concluded a deal to purchase health care giant Cigna for $48 billion. Yes, $48 billion.

This merger comes on the heals of a $37 billion merger that combined Aetna and Humana. McArdle rightly lays the merger mania at the feet of Obama Care and its tonnage of paperwork and rules and regulations that are expensive to implement. This also allows the now giant health insurers to better compete with the now giant health providers relative to pricing and billables. According to The Week article:
  • “For consumers, it means our health care will increasingly be delivered by only a few big players.”
  • “As insurers and hospital networks supersize, patients will get the role of ‘tiny human standing on the ground between them.’”
Tiny human vs. supersized hospitals and insurers. Guess who does not make out well in that situation. Thus, as with most government programs, the so-called cure is often worse than the status quo, leaving the original situation worse off than before politicians got involved. Obama Care is no different: less choice, probably lower quality at a higher price.

More Obama Care news tomorrow and I can guarantee you it will not be any better than what we discussed today.

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