Monday, September 19, 2016

September, 2016, Part 1, The Unfolding Disaster That Is Obama Care: Higher and Higher Rates, Less and Less Competition and Choice

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 its 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: Obama Care legislation never addressed these listed root causes and thus, has no chance of ever being successful.

But it is not just missing the root causes of our healthcare costs that makes Obama Care so horrible. It resulted in millions of Americans losing access to their favored doctors, hospitals, and insurance policies. It has caused insurance premiums, deductibles and co-pays to escalate substantially. It will likely add trillions of dollars to the national debt. It has exposed millions of Americans to higher than necessary identity theft chances. It has created government bureaucracies that are wastefully spending taxpayer wealth and being exploited by criminal elements. It has stifled economic growth and job creation.

These are just a sample of the types of idiocy that we have been reviewing for the past several years in this blog relative to Obama Care., To read those past posts, just enter the phrase, “the unfolding disaster,” in the search box above.

This week we will be reviewing the latest unfolding disasters from the worst piece of legislation ever written by Washington:

1) We have already discussed the many disasters of Obama Care when it comes to delivering actual health insurance policies to Americans.Most of the Obama Care exchanges never came close to achieving their promised enrollment levels and at least one exchange never even got to provide one American an Obama Care insurance policy. More than two thirds of the Obama Care co-ops have already failed dramatically, causing their customers to lose their insurance coverage. And large insurance companies like UnitedHealthcare and Humana have withdrawn from the Obama Care business because it caused them to lose billions of dollars. 

And according to a USA Today article by Nathan Bomey on August 16, 2016, the carnage just got worse. The third largest health insurer in the country, Aetna, has announced that it will be folding down 70% of its Obama Care policies. It will exit all but four states it is currently operating in with Obama Care policies due to heavy financial losses from those Obama Care policies. This will cause thousands of its current Obama Care policy holders to lose their coverage by the end of the year and either go uninsured or seek out other options.

As with UnitedHealthcare and Humana, Aetna blamed its financial loses on the reality that not enough younger, healthier people signed up for Aetna’s Obama Care policies. This caused the company to not be able to suck money out of the healthy and young to service the unhealthy, the economic model that Obama Care is based on. 

Maybe, just maybe, we can now have a discussion on how fatally flawed that economic model is, Obama Care’s architect, MIT’s Jonathan Gruber’s arrogance notwithstanding. Worst piece of legislation ever passed based on a failed economic model and its utterly failed economic assumptions regarding human behavior.
2) So not only are Obama Care policy holders losing their insurance coverage as companies flee the market, those that remain are going to get hit with some massive insurance rate hikes in 2017. Hannah Bleau, writing for the Chicks On The Right website on August 28, 2016, reviewed what state insurance commissioners are seeing when it comes to Obama Care insurance rate requests for 2017:

  • Obama Care policyholders in 19 states could see double digit rate hikes in 2017 for their Obama Care policies.
  • The double digit rate hikes requested by Highmark Blue Cross Blue Shield of Delaware and Aetna in Delaware (one of only four states it will continue to serve), blamed their massive double digit rate hikes on the reality that the Obama Care subsidy program is expiring.
  • The steepest estimates for rate hikes include Tennessee with rate hikes likely to exceed a whopping 51%, Arizona (39%), Montana (35%), Delaware (29%) and Pennsylvania (25%).

What is likely to happen in these and other states is that healthy people who do not think they will have an immediate need for health insurance will drop their now costlier policies and forego these rate hikes altogether. This will further damage insurers’ financial results since they will be stuck serving less healthy customers causing them to raise their rates the following year driving more people out of their policies, forming a classic definition of a death spiral.

3) The iPatriot website recently ran article entitled, “Obamacare Scheme Imploding Ahead Of Schedule!” It covered a lot of what we discussed above with some additional twists of disaster:

  • The article cited an article from the Investor’s Business Daily which reported that an Illinois state insurance regulator stated that Obama Care policy premiums could jump as much as 55% next year.
  • Specifically, Bronze plans could go up 44%, Silver plans could go up 45%, and Gold plans could go up 55%.
  • The article reiterates our discussion above that Illinois is not atypical of what is going on in other states which are also seeing double digit increases in Obama Care policy costs.
  • But the article also steps outside of Obama Care’s disasters to discuss another government healthcare disaster, Medicare: “The latest Medicare Trustees report, warns that by 2040 half of all hospitals, 70% of all skilled nursing homes and 90% of home health care services will not be able to survive under Medicare’s increasingly skimpy fees.”
And as hospitals, nursing homes, and home health care services go out of business, the lack of competition will drive prices up even further, leaving poor and middle class families with little affordable health care option for them and their loved ones in just a few decades. This is what happens when you do not attack the root causes of a situation, as we laid out above. You never have any chance at all of resolving the real problem, be it Obama Care or Medicare.

4) Shikka Dalmia, writing for Reason magazine on September 6, 2016, also pointed out that “Obama Care is Failing Spectacularly!” Details from her article include the following realities:

  • Obama Care is failing so badly that the attempted fixes might make a bad situation even worse.
  • Aetna is pulling out of the Obama Care business in 11 of 15 states after losing about $300 million annually and the fact the company sees nothing in the near future that will reverse that trend.
  • Seventy percent of Obama Care co-ops have already gone belly up, a concept that was supposed to provide competition to insurance companies in areas with little insurance competition. 
  • The failure of the co-ops have left many counties across the country with only one insurance company option, with Pinal County, Arizona have no one providing health insurance options to that county’s citizens.
  • The only Obama Care insurance companies that appear to be hanging in there are those that have long been serving the Medicaid market which have resulted in policies that skimp on benefits and have very narrow and lean hospital and doctor networks, networks that are typically not the best.
  • The article debunks the Obama Care supporters’ myth that the exit of the big insurance companies from the Obama Care markets is normal and represents a competitive marketplace: “Obamacare's boosters on the editorial page of The New York Times and elsewhere maintain that the exit of all these biggies is no big deal because it represents the normal weeding-out process of a competitive market. That's a nice try—but no sale! In a functioning market, companies die when their customers take their business to alternative suppliers. In this case, customers are unwilling to purchase the product in the first place given that total enrollment in Obamacare exchanges is 40 percent less than Congressional Budget Office projections last year.”
  • The article also visits the death spiral that is going on with Obama Care that we discussed above and in previous posts: “This riskier-than-expected patient pool is forcing insurers to raise premiums, which prices even more healthy people out of the market, which causes more hikes, unleashing a death spiral of adverse selection—exactly as many critics of the law had predicted would happen.”
  • Princeton University professor Uwe Reinhardt also believes that Obama Care is in a death spiral, one that was actually historically experienced back in the 1990s when New York and New Jersey forced insurance companies to not discriminate in their policy writing based on the health status of a person, a policy that failed back then also.

The article concludes that the next President should be very worried when it comes to Obama Care, given how badly it has screwed up the entire health delivery system in this country.

Another month and another set of Obama Care disasters: higher and higher rates, less and less competition, and a death spiral forming. More disasters tomorrow.

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