Commentary Magazine


Topic: insurance costs

OCare Study: Obama’s TD Dance Premature

After President Obama’s enrollment deadline touchdown dance, some Democrats have been trying to act as if the health-care law to which they have tied their political fortunes is a grand success. Many in the news media have followed their lead and concluded that the claim that 7.1 million Americans had signed up for the scheme by the April 1 deadline meant that doubts about its viability or popularity were put to rest. The fact that perhaps as many as 20 percent of those being counted as happy ObamaCare customers haven’t paid their premiums—and thus aren’t covered—is being ignored. So is the fact that it is entirely likely that the vast majority of those included in the 7.1 million figure were not previously uninsured, meaning that many were forced out of their old, preferred plans and are now paying more for coverage they didn’t want.

But a new study from Express Scripts, the large pharmacy benefits-managing company, reveals something else that ought to depress those liberals throwing victory parties for the success of the misnamed Affordable Care Act: those signing up for ObamaCare appear to be older, sicker, and more dependent on expensive, specialty drugs than the average person covered by employer-based health insurance. Though it’s possible that the last-minute surge of signups may reduce the preponderance of sick people among those covered by ObamaCare, the results among the early enrollees show that the expectation that the program will be able to pay for itself is almost certainly misplaced. Moreover, the imbalance in favor of the sick means that the price of insurance may go up even higher next year than had already been predicted. While Democrats may be relieved that those price increases won’t go into effect before November, the country may need to brace itself for a tsunami of outrage in 2015 after an ObamaCare-fueled hike sends insurance costs skyrocketing.

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After President Obama’s enrollment deadline touchdown dance, some Democrats have been trying to act as if the health-care law to which they have tied their political fortunes is a grand success. Many in the news media have followed their lead and concluded that the claim that 7.1 million Americans had signed up for the scheme by the April 1 deadline meant that doubts about its viability or popularity were put to rest. The fact that perhaps as many as 20 percent of those being counted as happy ObamaCare customers haven’t paid their premiums—and thus aren’t covered—is being ignored. So is the fact that it is entirely likely that the vast majority of those included in the 7.1 million figure were not previously uninsured, meaning that many were forced out of their old, preferred plans and are now paying more for coverage they didn’t want.

But a new study from Express Scripts, the large pharmacy benefits-managing company, reveals something else that ought to depress those liberals throwing victory parties for the success of the misnamed Affordable Care Act: those signing up for ObamaCare appear to be older, sicker, and more dependent on expensive, specialty drugs than the average person covered by employer-based health insurance. Though it’s possible that the last-minute surge of signups may reduce the preponderance of sick people among those covered by ObamaCare, the results among the early enrollees show that the expectation that the program will be able to pay for itself is almost certainly misplaced. Moreover, the imbalance in favor of the sick means that the price of insurance may go up even higher next year than had already been predicted. While Democrats may be relieved that those price increases won’t go into effect before November, the country may need to brace itself for a tsunami of outrage in 2015 after an ObamaCare-fueled hike sends insurance costs skyrocketing.

The problem here is that having established ObamaCare as an entitlement that they believe can never be revoked, the administration has stuck the health-care system with a situation that is a financial nightmare. As the New York Times reports:

Julie Huppert, vice president for health care reform at Express Scripts, said she expected to see the picture change as the year progressed. But she said this early glimpse was crucial for insurers, which were already setting their rates for next year.

“There may not be enough time to assess much more than this,” she said.

The study found that six of the 10 most costly drugs in the marketplace plans, in terms of total spending, were specialty drugs, in contrast to four of the top 10 drugs in employer plans. The higher use of specialty drugs could point to additional health care costs, some said.

“The medication is only the tip of the iceberg,” said Daniel N. Mendelson, chief executive of the consulting firm Avalere Health. “What goes along with that is a need for physician visits and, often, hospitalizations associated with complications from the conditions.”

In addition to finding increased use of drugs to treat pain, seizures and depression, the study also found that 6 in every 1,000 prescriptions in the marketplace plans were for drugs that treat H.I.V., a number that was nearly four times the figure among those with employer coverage.

While the president and his supporters may take credit for making it easier for those with pre-existing conditions to gain coverage, if enough young and healthy consumers have not been suckered into signing up, insurance companies are going to be stuck with paying for all those sick and elderly Americans who have been shunted into the program. That means they are going to have to drastically raise prices the next chance they get.

Just as bad is the sticker shock many of those who are now part of the ObamaCare program are experiencing when they go to the pharmacy:

Some consumers who signed up for marketplace plans said they were shocked when they made their first visit to the pharmacy this year. Lawrence Cwik, a photographer in Portland, Ore., said his monthly contribution for Atripla [an H.I.V. drug] increased to $1,018, from $40, when he switched to a new marketplace plan after his old plan was canceled. Both were through Regence BlueCross BlueShield of Oregon.

Mr. Cwik, 55, said he complained and the insurer agreed to reduce his out-of-pocket payment to $40 for the rest of this year, “but beyond that, I’m pretty much out of luck.”

That scenario is being played out across the country countless times this year as those who lost previous coverage as a result of ObamaCare’s implementation pay the price of the president’s great “success.”

Democrats and even many Republicans long believed that once it went into effect, ObamaCare would become as beloved as Social Security or Medicare. But despite the White House celebrations about the enrollment figures, that assumption is still unfounded. The long-term costs of this law for many Americans will be devastating. The more people experience it, the less popular it is likely to get.

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Guess What: ObamaCare Will Make Insurance More Expensive

Ed Morrissey calls our attention to a New York Times article that makes the case that ObamaCare will likely send health-insurance premiums skyrocketing. The Times looks at New York’s state plan:

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

Hmm. Sounds like what happened in Massachusetts, where, lo and behold, insurance costs continued to climb, and, despite an individual mandate, many people chose to pay the fine rather than pay exorbitant insurance premiums. So in New York, the number of insured has dropped to 31,000 from 128,000 as costs soared to more than double the nation’s average.

As the Times explains, “The new federal health care law tries to avoid the death spiral by requiring everyone to have insurance and penalizing those who do not, as well as offering subsidies to low-income customers. But analysts say that provision could prove meaningless if the government does not vigorously enforce the penalties, as insurance companies fear, or if too many people decide it is cheaper to pay the penalty and opt out.”

So we’re going to force individuals to buy more-expensive plans than they might want (the issue Paul Ryan alluded to at the health-care summit), dump them into pools with high-risk patients, and then hope the costs don’t drive healthier customers out, hiking up the costs for the remaining individuals, who will look to the government for ever-increasing subsidies. Remarkable isn’t it, that the Democrats never looked, or cared to look, at the experience of Massachusetts and New York before jamming through their historic legislation? But then they didn’t much care in the end what was in it or how the CBO flimflam scoring was arrived at. What was important is that they had a “win.”

Now that we’re getting a good idea at what they’ve done, it certainly boosts the “repeal and replace” effort. It would seem the responsible thing to do before the entire country winds up like New York or Massachusetts – with sky-high insurance costs and a new budget-busting entitlement, and nothing approximating “universal coverage.”

Ed Morrissey calls our attention to a New York Times article that makes the case that ObamaCare will likely send health-insurance premiums skyrocketing. The Times looks at New York’s state plan:

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

Hmm. Sounds like what happened in Massachusetts, where, lo and behold, insurance costs continued to climb, and, despite an individual mandate, many people chose to pay the fine rather than pay exorbitant insurance premiums. So in New York, the number of insured has dropped to 31,000 from 128,000 as costs soared to more than double the nation’s average.

As the Times explains, “The new federal health care law tries to avoid the death spiral by requiring everyone to have insurance and penalizing those who do not, as well as offering subsidies to low-income customers. But analysts say that provision could prove meaningless if the government does not vigorously enforce the penalties, as insurance companies fear, or if too many people decide it is cheaper to pay the penalty and opt out.”

So we’re going to force individuals to buy more-expensive plans than they might want (the issue Paul Ryan alluded to at the health-care summit), dump them into pools with high-risk patients, and then hope the costs don’t drive healthier customers out, hiking up the costs for the remaining individuals, who will look to the government for ever-increasing subsidies. Remarkable isn’t it, that the Democrats never looked, or cared to look, at the experience of Massachusetts and New York before jamming through their historic legislation? But then they didn’t much care in the end what was in it or how the CBO flimflam scoring was arrived at. What was important is that they had a “win.”

Now that we’re getting a good idea at what they’ve done, it certainly boosts the “repeal and replace” effort. It would seem the responsible thing to do before the entire country winds up like New York or Massachusetts – with sky-high insurance costs and a new budget-busting entitlement, and nothing approximating “universal coverage.”

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Flotsam and Jetsam

What comes from a commander in chief who sends mixed messages? “Nearly a month after Obama unveiled his revised Afghanistan strategy, military and civilian leaders have come away with differing views of several fundamental aspects of the president’s new approach, according to more than a dozen senior administration and military officials involved in Afghanistan policy, all of whom spoke on the condition of anonymity to discuss internal deliberations.”

Matthew Continetti: “There really are two Americas. There’s the America of the ‘expert’ schemers, planners, and centralizers inside the Beltway, who think they know what’s good for the people, whether the people like it or not. And there’s the America of just about everyone else. They are no doubt the ones Irving Kristol had in mind when he wrote, ‘The common people in such a democracy are not uncommonly wise, but their experience tends to make them uncommonly sensible.’” It is a good thing indeed that there are more of the latter.

David Axelrod says we will learn to love ObamaCare: “When people focus on what this bill is and not what it isn’t and recognize what an enormous landmark achievement it is, progressive achievement, you’ll see folks rallying around this and not running away from it.” Notice how they assume the public will be awed by the “landmark” quality of the bill. That’s how politicians think; ordinary people tend to focus on what legislation is actually going to do for or to them.

The Washington Post editors blast the Obami’s human-rights policy, seeking to mix economic progress with fundamental rights as “standard doctrine of the Soviet Bloc, which used to argue at every East-West conference that human rights in Czechoslovakia were superior to those in the United States, because one provided government health care that the other lacked.” Ouch. The editors rightly condemn this as a sly effort to downplay democracy, especially in the Middle East: “If the Obama administration believes that liberty is urgently needed in the homelands of al-Qaeda, Ms. Clinton still has offered no sign of it.”

Yes, in the end, all Democrats on health-care “reform” turned out to be liberals in favor of a big government power grab: “We trust voters in Nebraska, Louisiana, Indiana, Virginia and elsewhere noticed that these votes ultimately ensured the passage of a bill that will increase insurance costs, retard medical innovation and sorely damage the country’s fiscal position.” Judging from the polls, I think they are noticing.

Looks like our fellow citizens are our best defense: “Despite the billions spent since 2001 on intelligence and counterterrorism programs, sophisticated airport scanners and elaborate watch lists, it was something simpler that averted disaster on a Christmas Day flight to Detroit: alert and courageous passengers and crew members.”

New York District Attorney Robert Morgenthau on the Obami’s Iran engagement policy: “The president is smoking pot or something if he thinks that being nice to these guys is going to get him anywhere.”

Respected legal scholar Randy Barnett makes the argument that the individual mandate to buy health insurance is unconstitutional: “A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States. . . First, it would impose a duty on individuals as members of society. Second, it would require people to purchase a specific service that would be heavily regulated by the federal government.” And if not unconstitutional, it is at the very least, enormously objectionable to a great number of Americans on both the Right and the Left.

What comes from a commander in chief who sends mixed messages? “Nearly a month after Obama unveiled his revised Afghanistan strategy, military and civilian leaders have come away with differing views of several fundamental aspects of the president’s new approach, according to more than a dozen senior administration and military officials involved in Afghanistan policy, all of whom spoke on the condition of anonymity to discuss internal deliberations.”

Matthew Continetti: “There really are two Americas. There’s the America of the ‘expert’ schemers, planners, and centralizers inside the Beltway, who think they know what’s good for the people, whether the people like it or not. And there’s the America of just about everyone else. They are no doubt the ones Irving Kristol had in mind when he wrote, ‘The common people in such a democracy are not uncommonly wise, but their experience tends to make them uncommonly sensible.’” It is a good thing indeed that there are more of the latter.

David Axelrod says we will learn to love ObamaCare: “When people focus on what this bill is and not what it isn’t and recognize what an enormous landmark achievement it is, progressive achievement, you’ll see folks rallying around this and not running away from it.” Notice how they assume the public will be awed by the “landmark” quality of the bill. That’s how politicians think; ordinary people tend to focus on what legislation is actually going to do for or to them.

The Washington Post editors blast the Obami’s human-rights policy, seeking to mix economic progress with fundamental rights as “standard doctrine of the Soviet Bloc, which used to argue at every East-West conference that human rights in Czechoslovakia were superior to those in the United States, because one provided government health care that the other lacked.” Ouch. The editors rightly condemn this as a sly effort to downplay democracy, especially in the Middle East: “If the Obama administration believes that liberty is urgently needed in the homelands of al-Qaeda, Ms. Clinton still has offered no sign of it.”

Yes, in the end, all Democrats on health-care “reform” turned out to be liberals in favor of a big government power grab: “We trust voters in Nebraska, Louisiana, Indiana, Virginia and elsewhere noticed that these votes ultimately ensured the passage of a bill that will increase insurance costs, retard medical innovation and sorely damage the country’s fiscal position.” Judging from the polls, I think they are noticing.

Looks like our fellow citizens are our best defense: “Despite the billions spent since 2001 on intelligence and counterterrorism programs, sophisticated airport scanners and elaborate watch lists, it was something simpler that averted disaster on a Christmas Day flight to Detroit: alert and courageous passengers and crew members.”

New York District Attorney Robert Morgenthau on the Obami’s Iran engagement policy: “The president is smoking pot or something if he thinks that being nice to these guys is going to get him anywhere.”

Respected legal scholar Randy Barnett makes the argument that the individual mandate to buy health insurance is unconstitutional: “A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States. . . First, it would impose a duty on individuals as members of society. Second, it would require people to purchase a specific service that would be heavily regulated by the federal government.” And if not unconstitutional, it is at the very least, enormously objectionable to a great number of Americans on both the Right and the Left.

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RE: ObamaCare Loses Brooks

While I’m certainly glad that someone on the Times op-ed page has come out against ObamaCare, David Brooks could certainly have been a bit more forceful about it. Nothing wishy-washy about Keith Olbermann’s rejection of ObamaCare.

But I was struck by one thing that Brooks wrote: “The fact is, nobody knows how to reduce cost growth within the current system.”

Of course we do.

Allow people to buy insurance across state lines and thus escape unwanted mandates and such economic idiocies as “guaranteed issuance.” If New Yorkers could buy health insurance in Connecticut, their insurance costs would drop by 40 percent overnight. How’s that for reducing costs, Mr. Brooks?

Reform tort law. Texas did exactly that a few years ago and the cost of medical malpractice insurance — which, of course, is passed on to patients — fell by an average of 21 percent, and 7,000 new doctors began practicing in the state, many in under-served areas.

Require that medical-service providers post prices for standard procedures, allowing comparative shopping by doctors and patients alike. Charges for standard procedures can vary dramatically because they aren’t readily ascertained. Once posted, they would tend to converge toward the lower end. Combined with medical savings accounts that incite health-care consumers to look for the lowest prices, the reduction in costs would amount to billions of dollars.

Allow the young to buy high-deductible, low-cost health insurance to protect them from highly unlikely but devastating accidents and illnesses that represent the greatest risks to their health. That would enlarge the insurance pool and decrease the number of uninsured who are shifted onto the bills of those with insurance. That allows lower premiums.

Health-care costs will increase for reasons we can do nothing about, like inflation, an aging population, new and expensive technologies and drugs, and the fact that when we save a patient from dying of one illness, we guarantee that he will later die of another, at further cost. But there are hundreds of billions of dollars wasted in the health-care system today, and we know exactly how to fix that.

The only reason we haven’t is because politicians don’t want it fixed.

While I’m certainly glad that someone on the Times op-ed page has come out against ObamaCare, David Brooks could certainly have been a bit more forceful about it. Nothing wishy-washy about Keith Olbermann’s rejection of ObamaCare.

But I was struck by one thing that Brooks wrote: “The fact is, nobody knows how to reduce cost growth within the current system.”

Of course we do.

Allow people to buy insurance across state lines and thus escape unwanted mandates and such economic idiocies as “guaranteed issuance.” If New Yorkers could buy health insurance in Connecticut, their insurance costs would drop by 40 percent overnight. How’s that for reducing costs, Mr. Brooks?

Reform tort law. Texas did exactly that a few years ago and the cost of medical malpractice insurance — which, of course, is passed on to patients — fell by an average of 21 percent, and 7,000 new doctors began practicing in the state, many in under-served areas.

Require that medical-service providers post prices for standard procedures, allowing comparative shopping by doctors and patients alike. Charges for standard procedures can vary dramatically because they aren’t readily ascertained. Once posted, they would tend to converge toward the lower end. Combined with medical savings accounts that incite health-care consumers to look for the lowest prices, the reduction in costs would amount to billions of dollars.

Allow the young to buy high-deductible, low-cost health insurance to protect them from highly unlikely but devastating accidents and illnesses that represent the greatest risks to their health. That would enlarge the insurance pool and decrease the number of uninsured who are shifted onto the bills of those with insurance. That allows lower premiums.

Health-care costs will increase for reasons we can do nothing about, like inflation, an aging population, new and expensive technologies and drugs, and the fact that when we save a patient from dying of one illness, we guarantee that he will later die of another, at further cost. But there are hundreds of billions of dollars wasted in the health-care system today, and we know exactly how to fix that.

The only reason we haven’t is because politicians don’t want it fixed.

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The Devil Is in the Details

The AP reports:

Americans are worried about hidden costs in the fine print of health care overhaul legislation, an Associated Press poll says. That’s creating new challenges for President Barack Obama as he tries to close the deal with a handful of Democratic doubters in the Senate.

For months the president held dog-and-pony shows at the White House, refused to talk about specifics, and declined (still has) to put forth his own health-care bill. We know why. When it gets down to the details, the public hates what he is selling:

For example, asked if everyone should be required to have at least some health insurance, 67 percent agreed and 27 percent said no. The responses flipped when people were asked about requiring everybody to carry insurance or face a federal penalty: 64 percent said they would be opposed, while 28 percent favored that. … “I think it’s crazy. I think it infringes on our rights as a citizen, forcing us to do these things,” said Eli Fuchs, 26, of Marietta, Ga.

Likewise, support for a ban on denial of insurance coverage for pre-existing conditions drops dramatically when people find out that their own insurance costs will go up, and support for mandates on employer coverage plunges when voters hear there are fines for employers who don’t comply.

No wonder the president wanted to avoid getting into the nitty-gritty specifics for so long. Who wants to be the bearer of bad news? But it’s not easy to pass legislation that is exceptionally controversial without getting into the weeds and confronting criticism head on. If Obama is such a great orator and so persuasive, why didn’t he tell the public about the “trade-offs” that are now proving to be a stumbling block?

Obama kept telling us during the campaign that politicians — those old-fashioned pols he was going to replace — didn’t treat voters like adults and deliver them tough medicine. But he’s done precious little of that since being elected. And by avoiding a full and thoughtful conversation on what he really wants — much higher taxes, a raft of new regulations with stiff penalties, and more government control of health care — he has left the heavy lifting to Harry Reid (never a good idea), and left the American people feeling like he’s tried to pull a fast one (also never a good idea).

The AP reports:

Americans are worried about hidden costs in the fine print of health care overhaul legislation, an Associated Press poll says. That’s creating new challenges for President Barack Obama as he tries to close the deal with a handful of Democratic doubters in the Senate.

For months the president held dog-and-pony shows at the White House, refused to talk about specifics, and declined (still has) to put forth his own health-care bill. We know why. When it gets down to the details, the public hates what he is selling:

For example, asked if everyone should be required to have at least some health insurance, 67 percent agreed and 27 percent said no. The responses flipped when people were asked about requiring everybody to carry insurance or face a federal penalty: 64 percent said they would be opposed, while 28 percent favored that. … “I think it’s crazy. I think it infringes on our rights as a citizen, forcing us to do these things,” said Eli Fuchs, 26, of Marietta, Ga.

Likewise, support for a ban on denial of insurance coverage for pre-existing conditions drops dramatically when people find out that their own insurance costs will go up, and support for mandates on employer coverage plunges when voters hear there are fines for employers who don’t comply.

No wonder the president wanted to avoid getting into the nitty-gritty specifics for so long. Who wants to be the bearer of bad news? But it’s not easy to pass legislation that is exceptionally controversial without getting into the weeds and confronting criticism head on. If Obama is such a great orator and so persuasive, why didn’t he tell the public about the “trade-offs” that are now proving to be a stumbling block?

Obama kept telling us during the campaign that politicians — those old-fashioned pols he was going to replace — didn’t treat voters like adults and deliver them tough medicine. But he’s done precious little of that since being elected. And by avoiding a full and thoughtful conversation on what he really wants — much higher taxes, a raft of new regulations with stiff penalties, and more government control of health care — he has left the heavy lifting to Harry Reid (never a good idea), and left the American people feeling like he’s tried to pull a fast one (also never a good idea).

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