Free Markets, Free People

ObamaCare: the myth and the reality

Perhaps I should say the building myth and the reality.

What is the building myth?  That the worst is behind it.  Megan McArdle fills you in:

Many of the commentators I’ve read seem to think that the worst is over, as far as unpopular surprises.

But she then takes a chain saw to that particular notion:

In fact, the worst is yet to come.

· 2014: Small-business policy cancellations. This year, the small-business market is going to get hit with the policy cancellations that roiled the individual market last year. Some firms will get better deals, but others will find that their coverage is being canceled in favor of more expensive policies that don’t cover as many of the doctors or procedures that they want. This is going to be a rolling problem throughout the year.

· Summer 2014: Insurers get a sizable chunk of money from the government to cover any excess losses. When the costs are published, this is going to be wildly unpopular: The administration has spent three years saying that Obamacare was the antidote to abuses by Big, Bad Insurance Companies, and suddenly it’s a mechanism to funnel taxpayer money to them?

· Fall 2014: New premiums are announced.

· 2014 and onward: Medicare reimbursement cuts eat into hospital margins, triggering a lot of lobbying and sad ads about how Beloved Local Hospital may have to close.

· Spring 2015: The Internal Revenue Service starts collecting individual mandate penalties: 1 percent of income in the first year. That’s going to be a nasty shock to folks who thought the penalty was just $95. I, like many other analysts, expect the administration to announce a temporary delay sometime after April 1, 2014.

· Spring 2015: The IRS demands that people whose income was higher than they projected pay back their excess subsidies. This could be thousands of dollars.

· Spring 2015: Cuts to Medicare Advantage, which the administration punted on in 2013, are scheduled to go into effect. This will reduce benefits currently enjoyed by millions of seniors, which is why they didn’t let them go into effect this year.

· Fall 2015: This is when expert Bob Laszewski says insurers will begin exiting the market if the exchange policies aren’t profitable.

· Fall 2017: Companies and unions start learning whether their plans will get hit by the “Cadillac tax,” a stiff excise tax on expensive policies that will hit plans with generous benefits or an older and sicker employee base. Expect a lot of companies and unions to radically decrease benefits and increase cost-sharing as a result.

· January 2018: The temporary risk-adjustment plans, which the administration is relying on to keep insurers in the marketplaces even if their customer pool is older and sicker than projected, run out. Now if insurers take losses, they just lose the money.

· Fall 2018: Buyers find out that subsidy growth is capped for next year’s premiums; instead of simply being pegged to the price of the second-cheapest silver plan, whatever that cost is, their growth is fixed. This will show up in higher premiums for families — and, potentially, in an adverse-selection death spiral.

In fact, she is exactly right.  Note how many of these surprises happen before 2016.  And, as they come true, perhaps … just perhaps … when voters are told that the rest of this nonsense is likely to come true too (it is the law, you see), they might believe it.

Perhaps.  The “Cadillac tax” was inartfully delayed until after the election.  However, the snowball will already be rolling down hill by then and you’d think the public would be open to believing that the rest of this abomination, that which was delayed, will indeed happen.  And you’d also believe they’d want to do something about that (that, of course assumes Obama doesn’t wave the magic executive pen and waive all of this until after the election).

But then, doing something would depend on what?  Well, getting elected officials that want to actually get rid of most of this monstrosity and are willing to say that and then do it.  Uh, that won’t be Democrats (well except perhaps blue dog Democrats, if they’re not extinct by then).

What it all boils down too is that voters will have to depend on Republicans to do the heavy lifting.  The question is will they do that if elected?  In other words, will Republicans be up to the job?

If I had to base it on the current crop – yeah, not so much.

~McQ

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7 Responses to ObamaCare: the myth and the reality

  • So far, it seems a lot of people are…like me…”opting out”.
     
    We ain’t gonna.  Nuh-uh.  And that will tend to grow as stories of civil disobedience begin being told.
     
    Meantime, the people getting it in the ass-il regions in the various creative ways this monstrosity provides can only grow in number, and there is a critical mass of red-hot anger that will be reached.

  • More food for thought…
    40% of all physicians in this country are over 50 years old – many if not most are looking to get out of medicine.  Reimbursements to physicians for these ACA plans are estimated (because no one really knows) to be lower than Medicare (but higher than Medicaid).  Many physicians no longer accept new Medicare patients because of the low reimbursement levels.
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    Rumor is that physicians may lose their medical license if they do not comply with federal mandate to utilized Electronic Medical Records (EMR).  I know several who refuse to jump onto this bandwagon.
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    Aside from ACA, HIPAA, OSHA etc., October 1, 2014 brings not a new set of numeric codes, but an entirely new way to code diagnoses (ICD-10) – and this also is not optional.  We go from about 11,000 codes to around 72,000.  The consultants I’ve encountered initially were telling their clients they’ll need at least 3 months of operating capital to survive the transition.  That has been revised to 6 months.  What small practice can afford this with declining reimbursements, increasing overhead costs, and exploding regulatory demands?
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    The carrot-and-stick approach was utilized to induce physicians to adopt EMR.  Stick:  reimbursement levels will be cut, increasing by .5% each year of non-compliance.  Carrot:  If you do an “attestation”, verifying you are following all the rules (i.e., submitting your statistical data to the feds, handing out clinical summaries at the end of each visit, etc.), you may qualify for reimbursement for some the costs of implementing this (average estimated to be about $50k).  Since this is done largely on the honor system, the data they’re gathering is garbage.  Just got an email from our state society – if you completed your attestation and declared yourself eligible for reimbursement, you’re now on the audit list and likely to be audited BEFORE you even get your money.
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    Oh yeah – and they’ll be creating government policy from garbage data submitted on the honor system from thousands of practices and hospitals across this land.  Go ahead and peel back yet another layer of fail…

  • … but I’ve been told that we will grow to love it

  • There is a viable alternative. Vote Tea Party, the Taxed Enough Already party. The only caveat is GO OUT AND VOTE.

    • Gosh, I sure wish it were that simple.

       

      Unfortunately, it’s not. The Tea Party has to fight not only the Democrats, but also the establishment Republicans, the media, and even the IRS.

       

      Plus, it faces a voter education problem that is about like trying to teach calculus to a cat. We have three generations who have been indoctrinated to believe the government *owes* them anything they need to be comfortable, including healthcare.

       

      I’d love it if the Tea Party earned enough votes to be the force behind the repeal of Obamacare. The odds are against it, but any Tea Party candidate (of the non-wacko variety) that is running in my area is getting my vote. 

       

      What is unfortunately more likely is that a sizable fraction of Tea Party elected officials and local leaders will be co-opted and defanged by the establishment GOP, the way Orrin Hatch did in Utah during the last election. After seeing Mike Lee knock out Bennett two years earlier, the establishment GOP adapted and undermined the Tea Party, and Gentry GOP member Hatch is back for six years.

       

      With the amount of money going through our politics, the forces of big government are powerful and vicious. I salute and support the Tea Party’s fight, but I have no illusions about their chances of success.

      • “The Tea Party has to fight not only the Democrats, but also the establishment Republicans, the media, and even the IRS.”
        ___
        Used to smugly chuckle at folks claiming the Democrats stole the last election.  Then comes the IRS revelations – and that’s just what’s been fessed up to.  Money being the lifeblood of politics (and the IRS effectively cut off their fundraising ability), it’s a pretty strong case they’ve got.