Obamacare: Fail?

Wizard-of-Oz
A predictable tsunami of a website disaster, inattention to details by the administration, repeated tossing of wrenches into the works by the republicans, a government shutdown, a defund movement, dozens of worthless votes against Obamacare rather than looking for how to fix it and gross overpricing are some of the problems that have led to the current  disaster in progress.

The Democrats wanted healthcare reform badly. And so it has been done. What would every thinking person want? Affordable insurance, optimal pricing, coverage for important items, reward for healthy lifestyle (good diet, no smoking, low substance abuse including alcohol, exercise), risk sharing over a large population group, no prior existing condition clauses, no drop clauses, and you don’t go bankrupt if you get sick.

That sounds great to most people not brainwashed by the media. It sounds good to republicans, independents and democrats. Many of these are principles historically espoused by people from both major parties.

One would expect that with a large risk pool insurance costs would go down. Most models predict that and it sounds like a reasonable assumption. But having healthy people in the risk pool is especially important according to most republican theorists and the democrats have gone along with that. So, there needs to be an incentive for young healthy and older healthy people to sign up. Right now there is a negative incentive: 1% of your salary as a penalty for not signing up. And the pricing itself is at the rip off level. Young people are told they are priced higher because they are covering old people who can’t be priced at more than 3 times their rate. Healthy older people have it high because they are underwriting pediatric dental care, fertility and obstetrics issues which they will not require.

And today, the insurance companies who like this plan which is a giveaway to them with overpriced insurance being subsidized in many cases by the federal government. While theoretically review boards were set up to keep rates affordable. They failed. In spite of high rates, some insurance carriers decided against participating in even populous states panels. This appears to be more an expression of politics than of finance. Which is the same as the group of red states declining to participate even with the financial incentives for them and for their needy constituents. How one wants “states rights” which used to be a code word for things that weren’t rights for many people, but still throw the responsibility back onto the Federal Government for implementation of a plan that allowed states to fine tune it and have their own individual carriers and plans makes no sense at all.

One of the main things I did not like about Hillarycare was the setting up of 50 different panels, groups, and the increased costs of having so many different insurance plans for so many states. We’ve got that now since the smaller states seemed to desire it. Now they have very few choices in those states and believe the prices are high because of that. Well, everyone who is not going to be subsidized finds the prices high: old people, young people, families, singles and groups. It is high. Do we have any potential remedies?

Single payer is not a possibility and not going to happen. So that is not on the table, and neither this nor any proposal discussed here is a step in that direction. What you have today is not a government takeover of insurance no matter what you’ve heard on cable news or liberal or conservative media. It just isn’t. It is still corporate today, but could use a bit of assistance of a different sort to get some downward pressure on the premiums.

First, get the oldsters out of the pool, so the young people can stop being told their plans are costly because there are so many freeloading old people on their plan. Before the debacle that is ongoing now began, I thought Medicare should be expanded to those 57 and up. But, the price gouging related to age begins at about age 50. So, I’d expand Medicare down to include, (“Medicare-Light” as a form of insurance) those down to age 50 (negotiable age of course). Those between 50 and 65 generally have far fewer health expenditures than those 65 to 80. Their premiums would be higher than Medicare is and would not be subsidized in any way by Medicare savings. Their pricing and cost assistance would be under Obamacare provisions. And voila, the older people are in their own risk pool, will pay money that will likely help underwrite Medicare for those over 65.

Everyone should get a cost incentive for regular exercise, no smoking, good health and normal BMI (with exception for athletes who have a high BMI from high muscle mass).

It is possible that this will not go far enough in price reduction. A plan that is somehow set up as a “self-funding” plan by those in it to keep costs low and administered by one or more insurance carriers could work. This would be a “public option” of a sort. Large corporations have done this, and many government plans have done this. With the exception of the state of Illinois which has done a terrible job, most other self funded plans have worked well. I am not an expert on self funded plans, and I do not know their status after January 1, 2014. But I’m sure there are experts who can decide if this or some other solution is viable to have an alternative for a lower priced option for those under 50. I am not necessarily a fan of the “Medicare for all” which for many would be what has been opposed as a government take-over of healthcare. Competition is important and the government as a monopoly holder of insurance plans would not be a good thing.

The current dumping of individuals from their individual insurance plans is the last gasp of cherry picking by the insurers. They could all have made the current plans updated and told the individuals how much the new compliant plans would have cost. But that would have been a reasonable approach. Dumping was quick, effective, and made everyone else look bad.

Yesterday, it was announced that Maryland would not implement the business portion of Obamacare. Somehow this has not made the National news. This has tremendous ramifications. It is an embarrassment for a state that said how wonderful their new plan rollout was going to be and how well prepared they would be. But their Wizard of Oz has been revealed as a fraud. There was nothing behind the curtain except a slow, mostly down, failing web site hiding overpriced plans. But this seems to me to indicate that it is not possible to get this off the ground on a national level right now.

Scrap it and start over is a political motto and a cop out. But I’d scrap the current web designs and vendors and start them all over. I’d fine tune the plan and amend it so that it is an affordable plan for more than just those receiving government assistance. Right now, the burden of pricing is on the federal government and those working Americans who do not need federal assistance. Rework those failing websites, start them over, and get to work on fine tuning and a major reworking of this plan to make it affordable for all.

References:

Maryland Delays Full Healthcare System Rollout (WSJ)

Illinois and The Future Of Healthcare

lincoln-logs-1An Open Letter to Governor Pat Quinn
Governor of Illinois

Dear Governor Quinn,

The state of Illinois is apparently in a precarious position. There are many ongoing discussions about when Illinois will become completely insolvent. Under current law, states can not declare bankruptcy. States do have many means to stay solvent. They can levy taxes, raise tax rates, create user fees, raise user fees, raise tuition on state schools, increase user fees on state highways and roads, create emergency fees on telephone services (911 fees), sell bonds, and even have a bake sale if they’d like. They can cut back on expenditures by a variety of means. The state can pay their employees less and have their employees take limited furloughs. The state can cut back on future benefits offered. A state may lease less space or lease space in less expensive parts of their state.

Selectively skipping payment on certain bills or types of bills by design and systematically avoiding select bills to one group of service providers should not be an option. In the case of the state of Illinois, a decision was made to not pay medical providers bills for 8 months after they have provided the service. In most states it is a legal offense with penalties for the slow payment of medical services. In many states the penalty is interest for payments that take longer than 30 days. This was set up for accidental slow payments. It was not set up for the deliberate avoidance of payment.

With a democratic legislature and a democratic governor it is surprising that Illinois is working so hard at undermining the healthcare system by not paying physicians for 8 months after they have provided services. The state of Illinois and its insurer maintain that claims are processed promptly but payments are delayed until money is allocated.

The conservatives blame the financial problems of Illinois on unions, pensions and benefits. Whatever it is, this is an untenable solution. You can not have payments and the agreements to pay for services arbitrarily abrogated. This creates many problems both for the patients having services (with their medical savings plans not paying for items in the year in which the services occurred and for the providers who don’t receive payment for months and months).

Since the Affordable Health Care Act (also dubbed Obamacare) is on the way and almost here, perhaps Illinois should just drop their bankrupt and unfunded ERISA healthcare benefit and allow workers to purchase individual plans from the state panels. Illinois can then decide how much they can subsidize the health plan, and allow Obamacare to demonstrate how well it works. It certainly can not work any worse then the current democratic designed, self-funded ERISA plan they are now using to undermine the health care delivery system. If the bills that are unpaid are those of the insurers, I can not see those bills going unpaid for 8 months. You will be booted out of your healthcare insurance.

Respectfully,

Stephen M. Pribut

References:

Insurance Payment Delays Causing Hardships for UIC Employees

Illinois Claims Handler Letter on Delay of Payments