Thursday, February 23, 2012

Obamacare - At What Cost?

As Henry says, we get letters, or in this case, comments.

One of our regular readers offered his views of Obamacare and what has been accomplished to date. Below are his observations . . . as well as ours.
So let’s turn to the real story of the low costs of the first year of the ACA and what has occurred while cost increase have mitigated:
1) 2.5 million young Americans are now covered on their parents plans
At what cost?

For argument sake, let's assume a relatively low premium of $100 per month per child. If these "children" are in fact on the parents plan there is a good chance the premium is considerably higher but $100 is a place to start.

So how much are parents, and their employers, paying to cover these young adults that, in most cases should be on their own and self sufficient?

Using our reader's figures of 2.5 million plus our figure of $100/mo this coverage comes to $250,000,000 per month that must be paid by someone.

That's an additional $3 billion in annual premiums.
2) 54 million Americans with insurance got an array of preventive care services with no copay or out of pocket
Of course we know that preventive care isn't really free, so someone has to pay for it. Annual exams at a par provider, exclusive of immunizations and anything other than routine lab, cost the insurance carrier about $250 per visit. Of course you have to run that through the MLR machine, which means the premium must be increased by $300 - $315 to cover the cost of the "free" exam.

Offering this benefit to 54 million people means around $16 billion in new premiums paid by someone.

Since when do we need insurance to pay for a $250, once a year exam?
3) Seniors saved over $4 billion in drug costs due to the donut hole closing
Gotta admit, I have no idea how to calculate this one, but for chuckles and grins let's just use the $4 billion figure and not even add any overhead costs.

That means seniors will see their PDP premiums rise by at least $4 billion to offset the closing of the donut hole.
4) 32 million seniors got an array of preventive care services with no copay or out of pocket saving billions more
Here we go again with the free preventive stuff. No reason to deviate here, although at this point MA plans and Medigap are not subject to MLR. Their loss ratios are actually richer than plans subject to MLR, so the 80% figure is being generous.

So 32 million x $250 divided by .80 adds another $10 billion to MA and Medigap premiums, out of pocket to seniors that lack MA or gap cover or to Medicare claims.

So far we have shifted some $33 billion to the pocket book of roughly 88 million people.
5) Medicare Advantage premiums are flat to down for the first time ever even though subsidies to these private insurer plans lost a 14% subsidy that will save Medicare $500 billion over 10′ years
While it is true that many MA plans did not raise premiums, there were quite a few plans that withdrew from the market place, especially in rural areas. Many seniors either transitioned to Medigap plans or simply returned to original Medicare and will pay their out of pocket costs when they can afford it.

Even with allegedly stable premiums, every plan I am familiar with increased cost sharing via higher copay's and higher out of pocket.

Focusing on MA premiums alone is a bit disingenuous.
6) Medical loss ratio rules will result in nearly $2 billion in rebates to employers and consumers. Billions more is being saved from rate increase being subject to review in all 50 states thus discouraging insurers from being able to do whatever they want in increasing rates without justifying them publicly.
Again, we are playing games here.

Maybe the billions in savings and rebates thrown around by this reader are accurate, or perhaps not. What I can say is this:

Quite a few carriers have already exited the individual major med and small group market. This translates in to less competition, fewer choices and higher premiums. Some carriers have laid off staff and transferred customer no-service overseas.

Not only are American jobs being lost over Obamacare but customer service, which has never really been a hallmark any way, has deteriorated significantly.

Of course the idea of MLR and Premium Police never made any sense to me. In a competitive environment the market, not some government body, decides what the real rate should be.
7) Medicare fraud enforcement saved a record $4.6 billion in recovered payments and the ramped up enforcement team likely reduced ongoing fraud even further by deterring criminals
Ah yes, the perennial waste, fraud and abuse argument.

Will someone please explain why we needed a 2200 page law (that no one bothered to read before passing) combined with countless under the table deals, not to mention billions of dollars in new taxes before DC did what we pay them to do any way?

That is, curb waste, fraud and abuse . . .
8) Annual and lifetime maximums no longer exist which will save many families over time from medical bankruptcy.
Medical bankruptcy is a fraud proven many times over. The additional premium for removing annual and lifetime caps is nominal, not even worth factoring in to the cost of Obamacare.
9) Children no longer face pre ex restrictions and that will apply to all of us in 2014
True, but then children in most states can not obtain insurance on their own. "Child only" plans no longer exist in almost every state, even for perfectly healthy children.

How is that working for you?

So to recap, we have about $33 billion in new premiums to cover items that were previously paid directly by consumers but without the insurance carrier overhead factored in.

We have millions of seniors that lost access to MA plans, plus millions more that now have higher PDP premiums and/or higher out of pocket costs.

American jobs have been lost and shifted overseas. Literally thousands of agents have simply given up and left the business, meaning millions of potential buyers are left to fend for themselves in the maze of health insurance or rely on the "expertise" of home office trainee's.

We have a law that may prove yet to be unconstitutional, over half the population that have taken a "take your mitt's off my health insurance" stance, higher overall costs, fewer choices and millions of children who can only obtain health insurance by riding on their parents' plans at significantly higher premiums than existed before Obamacare.

I gotta ask again, how is this better than before?
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