A Loose Cannon

[UPDATED: Please see below]

Not really, but I couldn't resist the headline. Michael Cannon, Director of Health Policy Studies for the prestigious Cato Institute (and FoIB), has a terrific and timely guest column in todays USA Today. He writes:

"Simply expanding coverage would have little effect on the quality of care, health disparities, or how long we live, nor would it stop free-riders from shifting costs to others. In fact, expanding coverage through government regulation or tax-and-transfer programs would make our problem worse."

Amen.

But that's not all:

"If we want to increase access to health care, our first priority must be to contain costs. Nothing would help more than 200 million cost-conscious consumers."

Which is another way of saying what we've been touting for quite a while: health insurance costs increase because health care costs increase.

He also reminds us that "there are not 47 million U.S. residents who can't get health insurance. According to the Department of Health and Human Services, that Census estimate "appears to overstate the uninsured substantially compared to other surveys."

As they say, read the whole thing.

UPDATE: Commenter Zagreus Ammon has some issues with some of Mr Cannon's conclusions. On his blog, he goes into further depth; he lists 8 areas of contention. This is one of the great boons of the blogosphere: relentless fact-checking and civil disagreement.

Firing a Cannon at SCHIP

FoIB and Cato Institute wonk Michel Cannon has a fascinating and insightful article in the latest edition of the National Review Online. In it, he argues pursuasively that although the program has enjoyed modest success, it has done so at an unjustifiable price.

Here's a taste:

"It’s not even clear that SCHIP’s method for improving children's health—expanding insurance coverage—is the right one. The New England Journal of Medicine reports large gaps between the quality of care children receive and what they should receive, even if the children have insurance. That study’s authors conclude, “Expansion of access to care through insurance coverage, which is the focus of national health care policy related to children, will not, by itself, eliminate the deficits in the quality of care.”

Note well that last caveat about "quality of care." How come *that's* never addressed by those who favor socialized medicine?

As they say, read the whole thing.

Cannon Fodder

FoIB (and MedWonk Biggie) Michael Cannon has an interesting article in this month's Forum for Health Economics & Policy journal. In it, he proposes his solution to the health insurance issue:

"The creation of tax-free health savings accounts presents a new opportunity to reduce the distortions created by federal tax preferences for health-related expenditures that ultimately could help eliminate those distortions."

What he's talking about here are so-called "Large HSA's" with deductibles starting at $8000 ($16,000 for familes). His contention is that these plans, with ultra-low premiums, will allow employers to funnel more cash away from insurance carriers and into their employees' pockets.

A laudable goal, to be sure, but I have some issues with it. Last year, Michael was kind enough to share with me the "white paper" on which this was based. I found the idea intriguing (after all, I am a major proponent of CDHP and HSA's), but had some reservations, which I shared with him at the time.

I am absolutely thrilled for Michael to have been published in such an august journal, and hope (and presume) that his piece will spark a much-needed discussion.

I'd also like to share with our readers my response to Michael last year. Hopefully, this too will help move the ball forward:

1) I've always been a believer in "rising tides raise all ships" (paraphrase): when folks talk about the inequity of the employer write-off, they always talk about deleting or capping it. I've always wondered why it wouldn't make more sense to expand it; that is, enable everyone who buys their own cover to deduct it. I see that you've taken some of that with your bigger/better HSA idea, and that's a good thing.

2) Your idea about basically taking the whatever the e'er/e'ee pay for h/c insurance and running the whole thing thru an HSA is intriguing. Seems to me that this is a variation on (expansion of?) "cafeteria plans." I really like that.

Putting those two together (plus whatever else I haven't gotten to yet), I can see where there would be some significant progress. My only reservation is one of pragmatism: how likely is it that the class-warriors would embrace this (or even consider it at all)? Obviously, that's not a reason not to pursue it, but do you have a strategy in mind for dealing with the inevitable obstructionists?

ADDENDUM: In subsequent correspondence, I also pointed out to Michael the feasibility conundrum such a plan would face. Briefly, insurers know that there is an absolute premium "floor," below which they cannot go. These include fixed and administrative costs, morbidity and reserves. In other words, no matter how high the deductible gets, there's really only "so far" the premiums can be trimmed, until there's no savings to be had. That's why, for example, you save (say) $100 going from a $3000 to a $4000 deductible, but only $25 going to the $6000.

The other problem is that, while I remain convinced that HSA's are a potent weapon in the fight against health care costs and consumer apathy, I don't believe that it is the only such. While "Large HSA's" may appeal to some "large employers," I'm not convinced that they'll play well with smaller groups (or in Peoria, as they say).

Nevertheless, Michael's made an impressive beachhead in the ongoing battle to solve the health insurance "crisis," and we applaud him for that.

Cannon Fire!

FoIB (and Cato Institute director of health policy studies) Michael Cannon fires another volley across the bow of ObamaTax advocates:

More GruberGate Cannon-fire

As we've noted for a while, Herr Dr J Gruber has managed to talk himself into quite a corner. While making big coin (for apparently small work) designing and implementing the ObamaTax, casually demeaning the poor, feckless congresscritters who voted for it (that we might then learn what's in it), and then doubling down on both, he's managed to raise quite a few hackles.

Once of his most vociferous - and successful - hacklers has been FoIB Michael cannon (oh, yeah, he's also the Cato Institute's director of health policy studies). Today, Michael has a special treat in store:

Grubergate, the Mini-Series

Presented in eight parts (from Stupid Voters through What the Future Holds), you'll be entertained and enraged (likely in equal measure). It's the Don't Miss hit of the season!

Cannon-fire scores a hit

A while back, we noted that uber-wonk Michael Cannon claimed that citizens of states with Fed-run Exchanges weren't eligible for ObamaTax subsidies, and that the employer mandate was inoperative in those states. At the time, the story didn't have a lot of "legs;" indeed, the IRS ran rough-shod right over it, announcing far and wide that they were going to ignore that part of the actual, written, passed-by-Congress and sign-by-the-President law.

As one might imagine, this hasn't sat well with various and sundry folks who feel, perhaps nostalgically, that the law-as-written should mean something, and so a group of them filed suit to have it enforced.

The lawsuit has languished for a while, but has now been given new life by a Federal judge who - gasp! - understands that the plaintiffs have a legitimate case:

"A federal judge on Tuesday refused to dismiss a case that could fatally cripple the Obamacare health insurance law ... 'The IRS cannot rewrite the law that Congress passed'"

But of course they can do just that, and so far what's stopping them?

Bueller? Anyone?

More Cannon Fire

Cato Institute Director of Health Policy Studies (and FoIB) Michael Cannon summarizes most of ObamaCare's broken promises and failed metrics.

Here's a quick summary, courtesy of Americans for Prosperity:

Cannon Fodder/LinkFest

FoIB Michael Cannon, the Cato Institute's director of health policy studies, has a trio of interesting, provocative and insightful posts up:

■ Oops, Maybe ObamaCare’s Cost Controls Won’t Work after All wherein MC reports that the Congressional Budget Office just revealed they aren’t very successful, after all:

"In nearly every program, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program"

Ooops indeed.

■ *Will the Feds Be Ready With the Fallback Insurance Exchanges by October 2013? As we've repeatedly pointed out here at InsureBlog, the Exchanges aren't really the panacea they're being touted as. The reality is that less than half of the 58 states are actually on-track with having their Exchanges "ready to go" on schedule.

Quelle surprise.

■ Wisconsin Stiff-Arms ObamaCare Seems that Badger State Gov Scott Walker has told the Feds "thanks, but no thanks," and has ""announced Wisconsin will return the $37 million “Early Innovator Grant” it received from the Obama administration under the health care law."

Not just no, but Hell No.

Precision Cannon Fire

As we noted a week ago, some Grand Canyon State citizens are going to have a problem this November:

"People in Pinal County are at risk of a health insurance problem that hasn't happened anywhere else in the country: no companies offering marketplace health insurance"

Turns out, Aetna was the sole remaining carrier on that state's Exchange, and they've bailed. That means that, if you live in Pinal County (home of the Boyce Thompson Arboretum) and you want to buy health insurance, you'll have to buy if off the Exchange.

Which also means you get to pay full-freight: no subsidies for off-Exchange plans.

And that most likely means you'll be faced with plans that are unaffordable. No problem: the ObamaTax makes provision for such circumstances, and offers an exemption for folks who can't afford premiums.

Except there's a pretty significant, but under-the-radar, catch: this exemption won't be available to the folks in Pinal County.

Why not?

Well, as FoIB Michael Cannon explains, "[t]he unaffordability exemption applies only if “the annual premium for the lowest cost bronze plan available in the individual market through the Exchange” is unaffordable." But there are **no** plans on the Exchange.

See the problem?

Read the whole thing, you'll be glad (and/or furious) that you did.

Death Panels take Cannon Fire

As in Cato's Michael Cannon, who heads up a special Cato forum at noon tomorrow (Thursday). Michael is joined by Len Nichols, the Center for Health Policy Research and Ethic's Director (whom we've met before), and a few other "friends."

The forum will discuss the ObamaTax's Independent Payment Advisory Board (IPAB) Death Panels, and takes place at the Institute. For those of us who can't be there in person (and thus will also miss out on lunch), the event is being livestreamed, as well.

Loose Cannon Update

Recently, we noted that FoIB and Cato Institute biggie Michael Cannon had an op-ed in USA Today. Well, building on his new-found celebrity (notoriety?), Michael will be a featured guest on this evening's edition of ABC's 20/20. In fact, the whole show is on the health care delivery and finance debate, facilitated by John Stossel.

As they say: Check your local listings.

Exchanges, Subsidies and intent

[Note: This post was co-written by Henry Stern and Bob Vineyard]

We've often lamented that it's too bad no one read the ObamaTax bill before they passed it, and with good reason. A fundamental problem is that the 2000+ pages of the bill, and the 13,000+ (so far!) pages of reg's promulgated to enforce it, keep handing up surprises. As we've pointed out, folks in states which opted for Federally-run Exchanges aren't eligible for the ObamaSubsidies, thereby driving their costs even higher.

Or are they?

Cato's Michael Cannon has been, perhaps, the most vocal in pointing out this discrepancy:

"This was no “drafting error.” During congressional consideration of the bill, its lead author, Sen. Max Baucus (D-MT), acknowledged that he intentionally and purposefully made that bailout conditional on states implementing their own Exchanges ... On May 24, the IRS finalized a regulation that says the law’s $800 billion [subsidy funding] will not be conditional on states creating Exchanges"

So what's the big deal?

The following appeared on a forum for insurance professionals in which Bob participates (it's about the ObamaSubsidies noted above):

"If you are ELIGIBLE to join any employer group plan where your portion of the premium is less than 9.5% of your income, then you won't get a subsidy. Next - drumroll please - this also holds true for dependents ... Due to the fact that the EMPLOYEE portion is less than 9.5% of the FAMILY income, the entire family is disqualified from a subsidy even if the employer pays nothing for dependent coverage."

In fact, and this is a real kick in the shins, it doesn't seem to matter whether you actually sign up for the group or not: maybe you found a better deal on the Exchange [ed: hey, it could happen!] and buy it, presuming that the net premium will be less because of the subsidy. Nope.

And it's no better if you do sign up for the group plan:

"Actually, the employer doesn't even have to pay a large portion in order for this to kick many families out of the subsidy ... a family of four must pay $729 in premium to equal 9.5% of their income if they make 400% of FPL. That means that any employer group health plan that charged that employee less than $729 for the EMPLOYEE-ONLY coverage would disqualify him and his dependents from receiving a subsidy. Nice."

And it only gets better worse:

Halbig is it?

Last week, we noted that Michael Cannon's years-long coverage of the subsidy vs Federally-run Exchange issue had passed another hurdle:

"A federal judge ... refused to dismiss a case that could fatally cripple the Obamacare health insurance law ... 'The IRS cannot rewrite the law that Congress passed'"

This was a substantial blow to proponents of the ObamaTax, and this week, Michael has more details on why this is, in fact, a very big deal. I highly recommend that you click on through.

But I wanted to highlight a few items. Joel L. McElvain is the government's Obamastration lawyer arguing the case on behalf of his masters. Here he attempts verbal jujitsu, with predictable effect:

"Congress is creating a “legal fiction” that each state has established an Exchange. If a state does not establish an Exchange, “the premise stands” that it has. Therefore, when the federal government establishes an Exchange, it is, fictionally but legally, “an Exchange established by the State.”

I told Michael that this gave me a headache, and wondered how Mr McE could say that with a straight face.

A bit later, we run into our old "friend," Timothy Jost. Esteemed co-blogger Patrick recently skewered Mr J here:

"So tell me Tim, as a law professor which quote of yours is correct?"

Definitely read Michael's piece, it's quite enlightening.

Cavalcade of Risk #53: Second Anniversary Edition

Welcome to our 2nd Anniversary Edition of the Cavalcade of Risk. Pickins' were slim this week; although we got a few good risk-related posts, we were inundated with investment-related entries that had nothing to do with the nature of the Cav. Nevertheless, we strive to present quality (if not quantity).

As this is our Anniversary Edition, I'm going to give top billing to folks who submitted a "Best of..." post. But don't stop there, dear reader, there are more risky posts that follow:

Vintage Posts

■ Colorado Health Insurance Insider's Jay Norris considers this his favorite risk-related post of the past year. Based on a conversation he had with a client, Jay points out the importance of having your own individual (or family) health insurance plan - even if you have an option for group coverage through your employer.

■ Back in November, the Silicon Valley Blogger pointed out the risks of borrowing to purchase a home. And then he showed us how to mitigate those risks.

Cutting Edge Posts

■ Our favorite Healthcare Economist, Jason Shafrin, draws a non-intuitive connection between mortality (the ultimate risk assessor) and increased educational opportunities.

■ Cato Institute's Michael Cannon (who'll host the upcoming mid-July Cav) argues that the individual health insurance market actually does a better job than the group market in protecting folks with significant health problems.

■ Dan Melson, blogging at Searchlight Crusade, discusses the risk one faces when making a "good faith" deposit in real estate transactions. Who knew?

■ Identity theft is a big deal, and Jim at Bargaineering discovers a few DIY tricks to minimize the risk that yours will become fair game.

■ And while we're on the subject of identity and risk, Sox First blogger Leon Gettler reports on a New York-based bank that seems to have, um, misplaced the personal info of 4 and a half million people. Yikes!

■ Just back from a jaunt to foreign lands, Workers Comp Insider's Julie Ferguson has a timely post about the millions of teens who take on their first jobs this summer. Many young people want to fit in on the job and please their new boss, but WCI has the stories of four teens who learned about work safety the hard way.

■ In keeping with Jason's theme on mortality, our own Bob Vineyard has a timely post on the importance of end of life planning, including living wills and other advanced directives.

■ Last minute addition: Lara Utter, blogging at IowaBiz, asks if you're truly prepared for a catastrophic loss, and posits some helpful ways to deal with one. (Courtesy of FoIB Joe Kristan)

That's it for this edition, please stop by Bargaineering on June 18th for our next installment.

Bad News Exchange

As Bob noted a few weeks back, "[c]ome 2014 "Exchanges" will be where many American's buy insurance. You will be encouraged to go online or call an 800 number and pick a plan. You will discuss your needs with salaried navigators that are unlicensed and unregulated."

Or will you?

Although the Exchanges are ostensibly a key component of ObamneyCare©, there's now some question as to their viability. In a pair of posts from FoIB (and Cato's Director of Health Care Policy) Michael Cannon, we learn that:

"[T]he federal government doesn’t have the money to create ObamaCare Exchanges, and the administration has no hope of getting that funding through the Republican-controlled House. So if states don’t create Exchanges, they might not exist."

Here's the rub: if your state demurs, then you're not eligible for the promised subsidies.

And speaking of states who've given HHS Secretary Shecantbeserious and her Exchanges the snub, legislators in the Beaver State have "blocked approval of Oregon’s health insurance exchange."

Are dominoes beginning to fall?

The Benefits Package: New Year's Edition

Welcome to the first Benefits Package of the new year (and, indeed, of the new decade). We're grateful to Evan for the opportunity to be the first "non-Evan" hosts, and to this week's participants for sharing their insights and ideas.

I'm also pleased to help launch a new "niche carnival;" that is, one with a more narrowly defined focus. It seems to me that these smaller versions are less intimidating for hosts and readers alike. Certainly, it's a lot easier to edit and post a carnival with 8 or 10 (or a dozen!) entries than some of the "big boys." So if you're even remotely interested in hosting a future edition, please drop Evan a note: I guarantee you you'll find it a simple, yet rewarding, experience.

And now, on with the show:

■ David Kerrigan looks under the hood at what, exactly, drives the decision to keep or change group insurance carriers. You may be surprised at the role played by network size.

■ The Cato Institute's Michael Cannon wonders if the administration is perhaps playing fast and lose with their numbers-crunching, at least regarding how it deals with expenditures and the private sector. Great food for thought.

■ Anne Freedman combines some (scary) statistics with good old-fashioned common sense as she explores the growing problem of an aging work-force. Specifically, older workers may be playing an outsized role in keeping out "new blood." This doesn't bode well for our current unemployment situation.

■ Only David Williams could combine coupons, bullets and FuzzBusters and come up with an intriguing post on why it's bad policy for drug companies to make your co-payment for you.

■ Benefits Package founder (and uber-wonk blogger) Evan Falchuk shares some important lessons he learned from a group of Longhorn business folks. He's careful to point out that it's less prediction than recognition.

■ Another great health policy wonk, David Harlow, takes aim at Jeff Goldsmith's recent article on Accountable Care Organizations (ACO's). While acknowledging that Mr G makes some valid points, David's convinced that the basic ACO model is still salvageable.

■ Jennifer Benz and Ed Bray provide us with a handy two-minute overview of PPACA (known around these parts as ObamaCare©); just the ticket when the boss asks "what's this all about?" It's handy, brief and timely.

■ There's no question that prescription drug prices play a key role in how much we pay for health benefits. George Van Antwerp lays out the case for efficient innovation in how PBM's (Pharmacy Benefits Managers) market themselves to demonstrate the value they bring to the table.

■ Just as pharmacy benefits impact the cost of health care, so may improved utilization of Information Technology (IT). Blogging at Action for Better Healthcare, Kester Freeman reports on a new IT initiative currently underway by IBM and Premier Health Alliance that hopes to effectively address the issue.

■ As Keith McMurdy explains, pension benefits are also affected by the current economic downturn, and could lead to a "withdrawal liability" problem.

■ In our own contribution, we discuss how some employers are going mental over mandates.

And that wraps up the Benefits Package, Third Edition. Be sure to stop by Jennifer Benz's place on the 24th for the next exciting installment!

ObamneyCare© Glitch - IB Ahead of the Curve

Over two months ago, Bob noted that citizens in states that opted out of creating their own Exchanges would be ineligible for premium subsidies. Since so few states have thus far even begun exploring how to set up an Exchange, this has now hit the radar.

As Cato's Michael Cannon writes in today's Wall Street Journal:

"[Obamneycare©] offers "premium assistance"—tax credits and subsidies—to households purchasing coverage through new health-insurance exchanges ... [Obamneycare©] authorizes premium assistance in state-run exchanges (Section 1311) but not federal ones (Section 1321)."

Ooops.

So folks in states utilizing Exchanges run by the Federales will have a choice: buy (and pay for) unaffordable health insurance, or go to jail.

So not only didn't they read it before they passed it, they didn't even debug it.

2 Cool Monday

■ Last week, Cato's Mike Cannon participated in a debate about the pros, cons and effects of individual health insurance mandates. This is important, fascinating stuff, and I highly recommend the video to our readers.

■ Longtime readers may recall our guest post from Medical Office Manager Kelley Beloff. Her practice has truly embraced health care transparency, and even makes its "menu" available to their patients. With Kelley's permission, this intriguing look "behind the scenes" is available for download here. Enjoy!

Shecantbeserious KEEPS digging

At some point, HHS Secretary Kathy "A W Livingston" Shecantbeserious became a parody of herself. The exact moment that this occurred is unclear, but certainly this kind of over-the-top rhetoric does little to diminish the feat:

"I think there's no question ... people will run out of money, very quickly [under the GOP Medicare plan if you have cancer]. And if you run out of the government voucher and then you run out of your own money, you're really left to scrape together charity care, go without care, die sooner. There aren't really a lot of options.”

Paging Dr Bugs Bunny.

First, it's pretty pathetic that the same agency which boasts Sir Donald Berwick would have anything to say about killing off old people: pots, kettles and all that.

More importantly, though, the so-called Ryan Plan would do no such thing. The "vouchers" would enable seniors to pick the plan that's right for them, but includes a safety net for the most catastrophic of claims. And it's pretty funny that the same political party that brought us ObamEchanges© would deride the same kind of mechanism for seniors.

Cato's Michael Cannon rebuts that "voucher-like Medicare reforms will lead to reductions in the per-unit cost of producing certain goods and services, and therefore to lower prices." Considering health care in this way helps to really drive home the point that costs are not, in fact, the same as expenses (a point that we've made repeatedly here at IB).

Michael also reminds us that "”nearly 30 percent of Medicare’s costs [spending!] could be saved without adverse health consequences.”

Indeed.

ObamaCare© Going Forward: What the Future Looks Like

As Bob noted the other day, we're only now beginning to see the implementation of key pieces of this train-wreck. But we can already extrapolate the results, based solely on the two pre-existing nationalized services under which so many Americans already suffer: Medicare and the Veteran's Administration.

We discussed Medicare's many faults before, from its ubiquitous claims denials (far worse than any private insurer's) to its strangling of providers. But we haven't really looked at the VA; luckily for us, FoIB Mike Cannon has done the legwork, and it's not pretty:

"The Veterans Health Administration shows how incompetent the federal government is when it comes to making medicine a patient-centered enterprise ... John Lamie survived six roadside bombings in Iraq, only to have the Department of Veterans Affairs refuse to accept three months’ worth of medical tests he underwent for jaw and shoulder wounds — tests performed by VA-approved doctors at VA facilities."

Believe it or not, it actually gets worse from there.

At this point, of course, there are two potential outcomes: either ObamaCare© is repealed (less likely) or that a lot of folks will be looking elsewhere for care.

Time will tell.