Was Obamacare Worth It? How Many of the Previously Uninsured Have Really Signed Up?

Health insurance reform was long overdue. But did it need to be done the way the architects of the Affordable Care Act did it?

Obamacare was enacted, and the private health insurance market fundamentally changed, so that we could cover millions of people who previously couldn't get coverage.

Are enough people getting coverage who didn't have it before to justify the sacrifices the people who were already covered––in the individual, small group, and large employer market––are making or will make?

I will suggest the country will never really be able to judge how good or how bad Obamacare is until that question is answered.

The One Thing That Could Save Obamacare––And The Obama Administration Needs To Do It In the Next Month

To properly price the exchange health insurance business going forward the carriers have to sharply increase the rates. A senior executive for Wellpoint, which sells plans in 14 Obamacare exchanges, is quoted in a Reuters article telling Wall Street analysts there will be big rate increases in 2015, "Looking at the rate increases on a year-over-year basis on our exchanges, and it will vary by carrier, but all of them will probably be double digits."

If the health plans do issue double digit rate increases for 2015, Obamacare is finished.

There are a ton of things that need to be fixed in Obamacare. But, I will suggest there is one thing that could save it.

What Individual Mandate? It is Looking More and More Like the Obama Administration Will Not Enforce the Individual Mandate

It looks to me the Obama administration will claim at least 6 million enrollments by the end of March. But that will mean 75% of subsidy eligible people will not have bought a plan.

Will the 2014 mandate to buy health insurance be enforced come tax time?

It sure doesn't look like it.

To be sure, the administration is not making any major announcements prior to the close of open enrollment on March 31 the better to get as many people to sign-up as possible.

When asked about waiving the individual mandate at a recent Congressional hearing, HHS Secretary Sebelius said, "That's what the law says and that is what will happen."

Well sort of.

Republicans Considering Proposing High-Risk Pools––Health Insurance Ghettos

We are hearing that Republicans are considering proposing high-risk pools as part of an alternative health insurance reform proposal to Obamacare.

A high-risk pool proposal would likely mean the Congress giving states the flexibility, and perhaps funding, to set up these risk pools. Risk pools by definition are a place where people can go when they are not able to buy health insurance in the regular market because they have a health problem.

That means Republicans would be turning the clock back to a time when insurance companies could turn people down for health insurance because of their health status.

Silly Republican Insurance Reform Ideas––Selling Insurance Across State Lines and Association Health Plans

There are news reports indicating Republicans will be proposing such longstanding health insurance reform ideas as selling insurance across state lines and association health plans.

These ideas have been around for some time and have served Republicans as convenient talking points out on the campaign trail positioned as common sense alternatives to Obamacare.

When I discuss these ideas with people in the insurance industry––people who know how their market really works––these ideas generally command plenty of snickers.

Gallup: The Number of Those Uninsured Is Falling––Why All of the Amazement?

Reading the many press reports about the new Gallup poll estimating the number of the uninsured I couldn't help be surprised by their surprise.

Under the headline, "Obamacare Working?" CBS reported that Gallup found the uninsured rate had fallen to 15.9% in a survey taken during January and February. That was down from 17.1% at the end of 2013––a reduction of 2.5 million adult Americans.

Other news reports have pegged the reduction in the uninsured to be worth as many as 4 million people.

The Los Angeles Times headline said, "Obamacare Meeting Goal of Reducing Number of Uninsured, Data Indicate."

Well, dah!

The Gallup survey is fully consistent with the reports that Obamacare's enrollment is coming in at a tepid rate at best and there are serious questions about the number of uninsured that are buying Obamacare.

Obamacare: The Uninsured Are Not Signing Up Because the Dogs Don't Like It

Here's my version of a classic corporate marketing story from the 1980s:

A big dog food company decided to come out with the latest and greatest new dog food. They hired the smartest consultants from the big universities in Boston to advise them. They had their scientists, who know far more about nutrition than any consumers or the dogs, come up with the most nutritious formula they were convinced was good for them. The engineers designed a new and cost effective manufacturing process that capped their overhead. The marketing department allocated enormous amounts of money to the various state sales offices and put together a very expensive and colorful national ad campaign led by a charismatic spokesman. The company trained a newly recruited sales force and signed up the biggest supermarkets for the best shelf space.

It did not sell.

Extending the Obamacare Cancelled Policy Moratorium––One More Contortion in the Pretzel

The administration has confirmed that the individual policies that were supposed to be cancelled because of Obamacare can now remain in force another two years.

For months I have been saying millions of individual health insurance policies will be cancelled by year-end––most deferred until December because of the carriers' early renewal programs and because of President Obama's request the policies be extended in the states that have allowed it.

The administration, even today, as well as supporters of the new health law, have long downplayed the number of these "junk policy" cancellations as being insignificant.

Apparently, these cancelled policies are good enough and their number large enough to make a difference come the November 2014 elections.

More Obamacare Unravelling

On Friday, I asked if Obamacare was unraveling.

The Obama administration announced today that they are delaying the employer mandate again.

In the announcement, they said that large employers, those with at least 100 workers, will only have to cover 70% of their otherwise eligible workforce in 2015 and 95% in 2016 and beyond.

The administration also said that employers with 50 to 100 workers will have their mandate to provide affordable health insurance to their workers delayed until 2016––one more year's reprieve.

Employers with less than 50 workers, not required to provide coverage by the Affordable Care Act, will be exempt from the original reporting requirements in 2015 and every year thereafter.

Democrats have been under increasing political pressure from employers back home because of the reporting requirements as well as the mandate that employers with more than 50 workers offer coverage. No doubt Congressional Democrats have been pressuring the administration to back off on the requirements with an election approaching in the fall.

Is Obamacare Unraveling?

Rumors have been circulating in the marketplace all week that the administration was thinking of extending the individual health insurance policies that Obamacare was supposed to have cancelled for as much as three more years.

Those rumors have now come out into the open with Tom Murphy's AP story that began running today.

That the administration might extend these polices shouldn't come as a shock. My sense has always been that at least 80% of the pre-Obamacare policies would ultimately have to be canceled because of the administration's stringent grandfathering rules that forced almost all of the old individual market into the new Obamacare risk pool.

But with the literal drop dead date for these old policies hitting by December 31, 2014, that would have meant those final cancellation letters would have had to go out about election day 2014. That would have meant that the administration was going to have to live through the cancelled policy nightmare all over again––but this time on election day.

Judging Hospital Quality and Narrow Networks––Barking Up the Wrong Tree?

It isn't news for anyone to suggest the most expensive hospitals may not be worth the money. 

A recent paper published in the journal Health Affairs, "Understanding Differences Between High- and Low-Price Hospitals: Implications For Efforts To Rein In Costs" makes some excellent points regarding the pricing power of the largest hospitals and the wide variation in local prices. But then it attempts to make some comparisons between cost and quality of care concluding that "the high-priced hospitals' performance on outcome-based quality measures was mixed.".

Looking at the analysis suggesting that cost doesn't necessarily equal quality and comparing it to some real life situations I've seen leads me to believe these studies are missing something really big.

The Republican Alternative to Obamacare––Their Aversion to Fixing It May Prove to Be a Political Mistake

The Republicans have an alternative to Obamacare and they may have given the Democrats a big political gift.

The proposal was unveiled last Monday by Republican Senators Richard Burr, (NC), Tom Coburn (OK), and Orrin Hatch (UT).

The Republican plan targets many of the most unpopular parts of the Affordable Care Act such as expensive mandated benefits and the resulting lack of choice, the individual mandate, the employer mandate, and age-rating disruptions.

My sense is that most independent voters––the ones that matter in an election-year––don't want Obamacare repealed; they want it fixed.

The problem for Republicans is that they have such a visceral response to the term "Obamacare" that they just can't bring themselves to fix it. The notion that Obamacare might be fixed and allowed to continue as part of an Obama legacy and as a Democratic accomplishment is something they can't get past.

So, the only way Republicans can propose an alternative to Obamacare is to first wipe the health insurance reform slate clean and start over.

There is a problem with that strategy. Have you heard the one about, "If you like your health insurance you can keep it?"

Survey Data and Market Reports Say the Uninsured Are Not Signing Up for Obamacare

In my last post, I asked, "But what if most of the uninsured literally don't buy Obamacare?"

"Only 11% of consumers who bought new coverage under the law were previously uninsured," according to a survey of 4,563 consumers eligible for the health insurance exchanges done by McKinsey & Company and reported in Saturday's Wall Street Journal.

The Journal reports that "insurers, brokers, and consultants estimate at least two-thirds" of the 2.2 million people who have so far signed up in the new exchanges are coming from those who already had coverage.

This is consistent with anecdotal reports from insurers I have talked to that are seeing very little net growth in their overall individual and small group markets as of January 1.

Obamacare: To Buy Or Not To Buy–––An Entrepreneur Would Have Done It Differently

Now that consumers can generally make an efficient health insurance purchase at HealthCare.gov and most of the state-run exchanges, we can finally get to the real question.

Are the healthy uninsured going to buy it?

The big health insurance changes Obamacare made to the individual and small group market were arguably done in order to get everyone, sick and healthy, covered in a more equitable system.

To be clear, no one I know of wants to go back to the prior health insurance market that excluded people from being covered because of pre-existing conditions.

But what if most of the uninsured literally don't buy Obamacare?

Then people will question whether or not all of this change was worth it: Why did those who were in the old individual and small group market have to accept all of the expensive changes, narrower networks, higher deductibles, and fewer choices if the uninsured largely don't want it?

Are we moving away from a system where only the healthy could buy health insurance to a system where only the sick want to buy it? 

Will There Be an Obamacare Death Spiral in 2015? No

If the Obamacare health insurance exchanges are not able to get a good spread of risk––many more healthy people than sick––the long-term viability of the program will be placed in great jeopardy.

Given the early signs––far fewer people signing up than expected, enormous negative publicity about website problems, rate shock, big average deductibles, narrow provider networks, and a general growing dissatisfaction over the new health law––it is clear to me that this program is in very serious trouble.

But that trouble would not necessarily transfer to the health insurance plans participating on the state and federal health insurance exchanges.

Obamacare contains a $25 billion federal risk fund set up to benefit health insurance companies selling coverage on the state and federal health insurance exchanges as well as in the small group (less than 50 workers) market. The fund lasts only three years: 2014, 2015, and 2016.

HealthCare.gov Enrolls 1.1 Million by Year-End––Cause For Celebration or Worry?

After the disastrous launch of Obamacare the enrollment of 1.1 million people in the 36 state exchanges run by the feds is a major accomplishment. It is likely that the enrollment in the 14 state-run exchanges will take total Obamacare's private insurance enrollment to near 2 million for the year.

Does this mean that Obamacare is finally on track and moving toward success?

The Obamacare Slippery Slope––What's Your "Hardship?"

As of this morning, here are the new rules.

If you had a health insurance policy that was cancelled, you are now exempt from the individual mandate and its tax penalty should you not decide to buy a replacement policy. In addition, you can now sign up for the very high deductible Catastrophic Plan that was originally reserved only for those under the age of 30.

If you did not have a health insurance policy that was cancelled, you are still subject to the individual mandate and you are not entitled any special treatment toward signing up for the Catastrophic Plan. You must pay the full price for an exchange plan and accept whatever out-of-pocket costs and network limits it might have for the money.

Obamacare Week 10––A Dearth of Enrollment In the States and Continuing Backroom Problems

A few observations after 10 weeks of Obamacare implementation.

The Obama administration released the first two months enrollment figures this week. With HealthCare.gov still struggling in November, the enrollment of 137,000 people in the 36 states was expected. The main event for the federal exchanges will play out in December now that most people can navigate it.

What I found notable in the report was the lack of robust enrollment in the states. In states where the exchange has been running at least adequately for many weeks now, the enrollment numbers are far from what I would have expected.

California enrolled 107,000 people in private plans in the first two months. But California has cancelled 800,000 current individual health plans effective January 1––all of whom have to buy a new plan by January 1 or become uninsured. The only place those who are subsidy eligible can get a subsidized plan is in the California exchange. In addition, California has about 2.5 million people uninsured and exchange eligible. A Robert Wood Johnson (RWJ) report estimated that California has 1.4 million of those people eligible for subsidies in the exchange. Given the $250 million in outreach and marketing money the federal government has earmarked for California's exchange, the dearth of sign-ups so far is concerning.

Is Obamacare Responsible For the Recent Slowdown in Health Care Costs?

That is what we have been told the Obama administration will claim on Friday as they begin the job of reselling Obamacare.

Is Obamacare even partly responsible for the slowdown in health care costs?

That is silly.

First, Obamacare is not a health care reform law; it is a health insurance reform law. No one on either side of the debate has ever argued anything different.

The December 1 Obamacare Relaunch––Nobody Can Spin the Main Event

From 27,000 enrollments in October to a reported 100,000 enrollments in November, the Affordable Care Act's website is apparently working better and getting more people signed up.

But is it fixed well enough to handle the expected wave of at least many hundreds of thousands of people eager to get guarantee issue health insurance for the first time or replace a canceled policy by January 1?