Tuesday, September 6, 2016

Under Obamacare, Health Care Costs Unlikely to Ever Drop - Opportunity Lives


As reported extensively at Opportunity Lives, the cost of health care is skyrocketing nationwide, with insurance companies raising premiums or even pulling out of the Obamacare exchanges due to enormous profit losses over the past few years.  Liberals have long argued this was merely a temporary hiccup as insurers adjusted to the new regulations and mandates of President Obama’s signature law. But experts are now warning that the problems associated with Obamacare are only compounding and show no hope for improvement.
In an ideal world, President Obama would recognize the pain American families are feeling under the rule of his law and collaborate with Republicans, several of whom are physicians, to put together a plan that works for the country. But that seems unlikely in a hyper-politicized environment.

According to Megan McArdle of Bloomberg, the Obama administration has found itself in a difficult position. Regulators, who place significant controls on premium prices, have an interest in keeping costs low for policyholders. But with insurers posting record losses, these bureaucrats don’t want to drive them out of the exchange program, either, and thus, must permit rates that allow them to yield a modest profit.
“They are not going to approve rates they believe will cause insurers to lose large sums of money,” McArdle explained.
“A BIG PART OF IT IS SIMPLY THAT THE INSURERS CANNOT MAKE A PROFIT AT CURRENT PRICES”

Insurers are hemorrhaging money because Obamacare requires the guaranteed issue of policies, even when patients pose extreme financial risks to the provider. Further, Obamacare mandates that insurers cover a bevy of new procedures and treatments, tacking on additional costs to doing business for these companies.
These goals are all well and good, but intentions often go astray when market forces are not understood.  
Obamacare attempts to camouflage an insurance company by calling it  a health plan. The obvious point about insurers using risk to appraise premiums has been totally ignored.
“THEY ARE NOT GOING TO APPROVE RATES THEY BELIEVE WILL CAUSE INSURERS TO LOSE LARGE SUMS OF MONEY”
To compensate for the financial strain imposed by Obamacare, insurers have raised rates. For millions of Americans, this means premiums and out-of-pocket expenses doubling, tripling or even quadrupling. As a result, healthier patients, many of whom are young and pose virtually no risk to insurers, have opted to drop their coverage, pay out of pocket for medical costs they incur and endure a tax penalty for their failure to maintain insurance. The plans based their income on the number of young and healthy patients who have little medical expenses. Most of these people did not carry health insurance in the first place. The sudden impact of paying $200 dollars a month did not compute, especially when their out of pocket and deductible expenses would also add to their monthly costs.  Why pay a premium when the $ 200 premium could go directly to direct payment expense?   Well, the HSA or MSA was invented. Patients could place money in a tax deductible savings account, before taxes.  It is all about cash flow. Most of these young people do not have discretionary income to save $ 200.00 each month
This is because of the aforementioned healthy-sick ratio of patients, nicknamed the adverse-selection death spiral. As prices go up to compensate for the rising number of sick Americans covered, healthy consumers are forced out of the market, exacerbating the risk insurers already face in covering those who cost more to insure.

As typical of most government programs it does not happen. It was an illusion foisted upon all of  us.  Perhaps for older adults and those with substantial income it might be work.
Obamacare advocates insist that this is a temporary problem, but as McArdle points out, the problems are far more systemic than the law’s defenders like to admit.
The worse news, McArdle writes, is that, “unbeknownst to most people, the subsidies are actually capped at a little over 0.5 percent of gross domestic product. We’re nowhere near that level yet — the Congressional Budget Office expects us to spend about $43 billion in 2017 on premium tax credits, while 0.5 percent of GDP would be a hair over $90 billion — but it doesn’t take too many years of 10 percent increases to get there.”
Perhaps the most realistic view, cynical though it may be, is that the impending death spiral was always the point of Obamacare. Conservatives are accused of engaging in hyperbole for even bringing up the accusation, but all evidence points to this being the actual motivation.  
Liberals have always desired a government-run health care system. They knew the public would never accept it. So they concocted a scheme they knew would succeed by failing. With the collapse of Obamacare, they figured, most Americans would have no choice but to embrace some amped-up iteration of Medicaid or a single-payer system that puts most private insurers out of business. Private coverage would remain only for the affluent who could purchase it to supplement their state-sponsored care, just as it’s done in many European countries — the same countries whose “universal” health care systems have been lauded by Democrats but left patients with long lines and little hope.
At the worst it looks like a conspiracy. At the least it was a stupid bungling. Our government is so disorganized it would be hard pressed to conjure up this plan. Nevertheless, it may happen.  I have always suspected as much. Make the system so chaotic and  unworkable that we all give up and sue for a single payer system. "Just go away"
In an ideal world, President Obama would recognize the pain American families are feeling under the rule of his law and collaborate with Republicans, several of whom are physicians, to put together a plan that works for the country. But that seems unlikely in a hyper-politicized environment.
Ellen Carmichael is a senior writer for Opportunity Lives. Follow her on Twitter @ellencarmichael.

Under Obamacare, Health Care Costs Unlikely to Ever Drop - Opportunity Lives

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