By James Kwak
When it comes to Obamacare, I’m firmly in the “significantly better than nothing” camp. Obamacare has increased coverage—although not as much as one might have hoped. The percentage of people uninsured has fallen from around 17% in 2013, when only a few coverage-related provisions of the ACA were in effect, to around 11% in early 2015, after the major changes kicked in in 2014. That’s six percentage points, or millions of people—but it’s still much less than half of the pre-ACA uninsured.
There has also been a lot of controversy over the impact of Obamacare on health insurance prices. According to the Kaiser Family Foundation, the weighted average pre-subsidy price of a silver plan on the exchanges only increased by 3.6% from 2015 to 2016, which certainly seems good. But one way the ACA keeps premiums reasonable is by pushing people into plans with high levels of cost sharing. The average silver plan has a combined annual deductible (including prescriptions) of more than $3,000; the deductible for an average bronze plan is close to $6,000. In other words, one reason that insurance premiums are affordable is that those premiums don’t buy you what they used to, as insurers shift more and more health care costs onto their customers.
This is exactly what we should have expected. Obamacare is an example of “managed competition,” something that Bill Clinton talked about on the campaign trail twenty-four years ago. The basic principle is that competitive markets will generally produce good outcomes—low costs, efficient allocation of resources to meet consumer needs, etc.—but need to be managed around the edges. Moderate Democrats (what we used to call moderate Republicans) have fallen in love with this idea, because they can talk about the wonders of markets while blaming anything they don’t like on “market failures.”
The classic example of correcting for a market failure, of course, is the individual mandate. By now, every liberal interested in policy has learned what adverse selection is and, more specifically, can explain why community rating will produce an adverse selection death spiral unless you have mandated universal participation. This is the image that Obamacare’s most ardent supporters want you to take away: cleverly designed regulation preventing a market failure and ensuring universal coverage, while enabling markets to reduce costs, encourage innovation, blah blah blah. What could be better?
The dirty not-so-secret of Obamacare, however, is that sometimes the things we don’t like about market outcomes aren’t market failures—they are exactly what markets are supposed to do.
The problem with adverse selection, remember, is that people know more about their health status than insurers do, so they only buy policies that are profitable for them on an expected basis (that is, sick people are more likely to buy insurance than healthy people), which means that insurers would lose money, so insurers raise premiums, but that only reduces the number of people buying insurance. But imagine if insurers had the same information as insureds, so they could calculate the actuarially fair price for every policy. No more adverse selection! But would that be a good outcome? Sick people and poor people would be unable to afford insurance at all. That’s what markets do: they distribute goods and services based on people’s willingness to pay, which is a function of their budget constraints. And that’s not something that we as a society are willing to accept.
So Obamacare says: No medical underwriting!—which means, basically, that the healthy and the sick pay the same up-front premiums. At this point, with a universal coverage mandate and no medical underwriting, you might think we should just have a single payer system. But … but … markets!
So, in order to give private insurers something to do, Obamacare allows them to offer different flavors of health plans, within the rules set up by the ACA. But what is it that insurance companies do? They try to sell policies for more (in premiums) than they cost (in benefits). We know sick people will cost more than healthy people, but now insurers aren’t allowed to price discriminate on the front end. So, instead, they offer plans with loads of cost sharing—high deductibles, high out-of-pocket maximums, and high levels of coinsurance. Cost sharing has two purposes. One is to deter people from actually using health care—this is the reality of “consumer-driven health care.” The other is to make the sick pay more than the healthy. Remember, that’s how markets are supposed to work. Insurers are supposed to identify the sick people and charge them more for insurance; Obamacare says they can’t do that, so instead they switch to policies that force sick people to pay more for care at the point of service.
None of this is at all nefarious. If you’re going to have private health insurance companies, you have to let them try to make money—otherwise, what’s the point? Indeed, if you like markets, you have to recognize that markets only do what they do because companies are trying to make money.
But you run up against this fundamental problem: Markets work by making people pay for what they get; the more health care you “consume,” the more you pay, either in insurance premiums or at the hospital. But the vast majority of Americans are not comfortable with the idea that rich people get good health care, middle-class people get passable health care (until they get seriously ill, in which case they go bankrupt), and poor people get no health care to begin with.
Obamacare is a heroic attempt to make the best out of this basic conundrum: we are trying to use markets to distribute something that, at the end of the day, we don’t want distributed according to market forces. That’s why we have not only the individual mandate and the prohibition on medical underwriting, but also the expansion of Medicaid, the subsidies, the Cadillac tax (because we don’t like the market when it produces gold-plated insurance plans) and, most telling of all, risk adjustment.
What is risk adjustment? Well, consider what a profit-seeking insurer would do if it has to charge the same price to everyone. In that case, you want to sell insurance to healthy people, not to sick people. Since you’re not allowed to turn people away, you design marketing programs so that only healthy people find out about your product. Again, nothing nefarious going on. But that’s bad for the system, because then other insurers will get stuck with the sick people, lose money, and pull out of the market.
So Obamacare’s risk adjustment provisions transfer money from plans with healthy people to plans with sick people. Insurance companies aren’t allowed to compete by trying to attract lower-risk customers. The only way they are allowed to compete is by paying less to health care providers for the same services (since Obamacare requires standard minimum benefit packages for all plans). But the thing is, we already know how to lower payments to providers. The key is to be a really, really big insurance plan, covering lots of people, so that you have bargaining power when it comes time to negotiate rates with hospitals and physician offices. There’s no “innovation” to stimulate here; it’s pure market power. No one has more of it than Medicare—and nothing can have as much market power as a single payer plan.
So at the end of the day, Obamacare is based on the idea that competition is good, but tries to prevent insurers from competing on all significant dimensions except the one that the government is better at anyway. We shouldn’t be surprised when insurance policies get worse (in terms of the benefits they actually provide) and health care costs continue to rise.
If we take as our starting premise that everyone should be able to afford decent health care—something that literally everyone agrees with—then the most obvious solution is single payer or one of its close cousins, such as we see in every other advanced economy in the world. But … markets! Not just Republicans, but also most Democrats are convinced that markets must be better, because of something they learned in Economics 101. Health care is one of the best examples of economism—the outsized influence that the competitive market model has had on public policy, even in areas where its lessons patently don’t apply.
You could say that the Obama administration made the best of the lousy hand it was dealt by decades of market propaganda and a weak majority that hinged on Democrats In Name Only. Obamacare certainly improves on what preceded it (nothing, that is, as far as the individual market is concerned). But ultimately it is a flawed attempt to force markets to produce outcomes that markets don’t want to produce.
The Baseline Scenario 
The failure here lies within the education system and lawmakers solely. The toilet paper caper can reverse this problem, more on that later.
I explain the value and problems of the ACA this way: “It’s like a tent and a place to pitch it to a homeless family.” They’d probably really rather have a house, or at least better insulation, but this is what the USA is so far willing to promise its citizens. It is unpleasantly similar to many other US schemes wherein the poor are to be made to pay for their own charity. As a result of one exceptionally poor scheme, we ended up dynamiting buildings.
A less obvious market failure is that, since gross profit is capped at somewhere between 15% and 20%, an important method of increasing profit is to overtreat and never cure. This pervades the system, especially in the management of the chronic conditions of aging.
BTW, dropping large medical expenses on people is not what most of us would consider “sharing.” Maybe we should call it “cost-evading” instead.
Later thought: one of the most awful things about the ACA system is that it pushes the highest costs on to the working poor; the people only a bit above the depths of poverty that make one eligible for Medicaid. A fair system ought put the highest costs on to people with the most ability to pay, not the least.
Mr. Kwak has here achieved the impossible: written something on Obamacare that no reasonable person can disagree with. One can suggest thoughts that might have been included or expanded, but this basic analysis of the actual economic facts–with a slight but sufficient nod to the political realities–is to me indisputably on target. Bravo!
Let’s not forget the deal that Obama had to cut with pHarma: no negotiated drug prices…the same as they did with Medicare Part D and why Medicare pays 30% more for drugs than price-negotiated Medicaid! A disgrace that is costing the taxpayers billions.
One other point: the reason it worked for Romney in Massachusetts is that he had insurers of that state only to deal with. The GOP argued states rights to keep the present system thus destroying competition. The disgrace is that we are the only industrialized nation that doesn’t have national healthcare…but who cares? Certainly not the wealthy.
I don’t understand why smart folks like Mr. Kwak keep asserting incorrectly that high cost sharing and high deductibles in the individual insurance market are new. They’re not.
I’ve been buying individual insurance since 2005 and it’s been this way since at least then. I had no pre-existing conditions and I had my pick of policies with deductibles ranging from $500 to $5000. The premium at each level of deductible was such out that as long as I didn’t hit the deductible every year, the $5k deductible was the best bet. You could either choose a $5k deductible, or choose a $2k deductible and paid an extra $2k in premiums compared to having a $5k deductible. I don’t know of anyone in the individual market who had an individual policy in the 2000s with a deductible below $1000. The cost of such a policy, even if you were healthy, was so high that it didn’t make sense unless somehow you could pass underwriting and you knew you’d hit the deductible every year.
Superbly argued and written. Excellent.
Now, why are we so ideologically wedded to free markets? Part of it is that Econ 101 is nice and elegant and easy to understand, and the complexities of the market and where/when/how its occasional failures are much harder to grasp. Most economics students don’t make it that far.
But another reason is that there is a lot of money both overtly and covertly promoting the notion that free markets are infallible. This often works in subtle ways. For instance, let’s say there are certain economists that are academically and intellectually mediocre but highly free market-oriented in their views. Even though they’re not leaders in the field, they’re much more likely to be provided a platform to share their views, on behalf of certain think tanks, newspaper op-ed pages, and foundations backed by industry groups and individuals who stand to benefit from free market-leaning public policy.
We like to think we’ve come up with our own opinions and biases, but the reality is that this type of thing influences everyone, even the smartest among us, and skews the policy discourse. It’s one more reason to conclude that the enormous influence of money on politics is far and away our biggest issue as an American society.
Article is dead on target: Obamacare is using a hammer to drive screws – markets are not good mechanisms for distributing critical need items like medical care.
That said, there are things which markets do well. Enabling price discovery and enforcing competitive pricing from service providers ARE things that markets do well, and things which would benefit the healthcare market. As such, I find it unfortunate that very few articles which criticize Obamacare make note of the tremendous missed opportunity to create more price transparency and enable “shopping”. Obviously this is of little to no benefit in the context of emergency services, but there are plenty of medical activities (even major lifesaving operations) where the patient would have the opportunity to shop around and make a decision based on price and quality.
Unfortunately, Obamacare did nothing to make either the cost of care or the quality of care more transparent. There are no requirements (that I know of) which make price information more available to the consumer. Good luck finding out in advance how much you’re going to pay for a major operation or a minor procedure.
There are also no requirements (again, that I know of) around reporting of things like hospital-acquired infections or deaths due to medical errors. Reporting these things is still largely voluntary which means that useful information is very scarce.
These failures are particularly damning in the context of all the hullabaloo about markets that accompanied the acrimonious debate around Obamacare. Further evidence, if any was needed, that the proponents of “free markets” do not understand them, and have no particular allegiance to them other than as a dog whistle for getting their constituents worked up.
More like Not Even Democrats. Lieberman killed the public option and all enticements to draw Republicans ultimately failed. In many cases, these plans will be captured by local monopoly providers. I would dispute everyone wants to see everyone have healthcare. A distinct minority blame their costs on access by the poor and resent it greatly.
Obamacare was merely the shoe in the doorway to move on eventually to universal single-payer system. That would’ve been unacceptable five years ago but in another five years the American population will be begging for it. One of the most important parts of Obama care is actually the Medicaid expansion because that is insurance which people can afford. The next step after the current Medicaid expansion should be to allow people with significantly higher incomes to buy Medicaid insurance at cost plus x percent. After that comes the next really big discussion of why if you over 65 you get this great insurance program called Medicare while everyone else who can’t afford private insurance is stuck with Medicaid and its limited number of providers. Once that discussion ends with both groups having somewhat equal insurance (i.e. somewhat less for the Medicare population and more for the Medicaid population) we end up with a two-tier system somewhat like Germany where the top 20% has great private insurance and the other 80% has recently good national health plan
You write: “What is risk adjustment? Well, consider what a profit-seeking insurer would do if it has to charge the same price to everyone. In that case, you want to sell insurance to healthy people, not to sick people. Since you’re not allowed to turn people away, you design marketing programs so that only healthy people find out about your product.”
And if you understand that, why do you keep mum on the credit risk weighted capital requirements for banks, by which regulators have designed regulations so that the safe (the healthy) get preferential access to bank credit.
That, by allowing banks to leverage more on safe assets than on risky assets, allows banks to earn higher risk adjusted returns on equity on safe assets than on risky assets.
In other words, current bank regulators, if nannies, would have told the children to beware a lot of the ugly and foul smelling people, and embrace a lot the nice looking gentlemen offering candy?
You doubt it? The risk weights for that rated below BB- was set at 150% while the risk weights for the AAAs at only 20%.
Here are 19 reasons for why I know the bank regulators in the Basel Committee are complete idiots… or something worse http://bit.ly/1TgB6EJ
Would the problem (adverse selection) be mitigated if insureds could switch plans at any time rather than only once a year? That may seem counter-intuitive, but if insureds could change plans at any time, a healthy person who bought a HD plan could switch to a LD plan if she became sick; hence, insurers wouldn’t have the incentive to separate the healthy from the sick (by offering low cost HD plans to the healthy and high cost LD plans to the sick).
The problem with OBAMA- …CARE: is that it misdirects intention from the start. What it has created is the starting line for Too Big To Fail in the medical insurance path dependence economy. The bulk of the money is driven into insurance pools which are…let’s be honest…
MORAL HAZARD seas of cost shifting and price fixing, and in medical market driven economies of scale; that means profits based upon cost/medical ratios.
Obama-Insurance Plans are rigged to go to greater gains at the top and greater pains at the bottom-up care delivery itself. Already the biggest offenders are seeking monopoly size mergers and the smaller groups are being squeezed into submission. The “consulting” operations advise greater co-pay to play…up front deductive costs to patients which only make access to real care more and more difficult. In the Hudson Valley it is already a $500 co-pay to the emergency room and add-on for an ambulance. Higher deductibles are simply toll booth pricing guarantees on one end, and boundaries to entry on the other. The loss of patients drives the excuse ridden medical industry to increase “costs” pricing and scale down on actual applications to the less fortunate. The bottom line is simply that forcing everyone to pay tribute to the Insurance Industry is going to become impossible to reverse and correct. The prospect for Universal care and a fair market in medical delivery has never been more further away; and this was enhanced and accelerated under this so called “relief” to the uninsured population of underserved people. The only success for Obamacare has been in the lip-service industry of false economies and perverted incentives that are contagiously growing towards private equity ownership markets and premium stealth and wealth delivery systems of scaled medical capture.
http://www.nakedcapitalism.com/2016/05/hospital-profits-and-quality-may-fall-but-hospital-executives-compensation-keeps-rising.html#comment-2590446
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Hospital Profits and Quality May Fall, But Hospital Executives’ Compensation Keeps Rising
Posted on May 3, 2016 by Yves Smith
By Roy Poses, MD, Clinical Associate Professor of Medicine at Brown University, and the President of FIRM – the Foundation for Integrity and Responsibility in Medicine. Cross posted from the Health Care Renewal website
Despite recent attempts at health care reform, US health care dysfunction seems to proceed inexorably with ever rising costs, and continuing problems with access and quality. A likely reason is that those who find the current system personally profitable are in a position to resist real reform. The people who seem to gain the most from the status quo are top hired executives of big health care organizations.
In particular, stories about huge pay for hospital and hospital system managers continuously appear in the media.
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Read complete details: NAKED CAPITALISM
http://www.nakedcapitalism.com/2016/05/hospital-profits-and-quality-may-fall-but-hospital-executives-compensation-keeps-rising.html
Click to access 028-02-0086.pdf
JOURNAL OF INSURANCE MEDICINE
Copyright © 1996 By Journal of Insurance Medicine
“This study finds the science of fraud control
scarcely developed and little understood by industry
practitioners. Academia has paid little attention to the
problem. Within the health care industry, the task of
fraud control is complicated by the social acceptability
of insurers as targets, the invisible nature of most
fraud schemes, the separation between administrative
budgets and “funds”, the respectability of the health
care profession, and the absence of clear distinctions
between criminal fraud and other forms of abuse.
Existing approaches to control are more effective
in controlling billing errors, overutilization, medical
unorthodoxy, and other forms of abuse than in dealing
with criminal fraud”
===========================================
A Journal of Insurance Medicine!
It is telling that the insurance industry has always been a keen advocate against insurance fraud in the arena of medical reimbursement, essentially self protecting and it is hard to argue against legitimate abuses. It is arguable, however, that once asymmetrical rationing and rationality becomes the norm, the idea that “good people are forced to do bad things” becomes a corrupting element in the world fo self-reimbursement (A.K.A.: Stock ownership syndrome; where the shareholders are the executives and the explanation for insurance denials are the obligation to shareholders. The corporate insurance narrative places the Insurance Companies as “victims” and makes the presumption that this is a socially acceptable norm that must be accounted for strategically and tactically. It is questionable to say the least that HIPPA laws are in the interest of patients rather than insurance liability interests.
The fact is that it creates information blackout and blocks public scrutiny of real life health threats from nature, from industries and from corporate institutions that benefit from asymmetrical knowledge. The result is that while FRAUD and control fraud may be heavily attacked from the Insurance Interest and lobby incentives driving legislation, there is no assessment advocating or even investigating
in the opposite direction. Without regulatory legislation everything is legal by default. The Insurance Industry dictates to consumers as well as the average physician. A corruption and cultural capture that goes unspoken because the people at the top are the power scalar that direct and misdirect the complex question of moral hazzard,
perverted market incentives, and middle men managerialism ina false economy of profit driven life styles and a captured colonized market.
“S.O.S. > “Stock Ownership Syndrome”; where the shareholders ARE the Executives …..and the explanation for insurance denials are THEIR obligation to shareholders.”
Bruce E. Woych
(cite it)
The Insurance Economy is way out of proportion and if fraud against this massive financial equity is any indication of the trends for its corruption, than we only see the tip of the iceberg that the Corporate Insurance Elites care to conflate with being the victims; and no one truly scrutinizes for the accounting fraud of profit taking over service delivery and risk distribution. One note from the Journal of Medical Insurance cited above:
“Congressi6nal testimony provided by GAO in 1995,
on fraud in the Medicare and Medicaid programs, cited
several examples of schemes that, according to GAO,
ought clearly to have been detected and stopped. But
these schemes came to light only through tip-offs or
whistleblowers, rather than through the operation of
any routine monitoring or audit.”
Click to access 028-02-0086.pdf
================
of course the only “whistleblowers” on the consumer side:
The Fear of Sicko: CIGNA Whistleblower Wendell Potter …
http://www.democracynow.org/2010/11/23/the_fear_of_sicko_c
We host a joint interview with Academy Award-winning filmmaker Michael Moore and Wendell Potter, who was the head of corporate communications for the health insurance …
http://www.democracynow.org/2010/11/23/the_fear_of_sicko_cigna_whistleblower
“Moore said that the industry was willing to spend hundreds of thousands of dollars trying to “stop a movie” because they were afraid it “could trigger a populist uprising against” what he called a “sick system that will allow companies to profit off of us when we fall ill.”
“In his book, Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans, Wendell Potter reveals the insurance industry funded a public relations campaign to discredit Moore and the film.”
Nation on the Take: How Big Money Corrupts Our Democracy and What We Can Do About It Hardcover – March 1, 2016
by Wendell Potter (Author), Nick Penniman (Author)
http://wendellpotter.com/about/
“I carried out PR initiatives that would help my company achieve its main objective: enhancing shareholder value.” Wendell Potter on the Insurance Empire that runs and ultimately controls our health care.
see also: http://wendellpotter.com/
Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans
Sep 13, 2011
by Wendell Potter and John D. Rockefeller IV
Obamacare: What’s in It for Me?: What Everyone Needs to Know About the Affordable Care Act Dec 6, 2013
by Wendell Potter
So Obamacare’s risk adjustment provisions transfer money from plans with sick people to plans with healthy people.
Surely this is backward, no? I don’t understand it if the transfer indeed goes “from plans with sick people to plans with healthy people.”
Wendell Potter puts the best possible light on Obamacare in his review; and essentially parallels James Kwak;s “I’m firmly in the “significantly better than nothing” camp.”
The questions already emerging however, is how long the fact that more people are insured will actually make a medical difference. The forced tribute to insurance in the long run will only increase the money pool and in the end the price structure will trip the scales only in favor of institutionalized Insurance and the profit incentive will tip the boat to a new titanic confusion.
https://www.publicintegrity.org/health/wendell-potter
For-profit hospitals mark up prices by more than 1,000 percent because there’s nothing to stop them
By Wendell Potter June 15, 2015
“So Obamacare’s risk adjustment provisions transfer money from plans with sick people to plans with healthy people.”
I suspect this is backwards.
Great post!
This situation you so aptly described is likely to lead to smaller states having only insurer in the individual market – hardly a competitive market. This is set to happen in Alaska in 2017:
https://www.adn.com/article/20160502/moda-health-leave-alaska-s-individual-insurance-market-2017
oops, I left out a key word:
… only *one* insurer in the individual market …
Instead of comparing premiums, you need to compare actual net out of pocket spending. This accomodates varying deductibkes and copays
Ed, many markets have two or three providers. No more competetive than one
THE TOILET PAPER CAPER:
By now it’s well known,(beyond a shadow of a doubt), that everything gvt does always leads to higher prices for consumers. Sure there are the manipulated statistics like the foods costs and unemployment rates, yet soon as you want anything other than a cheeseburger at Mcdonalds or you are underemployed, those statistics go out the window and soon there is gvt fat cat who now wants to hold you financially accountable to his responsible bank account. This has probably been the case since the civil war but has grown exponentially worse as each decade goes by, sky’s the limit for the reasons behind this problem, but it’s safe to say that human behavior is mostly to blame, it’s the American culture, big dreams but small potential, Like once you heal a broken arm or those stitches are removed, the pain goes away to the affected area, yet the tiny dancer in your head and neck never goes away, or once you are committed to a glutinous lifestyle, life looks a whole better, but that private pain in the neck only gets worse for some, unknown to you, reason, it causes the human being to go prematurely insane.
And health care is no exception, this is where the toilet paper caper and proper education shows their strengths, everything about it reduces the cost of health care but at the same time embarrass’s the ruling establishment and educational institutions. Much like Hillary is as guilty as sin, but should the FBI and Justice Dept, indict her, they too would be found just as guilty and embarrassed as Hillary will be, and who in gvt is willing to subject themselves to public scrutiny at this late hour. The toilet paper caper works just like a drug test and you only fall victim to the caper if you are guilty of the crime, all others have no problem subjecting themselves to the test. Now if the health care system was to be strictly a walk in proposition, they would make no money from me, and what little money they have made came from satan and the sh*t show he has to provide to all non-like minded individuals he comes across.
it’s a simple formula which works every time, if you do X and you do Y, you come down with a case of Z, now in reality you go the doctor with a case of Z and currently he’s not smart or wise enough to know why you came to him with a case of Z, and even if he was he would ask you if you do X and if you do Y and you would reply no, but still somehow come to him with a case of Z. This is where the crime occurs,(the crime being unnecessary health care costs, similar too squealing tires gets a ticket for unnecessary noise, this is unnecessary health care costs) now if you were have to take a drug test the results would be definitive regardless if you denied doing the drug, there is no sympathy from the law when it comes to drug tests. But once you go to the doctor with a case of Z, which implies commingling with the drug culture, questions are not asked or if they were, lies are accepted, and the sympathy card is played along with the higher health care costs( and take note, these costs are then spread to the general public rather than to the guilty individuals who in most cases are birds of the same feather). This can only take place within a satanical gvt environment, non other would tolerate such behavior, such human behavior. So since we can never talk to Mr. Big in the institution, or Mr Judge in the court house to resolve this problem.
I propose taking it to the streets with a case of my, [yes Annie, the latest and greatest, ism] intellectualism, (puts right thumb to lower lip and gently rubs across it) when ever you see an employee of one of these lawbreakers, mainly cops and ambulance drivers, if they are on the wrong side of the law you will see them jump like there is a hot potato in their pants or wave their hands around as if they going nuts, this alone could make it’s way back to the guilty Mr. Big’s and Judges who now only have the consequences to pay since we have past the point of no return in addressing these higher costs to the consumers conundrum, if you are on the right side of nature, no harm should come to you if you do as i do and avoid the doctor with the apple a day cure, it’s been good to me going on some 40 plus years.
Try it, and think of old skunk while you are doing so, because this satanical gvt has yet to do right by, or for me.
Great article. It gets at, but does not clearly state the one large problem or maybe a better word is, reality of Obamacare: Obamacare regulates health insurance, but left hospitals, doctors and pharma alone for the most part.
Mr. Kwak eludes to it here:
“The only way they (insurance companies) are allowed to compete is by paying less to health care providers for the same services….”
To put it most simply, Obamacare choose to regulate insurance companies (popular target) knowing that insurance companies would have no choice but to use “market forces” on hospitals, doctors and pharma (pharma may have even been spared this).
So right now we are going through the “market forces” phase of insurance companies pressuring hospitals and doctors to lower prices. Many hospitals are refusing, and deciding to get out of the self-insured patient business. This happens through the network coverage contract negotiations phase. As it is playing out, it seems the “best” (famous research hospitals) are the ones saying they refuse to drop prices. And than, as a consumer you just see that they are no longer in your network. It is a big game of chicken going on.
But Obamacare was always setup as insurance regulation, with the understanding that insurance companies would do the heavy lifting of price control.
Should Obamacare have regulated pricing?
Three patients walk-in to the same hospital and are treated by the same doctor for the same treatment. One has Medicare, one has group coverage through their fortune 100 company, the other is self-insured. Each will be charged a different amount for the care. Medicare patient may be charged $1000 (paid by the government), Boeing employee may be charged $1300 (paid by employee co-pay and employer’s insurance company) and the self-insured person may be charged $2500 (paid by self insured’s deductible and/or her insurance company.
But the fundamental problem is the same service had three different prices.
Let’s also regulate/mandate that the price of services, can not differ at the same hospital depending on how you are insured.
Don’t forget the premium subsidies and the convoluted paperwork they require. Obamacare tries to cure a diseased medical insurance system by melding it with an already snarled-up income tax system.
«But the vast majority of Americans are not comfortable with the idea that rich people get good health care, middle-class people get passable health care (until they get seriously ill, in which case they go bankrupt), and poor people get no health care to begin with.»
The problem is that while Real Americans voters are slightly uncomfortable with that idea, they are very uncomfortable with the idea of paying for the health care of those poorer than themselves.
That is, their idea that those poorer than themselves should have health care is largely a somewhat hypocritical sentiment, not a political position; their political position is to not pay for it.
That’s why there is no single payer and there are still11% uninsured: the politics of most voters who have union/corporate plans is “F*ck YOU! I got mine”.
«Obamacare choose to regulate insurance companies (popular target) knowing that insurance companies would have no choice but to use “market forces” on hospitals, doctors and pharma (pharma may have even been spared this).»
That’s a very good point that is rarely made and matters a great deal.
You know that this was by political design. The idea was to split the front of vested interests, by giving medical providers (doctors, hospitals, …) the option to opt out of Obamacare by refusing to deal with Obamacare health insurers.
The goal was also to create a three tier medical provision system: top rate providers in the union/corporate segment, mediocre providers in the Obamacare/Medicaid segment, none in the “underclass loser” segment.
This also because unions/corporates think that good medical provision should be a big fringe benefit that should only go to their members/employees, also to terrify them of losing their membership/job, so there must be a clear quality difference between union/corporate plans and Obamacare/Medicaid plans.