Posts tagged ‘insurance’

Healthcare Deductibles Rising -- Why This is GOOD News

Things like Obamacare cannot be discussed, it seems, in anything but a political context.  So if you don't like Obamacare, everything that happens has to be bad. But I actually think this is good news, and goes against my fears in advance of Obamacare.  I had been worried that Obamacare would just increase the trends of more and more health care spending being by third-party payers.  And my guess is that this is happening, when you consider how many people have gone from paying cash to having a policy, either a regular policy or expanded Medicaid.

A report out today puts numbers behind what hit many workers when they signed up for health insurance during open enrollment last year: deductible shock.

Premiums for employer-paid insurance are up 3% this year, but deductibles are up nearly 50% since 2009, the report by the Kaiser Family Foundation shows.

The average deductible this year is $1,217, up from $826 five years ago, Nearly 20% of workers overall have to pay at least $2,000 before their insurance kicks in, while workers at firms with 199 or fewer employees are feeling the pain of out-of-pocket costs even more: A third of these employees at small companies pay at least $2,000 deductibles.

“Skin-in-the-game insurance” is becoming the norm,says Kaiser Family Foundation CEO Drew Altman, referring to the higher percentage of health care costs employees have to share.

Honestly, this is good news, sort of.  I don't like the coercion and lack of choice, but the main problem with health care is that the person receiving the benefits is not the person paying the bills, which means there is no incentive to shop or make care tradeoffs.  Higher deductibles mean more people are going to be actively shopping and caring what health services cost, and that is a good thing for prices and health care inflation.

Penny-Ante Police Harassment and the Poor

The other day I wrote:

[Cars owned by African-Americans in Ferguson] are stopped at about a 6x higher rate for "equipment" deficiencies than whites.  Nitpicky regulations on car conditions (in Arizona your licence plate frame cannot cover any part of the word "Arizona" on the licence plate) are the great bugaboo of the poor and a nearly unlimited warrant for the police to stop minorities.  Mexicans here in Phoenix will tell me "woe to the Mexican who drives around here with a broken tail light -- he will be pulled over 3 times a day to have his immigration status checked".  In Phoenix, at least, stops for equipment issues are roughly the equivalent of pulling someone over for "driving while brown."  Even beyond the open-ended warrant these silly violations give the police, the fines and court costs create meaningful indebtedness problems for the poor which are hard to overcome.

Alex Tabarrok highlights some numbers from Arch City Defenders

new report from Arch City Defenders, a non-profit legal defense organization, shows that the Ferguson municipal courts are a stunning example of these problems:

Ferguson is a city located in northern St. Louis County with 21,203 residents living in 8,192 households. The majority (67%) of
residents are African-American…22% of residents live below the poverty level.

…Despite Ferguson’s relative poverty, fines and court fees comprise the second largest source of revenue for the city, a total of $2,635,400. In 2013, the Ferguson Municipal Court disposed of 24,532 warrants and 12,018 cases, or about 3 warrants and 1.5 cases per household.

You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant “low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay.”

If you have money, for example, you can easily get a speeding ticket converted to a non-moving violation. But if you don’t have money it’s often the start of a downward spiral that is hard to pull out of

I can testify to that last point.  I worked in the Emerson Electric headquarters for a couple of years, which ironically is located in one corner of Ferguson.  One of the unwritten bennies of working there was the in house legal staff.  It was important to make a friend there early.  In Missouri they had some bizarre law where one could convert a moving violation to a non-moving violation.  A fee still has to be paid, but you avoid points on your license that raises insurance costs (and life insurance costs, I found out recently).  All of us were constantly hitting up the in-house legal staff to do this magic for us.  I am pretty sure most of the residents of Ferguson do not have this same opportunity.

The Other Shoe Drops on Businesses From Obamacare: Reporting

A lot of discussion has gone into the costs of the employer mandate.

These costs certainly were potentially high for my company.  If we had to provide health care for all of our employees, it would cost us an annual sum between 3 and 4 times our annual profit.  As many of your know, my company runs public parks and campgrounds.  Already, we have struggled to get government authorities to approve fee increases driven by local minimum wage increases.  Most of these authorities have already told us that they would not allow fee increases in most cases to offset the costs of the PPACA employer mandate.   So we have spent a lot of time converting between 90 and 95% of our employees to part-time, so the mandate would not apply to them.  I have gotten a lot of grief for my heartlessness on this in the comments, but I have zero idea what else I could have done short of simply shutting down the business.

Yesterday I was in an information session about the employer mandate and saw that the other shoe had dropped for companies -- the reporting requirement.  Despite the fact that the employer mandate was supposed to kick in almost 9 months ago, until recently the government had still not released the reporting requirements for companies vis a vis the mandate.  Well, apparently the draft reporting requirements was released a few weeks ago.  I may be missing something, but the key requirement for companies like mine is that every employee must receive a new form in January called an IRS 1095-C, which is parallel to the W-2 we all get to report income.

I know that many of you have probably been puzzled as to what some of those boxes mean on the W-2.  Well, you are going to love the 1095C

click to enlarge

Everyone is scratching their heads, wondering what this means.  For someone like me who has seasonal and part time workers, this form is a nightmare, and I have no idea how we are going to do this.  Just to give you a flavor, here are the code choices for line 14:

1A. Qualified Offer: Minimum Essential Coverage providing Minimum Value offered to full-time
employee with employee contribution for self-only coverage equal to or less than 9.5% mainland
single federal poverty line and Minimum Essential Coverage offered to spouse and
dependent(s).

1B. Minimum Essential Coverage providing Minimum Value offered to employee only.

1C. Minimum Essential Coverage providing Minimum Value offered to employee and at least Minimum Essential Coverage offered to dependent(s) (not spouse).

1D. Minimum Essential Coverage providing Minimum Value offered to employee and at least Minimum Essential Coverage offered to spouse (not dependent(s)).

1E. Minimum Essential Coverage providing Minimum Value offered to employee and at least Minimum Essential Coverage offered to dependent(s) and spouse.

1F. Minimum Essential Coverage not providing Minimum Value offered to employee, or employee and spouse or dependent(s), or employee, spouse and dependents.

1G. Offer of coverage to employee who was not a full-time employee for any month of the calendar year and who enrolled in self-insured coverage for one or more months of the calendar year.

1H. No offer of coverage (employee not offered any health coverage or employee offered coverage not providing Minimum Essential Coverage).

1I. Qualified Offer Transition Relief 2015: Employee (and spouse or dependents) received no offer of coverage, or received an offer of coverage that is not a Qualified Offer, or received a Qualified Offer for less than all 12 Months.

Completing lines 14-16 will require an integration of our payroll provider with our health insurance information that I have no idea how we are going to pull off.

Obamacare Newly Insured Numbers Miss by at least 50% vs. Projections

With our new prosthetic memory, called the Internet, it should be easy to go back and look at past predictions and see how well those predictions played out.  Heck, sports talk radio hosts do it all the time, comparing their beginning of season predictions with what actually happened.  But no one ever seems to hold the government or politicians similarly accountable.

Here is one I found by accident.  In July of 2011, Kevin Drum quotes this prediction from the CMS (Center for Medicare and Medicaid Services, a government agency).

In 2014, the Affordable Care Act will greatly expand access to insurance coverage, mainly through Medicaid and new state health insurance exchanges which will facilitate the purchase of insurance. The result will be an estimated 22.9 million newly insured people.

In March of 2014 Kevin Drum quotes this from the LA Times

As the law's initial enrollment period closes, at least 9.5 million previously uninsured people have gained coverage. Some have done so through marketplaces created by the law, some through other private insurance and others through Medicaid, which has expanded under the law in about half the states.

The tally draws from a review of state and federal enrollment reports, surveys and interviews with insurance executives and government officials nationwide.

....Republican critics of the law have suggested that the cancellations last fall have led to a net reduction in coverage. That is not supported by survey data or insurance companies, many of which report they have retained the vast majority of their 2013 customers by renewing old policies, which is permitted in about half the states, or by moving customers to new plans.

This is presented as a great victory, but in fact it is nearly 60% below expectations of less than two years earlier.  We don't know the final number.  Drum, who should be expected to be on the optimistic end of projections, has upped his estimate to 11-13 million, but this is still barely half what was expected.   The disastrous Obamacare exchange rollout did one thing at least -- it hammered expectations so low that even a 50% miss is considered a great victory.

 

Hobby Lobby, Obamacare and Contraception

A few thoughts

  1. This is one of those "bad policy conflicts with bad policy" decisions that I have trouble getting excited about.   The government should not be mandating tiny details of health insurance policies.  On the flip side, personal religious beliefs should not trump the rule of law (example:  the fact someone has a religion that says it is legal to beat his wife should not create an exception allowing spouse abuse).
  2. That being said, the case only seems legally difficult if one completely ignores the existence of the 1993 RFRA, which most on the Left seem to want to ignore.
  3. I have zero patience with the facile argument that corporations have no individual rights.  Corporations are just assemblies of people.  Our right to assembly should not cause us to lose our other rights.  If I have freedom of speech as an individual, I don't give it up when I create a corporation.
  4. I am even more exhausted with the argument that opposing government subsidies of an activity is the same as opposing the activity itself.  Though half the readers who see this post will assume that I am anti-abortion or anti-contraception, which I am not. (Update:  This seems to be a prevalent argument today, though -- see here)
  5. The most ignored fact of this case in my mind is the absolute insanity of the government mandating that regular, predictable purchases be covered in an insurance policy.  Intelligent health insurance policies should no more cover routine contraception than home insurance policies should cover the cost of light bulb replacements.   Sure, I have no problem if some private person wanted such a policy and a private company offered one -- but mandating this craziness is just amazingly bad policy.
  6. If you really want to help women and reduce their net cost of contraception, stop requiring a prescription for certain contraceptives, like birth control pills.

Why We Are Seeing Long Waits And Shortages of Doctors and Basic Medicines in Health Care

This is a re-post of an article I wrote in 2012.  I am re-posting it to demonstrate that recent stories about doctor shortages and wait times are absolutely inevitable results of government interventions in the health care economy.

My son is in Freshman econ 101, and so I have been posting him some supply and demand curve examples.  Here is one for health care.  The question at hand:  Does government regulation including Obamacare increase access to health care?  Certainly it increases access to health care insurance, but does it increase access to actual doctors?   We will look at three major interventions.

The first and oldest is the imposition of strong, time-consuming, and costly professional licensing requirements for doctors.  At this point we are not arguing whether this is a good or bad thing, just portraying its inevitable effects on the supply and demand for doctors.

I don't think this requires much discussion. For any given price for doctor services, the quantity of doctor hours available is certainly going to increase as the barriers to entry to the profession are raised.

The second intervention is actually a set of interventions, the range of interventions that have encouraged single-payer low-deductible health insurance and have provided subsidies for this insurance.  These interventions include historic tax preferences for employer-paid employee health insurance, Medicare, Medicaid, the subsidies in Obamacare as well as the rules in Obamacare that discourage high-deductible policies and require that everyone buy insurance rather than pay as they go.  The result is a shift in the demand curve to the right, along with a shift to a more vertical demand curve (meaning people are more price-insensitive, since a third-party is paying).

The result is a substantial rise in prices, as we have seen over the last 30 years as health care prices have risen far faster than inflation

As the government pays more and more of the health care bills, this price rise leads to unsustainably high spending levels, so the government institutes price controls.  Medicare has price controls (the famous "doc fix" is related to these) and Obamacare promises many more.  This leads to huge doctor shortages, queues, waiting lists, etc.  Exactly what we see in other state-run health care systems.  The graph below posits a price cap that forces prices back to the free market rate.

So, is this better access to health care?

I know that Obamacare proponents claim that top-down government operation is going to reap all kinds of savings, thus shifting the supply curve to the right.  Since this has pretty much never happened in the whole history of government operations, I discount the claim.  When pressed for specifics, the ideas typically boil down to price or demand controls.  Price controls we discussed.  Demand controls are of the sort like "you can't get a transplant if you are over 70" or "we won't approve cancer treatments that only promise a year more life."

Most of these do not affect the chart above, since it is for doctor services and most of these cost control ideas are usually doctor intensive - more doctor time to have fewer tests, operations, drugs.  But even if we expanded the viewpoint to be for all health care, it is yet to be demonstrated that the American public will even accept these restrictions.  The very first one out of the box, a proposal to have fewer mamographies for women under a certain age, was abandoned in a firestorm of opposition from women's groups.  In all likelihood, there will be some mish-mash of demand restrictions, determined less by science and by who (users and providers) have the best lobbying organizations.

My longer series of three Forbes articles on this and other economic issues with Obamacare begin here:  Part 1 InformationPart 2 IncentivesPart 3 Rent-Seeking

Update:  Pondering on this, it may be that professional licensing also makes the supply curve steeper.  It depends on how doctors think about sunk cost.

 

VA Scandal Proves My Contention: The Only Government Health Care Cost Reduction Ideas are Rationing and Price Controls

I feel like I was way ahead of the pack on May 1 reminding everyone that the Left until recently held up the VA as a model for government health care.  I pointed to articles by Kevin Drum and Phil Longman in 2007, but since then others have highlighted articles by Paul Krugman and Ezra Klein that made the same point.  Klein said:

If you ordered America's different health systems worst-functioning to best, it would look like this: individual insurance market, employer-based insurance market, Medicare, Veterans Health Administration.

Paul Krugman said

Well, I know about a health care system that has been highly successful in containing costs, yet provides excellent care. And the story of this system's success provides a helpful corrective to anti-government ideology. For the government doesn't just pay the bills in this system -- it runs the hospitals and clinics.

No, I'm not talking about some faraway country. The system in question is our very own Veterans Health Administration, whose success story is one of the best-kept secrets in the American policy debate.

Supposedly, the reason for this success according to Drum and Longman was that ever-popular Lefty magic bullets, electronic medical records and preventative care.  On medical records:

"Since its technology-driven transformation in the 1990s...the VA has emerged as the world leader in electronic medical records — and thus in the development of the evidence-based medicine these records make possible." Hospitals that joined Longman's "Vista network" (his name for the VA-like franchise he proposes) would have to install the VA's electronic medical record software and would "also have to shed acute care beds and specialists and invest in more outpatient clinics." By doing this they'd provide better care than any current private network and do it at a lower cost.

On preventative care:

How is a supposedly sclerotic government agency with 198,000 employees from five separate unions outperforming the best the private market has to offer? In a word: incentives. Uniquely among U.S. health care providers, the VA has a near-lifetime relationship with its patients. This, in turn, gives it an institutional interest in preventing its patients from getting sick and in managing their long-term chronic illnesses effectively. If the VA doesn't get its pre-diabetic patients to eat right, exercise, and control their blood sugar, for example, it's on the hook down the road for the cost of their dialysis, amputations, blindness, and even possible long-term nursing home costs....The VA model is that rarest of health care beasts: one with a perfect alignment of interest between patients and providers.

Neither of these have ever proven in real life to actually lower costs in anything but tiny pilot programs, and there is a lot of reason to believe that while preventative care can improve health outcomes, it tends to increase costs.

I have said for years that at the end of the day, the only ideas government planners have for cost control are rationing (which leads to queuing) and cost controls on things it buys from private markets, like doctor time (which leads to shortages and more queuing).  This is why every health care system that offers free care to all comers, whether it be socialist systems in other countries or the VA or even an urban emergency room, has long queues.

In fact, the situation, as I think we will find at the VA, is worse.  Not only is the old pie being allocated differently (shifting from price-sensitivity to queue tolerance) but the pie of available supply is likely getting smaller as resources are consumed by government red tape and price controls drive suppliers out of the market.  The next stories will be about the staggering waste of money on red tape in the VA system, and the stories after that will be about a few VA users jumping the queue because of political connections.

This stuff is so inevitable that it was all addressed years ago in my three part series of Obamacare.  In that series, the issues were not failing exchanges and the mess we have seen so far, but the issues we are more likely to see over the long term.  The VA is merely a preview, but we shouldn't have needed a preview because we could have looked at countries like England.  Of course, if the media had any desire to honestly tell these socialized medical stories we would not get fawning profiles of the horrendous system in Cuba.

My Forbes series:

Tracking Changes in Those With Health Insurance

RAND has a study out on changes in people's sources for health insurance.  Once you get the hang of reading it, this is a great table:

click to enlarge

 

This is how to read it -- of the 40.7 million uninsured in September of 2013, 26.2 million remained uninsured, 7.2 million got new employer health insurance (ESI) , 3.6 million joined medicaid, etc.  But then some new uninsured were added back so the new total uninsured is 31.4 million.

One of the first things to notice is the marketplace number of 3.9 million is well below the Administration's claim of 7.1 million.  The Administration's number is not even within the error bar here, so one needs to be skeptical, if he was not already, of Administration sign-up figures.

We also can notice that the individual marketplace seemed to have shrunk from 9.4 million to 7.8 million.  No huge surprise, with all the cancellations that made the news last year.

The really interesting question, of course, is what happened to the uninsured.  We can use this table to look at net changes (millions of people).

2013 Uninsured 40.7
     To Employer -5.1
     To Medicaid -2.6
     To Individual +0.2
     To Exchange -1.4
     To Other -0.3
2014 Uninsured 31.4

To make sure everyone understands the math, 7.2 million left the ranks of the uninsured to get an employer policy, but 2.1 million previously insured by employers became uninsured.  The net is -5.1 million as shown.  All the other numbers are calculated the same way.

I have always had serious questions about the value of the Medicaid signups during this period.   Medicaid is not a limited enrollment product.  You can sign up bleeding on a gurney being rolled into the operating room, and in fact many do -- Hospitals are very good at enrolling people into Medicare as they walk in.  So it was really a misnomer in the first place that someone eligible for Medicaid is "uninsured" -- they are in fact insured, they just have not done the paperwork.  The Medicaid expansion in the PPACA probably helped, but many states that did not expand Medicaid had a lot of signups as well.

The exchange seems to have done little to affect the uninsured.  Net of the reductions in individual insurance presumably driven also by the PPACA, the exchanges reduced the uninsured by 1.2 million.

The really interesting number everyone is  looking at is the huge number of the insured that gained employer coverage.  Three quarters of the non-Medicare related reduction in uninsured (since I don't consider a lot of the Medicare signups a real reduction) were from people going onto employer plans.

Kevin Drum quotes Andrea Mcintyre as saying

If it’s correct, it was probably motivated multiple factors—I hate the word “synergy” on principle, but it comes to mind. The economy has been improving, so some of the previously unemployed have secured jobs with benefits. But CBO built in expectations about economic recovery, so I don’t think it’s quite right to try pinning all (or even most?) of the 8.2 million on that. The individual mandate, while weak in its first year, might be a stronger stick than we expected, nudging people to take their health benefits where they’d previously been opting out. Employers could be helping this move this trend along; the University of Michigan, for example, eliminated “opt out dollars” in 2014 (cash compensation for employees who declined coverage).

Drum add triumphantly

If this finding is confirmed, it's a genuine shocker. Although CBO projected that ESI would stay steady, there's been a lot of chatter about the likelihood of employers dropping coverage thanks to Obamacare. But that sure doesn't seem to have happened. So in addition to the usual sources of coverage—Medicaid, exchanges, sub-26ers—it looks like Obamacare has yet another big success story to tell, one that was almost completely unexpected.

Uh, maybe.  The employer insurance changes could also be an artifact of normal churn and of the odd study period.   The study period is only about half a year.  If there were annual patterns, ie with people losing employer health care early in the year and then gaining it at the end of the year, then only the gains would show up in the study and not the losses.  In fact, there is some reason to believe this is the case, as most corporations have open enrollment periods at the end of the calendar year.

But there is a more interesting issue here.  Folks arguing for Obamacare in the first place sold it by implying that most all the uninsured were uninsured because they could not afford coverage or did not have access.  Now it turns out a large block of the uninsured actually did have access and could afford it, they just chose not to buy it, for whatever reason.  Was this really what it was all about from the very beginning, forcing people to buy a product that they could afford but did not want?

Things That Would Have Gotten Me Fired in the Corporate World

This week's episode:  Spending enormous resources on a program to reduce X, and then not tracking (or even putting in place a mechanism to track) whether X was reduced as promised.   James Taranto quoting the National Journal quoting Administration officials:

The Congressional Budget Office estimates that the health care law will reduce the number of uninsured people by about 24 million over the next few years, and that about 6 million previously uninsured people will gain coverage through the law's exchanges this year. So, is enrollment on track to meet that goal? Overall enrollment is looking pretty decent, but how many of the people who have signed up were previously uninsured?

"That's not a data point that we are really collecting in any sort of systematic way," Cohen told the insurance-industry crowd on Thursday when asked how many of the roughly 4 million enrollees were previously uninsured.

Nicely done.  The PPACA was passed first and foremost to bring insurance to the uninsured.  I always thought that the Left misunderstood (accidentally or on purpose, I do not know) the nature of the uninsured and thus overestimated what impact the PPACA would have in this regard.  But one way or another, you would track the impact, right?  I can just imagine trying to explain to my old boss Chuck Knight why we spent billions to gain new customers for a product but didn't track how many new customers we gained.

Postscript:  Here is my prediction -- The Administration will declare that no one had "real" insurance (as they define it) so everyone in the exchange was previously uninsured.

Can One Be A Principled Moderate? And What the Hell Is A Moderate, Anyway?

Sorry, this is one of those posts where I am still struggling to figure an issue out, so bear with me if we wander around a bit and the ideas are a bit unfinished.

Kevin Drum and other progressives have been bending over backwards to argue that the now three year delay in implementing PPACA standards for private insurance policies is no big deal.

Really?  The PPACA is likely, for Progressives, to be the most important piece of legislation passed during this Administration.  Hell, based on the discussion when it was passed, for many it is likely the most important piece of legislation passed in the last three or four decades.  And when Republicans suggested delaying these same rules and mandates, e.g. during the government shutdown, they freaked, arguing that people should not have to go another day with their old crappy health care policies.

But now they just roll over and say, yeah, ho hum, this thing that everyone supposedly wanted is a political liability so its fine to delay it, no big deal.

If this were a signature piece of libertarian legislation (yeah, I know its hard to imagine such a thing) that was not being implemented by somebody I voted for and supported, I would be pissed.  I would be raking the President over the coals.

This difference in outlook may be why the Republican leadership hates the Tea Party.  The Tea Party gets pissed when folks they elect punt on the ideological goals they got elected to pursue.  They have no tribal loyalty, only loyalty to a set of policy goals.  The key marker in fact of many groups now disparagingly called "extremists" is that they do not blindly support "their guy" in office when "their guy" sells out on the things they want.

I have friends I like and respect -- smart and worldly people -- who are involved in a series of activities to promote political moderation.  What I have written in this post is the core of my fear about moderation -- that in real life calls for moderation are actually calls for loyalty to maintaining our current two major parties (and keeping current incumbents in office) over ideas and principles.

Which leads me to an honest question that many of you may take as insulting -- can one be a principled moderate?  I am honestly undecided on this.  But note that by moderate I do not mean "someone who is neither Republican or Democrat," because I fit that description and most would call me pretty extreme.  So "fiscally conservative and socially liberal" is not in my mind inherently "moderate".  That is a non-moderate ideological position that is sometimes called "moderate" because it is a mix of Republican and Democrat positions.  But I would argue that anyone striving to intellectual consistency cannot be a Republican or Democrat because neither have an internally consistent ideology, and in fact their ideology tends to flip back and forth on certain issues (look at how Republican and Democrat ideology on Presidential power, for example, or drone strikes changes depending on whose guy is in the Oval Office).

Moderates in my mind are folks willing to, or even believe it is superior to, take average positions, eg. "the PPACA just went too far and we should have had a less-far-reaching compromise" or "free trade agreements go too far we need a mix of free trade and protectionism".  They value compromise and legislative action (ie passing lots of laws in a fluid and timely manner) over holding firm on particular ideological goals.  I guess the most fair way to put it by this definition is they value consensus and projecting a sense of agreement and teamwork over any individual policy goal.

Postscript:  One other potential definition of "moderate":  One could argue that in actual use by politicians and pundits, "moderate" effectively means "one who agrees with me" and "extremist" means "people who disagree with me."  The real solution here may be to accept that "moderate" is an inherently broken word and stop using it.

Update:  There are areas where I suppose I am a moderate.  For example, I think that making definitive statements about what "science" has been "settled" in the realm of complex systems is insane.  This is particularly true in economics.  Many findings in economics, if one were honest, are equivocal or boil down to "it depends."  The Left is insanely disingenuous to claim that the science is settled that minimum wage increases don't affect employment.  But it is equally wrong to say that minimum wage increases always have a large effect on unemployment.  For one thing, almost no one (percentage wise) actually makes the minimum wage so we are talking about changes in the first place that affect only a couple of percent of the workforce, and may be mitigated (or exacerbated) by other simultaneous trends in the economy.  So of course their impact may not be large (in the same way that regulations on left-handed Eskimo Fortran programmers might not have much of an impact on the larger economy).

We have gotten into this bizarre situation that the science is suddenly always settled about everything, where it would be safer to argue that given the complexity of the systems involved the science can't be settled.  I liked this bit I read the other day in the Federalist

One of the more amusing threads that runs through the conversation among the online left is the viewpoint that the science is settled in every arena, and settled in their favor. The data backs the leftward view, and if it doesn’t, there must be a flaw in the data, or in the scientist, or secret Koch-backed dollars behind the research. This bit of hubris leads to saying obviously untrue things – like “every economist from the left and right” says the stimulus has created or saved at least two million jobs. Or that there’s “no solid evidence” that boosting the minimum wage harms jobs. Of course the media knows that these aren’t true, but they largely give these politicians a pass, because dealing in data and with academic research is their turf.

Folks on the Left who want to blame the Tea Party for the destruction of civil discourse need to look at themselves as well, declaring the science settled on everything and then painting their opponents as anti-science for disagreeing.  As I have pointed out before, this sort of epistemology is not science but religion, the appeal to authority backed by charges of heresy for those who disagree.

If I were going to make a political plea, it would not be for moderation but for better more respectful practices in the public discourse.

How Did Obamacare Authors Ever Fool Themselves Into Believing They Were "Bending the Cost Curve" With These Kind of Incentives?

I guess I never really paid much attention to how the Obamacare "risk corridors" work.  These are the reinsurance program that were meant to equalize the risks of various insurers in the exchanges -- but as exchange customers prove to be less healthy than predicted, they are more likely to become a government subsidy program for insurers.

I never knew how they worked.  Check out the incentives here:

According to the text of Obamacare, the health law's risk corridors—the insurance industry backstop that’s been dubbed a bailout—are only supposed to last through 2016. For the first three years of the exchanges, insurers who spend 3 percent more on health costs than expected will be reimbursed by the federal government. It’s symmetrical, so insurers who spend less will pay in, but there’s no requirement that the program be revenue neutral

So what, exactly, are the incentives for cost control?  If you lose control of your costs, the government simply pays for the amount you overspent.  Combine this with the fact that Obamacare puts caps on insurer non-patient-cost overhead spending, and I don't think you are going to see a lot of passion for claims management and reduction.  Note after a point, excess claims do not hurt profits (via the risk corridor) but more money spent on claims reduction and management does reduce profits (due to the overhead caps).

Nice incentives.

Postscript:  There is one flaw with my analysis -- 3% is a LOT of money, at least historically, for health insurers.  Why?  Because their margins are so thin.  I know this will come as a surprise with all the Obama demonization of insurance profits, but health insurers make something like 3-5% of revenues as net income.  My Boston mother-in-law, who is a very reliable gauge of opinion on the Left, thinks I am lying to her when I say this, even when I show her the Google finance pages for insurers, so convinced is she by the NYT and PBS that health insurer profits consume a huge portion of health care spending.

All that being said, I am pretty sure if I were an insurer, I could raise prices slightly, cut back on claims overhead, and make a guaranteed profit all while the government absorbs larger and larger losses.

Obamacare and Jobs in One Chart

This is a pretty amazing chart from Jed Graham and IBD which I have annotated a bit

click to enlarge

 

Note first that the diversion between high and low-wage** industries did not occur during the recession, and in fact through the recession the two groups tracked each other pretty closely until early 2010.  Then, in early 2010, something made the two lines start to diverge and in 2012-2013 they really went in opposite directions.

Well, my suggestion for the "something" is Obamacare.  In March 2010, the PPACA was passed.  Looking at the jobs data, one can date the stall in the economic recovery almost precisely from the date the PPACA was passed (e.g. here).

The more important date, though, is January 1, 2013.  This is a date that every business owner was paying attention to at the time but which seems entirely lost on the media.   All the media was focused on the start-date of the employer mandate on January 1, 2014.  Why was the earlier date important?  Let's go back in time.

At that time, the employer mandate had yet to be delayed.  The PPACA and IRS rules in place at the time called for a look-back period in 2013 where actual hours worked for each employee would be tracked to determine whether the employee would classified as full or part-time on the Jan 1, 2014 start date.  So, if a company wanted to classify an employee as part-time at the start of the employer mandate (and thus avoid penalties for that employee), that employee needed to be converted to part-time as early as possible, preferably before 2013 even started and at worst by mid-year 2013 [sorry, I typo-ed these dates originally].

Unlike the government, which apparently waits until after the start-up date to begin building large pieces of major computer systems, businesses often tackle problems head on and well in advance.   Faced with the need to have employees be working 29 hours or less a week in the 2013 look-back period, many likely started making changes back in 2012.  Our company, for example, shifted everyone we could to part time in the fourth quarter of 2012.  I know from talking to the owners of several restaurant chains that they were making their changes even earlier in 2012.  One employee of mine went to Hawaii in October of 2012 and said that all the talk among the resort employees was how they were getting cut to part-time over Obamacare.

Yes, the employer mandate was eventually delayed, but by the time the delay was announced, every reasonably forward-looking company that was going to make changes had already done so.   Having made the changes, there is no way they were going to switch back, and then back yet again when the Administration finally stumbles onto an actual implementation date.

If this chart gets any traction over the next few days, expect to see a lot of ignorance as PPACA defenders claim that the fall in low-wage work hours can't possibly have anything to do with the PPACA because the employer mandate has not even started.  Now you know why this argument is wrong.  The PPACA, and associated IRS implementation rules, drove companies to convert full-time to part-time jobs as early as 2012.

Usual warning:  Correlation is not causation.  However, I will submit that I was predicting exactly this sort of result years before it occurred.  This is not a spurious correlation that is ex post facto blamed on whatever particular bete noir I might have.  I and many other predicted that Obamacare would drive down work hours per week in lower-wage industries, and now having seen exactly that correlated with key Obamacare dates, it is not going to far to hypothesize a connection.

** Why could low-wage industries be impacted more than high-wage?  Two reasons.  One, low-wage industries are far less likely to offer a full Obamacare-compatible health plan to employees than high wage industries.  Second, the fixed penalties ($2000 and $3000 per employee) for lack of insurance plans are obviously a far higher percentage of the total pay in low-wage vs. high-wage industries.   A penalty that is 15% of annual pay is much more likely to cause employers to shift or reduce work than a 3% penalty.

Obamacare: Converting Individual Responsibility to Dependency

This is a topic I have hit on for a while, but now we have even more startling data.  Apparently, most of the people buying from the exchanges already had insurance:

Early signals suggest the majority of the 2.2 million people who sought to enroll in private insurance through new marketplaces through Dec. 28 were previously covered elsewhere, raising questions about how swiftly this part of the health overhaul will be able to make a significant dent in the number of uninsured.

Insurers, brokers and consultants estimate at least two-thirds of those consumers previously bought their own coverage or were enrolled in employer-backed plans.

The data, based on surveys of enrollees, are preliminary. But insurers say the tally of newly insured consumers is falling short of their expectations, a worrying trend for an industry looking to the law to expand the ranks of its customers.

… Only 11% of consumers who bought new coverage under the law were previously uninsured, according to a McKinsey & Co. survey of consumers thought to be eligible for the health-law marketplaces.

So, we know that 80% of the people are getting subsidized on the exchanges, and now we know that 70-90% of those previously had a unsubsidized policy beforehand.   This means that what the exchanges are doing is NOT insuring the uninsured, but converting people previously responsible for their own health care into government dependents.  The more cynical out there will argue that was the whole point in the first place.

2014 Obamacare Headlines

Here are a few shoes that are left to drop for Obamacare:

  1. Millions complain about their doctor no longer being in-network
  2. Thousands of companies are finding it cheaper to drop coverage and pay Obamacare penalties than continuing to provide health care coverage under new rules
  3. Despite fewer exchange enrollments than expected, total Federal subsidy payments higher than expected
  4. Emergency rooms overflow with new Medicaid patients that no private doctor will take on
  5. Exchange-sold health policies, particularly the unsubsidized ones, were mainly bought by the old and sick
  6. Obama Administration works to bail out health insurers via a number of different avenues
  7. Small to mid-size companies are shocked as Obama Administration finally reveals new record-keeping requirements
  8. After 5 years of 3-4% growth, health care spending skyrockets in 2014
  9. ________ health insurance company dropping coverage in  ____(state)_______
  10. Hackers steal tens of thousands of names and social security numbers from health care exchange computers.

I will score myself as the year progresses to see how many of these we actually see.  I would not be surprised to see every one of these.

Schadenfreude: New York's Cultural Elite Loses Their Health Insurance

Via the NYT:

Many in New York’s professional and cultural elite have long supported President Obama’s health care plan. But now, to their surprise, thousands of writers, opera singers, music teachers, photographers, doctors, lawyers and others are learning that their health insurance plans are being canceled and they may have to pay more to get comparable coverage, if they can find it.

They are part of an unusual informal health insurance system that has developed in New York in which independent practitioners were able to get lower insurance rates through group plans, typically set up by their professional associations or chambers of commerce. That allowed them to avoid the sky-high rates in New York’s individual insurance market, historically among the most expensive in the country....

The predicament is similar to that of millions of Americans who discovered this fall that their existing policies were being canceled because of the Affordable Care Act. Thecrescendo of outrage led to Mr. Obama’s offer to restore their policies, though some states that have their own exchanges, like California and New York, have said they will not do so.

But while those policies, by and large, had been canceled because they did not meet the law’s requirements for minimum coverage, many of the New York policies being canceled meet and often exceed the standards, brokers say. The rationale for disqualifying those policies, said Larry Levitt, a health policy expert at the Kaiser Family Foundation, was to prevent associations from selling insurance to healthy members who are needed to keep the new health exchanges financially viable.

Siphoning those people, Mr. Levitt said, would leave the pool of health exchange customers “smaller and disproportionately sicker,” and would drive up rates.

Alicia Hartinger, a spokeswoman for the Centers for Medicare and Medicaid Services, said independent practitioners “will generally have an equal level of protection in the individual market as they would have if they were buying in the small-group market.” She said the president’s offer to temporarily restore canceled polices applied to association coverage, if states and insurers agreed. New York has no plans to do so.

Donna Frescatore, executive director of New York State of Health, the state insurance exchange, said that on a positive note, about half of those affected would qualify for subsidized insurance under the new health exchange because they had incomes under 400 percent of the poverty level, about $46,000 for an individual.

I still do not understand how anyone could consider it a "positive" that 50% of people who were previously self-reliant now become wards of the state.

Douthat, Brennan, even McArdle Making 3 Mistakes in Looking at Exchange Subsidy Numbers

Ross Douthat in the NYT quoting Patrick Brennan

About one-fourth of the people who have entered their income information on their applications were deemed eligible for subsidies on the exchanges (about 900,000 out of about 3.6 million), which is lower than the number we saw in October alone and remains really far from what was projected. The CBO projected that just 1 million out of the 7 million people to enroll in the exchanges in the first year would be ineligible for subsidies, so the ratio is way off from what was expected (15–75 vs. 75–25). I had some thoughts on that surprising fact a month ago, and I’ll add a couple now: Unsubsidized customers (basically, those above the national median income) are generally savvier and more likely to have the resources to enroll and make their payments ahead of time, so maybe this is understandable and doesn’t say anything about who will eventually enroll. On the other hand, it may demonstrate that the people to whom insurance was supposed to be expanded — the uninsured, who tend to be low-income and not well educated — aren’t getting to the exchanges at all, and covering them will be a much longer term project.

There is a huge, enormous analytical problem with this-- they are looking at entirely the wrong numbers.  Incredibly, Meghan McArdle makes this same mistake, and I generally respect her analysis of things.   I am going to pull out my summary chart of the Exchange numbers to try to make things clear (click to enlarge):

november-obamacare-exchange

 

There are 3 major mistakes, each worse than the one before.

MISTAKE 1:  The 3.6 million total applicants number is in line 3 (3,692,599).  This is the wrong number.  The number he should use is line 4, the number of people who have had their eligibility processed.  So the denominator should be 3.1 million, not 3.6 million.

MISTAKE 2:  He leaves out the Medicaid piece.  Seriously, if we looking at numbers that are partially subsidized, why leave out numbers (Medicaid and CHIP) that are entirely subsidized?   This means the applicants eligible for subsidy are 803,077 + 944,531 or 1,747,608 which is 56% of the processed applicant pool.  The subsidy number may be lower than expected but I get the sense that the Medicaid percentage is higher than expected.

MISTAKE 3:  They are looking at the application pool, not the sign-up or enrollment pool.  That is understandable, because the Administration refuses to give the subsidy percentage breakdown of those who have selected a plan (a number which they certainly must have).  My guess is that people are putting in applications just to see if they are eligible for subsidies.  If not, they quit the exchange process and go back to their broker.   That is what I will probably do (out of curiosity, I would never accept taxpayer money for something I am willing to pay for myself).  The people who actually sign up for coverage are almost certainly going to skew more towards subsidized than does the applicant pool.

Making reasonable assumptions about the mix of subsidies in the "selected a plan" group, one actually gets numbers of 80-90% Medicare and CHIP and subsidies in the enrollment pool.

I do think McArdle is correct in saying that the uninsured numbers were both exaggerated and mis-characterized.  I have been saying that for years.

Yet Another Reason To Keep Government Out of Commerce

Because the government exempts itself from the most basic rules that apply to private companies.

Raising concerns about consumer privacy, California's health exchange has given insurance agents the names and contact information for tens of thousands of people who went online to check out coverage but didn't ask to be contacted.

The Covered California exchange said it started handing out this consumer information this week as part of a pilot program to help people enroll ahead of a Dec. 23 deadline to have health insurance in place by Jan. 1.

State officials said they are only trying to help potential customers find insurance and sign up in time. But some insurance brokers and consumers who were contacted said they were astonished by the state's move.

"I'm shocked and dumbfounded," said Sam Smith, an Encino insurance broker and president of the California Assn. of Health Underwriters, an industry group.

Smith said he was under the impression from the exchange that these consumers had requested assistance. He received the names of two consumers this week but has not yet contacted them.

"These people would have a legitimate complaint," Smith said.

The names provided include people who started an insurance application on the Covered California website since enrollment launched Oct. 1, but for whatever reason never picked a health plan or completed the sign-up process.

The state said it provided information on tens of thousands of people who logged into the state's website, but it didn't know the exact number.

The exchange said agents were given names, addresses, phone numbers and email addresses if available.

One Thing I Got Wrong About Obamacare

For several years I have feared that my high-deductible health insurance would be illegal.  I am a big believer in high deductible insurance.  First, it is real insurance, requiring that I pay day-to-day expenses but protecting me from catastrophic bill.  Second, it improves the health care system by providing incentives for consumers to actually price-shop services.

Well, I was wrong.  In fact, most people see to be getting higher deductibles than they want.

My only excuse is that the Obama Administration has acted for three years as if they hated high-deductible health coverage and were planning to make it go away.  Kathleen Sebelius has said on a number of occasions that it is not "real insurance" (she believes that insurance should actually be pre-paid medical care).  Seriously, here is an example of what she was saying:

At a White House briefing Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can't be compared to the comprehensive coverage available under the law. "Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus," she said. "They're really mortgage protection, not health insurance."

She is saying this all while the policies being prepared for the exchange were exactly the kind of coverage she was speaking out against.  And she had to know -- I cannot believe a former state insurance commissioner was not looking at what policies were being prepared for the exchange.  After all, her organization made the last minute decision to hide policy pricing from the public (e.g. deleted the window shopping functionality) and this almost certainly was in response to seeing the policies being prepared for the exchange and realizing the pricing and features were not going to make people happy.

By the way, there is a certain schizophrenia here that is entirely political:  These new policies have a $10,000 deductible, but they pay 100% for condoms?    They may well be creating a combination of catastrophic insurance and pre-paid medical care that has the worst of both approaches.

Politicians lie.  But what is it about this administration that lies in ways that are inevitably going to be discovered, in just a few months?  Can they really be so focused on getting through each individual news cycle that this kind of behavior makes sense?

Will Doctors Treat All These New Medicaid Patients?

Long lines in waiting rooms of hospital emergency rooms are often misinterpreted as solely due to demand from the uninsured.  Certainly some of the people are there because they have no insurance and they know hospitals have to provide them care.  But many of the people in that waiting room do have insurance through Medicare.  But they cannot find a doctor who will treat them at Medicare's combination of low reimbursement rates and onerous paperwork requirements.

JD Tuccille has more

Five minutes with using supply and demand curves and the most basic lessons of microeconomics would have predicted this.  In fact I did, about a year ago.

 

Of Course The Health Insurers are Behind Obamacare. Its The Greatest Bit of Cronyism Ever.

Kevin Drum thinks it is an insight to his readers that the insurance companies are a source of support for President Obama in keeping Obamacare alive.  And perhaps it is a surprise.  After all, most of the anti-insurance company rhetoric was for the progressives, who are always fired up for any endeavor they think will punish a private corporation.

The rest of us understand that of course the health insurance industry is all for Obamacare. For them, this is the greatest bit of crony legislation in history. For all the Administration rhetoric, essentially the US government has required that every citizen buy their product, and subsidizes many of these purchases with taxpayer money. Corporatism is rampant nowadays, a bipartisan affliction, but ethanol is that only other industry I can think of that has been granted this ultimate crony grail of subsidies combined with a requirement to purchase  (though maybe ethanol wins because, at least for cellulosic ethanol, there is actually a mandate to purchase a product that does not even exist).

Confused About Argument by Anecdote

Politicians frequently argue by anecdote.  I don't generally find this compelling -- after all, one can find an anecdote about just about anything among 300 million people.

But for those who do believe that an anecdote proves their case -- doesn't a reversal of fortune within that anecdote then disprove their case?  How can a particular person's experience be entirely generalizable, and then suddenly not be so when the facts change?

Back in October, Sanford had written a letter to the White House to share her good news. The 48-year-old single mother of a teenage son diagnosed with ADHD had just purchased what she considered to be affordable insurance on the Washington state exchange....

Her heartfelt letter made it to the President's hands and then into his October 21 speech.

"'I was crying the other day when I signed up. So much stress lifted.'" Obama said, reading from Sanford's letter.

The president said Sanford's story was proof, despite the technical problems with the healthcare.gov website, that the Affordable Care Act was working....

But then, after Obama mentioned her story, Sanford started having problems. Sanford said she received another letter informing her the Washington state health exchange had miscalculated her eligibility for a tax credit.

In other words, her monthly insurance bill had shot up from $198 a month (she had initially said $169 a month to the White House but she switched plans) to $280 a month for the same "gold" plan offered by the state exchange....

Last week, Sanford received another letter from the Washington state exchange, stating there had been another problem, a "system error" that resulted in some "applicants to qualify for higher than allowed health insurance premium tax credits."...

The result was a higher quote, which Sanford said was for $390 per month for a "silver" plan with a higher deductible. Still too expensive

A cheaper "bronze" plan, Sanford said, came in at $324 per month, but also with a high deductible - also not in her budget.

Then another letter from the state exchange with even worse news.

"Your household has been determined eligible for a Federal Tax Credit of $0.00 to help cover the cost of your monthly health insurance premium payments," the latest letter said.

Another Problem With Community Rating

Hospitals are required to treat everyone who shows up at the door, which results in a substantial amount of uncompensated care that hospitals must spread into their rate structure for other patients (and which also gives the lie to the syllogism that being uninsured means one does not have access to health care).

Supposedly, the PPACA was going to eliminate all these costs.  Actually, it does not eliminate these costs, it just changes who subsidizes them.  Currently, other hospital patients (and their insurers) subsidize this care.  In the PPACA medicaid expansion, some of this subsidy would shift to taxpayers  (whether the actual amount of costs subsidized would go up or down depends on your assumptions as to whether the Feds or the hospitals are better at managing them).

But hospitals think they might have found a third approach.  By law, insurance companies cannot legally turn down any applicants, particularly through the exchanges, based on their health condition.  So why not have the hospital (or its non-profit Foundation) buy policies for its perennially most expensive uncompensated patients?

US hospitals are exploring ways to buy “Obamacare” insurance plans for their sickest and poorest patients as they strain under the weight of tens of billions of dollars in uncompensated costs from the uninsured.

...The controversy is another reminder of the complexity of the US healthcare system, where hospitals are forced to pay about $40bn a year in so-called “uncompensated care”. People who are not insured go to emergency rooms because they cannot legally be turned away, and often hospitals bear the brunt of the costs.

“Hospitals are considering it,” says Mindy Hatton, general counsel of the American Hospital Association, the hospital lobby group. “Hospitals shouldn’t be on the front lines delivering preventive care that patients should be receiving in a clinic or doctor’s office. That doesn’t make sense for anyone.”

This is insurance companies' worst nightmare, of course.  It would not take very much of this sort of thing to trash the whole insurance market.

The Administration response to all this has been typical of its behavior through the whole PPACA implementation.  In general their approach to all new problems has been to:

  1. Make it clear that it hadn't really thought very deeply or completely about important implementation issues
  2. Make snap implementation decisions to tactically deal with one problem only to find they had created new problems
  3. When everything gets really messy, claim broad dictat-by-press-release powers it is not clear the law actually gives them

In this case, the Administration was faced with questions from Representative Jim McDermott.  He asked if exchange-sold health plans were considered Federal Qualified Health Plans (QHP) under the law.  If so, he pointed out that several of the things the Administration had discussed (e.g. allowing insurers to offer monetary inducements to customers who maintained good health habits) could be illegal under anti-kickback provisions.

As usual, it was pretty clear the Administration had no answer.  Or more accurately, had five different answers from five different people and agencies.  Kathleen Sebelius wrote back to McDermott that no, exchange sold plans were not QHP's and so the anti-kickback law did not apply.  This tactically solved McDermott's issue.  But it created large new issues, since it is the anti-kickback law that would have prevented hospitals from buying exchange plans for their most expensive patients.  If exchange plans are not QHP's, then hospitals considered that buying such plans was now legal.

All Sebelius has been able to do to temporarily quiet this mess has been to claim vague and unlimited powers to regulate virtually any behavior related to the exchanges.  Like Obama, she believes her press releases have force of law.  But in fact, even if she does have the claimed regulatory power, she actually has to go through a rules-writing process before any such rules can take effect.   These are structured, drawn out affairs with long delays for public comment.  This is the type of thing she needed to be doing 18 months ago.

Insurance Companies Got Thrown Under the Bus Today. And They Know It.

Well, so much for the implicit gag order Obama has had on the insurance companies.  Bet we will find out a lot more interesting details about the exchange rollouts now.

[T]he White House has its own idea to stop the bleeding: Allow insurers to renew existing plans in 2014 (which means they could continue into 2015) while forcing them to send Landrieu-like letters explaining why their plans don’t conform to the Affordable Care Act’s standards.

This doesn’t really ensure anyone can actually keep their plan — which means it also doesn’t affect premiums in the exchanges. But it makes it easier for Democrats to blame insurers for canceling these plans. And it perhaps makes it easier for the White House to stop congressional Democrats from signing onto something like Landrieu or Udall.

The insurance industry is furious. They’ve been working with the White House to get HealthCare.Gov up and running and they’ve been devoting countless man hours to dealing with the problems and they’ve been taking the heat from their customers over canceled plans, and now the Obama administration wants to make them into a scapegoat.

“This doesn’t change anything other than force insurers to be the political flack jackets for the administration,” an insurance industry insider told Evan McMorris-Santoro. “So now, when we don’t offer these policies, the White House can say it’s the insurers doing this and not being flexible.”

This is like telling GE to reintroduce 100 watt lightbulbs on thirty days notice, and then blaming them if they don't do it.  Or as I tweeted earlier,

 Update:  Left rallying around Obama, spreading the word that cancellations are all the insurance companies' fault.  I am SO glad I am not affiliated with a political party such that I would feel the need to embarrass myself to support some flailing politician on my team.

The Left has been calling cancelled policies "sub-standard" for months now.  For three years Obama's own folks were estimating that over half of individual policies would have to be cancelled due to the law, and in fact they purposely wrote the regulations narrower to invalidate the maximum number of policies.  But now cancellations are the insurance companies' fault??

Waaaaaaaay Too Late, And I Bet Obama Knows It

Via the WSJ:

President Barack Obama said Thursday that insurers will be able to continue health-insurance coverage next year for current policy holders that otherwise would be canceled under the new health-care law....

"Insurers can offer consumers the option to renew their 2013 health plans in 2014 without change, allowing these individuals to keep their plans," a senior White House official said, previewing Mr. Obama's announcement. These consumers will be given the opportunity to re-enroll, the official said, essentially extending the so-called grandfather clause in the 2010 health overhaul that allowed people to keep their plans if they were in place before the law passed.

"This step today is in the interest of fixing some of the challenges that have arisen" since then, the official said.

Under the plan, insurers are required to notify consumers whether their renewed plans don't include coverage that was required under the new health law, which set minimum coverage standards. They must tell consumers that new insurance options and possibly tax subsidies may be available for policies bought through online federal marketplace.

1.  The President announced this today to try to head off Congressional legislation to do the same thing.  Have we just given up on the rule of law?  Can the President unilaterally modify any law he pleases?  Shouldn't a modification in existing legislation have to come from the Legislature?  Can we just make it official and change the Constitution to say that the President can alter any legislation he wants as long as his party originally passed it?

2.  How is this even going to be possible?   My understanding is that insurance companies spend months preparing the pricing and features of their products for the next year.  The have done no preparation to offer these plans in 2014, because, you know, they were (and still are, whatever the President says in a news conference) illegal.   Its like your wife telling you to take the next exit when you are in the left lane driving 75 miles an hour in heavy traffic and the exit is about 100 yards away.  With 31 business days between now and the new year, how are they supposed to do this?  Or are they even expected to be able to do so?  Is this the President's way to blame shift to insurance companies?

Update:

How To Read the Evasive October Health Exchange Numbers

So the October exchange data is out and the report is a bit hard to follow, in part because it dodges and weaves trying to put the best face on things.  Fortunately, I have years of experience as a corporate planner digging into numbers from division heads trying to disguise what a train wreck their results are.  So here are the numbers in a simple graphical form (click to enlarge)Obamacare-October-Numbers2

Here is a simple narrative following these numbers: The exchange web sites had 26,876,527 visitors representing 47,840,217 estimated potential insured persons.  Of these, 846,184 applications have been completed covering 1,509,883 persons, of which applications covering 1,477,853 persons have been processed by the government to test eligibility.  Of these reviewed applications, 396,261 persons were eligible for Medicare or some other free program while the rest needed private coverage.  Of these, about a third were deemed eligible for a subsidy.   About 10% of those people eligible for private coverage have put a plan in their shopping cart, though it is unknown how many are subsidized and how many are not.  An unknown number have actually purchased insurance.  An unknown number of Medicaid eligible people actually have enrolled.

There are some real problems with the report's presentation.  Here are the worse issues:

  • They switch back and forth between applications and persons covered by applications (which is about 1.78 persons per app.)   This is presumably a bid to make the numbers as large as possible.  All the numbers above the first one in the chart above are persons covered by applications, not applications.  As you can see, I have converted the web site visitors to this same basis so we can get an apples to apples sales funnel.  Note that this means the 106,185 number for people who have "chosen a plan" is actually a lot fewer applications, perhaps less than 60,000.
  • They leave out the three numbers any reasonable person would most want to see.  How many people actually signed up and (if appropriate) paid for coverage?  Those numbers are completely missing.   How many Medicaid eligible people actually enrolled? How many of the 106,185 people covered by a plan in a shopping cart actually paid  (the shopping cart abandonment rate at private websites is about 2/3, if I remember correctly)?  And how much did these enrollments cost the taxpayer in terms of subsidies?

As bad as this report is for the administration, the truth is actually worse, as they have assiduously avoided including the numbers a reasonable person would want to see.  Without any other evidence, I have to assume that these obvious numbers were left on on purpose because they were awful.