Health Insurers For Obamacare

Published October 30, 2012

Consumer Power Report #348

One of the greatest myths perpetuated by supporters of President Barack Obama’s health care law is that it somehow boldly took on the insurance industry on behalf of the interests of the American people. This could not be further from the truth, as this report from the Washington Post indicates:

You’d think health insurance CEOs would be chilling the bubbly with Republican Mitt Romney’s improved election prospects, but instead they’re in a quandary.

Although the industry hates parts of President Barack Obama’s health care law, major outfits such as UnitedHealth Group and BlueCross Blue Shield also stand to rake in billions of dollars from new customers who’ll get health insurance under the law. The companies already have invested tens of millions to carry it out.

Were Romney elected, insurers would be in for months of uncertainty as his administration gets used to Washington and tries to make good on his promise to repeal Obama’s law. Simultaneously, federal and state bureaucrats and the health care industry would face a rush of legal deadlines for putting into place the major pieces of what Republicans deride as “Obamacare.” …

Things could get grim for the industry if Republicans succeed in repealing the Affordable Care Act’s subsidies and mandates, but leave standing its requirement that insurers cover people with health problems. If that’s the outcome, the industry fears people literally could get health insurance on the way to the emergency room, and that would drive up premiums.

The truth, as Tim Carney of the Washington Examiner has noted on multiple occasions, is that industry as a whole got what it wanted out of Obama’s law. The drug industry in particular extracted a great deal from the law, but little compares to the insurers, who became a legally mandatory purchase for millions of Americans:

Why are journalists so constantly surprised when the companies that stand to profit from provisions of Obama’s health-care law support the implementation of those provisions? … [T]he exchanges involve subsidizing health insurance companies. I find nothing curious about their support for state exchanges. The Times‘ Robert Pear raises an eyebrow because the insurance industry “battled” Obama over the law. Yes, they opposed provisions regarding Medical Loss Ratios (basically capping the legally allowable profit and overhead that health insurers can make), but the heart of the bill – an individual mandate paired with rules requiring insurers to accept all comers and controlling the pricing tiers they have – was a package the insurers proposed even before Obama was sworn in.

Throw in the subsidies for insurers and the laws requiring employers to cover employees, and you’ve got a bill full of insurer-friendly provisions. It’s noteworthy that on the ObamaCare case before the Supreme Court, the top health insurance lobby is not arguing to overturn the law, but is simply arguing that if the court kills the individual mandate, it must also kill the must-issue and “community rating” regulations.

The truth is that Obama’s law was always intended from the beginning to be a crony-capitalist enterprise, one that slowly turns the entire health care industry into a public utility. This is why we shouldn’t be surprised that insurers are concerned now about having to buy their way into another administration’s good graces after investing so much in playing ball on the policies of the current one.

— Benjamin Domenech



The November 16 deadline looms:

Gov. Butch Otter’s health insurance exchange working group has voted overwhelmingly in favor of a state-based health insurance exchange, opting for the model of using a private non-profit group set up by the state to run it.

The recommendation now goes to Otter, who must notify the federal government of which way the state will go by Nov. 16. If the state does nothing, it gets a federally run health insurance exchange and loses state regulatory control over its health insurance industry.

Only two members of the 13-member panel dissented in the decision, Rep. Lynn Luker, R-Boise, and political activist Wayne Hoffman.

Hoffman compared the state’s relationship with the federal government to “the relationship of an abuser to a spouse. We keep getting beat up by the federal government and we keep running back to the federal government, and we have done it time and time again.” He said, “I think the best interest of the state is to continue to resist this constitutionally dubious federal law. … The only way you’re going to get the federal government, Congress and the executive branch to reconsider the law is just to resist its implementation.”

Kevin Settles, owner of Bardenay restaurants, countered, “We need to get past arguing the legality of the law. The Supreme Court settled the issue.” He said, “We can make something good out of this. … With the state-based non-profit exchange, we can make it reflect Idaho.” He noted that Idaho’s current insurance premiums are among the lowest in the nation.

SOURCE: Spokesman Review


The New Jersey governor’s national ambitions may factor into his decision:

Oklahoma’s attorney general recently sued in federal court to block Internal Revenue Service regulations essential to Obamacare. Those regs impose tax penalties on employers that fail to provide insurance for their workers.

The AG argues that the Affordable Care Act permits the feds to collect such taxes only in states with exchanges. No exchange, no tax.

Whether the court will agree remains to be seen. But for the moment, Cannon’s argument is accepted among conservatives. Republican governors are being urged to thwart Obamacare by refusing to sign on to those exchanges.

The political implications are obvious for the governor whom many Republicans see as the front-runner for the 2016 presidential nomination in the event Barack Obama is re-elected. That’s Chris Christie, and last week, the Democrats acted to force his hand on Obamacare. They passed a new version of a bill they passed last spring that would have created an insurance exchange in New Jersey.

Christie vetoed that bill in May on the grounds that the court had not yet decided on the constitutionality of the individual mandate. That has since been decided in Obama’s favor. But Christie’s stalling for time again.

“I won’t make a decision until I have to,” Christie said last week. He has to by Nov. 16, if he wants to meet a federal deadline for creating that exchange.

But the real question is what will happen on Nov. 6. Mitt Romney has promised that if he’s elected, feathers will fly. He has pledged to reverse Obamacare.



An important ballot issue to block implementation:

No matter whether Proposition E passes or fails, federal law still requires health insurance exchanges to be established in every state by 2014.The exchanges are meant to provide individuals and small businesses a way to compare and buy health insurance policies online – like consumers already do with airline tickets and hotels. States can choose to set up their own online marketplace, work with the federal government, or let federal officials handle the whole thing themselves.

Thus the only issue before Missouri voters is whether the governor’s administration can establish a state-run insurance exchange, or whether that authority must come from a legislatively or a voter-approved law.

Even then, the ballot measure may be largely symbolic. That’s because both Democratic Gov. Jay Nixon and Republican challenger Dave Spence say they have no plans to establish a state-run exchange. The deadline for states to submit plans to the federal government is Nov. 16. So for all practical purposes, it may soon be too late for Missouri to develop its own insurance exchange, even if a governor wanted to do so.

State Sen. Rob Schaaf, who sponsored the ballot measure, said there is a broader principle at stake about who should make Missouri’s major decisions.

“I want to make absolutely sure that everybody knows that an exchange cannot just be created by the one person, the governor,” said Schaaf, R-St. Joseph.

“I know that some people claim that it’s just simply political, but it’s not,” Schaaf added. “This is a true legislative vs. executive branch battle here. I think it’s an important one, not symbolic.”

Schaaf’s ballot measure stems from a political showdown that happened on Sept. 15, 2011. At that time, Missouri already had received a $1 million federal planning grant and been awarded an additional $20.8 million to make further preparations for an insurance exchange. A state board was scheduled to allocate a portion of that money for consultants to work on the technical aspects of an insurance exchange.

But the board vote was canceled – and never rescheduled – after Schaaf and several other Republican state senators learned at the last moment about the meeting and complained that Nixon’s administration was attempting to implement an insurance exchange without legislative approval. That feeling of distrust led the Republican-led Legislature to refer the prohibitory measure to the November ballot.

SOURCE: NewsTribune


Reps. Camp and Boustany want to know more about what HHS isn’t sharing:

The Centers for Medicare and Medicaid Services hired the Omnicom firm in May to launch a national multimedia education campaign mandated by the Affordable Care Act. The contract was first reported on by PRWeek.

House Ways and Means Committee Chairman Dave Camp (R-MI), along with Oversight Subcommittee Chairman Charles Boustany (R-LA), said they are considering sending a subpoena to the Department of Health and Human Services for documents related to the contract.

They first requested the documents in May. They are giving HHS Secretary Kathleen Sebelius and her staff until October 31 to turn over the documents before they take action. Coincidentally, HHS has yet to respond to PRWeek’s request for the entire RFP as well. We also asked for the document in May.

The threat to subpoena comes four months after Rep. Jeff Flake (R-AZ) introduced HR 5894, the Patient Protection and Affordable Care Act Education and Outreach Campaign Repeal Act of 2012. The bill would eliminate Section 4004 of Obamacare, which provides for “education and outreach,” or advertising campaigns, about the law.

He cited PRWeek’s article as the impetus for his bill, which is now being mulled over by the House Committee on Appropriations and House Committee on Energy and Commerce.

“Spending millions of dollars promoting a bill that most Americans want to see repealed is wasteful and particularly irresponsible given our current fiscal crisis,” Flake said in a statement.



But don’t worry, there’s no such thing as a public option.

The Obama administration will soon take on a new role as the sponsor of at least two nationwide health insurance plans to be operated under contract with the federal government and offered to consumers in every state.

These multistate plans were included in President Obama’s health care law as a substitute for a pure government-run health insurance program – the public option sought by many liberal Democrats and reviled by Republicans. Supporters of the national plans say they will increase competition in state health insurance markets, many of which are dominated by a handful of companies.

The national plans will compete directly with other private insurers and may have some significant advantages, including a federal seal of approval. Premiums and benefits for the multistate insurance plans will be negotiated by the United States Office of Personnel Management, the agency that arranges health benefits for federal employees.

Walton J. Francis, the author of a consumer guide to health plans for federal employees, said the personnel agency had been “extraordinarily successful” in managing that program, which has more than 200 health plans, including about 20 offered nationwide. The personnel agency has earned high marks for its ability to secure good terms for federal workers through negotiation rather than heavy-handed regulation of insurers.

John J. O’Brien, the director of health care and insurance at the agency, said the new plans would be offered to individuals and small employers through the insurance exchanges being set up in every state under the 2010 health care law.

No one knows how many people will sign up for the government-sponsored plans. In preparing cost estimates, the Obama administration told insurers to assume that each national plan would have 750,000 people enrolled in the first year.

Under the Affordable Care Act, at least one of the nationwide plans must be offered by a nonprofit entity. Insurance experts see an obvious candidate for that role: the Government Employees Health Association, a nonprofit group that covers more than 900,000 federal employees, retirees and dependents, making it the second-largest plan for federal workers, after the Blue Cross and Blue Shield program.

SOURCE: New York Times


Avik Roy summarizes the details for women as individuals and business owners:

In 2008, women accounted for three-fifths of all Americans enrolled in Medicaid, our government-run health insurance program for the poor. Medicaid is under enormous strain because its costs grow faster than state tax revenues do. As a result, state governments are cutting services to women on Medicaid, which already provides the worst health outcomes in the country.

Instead of fixing this problem by improving the existing Medicaid program, Obamacare severely worsens Medicaid’s structure, by shoving an additional 11 to 17 million people – disproportionately men – into Medicaid. This means that state governments will have to divert even more resources away from the women who are already in the program …

There are only 20 female CEOs in the Fortune 500 survey of America’s largest corporations. But women have been starting new businesses at a faster rate than men for the last 20 years, and are expected to create the majority of new small-business jobs in the years to come. According to the U.S. Census, in 2007, women owned 37 percent of all businesses in the United States; from 1987 to 2007, the number of businesses wholly owned by women has nearly doubled, to about 8 million.

Obamacare’s employer mandate applies steep fines – $2,000 per employee – to any company with more than 50 employees that doesn’t offer health coverage to all of its workers. This fine creates a huge disincentive for small businesses to grow, because most small businesses have thin profit margins, and can’t afford extra costs. Business owners know that they can avoid the mandate by staying under 50 employees.

Obamacare includes significant income tax increases. Many of those tax increases fall on the middle class, but some are specifically aimed at those making more than $200,000 a year: in particular, a 3.8 percent surtax on investment income, and a 31 percent increase in Medicare payroll taxes on income above $200,000. The problem is that 54 percent of all private-sector workers – approximately 70 million Americans – are employed by companies that file their taxes as individuals. Indeed, 85 percent of all small businesses in the United States file under the individual tax code.

In addition, it’s small businesses who will be hit hardest by how Obamacare increases the cost of health insurance. Large businesses can self-insure, escaping the law’s web of mandates and regulations. But small businesses can’t. Those firms that already offer health coverage to their workers will face the choice of eating the cost of higher premiums, or dropping coverage for their employees and paying the fine.

SOURCE: Forbes