Obamacare Is the Dividing Line of Obama’s Presidency

Six weeks after the troubled rollout of the Michigan Health Insurance Marketplace, the Obama administration may be facing a new challenge: consumer anger at high deductibles in plans that were supposed to be the most affordable.

In southeast Michigan, deductibles in most of the 14 bronze plans listed on the marketplace — those with lower premiums — top $5,000 for a single person and $10,000–$12,000 for a family. Insurance won’t kick in until those out-of-pocket costs are met.

“(People) are saying ‘I can afford to buy health care, I just can’t afford to get sick,'” said Allen Zuppke, a Southfield insurance broker who helps consumers weigh risks, costs and options in buying health insurance.

President Barack Obama announced Thursday that insurers can extend policies on the individual market for another year after millions of Americans, including at least 146,000 in Michigan, received notices that insurers were canceling their policies because they didn’t meet the minimum standards of the health care law.

It’s not clear yet how the decision will play out. Michigan’s largest insurers said they’re waiting for guidance from Michigan Insurance Commissioner Ann Flood, who must decide whether to allow the change.

As it stands now, those high deductibles in the new policies being offered on the marketplace might provide a reason for the low enrollment numbers announced last week by the U.S. Department of Health and Human Services. Just more than 1,300 Michiganders had purchased insurance through the federally run www.healthcare.gov website, Michiganders’ portal to insurance under the Affordable Care Act. The site has been plagued by technical glitches that have led to error messages and frozen screens.

Former Detroit Police Officer Alfred Goode is among those who had hoped to have purchased a policy by now. Instead, he said, he’s at a loss as to what to do.

“I’m not a poor man, but I can’t afford this,” said Goode, who is losing his retiree insurance in Detroit’s bankruptcy. “That’s like another house note and a car note.”

In a closely watched and controversial decision, Gov. Sean Parnell announced Friday that Alaska will not participate in Medicaid expansion under the Affordable Care Act, describing it at a news conference as a “failed experiment.”

Expansion would have benefited 40,000 or more Alaskans, many of them low-income adults without children who currently have no health insurance. It also would have helped hospitals and doctors by reducing the amount of uncompensated care they have to write off and would have brought billions of federal dollars into the Alaska economy.

But Parnell, a Republican running for reelection next year, described it as one of many troubled parts of health-care reform.

“I believe a costly Medicaid expansion especially on top of the broken Obamacare system is a hot mess,” Parnell told reporters at a news conference in Anchorage called to announce his decision.

A range of groups and individuals – including chambers of commerce, Alaska Native organizations, churches and leading Democrats – had pushed for the change and reacted on Friday with disappointment, frustration and sharp criticism for the governor. But others, including right-wing think tanks, had argued against it. Some Republican legislators praised the governor, saying extending the health coverage would have been far too expensive for Alaska and the country.

Mr. Haslam is only the latest Republican tailor trying to figure out whether to expand the state’s Medicaid rolls as prescribed by President Obama’s Affordable Care Act. In his case, it involves trying — so far unsuccessfully — to balance some sharply conflicting concerns: struggling hospitals, local business groups, dwindling state resources and fierce conservative opposition to the new health care law.

And it has left him hanging out there, with no resolution in sight, while almost every other state has made a decision, and with many of his impatient constituents wondering how long it is going to take.

“Sometimes you’ve got to make a tough call,” said Craig Fitzhugh, the State House Democratic minority leader, who is pushing for expansion. “It’s time to say yes or no. I don’t want to get morbid or dramatic about this thing, but it’s lives we’re talking about here. It’s human beings.”

Rick Perry of Texas and Bobby Jindal of Louisiana, among many other Republican governors, have flatly rejected the expansion, even though it would provide billions of federal dollars to their states. Gov. Jan Brewer of Arizona and Gov. Rick Snyder of Michigan are among a small number who decided to accept it, coming under intense criticism from conservatives as a result. Gov. John R. Kasich had to do an end run around his own Republican-controlled Legislature to make it happen in Ohio.

But Mr. Haslam, who had once promised a decision by summer’s end, is still trying to negotiate a new plan of his own with federal officials, hoping it will satisfy the competing constituencies. It would involve using federal money to place many of the state’s poor on the federal health care exchange created by the act, rather than on Medicaid. But so far he has not persuaded federal officials, who have asked for more details, and said he expected no quick resolution.

Although he is not required to do so, Mr. Haslam has also promised not to enact anything without the approval of the Legislature, whose Republican majority, he said, was dead set against an expansion of Medicaid. Support for his alternative plan seems uncertain at best.

“We don’t want to expand a system that’s not doing a good job controlling costs,” the governor said, karate-chopping the air during an interview in his modest Statehouse office. “We want to end up with something that’s not just Medicaid with lipstick on it.”

Over the past two weeks, there’s been a lot of coverage of the President’s misleading promise that “If you like your plan, you can keep your plan. No matter what. Period.” But we mustn’t forget that there was a second part to that promise: “If you like your doctor, you will be able to keep your doctor. Period.” It turns out that isn’t necessarily true, either. On Saturday, the Wall Street Journal reported that, due to Obamacare’s cuts to Medicare Advantage, among other factors, UnitedHealth expects its network of physicians “to be 85 percent to 90 percent of its current size by the end of 2014.” The result? Some retirees enrolled in Medicare Advantage will need to find new doctors. And it’s a trend that could accelerate in future years.

First, some background. Over the next ten years, Obamacare was designed to spend around $1.9 trillion on expanding health coverage to the uninsured. The law pays for this new spending with $1.2 trillion in new taxes, and $716 billion in cuts to Medicare, relative to prior law. Of the $716 billion in Medicare cuts, more than one-fifth — $156 billion — comes from cuts to the market-oriented Medicare Advantage program. Medicare Advantage, also known as Medicare Part C, allows private insurers to administer the Medicare benefit; more than one-quarter of all seniors are enrolled in this program.

The logic for cutting Medicare Advantage — and it’s not an unreasonable one — is that prior to Obamacare, taxpayers paid $1.14 to cover a Medicare Advantage enrollee for every dollar they paid to fund someone in the traditional, single-payer Medicare program. The Affordable Care Act cuts 14 cents from the Medicare Advantage reimbursements in order to bring the two programs in line.

The private insurers who supply Medicare Advantage plans, like UnitedHealth and Humana, have been responding to the cuts by squeezing out inefficiencies in the way they deliver care. One obvious way to do that is to pay doctors and hospitals less — or kick out the providers who refuse to accept lower reimbursement rates. And that’s what United has done, according to the WSJ report from Melinda Beck.

“Doctors in at least 10 states have received termination letters, some citing ‘significant changes and pressures in the health-care environment,'” writes Beck. “The notices also tell doctors they can appeal within 30 days. That means many physicians and patients won’t know for sure who is in or out of UnitedHealth’s Medicare Advantage networks before the open-enrollment period to switch Medicare plans ends on Dec. 7.”

According to Beck, “Among the practices UnitedHealth has dropped are Moffitt Cancer Center in Tampa, Fla., and the Yale Medical Group in New Haven, Conn., which includes 1,200 faculty physicians.” Yale physicians are not the most sympathetic group; the Yale-New Haven Health System exerts near-monopoly power in Connecticut, and uses that power to keep prices high. It’s not surprising that UnitedHealth would drop them in an effort to keep costs down.

Notably, Beck reports that United’s competitors are not shrinking their networks as aggressively. “Other Medicare Advantage [plan] providers, including Humana Inc., Aetna Inc., and WellPoint Inc., said they are always evaluating their provider networks, but doctor groups say none appear to be shrinking them to the extent of UnitedHealth.” But United is the nation’s largest supplier of Medicare Advantage plans, due in part to their marketing deal with the AARP.