Yes, Obamacare Is Increasing Premium Costs

I knew the SCOTUS fact checks would come soon, and here’s a first one from David Hogberg:

The basis for the $43 billion in uncompensated care and the supposed cost-shifting it causes that results in family health insurance premiums being $1,000 higher annually comes from a 2009 report by the liberal FamiliesUSA called “The Hidden Health Tax: Americans Pay a Premium.”

Thomas Miller of the conservative American Enterprise Institute points to some very serious flaws in the study, such as undercounting “other sources of payment for care received by the uninsured, in some cases arbitrarily dismissing better estimates by others,” and crudely assuming “that the costs of care for the part-year uninsured would be proportionate to the portion of the year that they were uninsured (unlike [other researchers], who adjust for the clustering of more health spending into periods of insurance coverage.)” For the other flaws in the study, go here and scroll about two-thirds of the way down the page.

Jack Hadley at the Urban Institute has been examining the concept of uncompensated care for years, and in 2008 he and other researchers examined in exhausting detail all of the various sources of revenue, from government to private, that was available to help pay for uncompensated care and would, thus, avoid cost-shifting. In the end, the amount of uncompensated care that resulted in cost-shifting on to private insurance was “most likely about $8 billion. Given that total private health insurance expenditures in 2008 are estimated to be $829.9 billion (from NHEA projections), the amount potentially associated with cost-shifting represents less than one percent of private health insurance costs.”

In other words, if your family policy costs $12,000, then less than $120 of that is due to uncompensated care. $120 – really makes all this hassle over ObamaCare seem worth it, no?

Michael Cannon with a useful corrective:

Feldman’s limiting principle would even allow Congress to force Americans to purchase types of insurance that currently don’t exist. What if adverse selection so bedevils the markets for BAC-level insurance, positive-drug-test insurance, short-term-suicide insurance, overgrown-grass insurance, and oversleeping insurance that no carriers even offer such policies? Under Feldman’s rule, Congress could fix that by forcing carriers to offer such insurance and forcing you to buy it.

And that’s only what Congress could do in the presence of whatever scant adverse selection exists in unregulated insurance markets. But regulation typically encourages adverse selection – a point that Feldman elides, as if the catastrophic adverse selection that ObamaCare’s “community rating” price controls will cause were the market’s fault rather than Congress’. So what Feldman is actually saying is that Congress can force you to purchase insurance even if Congress itself caused the adverse selection. Which brings us back to broccoli.

Remember broccoli? Feldman writes, “If I choose not to buy broccoli, others can still buy it at a market price.” Perhaps that is true today. But let’s assume Feldman subscribes to the Obama administration’s argument that the Commerce Power enables Congress to regulate the timing and method of payment for a good that moves in interstate commerce. That would mean that Feldman believes Congress could pass a law stating that all broccoli purchasers must henceforth purchase it through a new method of payment called “broccoli insurance,” where all purchasers pay broccoli insurers a flat fee based on average broccoli consumption within the insurer’s pool of customers, regardless of how much broccoli an individual customer may consume. What would happen if Congress did that?

Well, those who consume the most broccoli would be thrilled. They could eat as much broccoli as they want – they could even stucco or decorate their houses with it – while paying much less than they did before. Those who rarely buy broccoli, on the other hand, would see their broccoli bills skyrocket. They may decide not to buy broccoli at all. When they leave the broccoli market, average consumption by those in the market will rise, as will broccoli premiums. That will cause more low-end broccoli consumers to leave the market, and the cycle will repeat itself.

Christie Herrera and Sean Riley task states with halting implementation until SCOTUS rules.

Earlier this month, the Congressional Budget Office found that the federal health law’s price tag nearly doubles to $1.76 trillion when fully implemented. One of the reasons for the jump is the law’s Medicaid expansion, which collectively forces states to add 25 million Americans onto an already-unsustainable program by 2020 – and pay $64 billion for the privilege.

While proponents argue that Medicaid is voluntary, many states believe there is little choice involved when the federal government has the power to tax citizens in the states, returning that money only if states comply with ever-increasing Medicaid mandates.

States have already been making difficult cuts to education, transportation and public safety. Even though Medicaid spending currently represents the biggest budget item for states – over 20%, more than education – the law seeks to further expand Medicaid rolls at the expense of other priorities.

Unfortunately, the news for people on Medicaid isn’t getting better. Increasing numbers of doctors aren’t accepting new Medicaid patients. People on Medicaid now are twice as likely as the uninsured to use the emergency room, because they can’t access primary care. The federal health law will only make a big problem even bigger.

Finally, the states are faced with health insurance exchanges, new bureaucracies designed to facilitate the federal takeover of health insurance. Governors in Georgia, Virginia, New Jersey and elsewhere are waiting on the Court’s ruling to decide whether to implement a state-based exchange or let the federal government set one up instead.

There’s no need to wait. These exchanges are a bad deal for states both now and in the future – and the Court’s decision won’t change that reality. Federal bureaucrats must approve every detail of state exchanges. Meanwhile, states will be on the hook for the cost of operating the exchange after 2015, when the federal money runs out.

Besides, only two states saw fit to establish an exchange prior to the federal law: Massachusetts and Utah. Most of the states were wise to reject exchanges then, and they should continue to reject them today.

Devon Herrick on the coming rationing.

IPAB is a 15 member board of unelected bureaucrats with the mandate to control Medicare spending through legislative proposals if spending grows faster than a set rate. However, the recommendations of the board aren’t merely proposals – they can automatically become law.

On the subject, Mr. Orszag said: “the proposals take effect automatically, unless Congress not only specifically votes them down but the President signs that bill. So the default is now switched in a very important way.”

So, how will the board actually control Medicare costs?

While the law expressly prohibits the board from rationing care, it allows changes to provider fees that will have the same effect. Cost control will likely take the form of cutting payments to doctors and hospitals, which will in turn limit the supply of doctors willing to treat Medicare enrollees. The American Medical Association said these cuts would harm seniors’ access to care.

Unfortunately for Medicare patients, doctors are already moving away from accepting Medicare due to low payment rates. As 78 million Baby Boomers begin to enroll in Medicare, even more pressure will be placed on the board to make cuts.

The need to reform Medicare to make the program sustainable is very important. But, instead of letting voters decide the best path forward, the law has taken power away from the people and their representatives, and placed in the hands of unelected, bureaucrats.

The role of Congress has been upended, and now rather than approve legislation, Congress will have to disapprove of the unilateral actions of a new bureaucracy.

Such an enormous delegation of power sets the precedent for a slow, but steady, erosion in the quality of care Medicare enrollees can expect.

Something more states are likely to experience soon:

Rebuffed by a federal judge in their lawsuit against the state, Arizona hospitals now want to talk.

Laurie Liles, president of the Arizona Hospital and Healthcare Association, said Thursday it is dropping the lawsuit it had filed against the state contesting the 5 percent cut imposed last year on what it pays for services to patients in the Arizona Health Care Cost Containment System.

Instead, she has opened negotiations with state senators to see if lawmakers can provide its members with needed financial relief. Liles said that covers not just that 5 percent cut but other changes in how the state’s Medicaid program works which has reduced the hospitals’ income.

Liles acknowledged her announcement comes less than a week after a federal judge refused the association’s request to immediately order the state to restore payments to their prior levels. Judge David Campbell said the hospitals were unlikely to win when the case goes to trial.

And Campbell totally dismissed several of the hospitals’ complaints of irregularities in how the state made the cuts and how they were approved by the U.S. Department of Health and Human Services.

But Senate President Steve Pierce, R-Prescott, who has set up a committee to negotiate with the hospitals, said the fact they were suing the state up until last week is irrelevant.

“That’s behind us,” he said, calling the offer to talk “an olive branch.”

“We all have to work together,” Pierce continued. “Whatever happened in the past, it’s time to move on, put things in scope, and do what’s right for Arizona.”

At the heart of the issue are cutbacks the Legislature ordered Gov. Jan Brewer to make in the AHCCCS program last year to help balance the budget.

One element of that was the 5 percent cut in payments for direct services. That was on top of an identical cut several months earlier, which came after a three-year freeze in rates.

The hospitals sued, contending the cuts were unjustified.

But the bigger problem financially for hospitals has been that the AHCCCS program overall was scaled back and is now covering fewer people. The result is people showing up at the hospitals without insurance and without the finances to pay their bills.

An interesting new white paper:

“Academic detailing” describes a government policy of sending academics or others to physicians’ offices and conferences to present objective information about drugs. The concept is that disinterested medical professionals rather than representatives from drug companies, perhaps from universities and governmental institutions, will provide information on best practices in the use of various drugs. The emphasis would be on prescribing proven drug therapies that have histories of being safe and that are often available in generic forms, with an eye toward minimizing costs and maximizing patient welfare.

A paper published in 1986, when drug companies’ detailing expenditures were much lower than today, indicated that significant savings could be achieved in Medicaid when physicians were visited for less than half an hour and counseled on what the paper termed “optimal” prescribing. The paper claimed such activity could see as much as a 3-to-1 benefit/cost ratio.

Academic detailing has now become a major emphasis of the federal government as part of its comparative effectiveness research and treatment emphasis mandated by the new health care law. States such as Maine, Idaho, and Pennsylvania have enacted laws and policies to implement academic detailing at the state level as well. Maine imposes a fee on pharmaceutical companies in order to fund its academic detailing efforts.

Academic detailing, which has occurred to some degree for 30 years, is viewed by some as a necessary corrective to pharmaceutical companies’ influence on physicians. Taxpayer resources appear to be poised to fund “truth tellers” armed with the latest objective scientific evidence to push back against the overwhelming resources of unscrupulous pharmaceutical companies. This does not, however, tell the full story.

While academic detailing is sold as objective and evidence-based, it is important to understand that pharmaceutical companies can make the same claim. Prescription drugs are subjected to extensive trials that last for years. Each new drug must pass the rigors of the FDA’s approval process, which is long and scientific.

Still, every prescription requires judgment. Two drugs made for the same purpose may exhibit different levels of effectiveness in an individual even if the clinical evidence, based on sampling and statistics, say they are of equivalent effectiveness. Nobody really knows why such differences exist, but this is part of the art of medicine that physicians practice. Academic detailing attempts to substitute the judgment of a few physicians who are active in government for that of actively practicing physicians working directly with patients.