Category Archive: Healthcare
Leave a Comment
The Affordable Care Act aimed to expand health insurance coverage, address pre-existing conditions, & reduce health care costs — but did it?
Bob Ewing and Brian Blase of the Mercatus Center discuss the goals of the Affordable Care Act (also known as Obamacare) and the implications of possible repeal or replacement by the incoming administration.
Leave a Comment
What’s happening to health insurance? It’s in a death spiral: premium hikes lead to enrollment drops lead to premium hikes …
Learn More: http://www.learnliberty.org/blog/why-chairs-are-cheap-and-epipens-are-expensive/
Leave a Comment
Dr. Brian Blase explains why healthcare premiums are rising and insurers are leaving the healthcare exchanges set by the Affordable Care Act. The result? “Death spiral.”
Comments Off on Buy ’em out – a new strategy for cutting government
If you were looking for serious policy discussion, the 2016 election has been a massive disappointment. As revealed during the debates and in their many public statements, neither Hillary Clinton nor Donald Trump has a plan for addressing the public sector’s biggest problem: government has become so large that it is unmanageable and ineffective.
In 1930, total government expenditure was 10% of GDP. Of that, approximately 3% was federal spending, and 7% was state and local spending. Today, government expenditure is about 40% of GDP, with 25% of that spending federal, and the remaining 15% state and local.
Government has gotten much larger, as well as significantly more removed from ordinary citizens. The concentration of power at the federal level weakens democratic checks on politicians and bureaucrats, who are freed to use tax revenues to advance their narrow interests, rather than those of the nation. The only way to fix this problem is to restore limited government and strict federalism, as envisioned by the 9th and 10th Amendments to the US Constitution.
A Massive Thicket
Many federal programs must be retired.
The problem is that a massive web of politicians, bureaucrats, and interest groups stand in the way of shrinking government back to a manageable scale. Voters like smaller and more local government—and hence a lower tax bill—in the abstract. But special interests oppose it, each on their specific issue.
The result is a classic ‘concentrated benefits, dispersed costs’ problem. Each interest group will fight hard to protect its privileges. Voters would be happy in the aggregate to end political patronage, but individually it’s too costly for them to do so. The result is runaway government, with taxpayers footing the bill.
Because of this, many proposals to shrink government are dead on arrival. But there’s one that hasn’t been tried, which will work for voters and political insiders both. In brief, taxpayers can buy out special interests.
The Buyout Strategy
The theoretical groundwork for this strategy has already been laid. Nobel laureate James Buchanan wrote a scholarly article titled, “Positive Economics, Welfare Economics, and Political Economy,” in which he argued that the only way to ‘test’ whether policy proposals are welfare enhancing is if the interested parties, private and public, consent to the proposals. This means any program to shrink the state has to get the consent of those currently benefiting from state policy, even if that policy is bad for the nation as a whole. Fortunately, there exists space between private and national payoffs for political entrepreneurs to arrange mutually beneficial bargains. In particular, it would be in the interests of taxpayers and political insiders both if taxpayers paid insiders simply to stop doing what they’re doing.
Consider economists’ favorite example of political inefficiency: agricultural subsidies. Economists are virtually unanimous in claiming there is no socially beneficial aspect of agricultural subsidies. In fact, such subsidies are socially costly, because they direct resources towards the promotion of products that the market has deemed less valuable. It would be both in taxpayers’ and agricultural producers’ interests if the following deal were struck: keep paying agricultural producers the full amount of the subsidy, in dollars, whether they stay in the industry or not.
This is a windfall gain for agricultural producers. Before, they only got the money if they made agricultural products. Now they get the money without any strings attached. Many will use this as an opportunity to get out of the business and do something else. Perhaps some will simply retire. But this whole arrangement is good for citizens.
The social costs of agricultural subsidies lies not in the money changing hands, but in the political distortion of resource allocation. Now that the cash transfer is without condition, agricultural producers no longer have an incentive to continue supplying output that the market has deemed lower-valued than cost. Ordinary citizens are better off, because subsidies are no longer destroying wealth. Agricultural producers are also better off, because they get the cash value of the subsidies irrespective of how much they produce. Everybody wins, and in terms of economic efficiency, the nation is wealthier.
More and More Buy Outs
Policies like this can be tinkered with in order to sweeten the deal for taxpayers. For example, continue paying the full subsidies for ten years, and then phase them out over the following ten. Since without this program, the subsidies would probably have continued in perpetuity, the policy will also be deficit-reducing in addition to wealth-enhancing.
The ‘buy them out’ proposal provides a general framework for reducing wasteful government activity on all margins. It can be applied to multiple issues: healthcare, education, even entitlement reform can be addressed by making mutually agreeable buyouts. The logic holds, whatever the specific application: these proposals will be windfall gains for political insiders, will reduce the government’s bill for ordinary taxpayers, and facilitate a more efficient allocation of the nation’s scarce resources.
Grand overhauls of public policy must take the status quo as given. The only way to deal with government bloat is to recognize political insiders are not going to forego their privileges without compensation. Taxpayers, working through their elected representatives, can and should buy out these insiders. Doing so may be the only incentive-compatible path back towards more local, responsive, and effective government.
Comments Off on It’s time to face Obamacare’s problems
There’s a joke from the old Soviet Union that essentially goes: “What’s harder to predict in the Soviet Union than the future? The past.” At the risk of killing the joke by explanation, its point was this: people’s opinions in the present are influenced heavily by their memories of the past. Thus, any government like the Soviets’ that seeks to manage people’s political opinions must spend a lot of time rewriting history.
This week’s announcement that Affordable Care Act (ACA) health insurance exchange premiums are rising this year by 25% on average brings that old joke to mind, for no sooner was this disturbing information released than many partisans leapt into action – not to recognize and address the problems in evidence, but to rewrite the law’s troubled history for the purpose of assigning blame.
Only so much spinning can credibly be done, however, because the reasons for the cost increases are straightforward and acknowledged by experts ranging from critical analysts, like the Mercatus Center’s Brian Blase, to Clinton advisor Chris Jennings (albeit via a memo leaked without his consent). What happened was this:
- The ACA substantially expanded health insurance coverage. To a first approximation, more health insurance increases health spending and prices, because it reduces the cost share consumers pay out of pocket and thus increases health service demand relative to supply.
- The ACA also tightly restricted the extent to which insurers could charge higher premiums to individuals with higher expected health costs (due to factors such as age or a pre-existing condition). Accordingly, ACA plan finances could only be stable if the premiums paid by or on behalf of younger, healthier participants well exceeded the value of their own insurance.
- Because it is not generally to someone’s benefit to carry insurance priced higher than its value, the ACA’s authors sought to induce participation by younger, healthier individuals by levying a tax penalty on those remaining uninsured. But the penalty wasn’t set high enough to exceed the income they’d lose by carrying coverage.
- To help low-income people foot these new insurance bills, taxpayers were required to finance substantial federal subsidies heavily concentrated on the poorest participants. But that still left a lot of other modest-income people without incentives to get covered. Research has shown that, in Blase’s words, “people who do not qualify for cost-sharing subsidies have generally found exchange plans not to be worth the cost.” These people have mostly declined to enroll.
- The ACA enrollment process allows individuals to avoid coverage while healthy, then sign up when they are ill and need care. This makes the participant pool sicker on average, further driving up average costs.
- As insurance costs rise, it becomes a worsening deal for young, healthy participants. This makes them less likely to maintain coverage, exacerbating the above problems and driving average costs still higher.
This dynamic arises from the ACA’s intrinsic design. Accordingly, many experts correctly predicted all this when the law was enacted. Leavitt, Hubbard and Hennessey wrote in 2009 that, “health insurance premiums will increase dramatically for the overwhelming majority of people” and that therefore “many will choose to go without and pay the tax penalty.” The CMS Medicare Actuary projected the ACA would on balance increase healthcare costs. Health economists Brad Herring and Erin Trish also wrote that the ACA’s coverage expansion would be “likely to increase” health spending. This May, Blase found that “massive insurer losses” in the exchanges indicated the next round of premium increases “may make last year’s . . . look small in comparison.” Naturally, now that these problems are plain for all to see, each party blames the other for refusing to correct them. Of course, each has a different opinion about what correction entails.
These problems were not inevitable. A less sweeping government intervention in health financing might have sought merely to protect individuals from ruinous health care costs. This is what we do, for example, with automobile insurance; it is designed only to protect us from financial disaster while leaving us each responsible for paying routine expenses. But the ACA’s authors were more ambitious, pursuing goals including comprehensive coverage for a wide range of discretionary health services, massive income redistribution, and obscuring the incidence of costs within a complex system of premiums and subsidies. The current situation arises basically from health insurance being relied upon to do a lot more than simply protect against risk.
It was not supposed to be this way. To the contrary it was repeatedly promised that the ACA would push health costs down. It was also promised specifically that the exchanges would be self-supporting without additional taxpayer funds. This is important to understand, for some are now advocating that the government prop up participating insurance companies with additional taxpayer dollars, for example by extending the ACA’s reinsurance program.
This is where a temptation to misremember history is arising. One recent Washington Post article implied that such a bailout would be consistent with the original spirit of the law because an ACA provision included to protect insurers, known as risk corridors, “originally was not supposed to pay for itself” and that Republicans only later sought to restrict it. This is flatly untrue. A taxpayer-financed bailout through the risk corridor program would be a direct violation of how everyone initially understood the ACA would work. Specifically:
- The original Congressional Budget Office (CBO) score certifying the ACA’s benign fiscal effects assigned no net cost to the ACA’s insurer risk mitigation provisions.
- The ACA’s supporters in Congress and at the White House repeatedly touted projections of “deficit-reducing health care reform” based on these provisions having no net costs.
- CBO later provided additional documentation that no net costs under these provisions were expected.
- The Obama Administration subsequently issued guidance informing the public that the provisions would be implemented “in a budget neutral manner.”
- CBO later projected the provisions would bring “net savings to the federal government” of $8 billion over ten years.
- The ACA’s supporters inside and outside of government all pointed to the updated CBO projection to assure the public there would be no bailout, but rather net savings.
In sum, the public was explicitly and repeatedly promised there would be no taxpayer-financed bailout of participating insurance companies. Congress’s later actions reaffirmed that understanding; the bailout some are now suggesting would renege upon it.
Whenever someone makes a heavy political investment in a policy, it becomes very difficult to acknowledge mistakes in that policy. This is why we so frequently see government doubling down on policy mistakes rather than correcting them. We see that temptation here, with many advocates arguing to expand the very policies producing substantial current problems. We should therefore turn our focus away from attempting to drag admissions of error from anyone. Instead, we all need to face up to the problems arising from the ACA, make a frank diagnosis of their sources, join together in fixing them and share the credit for doing so.
Comments Off on What you missed: Week of 10/28
Here’s what you missed this last week of October to get you caught up before the spooky weekend.
- A new Gallup poll puts public support for legalized weed at near record highs.
- AT&T has apparently been spying on customers and selling metadata to police without a search warrant (and making millions of dollars as a result).
- Uber’s self-driving truck makes maiden voyage to deliver beer.
- SNL’s Black Jeopardy skit surprisingly provides the most nuanced, touching take on contemporary American politics.
- Obamacare premiums are set to rise an average of 25% in most states this year.
Comments Off on The answer is a new government program. What’s the question?
The Sunday Washington Post had a long, hagiographic article about Senator Mark Warner’s critique about how capitalism “isn’t working” for the masses and his heroic attempts to fix it that left me thinking I’m in an alternate reality.
The problem he sees is that the growing tendency of people to change jobs throughout their career has left people unprepared for retirement, and that we need to do more to make sure that workers have some sort of safety net to provide them with health care and income in their golden years.
That this was largely addressed decades ago with the introduction of Social Security and Medicare was completely missing from the article. Social Security is an incredibly progressive retirement program that provides everyone with a work history of at least ten years with a decent-sized benefit that doesn’t go up all that much for wealthier people who contributed much more. And Medicare is the largest government program there is, covering hospitalization costs, basic health costs and drug benefits for tens of millions of senior citizens. The government spends about $1.5 trillion each year on these two programs, and they make up the majority of our federal budget. There’s also plenty of evidence that they prevent seniors from indigence: the poverty rate for seniors is well below that of other age groups.
The current Administration also added an expensive entitlement that makes it much easier for people under age 65 who do not receive health insurance to obtain it, along with a healthy subsidy. For a family of four in Washington DC there is still a subsidy for an income of $80,000, which is well above the mean household income, and Medicaid completely covers those who don’t make enough money to buy their own health insurance. What more can we possibly do to make health insurance more affordable for the working poor?
The latest push of the Administration–and one that Senator Warner is leading–is to create some sort of government 401k. The idea is an awful one–the rationale is that since we move around to so many jobs, and since many employees do not provide a retirement plan, the government should do it for them. Earlier this year the Department of Labor made it much easier for the states to set up retirement accounts for their workers that would be administered by the state as an option for workers at firms without a retirement plan.
It is a supremely bad idea. For starters, there is no evidence that a public option is better than a private option, and plenty of data showing the contrary. For instance, the college savings accounts run by the states are no different than what people would get if they went to their local Fidelity or Vanguard office and opened their account, save for the fact that the latter would not come with a tax break, and the money in the government account has a sharply higher management fee than are found in the private funds. The Department of Labor just spent a year trying to drive down management fees in retirement accounts and they’re embarking on a new plan that would invariably create millions of accounts with higher management fees than they could get elsewhere.
Until recently liberals were in full defense of defined benefit pensions despite the fact that they disadvantaged people who had shorter job tenure and were more likely to change jobs, both of which tend to be truer for women than men. That they realize these don’t work in today’s economy is gratifying, but their insistence that the government create a vehicle to replace it is nonsensical.
If we want to nudge people to get a retirement account, we can do that without the state of Massachusetts inserting itself as a middleman. And politicians should stop pretending that there’s a senior citizen poverty crisis, no matter how flattering the Post may treat such efforts.
Comments Off on Religion vs. Abortion, Explained
Perhaps the most contentious and difficult political-moral-legal issue over the past half-century has been abortion. Many Americans consider it tantamount to murder, whereas others insist that access to the procedure is a fundamental constitutional right. Some activists believe that the state or private employers should be able to force medical providers to perform abortions even if they have sincere religious beliefs against doing so. The advent of emergency contraceptives/abortifacients such as Plan B and Ella raise similar issues with respect to pharmacists filling prescriptions.
In 1973, shortly after Roe v. Wade was decided, Congress passed the Church Amendment to protect health care professionals. The legislation prohibits any court or public official from using the receipt of federal aid to require a person or institution to perform an abortion or sterilization contrary to their “religious beliefs or moral convictions.” The amendment also makes it illegal for health care organizations to discriminate against individuals who refuse to perform these procedures. In arguing in favor of these protections, Senator Frank Church (D–ID) remarked that:
[N]othing is more fundamental to our national birthright than freedom of religion. Religious belief must remain above the reach of secular authority. It is the duty of Congress to fashion the law in such a manner that no Federal funding of hospitals, medical research, or medical care may be conditioned upon the violation of religious precepts.
Subsequent Congresses expanded these protections. For instance, in 1996, Congress passed the Danforth Amendment which, according to Robin Fretwell Wilson, prohibits:
the federal, state, and local governments from discriminating against healthcare entities that refuse to (1) undergo abortion training, (2) provide such training, (3) perform abortions, or (4) provide referrals for training or abortions. Specifically, it protected doctors, medical students, and health training programs from being denied federal financial assistance, certifications, or licenses they would otherwise receive but for their refusal.
While not limited to institutions that oppose these practices for religious reasons, there is little doubt that an important motivation behind this act was protecting religious actors.
Like Congress, numerous states protect health care providers who have objections to performing certain procedures. According to the National Abortion Rights Action League (NARAL), “47 states and the District of Columbia [have] passed laws that permit certain medical personnel, health facilities, and/or institutions to refuse to provide abortion care.”
It is noteworthy that many (but not all) states specify that their conscience clauses protect individuals who object to abortions on “moral or religious grounds.” Some of these statutes offer better protection for religious liberty than others, but overall, both the national and state governments have made significant efforts to protect the ability of health care professionals to act (or not act) according to their religious convictions in these policy areas.
Recently, heated debates have arisen about various types of emergency contraception (EC). Some activists claim they merely prevent conception, whereas others contend that they can cause abortions. Some health care providers who believe that ECs can cause abortions and thus end innocent human lives have refused to administer or fill prescriptions for these drugs.
With respect to pharmacies, some states permit individual pharmacists to refuse to fill these prescriptions as long as another pharmacist is available to do so. Others permit pharmacies themselves to refuse to carry such drugs (particularly relevant for small, family-owned pharmacies). Currently, between 16 and 22 states protect health care providers and/or pharmacists from having to provide ECs.
A closely related issue concerns state and federal requirements that employers pay for various types of contraception, including ECs. Some employers have refused to provide health plans covering such drugs. States have moved to protect the consciences of such individuals and entities in different ways. According to NARAL, of the 28 states that require health insurance to cover controversial forms of contraception, 20 exempt employers from doing so if they have religious or moral convictions against these drugs.
At the national level, acting under the authority of the Patient Protection and Affordable Care Act of 2010 (the Affordable Care Act), the Department of Health and Human Services mandated that businesses cover a range of contraceptive devices, including ECs. Religious denominations and houses of worship were exempted from these requirements, but other religious organizations were not.
In response to significant outcry, the Obama Administration issued regulations whereby insurance providers used by religious organizations would offer these drugs at no cost (in theory) to the religious organizations’ employees. Some religious organizations were satisfied by this approach, but others believed they were still complicit in wrongdoing. For-profit businesses received no such protection, but in 2014, the Supreme Court held in Burwell v. Hobby Lobby Stores, Inc., that the Religious Freedom Restoration Act requires such an accommodation for a closely held for-profit corporation.
There is no denying that protecting religious actors who are licensed by the state to provide medical services is one of the most complicated policy areas in which religious citizens have been accommodated. In some instances, such as with ECs, even the basic effect of the drug is debated. Even when it is not, the state’s interest in regulating the provision of medical care, which can involve issues of life and death, is undoubtedly high.
These cases are further complicated because they raise equal protection issues and sometimes concern what the Supreme Court has called a fundamental right to abortion. It is telling that in spite of these complications, the nation and many states have gone to great lengths to protect the moral and religious convictions of health care providers.
Time and experience may reveal that some of the accommodations mentioned in this section are harmful. Although some advocacy groups fear that these accommodations will lead to great harm, there has been little evidence that this is the case. If substantial evidence arises that some of the policies mentioned in this section are detrimental to the well-being of patients, legislatures may have to rethink existing accommodations. If such evidence does not surface, however, legislatures in states without accommodations should move quickly to protect the religious liberty of all citizens more effectively.
Comments Off on Profit Shouldn’t Be a Dirty Word In Drug Development
Game-changing inventions taken out of entrepreneurs’ hands; slower innovation in healthcare technology and fewer ground-breaking treatments for patients worldwide. All are possible outcomes of a combative report from the influential United Nations High Level Panel on Access to Medicines, released in New York on Wednesday, which takes aim at the market-based system of drug development.
The panel argues that medicines would be cheaper if governments replaced markets in drug development, with a greater coordinating and resource-allocating role for the United Nations. It also proposes stripping companies of their intellectual property rights to ensure developing countries can access drugs at minimal cost.
The panel’s views are too pessimistic. Far from triggering some kind of public health Armageddon, the global spread of markets into the healthcare sector in recent decades has allowed us to live longer and healthier lives today than ever before.
Since 1960, global average life expectancy has risen by 36%, while India’s rose from 42 to 68 years with the gap between rich and poor narrower than ever.
Around the world, cancer death rates are plummeting. Infectious disease, recently a global scourge, is largely under control.
Much of the credit must go to the growth of global healthcare markets, which have created new technologies and knowledge and spread them worldwide on the back of free trade.
Five years ago, hepatitis C was an incurable condition treated in two ways: a 48-week course of injections with nasty side-effects, or a liver transplant. In 2013, the launch of new drug, sofosbuvir, revolutionised treatment meaning most patients could be cured within 12 weeks.
This sensational improvement has made sofosbuvir hugely profitable. Dozens of other companies are now racing to release cheaper and better hepatitis C cures to tap into this market, with five new treatments expected by 2018. Competition is expected to push down prices across the treatment class.
Competition for market share has seen companies recently develop a host of remarkable medical technologies, including vaccines against malaria and dengue fever, handheld devices to screen blood, portable ultrasound scanners, needle-free diabetes care, and transformative cancer drugs. Developments in precision medicine will soon see medicines tailored to individuals.
What the UN Panel’s report won’t say is that the most serious public health failings have come from governments rather than markets.
Many developing country governments – often the most opposed to the market’s role – have failed to develop the infrastructure to deliver proper healthcare.
World Bank figures show only 0.7 physicians per 1,000 people in India, well below the three to four typically seen in high-income countries. Africa is worse: most countries don’t record data but in Zambia and Zimbabwe, two that do, the figure is 0.2 and 0.1 respectively.
India only spends 4.4% of total government expenditures on health – well below the 15% recommended by the World Health Organization.
This shows a lack of government prioritisation to healthcare, which is at the root of most access to medicines problems.
Rather than attempting to replace markets in health with a government-led health technology development bureaucracy, the UN panel should be focusing on what works. This means harnessing the power of markets to achieve social goals, and working with the private sector as a partner, not treating it as an enemy.
This approach has been proven to work time and again.
Data shows that governments have generally achieved cheaper prices for HIV drugs when they are procured from companies via multilateral bodies such as the Global Fund, rather than when the intellectual property rights of the developers are forcibly overridden to allow state control over production and prices.
More recently, collaborations between the inventor of sofosbuvir, Indian generics manufacturers and the public sector in dozens of countries have seen the treatment made available to around half the world’s population infected with hepatitis C – a remarkable achievement in a few short years.
New, private-sector developed vaccines are now reaching patients in the world’s poorest regions thanks to industry partnerships with the donor-funded Global Alliance for Vaccines and Immunization. Among them are the world’s first 5-in-1 childhood diseases vaccine, the cervical cancer vaccine, and the brand new dengue fever vaccine, currently being rolled out in several Latin American countries.
The market-based system of drug development has been an enormous force for progress over the past 100 years. If the goal is to improve public health, the UN should be looking at ways to embrace it, rather than replace it.
Comments Off on The Obamacare Horror Stories Aren’t Slowing Down
When Stephen Blackwood’s mother was diagnosed with carcinoid cancer at age 49, it was a blow to the entire family. They would have to watch helplessly as the disease gradually claimed her health and her life.
Only a few things could slow the onset of her cancer: Expensive and painful Sandostatin shots, multiple appointments with specialists and several surgeries. Fortunately, she had a Blue Cross Blue Shield health insurance plan which was expensive but covered all of her treatments.
Then, in 2013, she lost her health insurance, thanks to the passage and implementation of the Affordable Care Act.
Desperate for coverage, she attempted to sign up for health insurance through healthcare.gov, but was unable to even browse the available plans due to a glitchy website (a widespread problem that made national news at the time). Her son alleges:
Because the exchange website in her state (Virginia) was not working, she went directly to insurers’ websites and telephoned them, one by one, over dozens of hours. As a medical-office manager, she had decades of experience navigating the enormous problems of even our pre-ObamaCare system. But nothing could have prepared her for the bureaucratic morass she now had to traverse.
When she finally found a plan, it did not come close to the coverage that her former plan offered. One of the things that was not covered under the new plan: the Sandostatin treatments that mitigated her symptoms and delayed the progression of the cancer. Stephen Blackwood says:
I understand that the intention—or at least the rhetorical justification—of this legislation was to provide coverage for those who didn’t have it. But there is something deeply and incontestably perverse about a law that so distorts and undermines the free activity of individuals that they can no longer buy and sell the goods and services that keep them alive.
Many More People Are Discontent Under The Affordable Care Act
The Blackwood’s story is dramatic and demonstrates the often-frustrating, sometimes-tragic impact of the early implementation of the Affordable Care Act.
But while unusually dramatic, the story is not an anomaly.
In fact, as the Affordable Care Act has matured, reports of individuals who are discontent with their plans have only increased. Overall, of people with ACA coverage in both 2015 and 2016, far more find it is becoming worse rather than better.
- Twenty-three percent report that they have a worse selection in hospitals and doctors in 2016 while only 13 percent report better selection from 2015.
- Thirty-four percent report that they feel less financially protected in 2016 while only 16 percent report an improvement in financial protection from 2015.
- 37 percent report that insurance is a worse value to them in 2016, while only 27 percent report it is a better value from 2015.
The below graph provides a few more telling statistics.
The chart above is just for people enrolled in ACA plans in the individual market. As Mercatus senior research fellow Brian Blase has noted, there are less than half the number of exchange enrollees in 2016 compared to initial projections. This is a strong indication that most eligible people, particularly those with income too high to qualify for large premium and cost sharing assistance subsidies, find the available plans not worth their cost. The question we now have to answer is why? Why are so many people unhappy under the Affordable Care Act? While a number of complicated factors are at play, a few are worth noting here.
1). People Are Having to Switch Their Plans…and Then Settle for Less
The first element to consider is change. Forty-three percent of returning healthcare.gov visitors selected new plans in 2016. Some simply wanted cheaper plans. Others, however, did it because the plans they had selected the year before were simply no longer available.
2). Thanks to High Deductibles and Rising Premiums, the Plans Aren’t As Attractive as Promised
Another reason so many people might be dissatisfied with healthcare might be because of the plans’ high premiums and high deductibles—the out-of-pocket price someone must pay before their insurance begins covering their medical expenses.
New Jersey resident David Reines, age 60, told The New York Times:
The deductible, $3,000 a year, makes it impossible to actually to go the doctor. We have insurance, but can’t afford to use it.
He suffers from chronic knee pain but is unable to see a specialist.
Karin Rosner, who lives in the Bronx, faces a similar situation. She has an eye condition that puts her at risk for a detached eye retina, but refuses to see a specialist thanks to her $1,750 deductible. It simply isn’t feasible, given her $30,000 salary, and the $300 a month she spends on the ACA’s silver plan.
The New York Times reports that more than half of all ACA plans involve deductibles that are $3000 or more.
Evidence also indicates that the ACA has caused premiums to rise (I’m skeptical of recent news to the contrary; I address why in another article.)
University of Pennsylvania economists suggest that “the pre-ACA average premium was lower than the lowest silver plan premium,” and they note that premiums and out-of-pocket payments may have increased anywhere from 14 to 28 percent as a result of the ACA.
It’s not difficult to see why customers are unhappy with the direction their health coverage has taken.
3). Young and Healthy People Aren’t Supporting the System.
If you don’t enroll in health insurance, you have to pay a $675 tax penalty, or 2.5 percent of your household income, whichever is higher, to the IRS.
In 2014, about seven million Americans have opted for the penalty, because it’s cheaper for them than buying health insurance.
According to the TechTimes, Clint Murphy, a healthy 45-year-old engineer who lives Sulphur Springs, TX, did the math: While he would have to pay $1,800 for not having insurance, enrolling in an insurance plan would cost him $2,900. The cost-benefit analysis is clear here: the cost of $1,100 is a small price to pay to forego health insurance coverage.
“The fine is still going to be cheaper,” he concluded.
This is something the government didn’t account for. Without young, healthy individuals buying insurance and thereby paying into the system, the government is finding itself saddled with the responsibility for supporting the healthcare of the older, sicker population.
As a result, the quality of care decreases while the cost of coverage skyrockets. And that will mean even more relatively healthy people choosing to opt out of the system.
It’s unsustainable. And based on how it’s working for the Americans it’s supposed to be helping, we’re already starting to see it buckle.
Comments Off on The Growing Politicization of Healthcare Thanks to Obamacare
One of the lesser-known consequences of the Affordable Care Act (ACA) is the consolidation of the insurance market into fewer insurance companies.
As Mercatus Senior Research Fellow and Forbes contributor Brian Blaise writes in a recent piece for Forbes, this has limited the range of choice and competition in the insurance market:
“The ACA has led to significant consolidation among providers through the health care market and is producing a severe adverse selection spiral in many states’ individual health insurance markets…. Now, exchange participation decisions are reportedly being made contingent upon DOJ decisions with respect to corporate mergers.”
This development, combined with the redirection of billions of un-appropriated dollars to failing insurance companies, makes the future of the ACA look dire.
“In May, a federal judge ruled that the Obama administration’s payments to insurers through its cost sharing reduction program are unconstitutional because Congress never appropriated the funding…. These payments likely exceeded $7 billion in 2014 and 2015 combined, and the administration continues to make them. The administration is also diverting billions of dollars in funds in reinsurance program contributions to insurers, funds that are legally required to be deposited in the U.S. treasury.”
Head over to Forbes to read the whole piece, and find out just how terminal things are looking for the ACA.
Comments Off on A Rule Meant to Reduce Neurosurgeon’s Fatigue Went Terribly Wrong
Richard Menger, a neurosurgery resident at Louisiana State University’s Health Sciences Center, tells a surprising tale in an article for the Foundation for Economic Education: how a rule meant to reduce doctors’ fatigue made neurosurgery less safe.
The rule was made with good intentions. Tired doctors are more likely to make mistakes, so by limiting the hours medical residents are permitted to work in a given week, there should be fewer tired doctors making fewer mistakes.
The good intentions didn’t lead to good results, however:
A landmark study in 2012 found that duty hour restrictions actually caused more complications. Preventable or avoidable bad outcomes increased because of disruptions in continuity of care.
Because each physician works fewer hours, they have to hand off patients to other doctors, which can lead to mistakes even more serious than those caused by fatigue.
If you’ve ever played the game “Telephone” in school, you know how this happens. The more people passing a message in the telephone game, the more warped the message becomes. Similarly, handing off patients from one doctor to another disrupts care and leaves room for mistakes.
In addition, Menger points out, surgeries are more likely to be dropped when hours restrictions are in place. Particularly in neurosurgery, where surgeries can range from 4 to 10 hours, restricting hours for residents means that residents perform fewer surgeries and get less experience.
This puts residents in a difficult situation:
If the resident is close to the duty hour cap, she could be faced with a terrible choice: she can make the unethical decision to go home, abide by the rules, and miss the opportunity to learn how to do a unique and challenging procedure that takes a lifetime to master — or she can make the unethical decision to lie about her duty hours.
This is just one example of how policies with good intentions can have unintended consequences, especially in health care. Check out the video below on FDA approval to learn more: