Wednesday, March 23, 2011

Happy Anniversary Obamacare?

Today marks the first anniversary of the Obamacare. President Obama signed it into law on this date last year.  As Nancy Pelosi famously stated right before its passage, "We have to pass it so that you can find what is in it".  So how is it working out one year later now that we know more about what is in it?

  • We were told that once people knew what was in it that public opinion would turn sharply in favor of the legislation.   Since then, the Democrats who provided all of the votes for passage have lost 63 seats in the House and 6 seats in the Senate in the 2010 mid-term elections.  Republicans regained control of the House and have their largest majority in the House since the 1940's.
  • The two most recent polls on Obamacare show strong majorities against the law.  CNN has it 59% oppose and 37% in favor.  Rasmussen has it at 53% against and 42% for.  This is a average spread of over 16 percentage points against the law.  These are higher unfavorables than last year at this time.
  • A group that was put together last year with much fanfare that was going to educate the public about Obamacare (the Health Information Campaign) and spend $125 million in doing so has all but disappeared. 
  • Over 1,000 waivers to Obamacare have been granted by HHS so that they do not have to comply with the new law currently.  Included in this number are a number of labor unions including the Teamsters, electrical workers, plumbers, carpenters and food and commercial workers.
  • Two federal judges have ruled the individual insurance mandate in the law unconstitutional.
  • At last count, 27 states have started or joined in a lawsuit against Obamacare.  The action is based on their concerns about its constitutionality as well as the massive costs to the states from Medicaid expansion that the states will have to pay for.
  • A big argument for Obamacare was providing access to coverage for individuals with pre-existing conditions who were unable to obtain coverage through the health insurance market.  A worthy goal. In the justification for the bill, it was projected that 375,000 individuals would sign up for coverage in the first year. As of Febuary, 2011, a grand total of 12,000 had done so.  
    • The experts are befuddled by the numbers.  I am not.  The health care crisis is not driven by accessibility as much as affordability.  People want a free lunch (or close to it) from health insurance.  Even people with pre-existing conditions and chronic conditions do not spend large sums all the time.  Given a choice between paying a certain $1,000/month for a health insurance policy against the chance they may be hospitalized, most will gamble.
    • A real life example of what I speak was reported in The Washington Post on a gentleman named Will Wilson of Chicago who has AIDS.
After he was diagnosed with AIDS in 2002, he discovered that his insurance at the time paid only $1,500 for medicine each year. His AIDS drugs cost $3,000 a month. Paying for the rest, he ended up in bankruptcy. Now Mr. Wilson, a tourist trolley guide, gets help from the federal AIDS Drug Assistance Program. 
But with no coverage for other kinds of care, Mr. Wilson remembers tears streaming down his face in February 2009, the night that he watched Mr. Obama vow to Congress, "Health care reform cannot wait, it must not wait, and it will not wait another year!" Mr. Wilson became an activist for health reform, circulating petitions, going to demonstrations. And the day after the president signed the bill into law, he was featured in a Chicago Sun-Times column quoted as saying, "I've had a grin on my face all day" at the prospect of the high-risk pool he could join. That was before the rates were announced in July, and Mr. Wilson discovered that the premium -- nearly $600 per month -- "was almost as much as my rent. It was like, no way! I was floored."
I understand his situation.  However, if your life is on the line you would think that a $600/month premium would be a bargain when your AIDS drugs cost $3,000/month.  Of course, it sounds like he is getting most of that for free.  No wonder the $600/month for everything else seems expensive to him.

John Goodman sums it up pretty well in his Health Policy Blog.

Alert readers will remember the White House summer of 2009 invitation to all Americans to send in their horror stories describing health insurance industry abuses. Although the complaints were many, the vast majority were about pre-existing condition limitations. Then, on the eve of the ObamaCare vote, every member of Congress who appeared on television to defend the legislation was able to cite by name an individual or family in his or her state or Congressional district with a heart wrenching story.
Gone was any interest in “universal coverage” or “insuring the uninsured” or “helping poor people get health care.” The case for change was focused almost exclusively on protecting the middle class from miserly insurance companies.

However, Goodman points out it was like giving a party to which no one comes and he asks the obvious question in light of the concerted efforts by the Administration to find more people with pre-existing conditions that want to buy coverage but have been denied.

Don’t you think it is a bit odd for the White House to send out an appeal to victims so they can identify themselves? That’s not normally how the political system works.
The more usual scenario is: victims unite and form interest groups; they lobby Congress, write letters, testify, etc; and eventually the pressure become so great that Congress legislates.
When have you ever heard of that entire process in reverse? When has Congress ever before decided it wants to do something and then conducted a nationwide search to find people who will benefit?

The bottom line on Obamacare is that those that benefit are very few and far between.  However, the cost of Obamacare is falling on everybody that already has coverage which is the vast, vast majority of Americans. Actuaries that I have talked to put the extra cost this year at 3-4% over and above normal health care cost trends.

Most people are reasonably satisfied with what they have but for the cost and issues regarding portability of coverage and continuity of coverage when there is a preexisting condition.   Issues that do not require a 2,400 page bill.

More costs will fall on those with employer coverage over the next year or so as more rules take effect.  In my opinion, this issue will not go away until after the 2012 elections.  In part, that election will be a vote on whether Obamacare has more anniversaries or ends up as an historical footnote.  In our system, the people's will always prevails.  Sometimes it takes longer than others to be revealed.  Time will tell.

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