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Post by elephant on Mar 23, 2012 7:39:44 GMT -5
My 21 year old & I discussed this a bit last night - specifically birth control. I think her 1st thought was "yes, they should cover it" then after some discussion said it should be up to the companies and maybe offered - which would be great. Just some basic knowledge of economics proves that the more is mandated in coverage, the less people will be covered. www.forbes.com/sites/aroy/2012/03/22/how-obamacare-dramatically-increases-the-cost-of-insurance-for-young-workers/How Obamacare Dramatically Increases the Cost of Insurance for Young WorkersIn 2009, during the height of the debate over Obamacare, the law’s architect, MIT economist Jonathan Gruber, was all over the op-ed pages, talking about how the bill would reduce the cost of health insurance. “What we know for sure,” he told Ezra Klein, “is that [the bill] will lower the cost of buying non-group health insurance.” His words were trumpeted by the law’s advocates, and were critical to persuading skittish Democrats to vote for the bill. But it turns out that “for sure” doesn’t mean what you thought it did. Because, now, Gruber is quietly telling state governments that the law will significantly increase the cost of insurance. And it will especially do so for young Americans: the ones who most struggle to find affordable health coverage.
Gruber then: Obamacare will “for sure” reduce insurance costs
Before the Patient Protection and Affordable Care Act became law, Gruber published a widely-cited analysis, using his Gruber Microsimulation Model, in which he asserted that in 2016, young people would save 13 percent, and older people 31 percent, on their insurance premiums. Gruber’s numbers were used to rebut an October 2009 analysis from PriceWaterhouseCoopers, which projected that non-group (a.k.a. individual-market) premiums would increase by 47 percent over the same period.Ezra called the PwC report “deceptive.” Jonathan Cohn, noting that the report was commissioned by the insurer trade group, AHIP, described it as “the insurance industry declaring war.” After Obamacare was signed into law, Cohn described the Gruber-led counterattack against PwC as a turning point in the fight to get the bill passed:
Consider what happened in September, when the insurance industry released a study purporting to show that reform would cause insurance premiums to skyrocket. The Senate Finance Committee—the logjam in the legislative process—was set to vote on its bill in less than 48 hours. The study, commissioned by the insurance lobby and conducted by a private accounting firm, represented a clear effort to undermine support. It was the kind of move that lobbying groups make all the time—and, in the old days, it might have worked, since nobody would have seen through the study’s tilted assumptions until…the damage had been done. But within hours of its publication, several blogs, including this one, had published critiques showing just how flawed the study was. The critiques circulated in Washington and provoked a backlash against the insurers. Wavering Democrats said they were offended by the effort at political sabotage; the Finance Committee went on to pass the bill, as it had originally planned.
President Obama, too, touted the bill’s ability to “bend the cost curve,” repeatedly promising that the law would “bring down premiums by $2,500 for the typical family.”
But that was then.
Gruber now: Obamacare will increase premiums by 19-30 percent
As states began the process of considering whether or not to set up the insurance exchanges mandated by the new health law, several retained Gruber as a consultant. In at least three cases—Wisconsin in August 2011, Minnesota in November 2011, and Colorado in January 2012—Gruber reported that premiums in the individual market would increase, not decrease, as a result of Obamacare.
In Wisconsin, Gruber reported that people purchasing insurance for themselves on the individual market would see, on average, premium increases of 30 percent by 2016, relative to what would have happened in the absence of Obamacare. In Minnesota, the law would increase premiums by 29 percent over the same period. Colorado was the least worst off, with premiums under the law rising by only 19 percent.
Some low-income individuals would benefit from Obamacare’s subsidies; for those individuals, the impact of these premium increases would be blunted. But if premium costs go up at a rate faster than people expect, taxpayers will be on the hook for billions upon billions of extra subsidies.
“It is true that even after [subsidies] some individuals are ‘losers,’” Gruber told The Daily Caller, “in that they pay more than before reform.” But why did Gruber change his mind? A “discriminatory” market is to blame, he says, in which “the sick just stayed [uninsured].”
More on that in a bit.
There’s no such thing as a free lunch
Gruber’s Microsimulation Model, which he felicitously abbreviates as GMSIM, attempts to project how Obamacare will affect insurance premiums by taking into account certain provisions of the law. “GMSIM is able to carefully integrate all of the key features of enacted federal law,” Gruber promises in his report to Colorado.
Gruber’s model focuses on six specific aspects of the law:
- The requirement that all insurance plans cover “certain essential benefits;
- The mandate that all plans meet a “minimum actuarial value” of 60 percent (i.e., that beneficiaries bear out-of-pocket responsibility for a maximum of 40 percent of their benefit costs);
- The requirement that insurers spend 80 percent of individual-market premium costs on health expenses (medical loss ratio);
- The law’s high-risk pools being folded into the exchanges;
- Competitive efficiencies brought about by the exchanges; and
- Requirements that insurers charge similar rates to the young and the old (community rating)."
In the case of Colorado, as I noted above, Gruber now projects that Obamacare will increase individual-market premiums by 19 percent on average. The biggest drivers of the increase, according to Gruber, are the new insurance regulations (especially the ones forcing upward a plan’s minimum actuarial value and mandating minimum essential benefits), and also the law’s insurance subsidies, which will incentivize “individuals [to choose] richer insurance with their tax credits.”
That is to say, Obamacare forces insurers to offer more benefits, requires them to spend more money on health expenses, and subsidizes the consumption of richer insurance packages. The laws of economics dictate that these costs will get passed down to consumers. It shouldn’t take a microsimulation from MIT to know there’s no such thing as a free lunch—but now you have one for good measure.
Gruber neglects Obamacare’s pre-existing condition provision
The money paragraph in Gruber’s report to Colorado comes on page 14. It’s there that he admits that his model doesn’t take into account Obamacare’s biggest change to the insurance market: its requirement that insurers take on all comers irrespective of pre-existing conditions, a.k.a., “guaranteed issue.” Here’s what he has to say about that (emphasis added):
It is important to recognize some limitations in our modeling of prices. In particular, given publicly available data we cannot incorporate the effects of the ban on pre-existing conditions exclusions. This ban will cause a rise in premiums as insurers are forced to cover conditions that they had previously excluded. In addition, there are new premium taxes on insurers that will raise premium rates…Overall, we cannot predict the net impacts of these factors on premiums without more analysis.
It is precisely this aspect of the law—its requirement that insurers cover those with pre-existing conditions—that is central to the analysis conducted by PriceWaterhouseCoopers, the analysis that Gruber and other PPACA advocates criticized back in 2009.
The whole reason that Obamacare includes an individual mandate—the controversial requirement that everyone buy health insurance—is that the law requires insurers to cover people with pre-existing conditions. Without an individual mandate, people could wait until they were sick to buy insurance, because their illness would now be a “pre-existing condition.” This, in turn, would drive up the cost of insurance, leading to the infamous adverse selection death spiral in which nobody bothers to buy insurance, except for the very ill, because it is too expensive.
The adverse selection death spiral
The problem, as PwC points out, is that the individual mandate is too weak. “While the new market rules [regarding pre-existing conditions] are implemented in full in [2014], the individual coverage requirement is…phased in gradually.”
The fine for not purchasing health insurance under PPACA is $95 per person in 2014 (or 1% of taxable income, whichever is greater), $325 in 2015 (or 2%), and $695 in 2016 (or 2.5%). Thereafter, the mandate is indexed to inflation.
In addition, many people are exempted from the mandate, such as those for whom premiums exceed 8 percent of household income. Hence, as premiums increase, more and more people will be exempted from the mandate.
The size of the mandate’s penalty is puny in comparison to the cost of health insurance. According to the government’s Medical Expenditure Panel Survey (MEPS), the average premium for an individual plan in 2010 was $4,940. If we assume that premiums increase by 6 percent a year—the historical rate—the maximum $695 mandate will account for only 10 percent of average premiums.
Because the mandate is weakly enforced, small in size, and gradually put into place, whereas the pre-existing condition mandate takes effect immediately, Obamacare creates the recipe for an adverse selection death spiral. “We would anticipate significant adverse selection to occur in the existing market,” reports PwC, “increasing premiums for those who have coverage today. Higher premiums will result in more individuals being exempted from the coverage requirement…the penalties will be phased in, so that they will not reach full effectiveness for several years. This lack of coordination increases the likelihood of a premium spiral that ‘gets ahead’ of the coverage requirement which…may further reduce the incentive for those who are healthy to buy coverage. This may then cause an increase in premiums for those with coverage today.”
Community rating increases insurance costs for the young
Many of the people who go uninsured are young people. The young are just entering the work force, and therefore typically have below-average incomes. In addition, the young are healthy, and have much less use for expensive health insurance.
Obamacare forces insurers to charge their eldest beneficiaries no more than 3 times what they charge their youngest ones: a policy known as “community rating.” This, despite the fact that these older beneficiaries typically have six times the health expenditures that younger people face. The net effect of this “community rating” provision is the redistribution of insurance costs from the old to the young.
According to my sources, this was a favor that Democrats did for the AARP, which was advocating for its older members, who are active at the voting both, compared to younger Americans, who vote less often. The AARP actually wanted Obamacare to have a community rating ratio of 2:1—that is, insurers could charge their eldest beneficiaries only twice what they charged their youngest. But they had to settle for 3:1.
The real problem is how the community rating provision interacts with the individual mandate. As I described above, the individual mandate is too weak. Hence, the young—who will face the steepest increases in their health insurance premiums—will be further deterred from buying coverage, which will in turn enhance the adverse selection death spiral.
The danger of relying on one man’s estimates
The central policy argument for the Patient Protection and Affordable Care Act is that it would increase access to health care for those who are currently uninsured, while leaving the system intact for those who are already covered. “If you like your health care plan, you can keep your health care plan,” as President Obama has repeatedly said.
Indeed, Jonathan Gruber promised that, based on his microsimulation model, the law would “for sure” reduce insurance premiums. And Gruber’s numbers were relied on, almost exclusively, by the bill’s most prominent advocates.
But Gruber, in a span of two years, has gone from claiming that the law would reduce non-group premiums by 13 to 31 percent, to estimating that they will increase those premiums by 19 to 30 percent. Worse still, Gruber’s model doesn’t adequately account for the law’s central feature: its requirement that insurers take on all comers, regardless of pre-existing conditions, while only weakly enforcing a nominal fine on those individuals who try to game the system.
The only thing that seems “for sure” is that there are flaws in Gruber’s model.
What happens if the Supremes intervene?
Next week, as you probably know, the Supreme Court will hear oral arguments in HHS v. Florida, the case that will determine the constitutionality of the individual mandate. Both sides in the case agree that, if the individual mandate is struck, the community rating and guaranteed-issue provisions should be struck as well.
If the Supremes do in fact overturn those three provisions of the law, you’ll still see an adverse selection death spiral. The law still drives up the cost of insurance through its “essential benefits” and “minimum actuarial value” provisions. Younger workers, who make less money, will be least able to afford such coverage, and will need to take advantage of the law’s taxpayer-funded insurance subsidies.
The bottom line is that there is no quick fix for the Affordable Care Act’s array of policy mistakes. We would be much better off repealing the law and starting over.
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Post by gunsey2u on Mar 23, 2012 18:15:27 GMT -5
Great article ele. Too many failed promises by Obama to believe anything he says about affordable health care. The only solution i can see is to repeal and start over.
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Post by Jack Frost on Mar 26, 2012 15:05:08 GMT -5
Personally, I despise what the insurance industry has become. I've heard far too many horror stories about them, and have been through the rounds with them myself in the past. Something needs to change, for certain. I do have a problem with the individual mandate, and believe it is unconstitutional. But, so is practically everything else the Federal government does now days... Every law ever invented is a "mandate" of some kind. And to say that a government can't force citizens to buy something is bullcrap - they sure as hell force me to buy automobile insurance!
The only folks who have a pure doctor/patient relationship are those who pay their own medical expenses. In EVERY other case, big business (aka insurance companies) control EVERY decision about what tests and treatment we will receive. So no, I don't really want government involved in my healthcare decisions, but I don't want some nameless employee of some huge corporation determining what medication I can receive either. At least the Government can be VOTED out...
If people only used insurance for what it is meant for (catastrophic circumstances), and paid for routine expenses themselves, healthcare costs would be drastically reduced. But, asking people to pay their own way is a thing of the past, I suppose.
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Post by gunsey2u on Mar 26, 2012 19:12:32 GMT -5
I think too many, drs. and patients, try to defraud the ones paying out the cash for these expenses. I don't blame ins. carriers to demand a few things for the money they are paying out. Trouble is, the ones of us that use the system for the way it was set-up to be used are being penalized for the actions of the not-so-honest. Then again, there's always the less-than-ethical doctor or businessman. All this said, I still don't want a government run health care system. That would be suicide for alot of us if we just stood by and let it happen.
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Post by Jack Frost on Jun 29, 2012 13:54:19 GMT -5
In my opinion (and I have a lot of doctors in my family - past and present), many (ahem, most) doctors are in the pockets of pharmaceutical companies. Period. Can't stay in business without their favor. Government runs healthcare in America, and has for decades through all sorts of regulation (not just of insurance either).
Anyway, it will only get worse from here folks, buckle your seat-belts!
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Post by gunsey2u on Jul 4, 2012 0:11:21 GMT -5
Yeah, every time i look at Pelosi i want to throw up. Guess now we'll all really find out what's in the bill. The only thng that i'm holding onto is that more than half our citizens do not favor iit so it was pushed on us. This makes me think that somehow it will get repealed.
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Post by pinkpanther on Jul 4, 2012 15:30:35 GMT -5
What really galls me is when you get a bill from a doctor about 3-6 or more months later stating a big sum of money you owe from a date of service listed on a day when you didn't even go to the doctor. We keep a calendar and mark the days when we go to the doctor.....and just about every bill we get has a date of service when we didn't even go to the doctor. And when they are asked about it they just say we will have to get back with you on that. And it isn't always the same doctor all the time...all the doctors do it.
A friend said they noticed the same thing on their bills. Now to me, that is a sign of defrauding the insurance co. And then again, sometimes I think that the doctors and ins. co's. are in it together to defraud.
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Post by gunsey2u on Jul 8, 2012 23:33:42 GMT -5
Finally got my bill on my surgery from back in January and it was 56,000. Of that total, i was charged over 5,000 for coronary care unit and I wasn't ever in the coronary care unit.
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Post by Jack Frost on Aug 28, 2012 19:28:39 GMT -5
$56,000 for surgery??? My great-great-grandfather was a "country" doctor in Cowpens. I've heard stories about him delivering babies in exchange for garden produce!!
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Post by elephant on Nov 15, 2012 12:10:35 GMT -5
www.caintv.com/left-goes-bonkers-as-obamacarePolitics: Left goes bonkers as ObamaCare actually starts destroying jobs
Published by: Dan Calabrese on Thursday November 15th, 2012
By DAN CALABRESE - You think they attacked business before? Just you wait.
We tried to tell them. You can't impose massive new health care costs on businesses without negatively impacting employment status and wage levels. But you knew they would never listen. You knew they would pass ObamaCare anyway, because they think businesses have gigantic piles of money sitting around in secret rooms somewhere, and the only reason they don't provide employees with gold-plated benefit packages - free of charge - is that they are heartless, greedy bastards who want all their workers to get sick, suffer and die.
So they went ahead and passed it. And now that everything we tried to warn them of is happening, you don't think they're going to just admit they were wrong do you? No way. We're already seeing how the left intends to deal with the news of massive cuts in jobs and employee hours, especially in the food service industry. They're going to attack the companies making the moves as greedy, unpatriotic cretins who are using ObamaCare as an excuse to enrich themselves at the expense of workers and customers.
Already a movement is starting to organize a boycott of Applebee's, Olive Garden and quite a few other well known chains because they are believed to be cutting employee hours - a move that allows them to avoid the requirement of paying for benefits under ObamaCare. And today the left is apoplectic over the plans of Florida-based Denny franchisee John Metz to impose an "ObamaCare surcharge" of 5 percent on meals.
I suppose most Obama voters don't know much more about business than Obama himself knows (which is pretty much nothing), so maybe they really didn't understand that this was inevitable. Maybe they really didn't understand that businesses can't just willingly hand over a portion of their profit margins without making some sort of move to mitigate the loss.
What they really don't understand is this: No business wants to pay employees poorly or offer them inadequate benefits. That's because it's not in the business's best interests to do that. Offering good pay and benefits prevents employee turnover, which comes with huge costs that businesses much prefer to avoid if they can. The same is true with prices. No one wants to increase prices, because it potentially puts you at a competitive disadvantage. A guy who imposes a 5 percent surcharge doesn't delight in irritating his customers. He's trying to cover an additional cost that's been imposed on him, and in the case of John Metz, he wants customers to know where that cost is coming from.
But while you want to pay as generously as you can, and charge as little as you can, you still need to make money. You can't give stuff away for free and pay everyone $1 million a year. You have to set wages and prices commensurate with what it costs to run your business, and with what the market can bear. It's when government starts imposing outside costs that it screws this up and forces businesses to do things they would not do if left to their own devices.
Don't try telling that to the left, though. They don't want to hear it. Now that the business community is doing exactly what some of said they would have to do, the left is going to launch a massive political campaign against them. Boycotts never work, so Applebee's will be fine, but if you thought Democrats were anti-business before, just wait until you see how they assail America's job creators for the rational, inevitable moves they have to make in response to the monstrosity that is ObamaCare.
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