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Mar
6

Obamacare – criticisms considered

Over the last week I’ve had several conversations with folks opposed to Obamacare/the Affordable Care Act.  Their criticisms are focused in several general areas:

  • it doesn’t do enough to control costs;
  • it is too expensive and we can’t afford it;
  • it is socialized medicine and violates our country’s foundational free market principles; and/or
  • it is intrusive and injects government into the doctor:patient relationship.

As I’ve said ad nauseum, PPACA (pronounce Pea-Pak-A) is so obviously a product of our vaunted-but-deeply-flawed political system that it should serve as a warning to all future legislators.  It was NEVER supposed to pass and become law as-is; if the Dems hadn’t completely screwed up the Senatorial election in Mass, thereby losing their veto-proof majority in the Senate and therefore had to pass the reform bill already passed by the House in the lame duck session, this conversation never would have happened.

Alas, it did, and here we are.

So, on to the complaints.

We can’t afford it.

C’mon, folks, as if the US health care system was affordable BEFORE Obamacare.  And, the recent announcement by Ala. Sen Jeff Sessions that the ultimate cost will be $6.2 trillion was flat-out wrong; his projections assumed the cost-control provisions of PPACA would be ended.  In fact, the Hill reported:

“the U.S. deficit will decline 1.5 percent as a share of the economy over the next 75 years, according to the GAO. Auditors attributed 1.2 percent of this improvement to the Affordable Care Act.”

Fact is, there are cost control provisions in PPACA, and unless they are repealed, they will reduce the deficit.  Two, the IPAB for one and ACOs, are promising – if only because neither has been proven. But I see another part of PPACA as likely the most effective; the mandate and prohibitions against underwriting.   If we all have to get insurance, and insurers can’t make money by risk selection and actually have to manage care (horrors!!), they’ll actually have to work on improving health, reducing morbidity, and improving the delivery of care – and eventually controlling cost thru their creative approaches.

Dirty truth folks, back in the old days (which includes every day up till 1/1/2014) health insurers spent most of their time/brain power/resources not on managing care, disease management, population health, or any other “health care” thing – but on underwriting. Nope, they worked hardest on figuring out first – who was likely to incur a claim, then second – how can we avoid insuring them.

That game’s over.  Now, insurers are stuck with all of us – healthy, fat, diabetic, blind, fit, gluten-free yoga enthusiasts, old, young, pregnant, single, whatever.  And if they are going to survive, insurers damn well have to figure out how to keep us – all of us – healthy and out of the doctors’ offices/ER.

Their game has changed more than anyone could possibly understand.

Why? Cause the heavy hand of government (that would be a government elected by us, folks) essentially said “enough of this crap.  Figure out how to control costs and improve health, or you’re out of business.”

The PPACA essentially changed – and leveled – the playing field.  The rules are clear.  And so are the penalties.  

Is it perfect? Hell no.  Is any legislation ever perfect?  Same answer.  But it is a LOT better than what we had before. Which, for those with short memories, was a completely out-of-control health system with declining numbers of insureds and rapidly rising costs.

 


9 thoughts on “Obamacare – criticisms considered”

  1. Joe, I cannot agree that a ban on underwriting will necessarily lead to lower insurance premiums.

    Under the PPACA, the high-risk persons who now get coverage in state pools will be integrated into the exchanges. People who are uninsured for medical reasons will get subsidies, and so some of them will join the exhanges also.

    It takes a great many young healthy persons to balance out the effects of just a few sick older persons in an insurance pool. This is my industry so I know whereof I speak.

    At the present time, health insurance companies are increasing premiums because of the uncertainty over who will be in the exchanges.

    Other insurance companies who can only make money by strict underwriting will just leave the business. Most insurers are owned by financial conglomerates who would drop their health products in a moment.

    Just a caution, then, about your prediction in this area.

    Bob Hertz,
    The Health Care Crusade

    1. Bob – thanks for the comment. A couple thoughts.

      “Under the PPACA, the high-risk persons who now get coverage in state pools will be integrated into the exchanges. People who are uninsured for medical reasons will get subsidies, and so some of them will join the exhanges also.”

      My response – Most high risk pools are woefully inadequate and underfunded, if not defunct. Several have not admitted new enrollees for years; Florida’s is down to less than a thousand members. However, there’s no question there will be more high risk people insured tomorrow than are today.

      I’ve also been in this industry for three decades, so I’m pretty knowledgable as well.

      “Other insurance companies who can only make money by strict underwriting will just leave the business.”

      My response – I doesn’t matter if some insurers leave the business. This is such a huge market opportunity that others will – and are – entering. There will be plenty of options as there is a guaranteed consumer base.

      I’d respectfully disagree with your statement “Most insurers are owned by financial conglomerates who would drop their health products in a moment.” The vast majority of health plans are NOT owned by conglomerates; UHG, Wellpoint, the Blues, Aetna, Coventry, et al are health plans first and foremost – they have to figure out how to survive and thrive or they’re extinct.

      Finally, there’s also no question insurers are raising prices due to uncertainty. My post refers to the future – when health plans are fully engaged, battling on a level playing field to win customers. This will force them to figure out how to lower costs and improve quality.

      I’d suggest Massachusetts’ history provides insight into where this will lead.

      cheers – Joe

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Joe Paduda is the principal of Health Strategy Associates

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