Tag: Coverage

Obama to Health Insurers: Stop Revealing How Expensive Our “Protections” Are

In the upside-down world of ObamaCare, politicians can force health-insurance companies to spend more yet blame them when premiums increase.

Today, President Obama extolled new “protections” included in the sweeping legislation he signed into law on March 23.

One category of “protections” requires consumers to purchase coverage for more and more expensive medical services (e.g., limitless coverage, requiring insurers to recognize ob-gyns as primary care physicians, coverage for “children” up to age 26).  If consumers valued such “protections,” they would have already bought them – and if they’re not in a position to select their own coverage, Congress should have fixed that problem.  Instead, Congress and President Obama forced consumers to buy them, and they are pushing health insurance premiums higher.

Another category of “protections” are actually just price controls.  Beginning this fall, ObamaCare will force insurers to cover minors with expensive conditions and at the same time charge those families far less than the costs they impose on the insurer.  Beginning in 2014, similar price controls will govern the entire market.  Insurers will respond by avoiding, mistreating, and dumping sick people, because that’s what these price controls reward.  Harvard health economist David Cutler, a sometime-advisor to President Obama, finds that health plans that provide quality care to the sick go out of business in the presence of those price controls.  If you think insurers mistreat the sick now, just wait until ObamaCare takes hold.  Along the way, ObamaCare’s price controls will increase premiums for young and healthy Americans.

Rather than take responsibility for its own law, the Obama administration is scapegoating insurance companies.  According to The New York Times, “The White House is concerned that health insurers will blame the new law for increases in premiums that are intended to maximize profits rather than covering claims.”  We’ve seen this before.  Massachusetts enacted a nearly identical law, which also caused premiums to rise.  State officials responded by imposing premium caps (more price controls!), which will force insurers to ration care.  As Massachusetts’ Deputy Commission for Financial Analysis at the Massachusetts Division of Insurance put it, premium caps will be a “train wreck.”

Meanwhile, “The administration worries that escalating premiums will force more people drop their policies before the law is fully implemented,” writes the Associated Press.  The administration is right to worry.  ObamaCare is already increasing premiums, and in 2014, it will force insurers to cover you at standard rates even if you get sick, which creates an even bigger incentive to drop coverage.

Hmm…there’s gotta be someone the administration can blame for that, too.

Guns Save Lives, Part XXXIVXX

John Lee still has his life and four children still have a father because Mr. Lee  had a handgun when three criminals tried to kill him and take his money.

When John Q. Citizen takes out a gun and the criminals flee, reporters don’t consider the incident “news” (at least when there are no injuries)–so guns are typically on the evening news when they are used by criminals.  As a result of that skewed coverage, it is no wonder that many people have a negative view about firearms.

On June 17, Cato will be hosting a forum about guns, crime, and self-defense.  Speakers include John Lott, Jeff Snyder, and Paul Helmke of the Brady Campaign.

For related Cato scholarship, go here.

John Brennan on Countering Terrorism

Earlier today, I attended a lecture at CSIS by John Brennan, a leading counterterrorism and homeland security adviser to President Obama. His speech highlighted some of the key elements of the administration’s counterterrorism strategy, in advance of tomorrow’s release of the National Security Strategy (NSS).

I hope that many people will take the opportunity to read (.pdf) or listen to/watch Brennan’s speech, as opposed to merely reading what other people said that he said. Echoing key themes that Brennan put forward last year, also at CSIS, today’s talk reflected a level of sophistication that is required when addressing the difficult but eminently manageable problem of terrorism.

Brennan was most eloquent in talking about the nature of the struggle. He declared, with emphasis, that the United States is indeed at war with al Qaeda and its affiliates, but not at war with the tactic of terrorism, nor with Islam, a misconception that is widely held both here in the United States and within the Muslim world. He stressed the positive role that Muslim clerics and other leaders within the Muslim community have played in criticizing the misuse of religion to advance a hateful ideology, and he lamented that such condemnations of bin Laden and others have not received enough exposure in the Western media. This inadequate coverage of the debate raging within the Muslim community contributes to the mistaken impression that this is chiefly a religious conflict. It isn’t; or, more accurately, it need not be, unless we make it so.

I also welcomed Brennan’s unabashed defense of a counterterrorism strategy that placed American values at the forefront. These values include a respect for the rule of law, transparency, individual liberty, tolerance, and diversity. And he candidly stated what any responsible policymaker must: no nation can possibly prevent every single attack. In those tragic instances where a determined person slips through the cracks, the goal must be to recover quickly, and to demonstrate a level of resilience that undermines the appeal of terrorism as a tactic in the future.

I had an opportunity to ask Brennan a question about the role of communication in the administration’s counterterrorism strategy. He assured me that there was such a communications strategy, that elements of the strategy would come through in the NSS, and that such elements have informed how the administration has addressed the problem of terrorism from the outset.

This was comforting to hear, and it is consistent with what I’ve observed over the past 16 months. Members of the Obama administration, from the president on down, seem to understand that how you talk about terrorism is as important as how you disrupt terrorist plots, kill or capture terrorist leaders, and otherwise enhance the nation’s physical security. On numerous occasions, the president has stressed that the United States cannot be brought down by a band of murderous thugs. Brennan reiterated that point today. This should be obvious, and yet such comments stand in stark contrast to the apolocalytpic warnings from a few years ago of an evil Islamic caliphate sweeping across the globe.

Talking about terrorism might seem an esoteric point. It isn’t. Indeed, it is a key theme in our just released book, Terrorizing Ourselves: Why U.S. Counterterrorism Policy Is Failing and How to Fix It. Because the object of terrorism is to terrorize, to elicit from a targeted state or people a response, and to (in the terrorists’s wildest dreams) cause the state to waste blood and treasure, or come loose from its ideological moorings, a comprehensive counterterrorism strategy should aim at building a psychologically resilient society. Such a society should possess an accurate understanding of the nature of the threat, a clear sense of what policies or measures are useful in mitigating that threat, and an awareness of how overreaction does the terrorists’s work for them. The true measure of a resilient society, one that isn’t in thrall to the specter of terrorism, is the degree to which it can conduct an adult conversation about the topic.

We aren’t there yet, but I’m encouraged by what I’ve seen so far, and by what I heard today.

AP: Obama Misleads Voters about ObamaCare’s Effects on Premiums

The Associated Press reports:

Buyers, beware: President Barack Obama says his health care overhaul will lower premiums by double digits, but check the fine print…

The [Congressional Budget Office] concluded that premiums for people buying their own coverage would go up by an average of 10 percent to 13 percent, compared with the levels they’d reach without the legislation…

“People are likely to not buy the same low-value policies they are buying now,” said health economist Len Nichols of George Mason University. “If they did buy the same value plans … the premium would be lower than it is now. This makes the White House statement true. But is it possibly misleading for some people? Sure.”

Nichols’ comments are also misleading – which makes the president’s statement not just misleading but untrue.

Under ObamaCare, people would not have the option to buy the same low-cost plans they do today.  That’s the whole problem: under an individual mandate, everybody must purchase the minimum level of coverage specified by the government.  That minimum benefits package would be more expensive than the coverage chosen by most people in the individual market.  Their premiums would rise because ObamaCare would take away their right to choose a more economical policy.

Note also that the CBO predicts premiums would rise by an average of 10-13 percent in the individual market.  Consumers who currently purchase the most economic policies would see larger premium increases.

Finally, the Obama plan would also force millions of uninsured Americans to purchase health insurance at premiums higher than current-law premium levels, which they have already rejected as being too high.  Their premium expenditures would rise from $0 to thousands of dollars.  Yet the CBO counts that implicit tax as reducing average premiums, because those consumers are generally healthier-than-average.  Only in Washington is a tax counted as a savings.

What Is ‘Meaningful’ Health Insurance? Who Decides?’

Noting that premium increases, such as Anthem’s proposed 39-percent hike in California, have caused individuals and employers to purchase less coverage, Kaiser Family Foundation president Drew Altman writes:

Rising health care costs and insurance company practices are leading not just to more expensive premiums, but to skimpier, less comprehensive coverage as well; slowly redefining what we have known as health insurance. To be sure, some economists argue that this is precisely what should happen…But this is not likely how regular people see it. Appropriate cost sharing is one thing, but we may be reaching the point in the individual market where the policies many people have simply cannot be considered meaningful coverage.

Of course, this is the whole idea behind President Obama’s proposed tax on high-cost health plans: higher prices will cause people to purchase less coverage, which will temper health care spending.

But whether Altman is correct depends on what the meaning of “meaningful” is.  When individuals pare back the amount of insurance they purchase, they are revealing what they consider to be meaningful coverage.  (The same is true when employers opt for less-comprehensive coverage, though employers’ revealed preferences are obviously a poor proxy for what their workers value.)

If Altman thinks the coverage that individuals are choosing “cannot be considered meaningful coverage” (note the passive voice), he is implicitly stating that individuals are not the best judges of their own welfare.  And the only way to devise an alternative definition of meaningful coverage is through the political process.

It is difficult to argue that the political process does a better job of selecting meaningful coverage.  That process forces many consumers to purchase coverage that they don’t find meaningful (e.g., chiropractic, acupuncture, circumcision), that they find offensive (e.g., abortion, contraception, in-vitro fertilization), or for treatments that are downright harmful (e.g., high-dose chemotherapy combined with autologous bone-marrow transplant for late-stage breast cancer).

Letting consumers reveal their preferences is possibly the worst way to define “meaningful coverage.”  Except for all the others.

Obama’s Other Massachusetts Problem

Even if Democrat Martha Coakley wins 50 percent of the vote in the race to fill the late Sen. Ted Kennedy’s (ahem) term, there are other numbers emanating from Massachusetts that present a problem for President Obama’s health plan.

On Wednesday, the Cato Institute will release “The Massachusetts Health Plan: Much Pain, Little Gain,” authored by Cato adjunct scholar Aaron Yelowitz and yours truly. Our study evaluates Massachusetts’ 2006 health law, which bears a “remarkable resemblance” to the president’s plan. We use the same methodology as previous work by the Urban Institute, but ours is the first study to evaluate the effects of the Massachusetts law using Current Population Survey data for 2008 (i.e., from the 2009 March supplement).  Since I’m sure that supporters of the Massachusetts law and the Obama plan will dismiss anything from Cato as ideologically motivated hackery: Yelowitz’s empirical work is frequently cited by the Congressional Budget Office, and includes one article co-authored with MIT health economist (and Obama administration consultant) Jonathan Gruber, under whom Yelowitz studied.

Among our findings:

  • Official estimates overstate the coverage gains under the Massachusetts law by roughly 50 percent.
  • The actual coverage gains may be lower still, because uninsured Massachusetts residents appear to be concealing their lack of insurance rather than admit to breaking the law.
  • Public programs crowded out private insurance among low-income children and adults.
  • Self-reported health improved for some, but fell for others.
  • Young adults appear to be avoiding Massachusetts as a result of the law.
  • Leading estimates understate the cost of the Massachusetts law by at least one third.

When Obama campaigns for Martha Coakley, he is really campaigning for his health plan, which means he is really campaigning for the Massachusetts health plan.

He and Coakley should explain why they’re pursuing a health plan that’s not only increasingly unpopular, but also appears to have a rather high cost-benefit ratio.

(Cross-posted at Politico’s Health Care Arena.)

Dear Poor People: Please Remain Poor. Sincerely, ObamaCare

In a new study titled, “Obama’s Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums,” I show that the House and Senate health care bills would impose implicit tax rates on low-wage workers that exceed 100 percent.  Here’s the executive summary:

House and Senate Democrats have produced health care legislation whose mandates, subsidies, tax penalties, and health insurance regulations would penalize work and reward Americans who refuse to purchase health insurance. As a result, the legislation could trap many Americans in low-wage jobs and cause even higher health-insurance premiums, government spending, and taxes than are envisioned in the legislation.

Those mandates and subsidies would impose effective marginal tax rates on low-wage workers that would average between 53 and 74 percent— and even reach as high as 82 percent—over broad ranges of earned income. By comparison, the wealthiest Americans would face tax rates no higher than 47.9 percent.

Over smaller ranges of earned income, the legislation would impose effective marginal tax rates that exceed 100 percent. Families of four would see effective marginal tax rates as high as 174 percent under the Senate bill and 159 percent under the House bill. Under the Senate bill, adults starting at $14,560 who earn an additional $560 would see their total income fall by $200 due to higher taxes and reduced subsidies. Under the House bill, families of four starting at $43,670 who earn an additional $1,100 would see their total income fall by $870.

In addition, middle-income workers could save as much as $8,000 per year by dropping coverage and purchasing health insurance only when sick. Indeed, the legislation effectively removes any penalty on such behavior by forcing insurers to sell health insurance to the uninsured at standard premiums when they fall ill. The legislation would thus encourage “adverse selection”—an unstable situation that would drive insurance premiums, government spending, and taxes even higher.

See also my Kaiser Health News oped, “Individual Mandate Would Impose High Implicit Taxes on Low-Wage Workers.”

And be sure to pre-register for our January 28 policy forum, “ObamaCare’s High Implicit Tax Rates for Low-Wage Workers,” where the Urban Institute’s Gene Steuerle and I will discuss these obnoxious implicit tax rates.

(Cross-posted at Politico’s Health Care Arena.)

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