Tag: insurance

Under Romney/ObamaCare, Even the Scapegoats Scapegoat

In a recent post on how RomneyCare is increasing health insurance costs in Massachusetts (by encouraging healthy residents to purchase coverage only when they need medical care) and how ObamaCare will do the same, I linked to a Boston Globe article where an insurance-company spokeswoman made this odd claim:

We believe…the gaming in the system…is adding as much as $300 million dollars to the health care system in Massachusetts.

It’s hard to know what she meant. Taken literally, this claim is obviously untrue.  The gamers aren’t adding revenue to “the system” – they’re withholding revenue.  Nor are they adding costs, in the sense of additional medical spending.  If anything, overall spending falls because the gamers are less often insured, and therefore consume less medical care.

She might have meant that the premiums the gamers aren’t paying (or the difference between what they pay and the medical care they receive) amounts to $300 million, and that the gamers are imposing that cost on non-gamers in the form of higher premiums. But that doesn’t hold water, either.  The gamers have zero power to impose costs on non-gamers; only the government has that power. All the gamers are doing is responding rationally to the incentives RomneyCare creates and avoiding — lawfully, I might add — a $300 million tax.

So if that was her meaning, this spokeswoman should have said:

RomneyCare is imposing a $300 million tax on insured Massachusetts residents by encouraging other residents to game the system.

Instead, she blamed consumers and argued for laws that make it harder for consumers to avoid RomneyCare’s private-insurer bailout individual mandate.

So now we’ve got President Obama, who signed a law requiring health insurers to pay for more stuff, blaming insurers for rising premiums.  We’ve got pro-RomneyCare politicians doing the same in Massachusetts.  And we’ve got health insurers, who support laws forcing consumers to buy their products, blaming consumers for the cost of those laws.

Remember how RomneyCare and ObamaCare were supposed to promote responsibility?

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.

Congress to Expand Deposit Insurance

While I never had much hope that this Congress would actually fix the real causes of the financial crisis - loose monetary policy, Fannie/Freddie - I had hoped that they wouldn’t do a lot to make an already bad situation worse.  Boy, was that hope naive.

Take the area of federally provided deposit insurance.  There is a massive amount of scholarly work, much of it empirical, that demonstrates that expanding the level and scope of deposit insurance results in more frequent and severe financial crises.  So what is Congress considering?  Yes, you guessed it:  expanded deposit insurance.

Recall during the financial crisis Congress raised the coverage limit to $250,000 - forget that there were never any premiums charged ahead of time for this coverage.  The FDIC also, without any basis in law, offered unlimited coverage to non-interest bearing accounts, targeted mostly at business customers.  While these expansions may have brought the system some short term stability, they come at the cost of considerable long term instability.

Congress is also making the misguided change of basing  insurance premiums on total assets rather than total deposits.  This will punish banks for relying on sources of funding other than deposits, giving banks an incentive to shift their funding toward deposits, putting the taxpayer ultimately at even greater risk.

So why all these expanded bank guarantees? Smaller banks view these as changes that would give them a competitive advantage relative to larger banks.  After all community and regional banks are far more dependent on deposits as a source of funds.  And while big banks are damaged politically, the smaller banks, despite their higher failure rates, have managed to maintain their political ability to shift the costs of their risk-taking onto the backs of the taxpayer.

You Say You Want Comparative-Effectiveness Research?

Over at CongressDaily, Julie Rovner has a great piece on the difficulties involved in generating and using comparative-effectiveness research (read: evidence that can improve the quality and reduce the cost of medical care). Rovner cites a recent New England Journal of Medicine article about the obstacles to conducting CER, and a recent article from Health Affairs that finds consumers tend to trust their doctor’s judgment more than evidence-based treatment guidelines.

In a paper titled, “A Better Way to Generate and Use Comparative-Effectiveness Research,” I explain how a string of government interventions – from state licensing of medical professionals and health insurance, to the tax preference for job-based health insurance, to Medicare and Medicaid – have reduced both patients’ demand for evidence about which medical interventions work best, as well as the market’s ability to supply that evidence.  In that paper, I predict that efforts like the CER funding in the “stimulus” bill and ObamaCare’s “Patient-Centered Outcomes Research Institute” will fail, just as all such government efforts have failed in the past.

If you want to generate evidence about which medical interventions work best, and have people use that evidence, then you need to liberalize the U.S. health care sector.

What Do The Economist’s Bloggers Think a Free Market Is, Anyway?

A correspondent for The Economist, whose initials are M.S., posts this on the Democracy in America blog:

[T]he new health-care-reform law passed in March is an entirely private-insurer, free-market-based reform. If someone were to refer to it as a “government takeover of the health-care sector”, that person would hold a factually incorrect ideological belief.

I wonder what convinced M.S. that the new health care law is an entirely free-market-based reform.  Was it the expansion of the government’s Medicaid program to another 16 million Americans?  Was it the 19-million-plus other Americans who will receive government subsidies to purchase private health insurance? Was it the new price controls that the law imposes on health insurance?  Or the price and exchange controls that it will extend to even more of the market?  Was it the dynamics those regulations set in motion, which will reduce variety and innovation in health insurance?  Was it the mandates that require private actors to spend their resources according to the wishes of the state?  Or the new federal regulations that will shape every health insurance plan in the United States, whether purchased through the employer-based market, the individual market, or the new health insurance “exchanges”?  Was it the half-trillion dollars of (explicit) tax increases over the next 10 years?  

I wonder what it is about this law that M.S. thinks is consonant with the principles of a free market.  Perhaps we have a different idea of what “free” means.

M.S. lists other “factually incorrect beliefs,” including:

that the Clinton plan would deny patients their choice of doctor, and that the health-care-reform bills in Congress at the time involved government “death panels” that could decide to withhold care from elderly patients on a cost-benefit basis.

I won’t dredge up the Clinton health plan.  But I have previously demonstrated that, when Sarah Palin claimed that President Obama wanted to give a government panel the power to deny medical care to the elderly and disabled based on cost-effectiveness criteria, the president had in fact proposed a panel with the power to do exactly that.

I agree with M.S. about this much: “once people are exposed to false information, it’s extremely difficult to convince them it’s false.”

Columbus Dispatch: ObamaCare = Malpractice

Popular discontent with ObamaCare extends even so far as the traditionally left-of-center Columbus Dispatch editorial page:

Almost daily, the ill effects of the health-care overhaul passed by Congress last month are becoming apparent. As employers and government bureaucrats analyze the law’s effect on bottom lines for the private sector and for government, the alarm bells are ringing.

The tragedy is that these ill effects could have been and should have been calculated before the law was passed, not after.

In fact, many of them were prophesied before passage of the bill, but the prophets were ignored by President Barack Obama and the Democratic majority in Congress. That’s because their uppermost goal was not to pass the best health-care bill possible but merely to pass anything that could be called “health-care reform” and could be claimed as a political victory by a president desperate for one.

The latest analysis of the bill’s likely effects comes from the Office of the Actuary in the federal Centers for Medicare and Medicaid Services. The report by Chief Actuary Richard S. Foster says that, far from reducing the cost of health care, the overhaul will add $311 billion to the nation’s health-care costs over the first decade the law is in effect…

As the weeks roll by, more and more unintended and should-have-been-anticipated consequences of this ill-conceived law will be revealed.

This should be no surprise, considering that the law was slapped together behind closed doors without proper testimony and vetting by health-care, financial and insurance experts, and is a patchwork of political and special-interest deals rammed through Congress using procedural gimmicks.

The nation deserved something much, much better than this.

Read the full editorial.  Repeal the bill.

A Glance into Costa Rica’s Health Care System

Costa Rica – my home country – has suddenly become part of the health care debate after celebrity radio talk show host, Rush Limbaugh said that he would move to Costa Rica go to Costa Rica for health care if  ObamaCare were approved by Congress the federal government gets too involved in health care in the next few years.

Soon after Sunday’s vote in the House of Representatives, a website was set up to buy Limbaugh a one-way, first-class ticket to Costa Rica. Liberals were quick to point out that my country has a socialized health care system that is among the best in Latin America.

People claim that in Costa Rica health care is a right, not a commodity. The problem surfaces when you actually need to exercise your “right.”

Last July, La Nación newspaper carried a report about one hospital that had 5,000 people on a waiting list for surgery, some waiting up to a year. Among those on the list, 900 patients waited months to have possible cancerous tumors extracted. According to the head of the Oncology Department, “We know that 85% to 90% will be cancer cases based on previous medical tests.” For many of these patients, the wait is the equivalent of a death sentence.

Stories like this are common in the Costa Rican press.

Unfortunately, the current nationalized health care system and the state-owned monopoly in health insurance stifle the development of a viable, dynamic private health care system. Thus, many Costa Ricans can’t imagine life without “free” health care. That’s too bad since there’s nothing free about mandatory monthly contributions from workers and nothing just about being forced to pay for deadly delays in health care attention.