Health Insurance Info for Colorado

news & commentary on health insurance and benefits

Six Million? Really??

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Much ballyhooed numbers on Obamacare enrollment are released, with an estimated six million enrolling, but  Rep. Marsha Blackburn (R-Tenn.) expresses doubt. See the video and news story here.

Even in the face of such strong enrollment numbers, though, which have not yet been verified, the government has moved to extend the open-enrollment date for federal exchanges, even after a Centers for Medicare and Medicaid (CMS) spokesperson said “we don’t actually have the statutory authority to extend the open enrollment period in 2014.” And of course, she is correct, as reported here. The open enrollment period is specifically defined by statute, and isn’t open to interpretation. Forbes has an interesting article on it, go here.

What this means is that people who have recently fallen ill or are otherwise uncovered will be able to get health insurance beyond the open-enrollment date, something that troubles insurers, some of whom are predicting double digit rate increases for 2015.

UPDATE: Here are three little questions about those Obamacare enrollment numbers.

O-Care Premium Spikes Coming

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One of the most frequently cited ways that insurers used to reduce costs for the new ACA compliant plans was to engineer new provider networks, primarily HMOs, with lower fee-for-service reimbursements, referred to as  per-member-per-month arrangements. These networks were reviewed at the state level for adequacy. In fact, the new networks were substantially smaller, as many physicians opted out of them due to reduced reimbursement rates or capitation necessitated by the new rules carriers must operate under due to Obamacare.

The federal government decided that this won’t be acceptable for 2015.  In a draft letter from the Centers for Medicare & Medicaid Services (CMS), insurers will be required to include 30% of “essential community providers” (ESPs) in their network.

ESPs serve primarily “underserved” populations, including community health centers, HIV/AIDS clinics, family planning clinics and children’s hospitals. From Insurance Business: “In order to assure this is the case, CMS plans to establish its own process for certifying adequate provider networks, cutting out the role of state regulators.” See the full story here.

CMS, in 2013, stated that, for 2014, they would “rely on state analyses and recommendations when the state has the authority and means to assess issuer network adequacy.” See the full text of the earlier guidance here. For 2015, with CMS expanding the ESP requirement,this will likely increase premiums further, due to an increase in network providers mandated by CMS.

Other changes that will have a cost effect on premiums include changes to stand-alone dental plans, and a new requirement to pay for a 30-day supply of any new drug that a new customer had been taking—even if the drug would not have ordinarily been covered.  For the complete 2015 guidance, go here.

Insurers are rightfully concerned about the new requirements, with America’s Health Insurance Plans (AHIP) already expressing its disapproval in comments filed on the proposed changes. Insurers have just weeks to present their changes, with some deadlines beginning in April of 2014.

Obamacare: premiums “to double”

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Health industry officials say Obamacare premiums will likely double, and in some cases triple, in certain parts of the country next year, in part because of the flawed launch of the new exchange marketplaces mandated under The Affordable Care Act. Announcements of rate hikes could come within months, with the most significant cause of rate increases related to projections about the number of young healthy individuals and families who would enroll, which have proved to be way off the mark.

The projection of double or triple-rate increases fly in the face of remarks by HHS Secretary Kathleen Sebelius, who said that “the [rate] increases are far less significant than what they were prior to the Affordable Care Act,” in testimony before the House Ways and Means Committee last week. This runs contrary to the way health insurance industry officials view rates in the coming year.

We’ve all been hearing about how younger people aren’t signing up in anywhere near the numbers needed or projected. So, why are young people important? In a phrase: adverse selection, which means, far more older, sicker people than younger, healthier ones in the pool, which creates – wait for it – higher claims costs that are almost certainly not supportable by current premiums.

In an article entitled Young Invincibles Are Killing Obamacare, Megan McArdle writes for Bloomberg View: “Young healthy people, and a lot of them, are needed to keep the market stable and premiums low. As we head into the final few weeks, we have a pretty good idea of how many young healthy people there will be, and the answer is: a whole lot fewer than the healthcare wonks were expecting.” Unfortunately, her dismissive analysis of the coming “death spiral” of Obamacare was flawed, even if she herself says that reaching anywhere near projections for young enrollees is “not likely”. Surprisingly, she concludes: “… it is now probably impossible to achieve the demographic mix that the government has been forecasting. And keeping it from happening may well prove very expensive for the federal government”.

How expensive? In his blog ACA Death Spiral, Seth Chandler, a law professor at the University of Houston Law Center, writes a thoughtful analysis on the Kaiser Family Foundation study of early, low enrollment of younger participants in Obamacare, cited by Ms. McArdle in her column. His analysis and conclusion is posted as “The Kaiser analysis of ACA enrollment has problems”, and is a good, if somewhat dense, analysis of how difficult it is to make an accurate projection, and why the projected deficit in insurer profits isn’t 2.4%, as projected by KFF, but “rather a  [deficit] projection of 4.5%”.

This is not good news for premiums, or for costs related to Obamacare that the federal government will be required to pay for. With rates for 2015 likely being filed this summer for approval prior to 2014 open enrollment, it increasingly looks like Obamacare will be the election year issue of 2014.

Another Obamacare delay?

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Kaiser Health News is reporting that the Obama administration is preparing to implement yet another rule change in the rollout of Obamacare that would relax the enforcement of the medical loss ratio (MLR) provision for health insurers.

To review:  The MLR provision, which took effect in 2012, requires all insurers in the individual and small-group  health insurance market to spend 80% of every insurance premium dollar (85% for insurers in the large-group market) on medical care and expenses for customers, according to specific guidelines developed by the government. Only the remaining percentage of 15-20% can be used for administrative costs and profits. If an insurer does not meet its minimum-loss ratio, it must issue a rebate to its customers.

From “In the Federal Register, the Department of Health and Human Services signaled it may give insurers a temporary break on the ratio requirements, citing “the special circumstances” of the disastrous launch of Obamacare’s federal exchange website ( The administration also made other last-minute political changes during open enrollment, which ends on March 31.”

The minimum-loss provisions have been roundly criticized in this and other forums, as insurers would have little reason to manage claims costs below the MLR, since they will be penalized for doing so. It essentially sets the allowable limit for profit, regardless of how efficient or how successful a carrier is. In other words, health insurance carriers are regulated as utilities (a concept I first ran across in a well-known industry publication more than fifteen years ago).

The issue appears to be that insurer costs relating to the botched launch of Obamacare will make it difficult if not impossible to meet the MLR. Of course, at that point, if losses due to claims and other costs exceed revenue (likely, in my opinion), then the next big crisis will be “risk corridors”, which will compensate health insurance carriers for unanticipated losses. An understanding of this can be found here. And yes, it is a bailout, since the government agreed to compensate insurance carriers, who are required to meet claims and loss guidelines mandated by the government, for losses under The Affordable Care Act.

That it is considered to be a bailout by conservatives and not-a-bailout by progressives is a given. The reality is that the taxpayer is on the hook for outflows from companies who agreed to participate in the health insurance exchanges, if inflows don’t meet requirements for claims and costs (very likely, given that much lower numbers of previously-uninsured applicants, as well as applicants who are in the younger ages that the plan requires, have actually enrolled in Obamacare). In fact, many in the media get it completely wrong, as detailed here.

It is puzzling to me why some Republicans are quick to introduce legislation forbidding insurer compensation (known as the risk-corridor provisions) for losses incurred in meeting the requirements of Obamacare. They’d be better off simply allowing the Act to come apart on its own, which is what will happen, given the amount of panicked fiddling that is occurring with its implementation, and replacing it with something that will work, minus all of the social re-engineering. Eliminating the risk corridor provisions of Obamacare will simply bankrupt most carriers who agreed to participate in the exchanges, since they will be unable to sustain the losses that will occur given the conditions as they exist “in real-ville”. It’s been obvious for some time that the estimated number of uninsured, by most left-of-center pundits and think tanks, including FamiliesUSA, was optimistic; those numbers were used to justify and support all of the projections needed to make Obamacare work. That it isn’t working shouldn’t now be a surprise, and bankrupting insurers will simply provide Democrats with the end game they’ve always wanted: the death of the private health insurance market. Republicans should brandish the “no bailouts!” banner with great trepidation.

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  • Published: Mar 28th, 2012
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  • Comments: Comments Off on Ignoring the 800 pound gorilla AKA Medicare/Medicaid

Ignoring the 800 pound gorilla AKA Medicare/Medicaid

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Today, as the Supreme Court continues to hear arguments, and asks pointed questions about the legality of Obamacare, it is interesting to note a salient fact that the left conveniently ignores, and in fact pivots away from, and much of the right, unfortunately, doesn’t seem to want to address, probably for political reasons: federal government spending on health care is the prime reason we have a health care crisis in this country.

And on this point, heads will explode: Medicare is a program that is best left to the private market to deliver. And Medicaid is intended for the financially indigent, and should be strengthened, not by forcing billions in expanded “unfunded mandates” down the states’ throats, which is, in my opinion, one of the main driving forces behind the lawsuit brought by 26 states against the federal government over Obamacare. It should be strengthened via block grants from the federal government to the states, so that states may craft their own solutions for the truly poor and financially indigent, rather than the micro-managed and politically inflamed rules from Washington. Note the use of the term “truly poor”. And it should not be a vehicle for the feds to use to jam millions of otherwise insured folks into Medicaid, rather than stay with private insurance, precisely what Obamacare will do. Welcome to the new “dependency class”.

I’ve always been struck by the Democrat’s premise that Medicare is cast in stone and real change is inconceivable. It’s a testament to their allies in the media just how brilliantly they’ve managed to frame the debate strictly within the narrow confines of the status quo, secretly knowing that the status quo is a) in large part responsible for the undoing of the health insurance market (what little of it truly exists, anyway) and b) absolutely essential to restrain, restrict and ultimately collapse any solid attempt at true Medicare reform, which must include the federal government’s dissolution of Medicare as it now stands.

Now, the Obamacare premise goes like this: “that 40 million Americans are distorting the health-care market by shifting costs of free emergency-room care to taxpayers and insurance rate-payers”, as stated in todays’ Wall Street Journal, “Health Law Faces Constitutional Test”.

(An aside: the real fallacy of this idea is this: it doesn’t cost anywhere near $1T, assuming you accept the original CBO-scoring of the costs of Obamacare [which I don’t, and no thinking person not under the influence of a lobbyist should] to provide health care, even at the inflated costs one typically finds in a hospital ER, to the uninsured in America, even if you want to accept the 40 million figure, which any number of studies have pointedly derided as wrong, and artificially inflated.)

Let me chart the path of the reasoning: the federal government is blaming people without health insurance for the catastrophic rise in the cost of health insurance premiums, and advances the notion that the “market” is ‘broken” and they must ride to the rescue.

Except that the market is “broken” because of a lack of market-friendly ideas and execution, including costly mandates, lack of tort reform, and – wait for it, here comes the gorilla – cost-shifting and price fixing by the federal government in Medicare reimbursement and, to a lesser extent, the unfunded mandates driven by Medicaid onto state budgets. The people-in-charge, the one’s riding to the rescue, and in fact the reason we have a problem in the first place.

The arguments in the Supreme Court over Obamacare are admittedly not on this little-known fact, and they shouldn’t be – the constitutional challenge to the law will suffice, for now, and Medicare’s role in our health care system isn’t a legal issue, per se, but rather a political one. But the premise behind Obamacare should be open to vigorous, even rancorous, debate, even if that debate is revolutionary: Medicare is ill-served in the federal government’s hands, and should be abolished and returned to the private market, albeit with adequate safeguards and regulatory framework to allow it to work as a free-market vehicle which delivers health care to the elderly without rationing or capitation. Assuming, as I do, that the nation’s seniors need, even require, a strong health care delivery system, Obamacare, with it’s IPAB function serving as a rationing board over a capitated health care delivery system, is not the answer, even if it’s deemed constitutional. It’s intent, really, is  to accelerate the drive to a single, Medicare-style system for all – the dreaded government option – only it won’t be an option, it will be all you have.

Obamacare is a dismal failure, not only because of its inherent unconstitutionality, as anyone who understands the limited power of  the federal government must see, but because it’s a canard to believe that the feds are acting in good faith to “fix” what they have broken: a free-market derived health care delivery system that rewards efficiency, is innovative, and more importantly doesn’t come between a doctor and his patient. Broadly, Medicare pays only about 85% of the cost of delivery of health care and, given that the feds buy almost half of all health care delivered in the U.S. yearly, this is a huge cost-shift to the private sector, a form of taxation which goes unanswered and ignored by those on the left, and makes the health care costs associated with the uninsured pale in comparison.

Of course, as everyone knows, whenever Medicare is discussed in the public realm, Democrats portray Republicans as “pushing Granny off the cliff”, while secretly watching their own minions do exactly that – while Republicans, powerless to stop them, get the blame. After all, it was Democrats who crafted the $500 million Medicare cut that brought the costs of Obamacare “below” $1T. Only it didn’t.

No discussion of how to fix the health care system in this country can exclude the federal government’s price-fixing in health care pricing, or the effect of this cost-shift, labeled as the “hydraulics of health care”, on the private sector. To do otherwise is equivalent to re-arranging the deck chairs on the Titanic. And Obamacare certainly isn’t the vehicle to do that, as it completes the disaster Democrats have been secretly hoping for. The Supreme Court challenge to Obamacare, while absolutely necessary, is a sideshow to what the real problem is. And continued chaos favors the Democrats anyway: all the more reason why Republicans need control of the House, the Senate AND the White House.

Lastly, Paul Ryans’ proposals on Medicare are interesting and informative, but I d0n’t think they go far enough – either in terms of building a true market-based health care system, or in terms of the impact on our looming Greek-style default over unfunded liabilities. More on this later.


The Argument Against Obamcare

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The Supreme Court of the United States, beginning this week, will hear arguments in the case against Obamacare, brought by 26 states against the federal government. Their legal ruling, due sometime this summer, will determine, in the words of David B. Rivkin and Lee A. Casey, writing in an op-ed in the pages of The Wall Street Journal, “the Constitution’s structural guarantees of individual liberty, which limit government power and ensure political accountability by dividing that power between federal and state authorities”.

In their article, published today, attorney’s Rivkin and Casey may be giving us a sneak peek at how Paul Clement, the attorney arguing against Obamacare, will craft his arguments to the Court. Mr. Clement is the former United States solicitor general charged with arguing that Obamacare “represents an unprecedented overreach into the personal lives of Americans”, according to Jess Bravin, writing in the WSJ (“Courtly Battle in Health Case”). Mr. Clement is lead counsel in the case, brought by 26 states to overturn the Affordable Care Act, notoriously known as Obamacare.

Given that there are any number of ways, on any number of separate issues, that the Supremes could rule, I will refrain from making any predictions. It is interesting to note, though, that health insurers, who have been reluctantly complicit in the birth of Obamacare, the major negotiating point in their favor being the individual mandate, presented the court with a brief that was remarkably neutral, suggesting that, if the individual mandate is overturned, then the entire bill must be overturned. This is nothing more than window dressing: the insurers know that their survival, at least at the time, required a healthy dose of government-imposed regulation on their business model, turning them into crony-capitalist utilities in exchange for the chance to continue profiting from a system that many Democrat legislators have decried as “evil” and have vowed to destroy. What this means is that insurers signed on to Obamacare as soon as the government promised them that everyone must be on coverage, essentially mandating a compulsory market (with compulsory profit, too). As it turns out, given the kind of remarks we’ve heard from former Administration officials and the Secretary of HHS, their flight to regulatory safety was ill-advised and will result in their ultimate demise. Perhaps they should have stood their ground and made a fight for it, rather than make a pact with the devil.




HHS update on women’s health care

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The Department of Health and Human Services (HHS) has just announced that any and all FDA approved “contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity,” will be provided under ObamaCare “without cost” in college/student-based health plans, and for women of college age but not attending school.

U.S. Senators release report on Obamacare

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Senators John Barrasso, R-WY, and  Sen. Tom Coburn, R-OK, have co-authored a report detailing the disaster known as Obamacare. Senators Barrasso and Coburn have a unique perspective on the emerging octopus of centralized/federalized health insurance: they are both physicians.

Some excerpts from the 38 page report:

  • Warned the health care law could eliminate about 788,000 jobs. CBO Director Doug Elmendorf confirmed in Congressional testimony that the health care law would reduce the workforce by approximately 800,000 jobs.
  • Concluded the Medicaid expansion’s “extra costs forced upon state taxpayers and state governments could climb into the hundreds of billions of dollars”. In fact, according to a tally of state estimates, the law will impose about $120 billion in additional costs on states, just in the first few years of the law’s implementation.
  • Explained the Community Living Assistance Services and Support (CLASS) program was “a budget gimmick to appear to offset new spending” and warned the program could “expose taxpayers to tens of billions of dollars of loss” because it was would eventually collapse. The Department of Health and Human Services (HHS) has admitted CLASS was unworkable, and shuttered the program.
  • Cautioned “the appearance of Medicare‘s extended solvency is actually only a mirage. In reality, under the new law, Medicare‘s unfunded liabilities will grow worse”. The Medicare Actuary late concluded that Medicare’s unfunded liabilities are made worse by about $2 trillion under the law.
  • Warned that “as the new law is being implemented, millions of Americans are in danger of losing their current health insurance.” HHS concluded that, under the law, between 39 and 69 percent of businesses will lose their status as “grandfathered health plans”—plans largely unaffected by the law’s new mandates. HHS estimates by 2013, up to 80 percent of small businesses will lose their grandfather status.
  • Noted that “rather than fixing an issue everyone in Congress agreed was a problem, Congressional leaders left the doc fix out of the final health bill” because of “budgetary shenanigans” to decrease the appearance of the bill’s cost. We warned that this policy omission “could endanger access to care for millions of seniors. In fact, Congress has already had to intervene several times to prevent severe cuts to physician reimbursements that would harm seniors’ access to care.

An eye opening report that every employee worried about their employer abandoning their health care, and every employer worried about the spiraling cost of benefits, should read.

The Federal “health care tax” revealed

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Many people are puzzled by media reports that center on “the doc fix” and other aspects of the Medicare and Medicaid programs, and this is to be expected, given that media outlets do a spectacularly poor job of explaining any aspect of federal health care policy, in my opinion. I’m writing this article in an attempt to broadly illustrate a basic tenet of federal health care spending, namely, price controls, and the cost-shifting to private patients that occurs because of centralized price-fixing at the federal level. I submit that this centralized pricing, which purchases on demand and without contract, health care at below-market prices, is a hidden tax passed directly to all Americans who purchase health care, or health insurance, and is a major driver, if not THE major driver, in ever increasing health care costs.

[Disclaimer: federal health care spending is so complex and obtuse that it’s extremely easy for the average person to get “lost in the weeds”, a situation tailor-made for policy wonks who feel we are all too ignorant to draw basic conclusions without their help.  This article is intended to cut through the chaff and provide a common-sense rationale for much of the current premium pricing debacle that we face. Frankly, given the behavior of regulators at the federal level, it’s astonishing to me that private insurers aren’t forced to demand double digit premium increases yearly from private payors just to stay in business.]

This column is in direct response to a clients’ question: how is the federal government purchasing health care at below-market rates? The client asked me to send him additional information on this topic, since I brought it up in a meeting. I must first confess that I provided him with a statistic, incorrectly stated: I inadvertently transposed a percentage when detailing the true costs of  federal health care costs as compared to the costs related to the private delivery of health care. I’ll fix that with this post, and provide substantial ammunition to support the idea that it is imperative that the federal government get out of the business of centralized price-controls in the health care arena. Sadly, it is very unlikely that this will happen, as the two sides on the issue are separated by a divide the size of the Grand Canyon on the heart of the matter – how to pay for and deliver health care to the nation, and by extension either control health care delivery at the federal level via central planning, or allow the free-market, and private insurers, working in harmony (important consideration) with various regulators to provide solutions to the health care woes of the nation with insurance programs that avoid rationing and expand care.

On one hand, progressive Democrats view insurance as evil, and wish to have health care costs borne by a progressive system based on a social policy of wealth redistribution through the tax code, the word “insurance” not being in their vocabulary. Conservative Republicans view health care, on the other hand,  as a free-market product that insurers, using standard reserve techniques, can provide far more economically and efficiently, without the centralization or government control demanded by progressives in their march towards utopia (a rationed utopia, at that). And it should be pointed out that Democrats have done a superb job of forcing the market conditions that have created a health care system in which there is little if any competition, where the federal government pays substantially less than the true cost of care for its Medicare/Medicaid programs, and where continued market and pricing stresses, literally created by Democrats intent on their end goal of a single-payor system, provide the perfect excuse for the federal government to proclaim that it alone can save the day, when in fact they have created the very problem they will now take pains to “fix”. But we are getting into partisan waters here, and it’s best to stick to the facts, and answer my clients’ question.

That the federal government purchases a great deal of the nations’ health care is beyond dispute. According to the Department of Justice, federal, state, and local governments pay for approximately 45 percent of total U.S. expenditures on health care. This figure, first published in 2003, is likely higher today. The problem is that Congress, rather than any free-market mechanism, approves the reimbursement schemes for much of that care – and we all know how well centrally planned price-fixing schemes usually work out. And herein lies the true problem: the controversy concerning Medicare or Medicaid isn’t that it under-pays health care providers and facilities, but that the under-payment is over-stated, or even, depending on whom you are listening or talking to, non-existent or even irrelevant. In fact, there does appear to be two schools of thought, which, coincidentally, mirror the two different philosophies of the left & the right. The left views the “underpayment” of costs related to its share of health care costs as unimportant, even illusory, due to the scale of care they are “purchasing”, and point to the complex (and politically tainted) process of Medicare price-setting as proof that all’s well with the way the feds pay for care. To explain, Medicare’s physician and other fee rates are based on the relative cost of providing services determined by what’s known as the Resource-Based Relative Value Scale (RBRVS), a system of “comparable worth” in medicine, and is itself based on “the objective theory of value, one of the fundamental tenets of Marxist economics”. This cumbersome process, updated every 5 years or so, is guided by input from the AMA, as well as others, but is ultimately set by the federal government, under the Federal Health Care Financing Administration, part of HHS, and then submitted to Congress. In the words of Michael F. Cannon, director of health policy studies at the Cato Institute, “The Medicare bureaucracy is somehow supposed to divine the correct prices for more than 7,000 distinct physician services in each of Medicare’s 89 physician-payment regions (yep, some 623,000 separate prices). And – unlike market prices – these price controls don’t automatically adjust to reflect the value of goods and services.” Central planning, at its finest.

The conservative right enthusiastically supports a contrarian view, and points out that “the hydraulics of health care“, which the left takes great pains to vigorously support as somehow necessary and equitable, and at the same time labels as overblown, is real and impacts every non-federal health care transaction. This controversy serves the left well, as it obscures the true costs associated with below-market federal reimbursement. It is, indeed, the 800 pound gorilla in the room.

To say that there is a lack of any consensus would be an understatement, and this explains the lack of clarity when discussing the impact of cost-shifting. And there is plenty of evidence, outside of left-wing policy wonks trying to re-define “costs” and “shifting”, to support the notion that federal reimbursement is below-market. Much of the evidence, as illustrated by this report, is troubling: cost shifting as a percentage of premium more than tripled over a five year time period, and appears to me to be accelerating. In fact, “employers and consumers in California pay up to 10 percent more for health care coverage because of government underpayments”, according to data compiled by Milliman for Blue Shield of California a few years ago. Even the Colorado Division of Insurance, in its most recent Annual Report, acknowledges that “..members of..Medicaid and Medicare.. typically pay less than commercially insured populations” when discussing cost-shifting.

So, an acknowledgement that cost-shifting is real and has an impact on, at least, premiums. But, how much is that impact, and how much more do private carriers and health care facilities wind up paying? In this study, The Lewin Group addresses cost-shifting relative to Medicare and Medicaid reimbursement. Lewin defined “cost-shift” as “not simply a set of differential prices as seen in the airline industry, but rather higher prices (above cost) systematically paid by one payer group to offset lower prices (below cost) paid by another payer group”[italics mine]. The study goes on to show a payment “hydraulic” (payment-to-cost-ratio) of 1.22 for private payers, compared with .95 for Medicare and .92 for Medicaid (1.00 would be cost). With a cost advantage of 5 to 7% below cost, and private insurers obligated to provide a profit to physicians and carriers in response, this represents a 30% increase in private payor costs compared to federal programs. In another article, entitled “At the Intersection of Health, Health Care and Policy”, published in Health Affairs, the authors acknowledge the Lewin Study and make note of  “The Cost Shift As A Form Of Premium Taxation” :

  • “The cost-shifting dynamic places hospitals in the unenviable position of playing the role of private-sector tax collectors, to maintain their financial solvency. To the extent that public programs are not adequately funded through general tax revenues and trust funds, and the uninsured get care for which they do not fully pay, hospitals must attempt to “tax” the privately insured to make up the shortfall. Some of this shortfall is absorbed by increased hospital efficiency or a decreased emphasis on hospitals’ social missions, but much of the difference eventually resurfaces in the form of increased health insurance premiums. Employers indirectly fund the cost-shifting tax through their purchase of health insurance. They bear not only the cost of health care insurance for their employees but also a portion of the under- and uncompensated care pool. This is one reason why—aside from the underwriting cycle—private-sector employers’ payments rise faster than underlying health care costs..”

This hidden tax is estimated at 32% by some observers (in 2007, hospital payments for the care of privately insured people were equal to about 132 percent of their actual costs of care; Shields, House Ways & Means hearings). And the “cost shift” appears to be increasing: In 2007, Medicare paid on average only 91 percent of the actual cost of hospital care for Medicare patients, as shown in the original Milliman report.

America’s Health Insurance Plans (AHIP), through a spokesman, goes further: “Right now, Medicare only reimburses hospitals about 85% of their cost. It’s employees and families that are paying $1500 a year to subsidize the Medicare program.” Given the 20% or higher differential that private payors, through their insurers, pay, this translates into an almost 40% differential between what Medicare reimburses and what private payors are expected to pay for the same services.

The consensus, then, is that, even if the left characterizes “cost-shifting” as an exercise akin to differential pricing with airline tickets or new cars, pricing hydraulics exist in health care, made all the more problematic by price controls that are neither realistic or flexible, and serve to exacerbate the current difficulty with fewer and fewer insureds paying a higher and higher tariff for more and more people who, by virture of mandated government cost-shifting in the form of reduced payments for services, are provided with services at less-than-cost, primarily to save the federal government from the true cost of its social welfare programs. This, then, is the “taxation without representation” present in your health insurance premiums.

I’ll address “the doc fix” is another post, since the reduction in Medicare payments for physicians services relates directly to the hydraulics of health care, and was a central feature in the purported “savings” that Obamacare was to provide in its first ten years – an estimate that has already been wiped out with further CBO estimates, not to mention Congress’ restoring the cuts to avoid political damage to a powerful lobbying group.

Update on mandatory contraceptive benefits controversy

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Quote: ” ..the Obama administration has implemented rules that even it concedes infringe on the traditional rights of religious employers.”

This article, written by James C. Capretta, details the Administrations’ way of speaking out of both sides of its mouth: “Here, it’s worth repeating some of the basic facts… on the same day that the administration announced it wanted to craft the so-called accommodation [to the mandatory contraceptives rule], it finalized the rule that had been previously issued with no change.” The rule, as I recall, was also published in the Federal Register. So much for “accommodation”.

The dominant elite media is doing it’s best to characterize this problem as no problem at all, as evidenced by this story, which inaccurately states that insurance companies, rather than employers, will be required to pay for these services (obviously, they must think that insurers are able to provide this at no cost to anyone, which boggles the mind, since nothing is ever provided “free” – it must be purchased first, and the cost is inevitably passed on to policyholders, as Mr. Capretta accurately states). In the case of the Catholic Church and its various entities, they are self-insured, for the most part, which means they pay, regardless of what President Obama wants you to think.


Obamacare and the new “dependency class”

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As I’ve noted elsewhere, the single largest problem with Obamacare (besides the deliberate destruction of private capital via the “death spiral” for health insurers casually mention by Secretary Sebelius) is the massive expansion of government health care, especially with Medicaid, via taxpayer-funded subsidies, creating a permanent “dependency class” that will accelerate wealth redistribution and move us (nudge us?) forever closer to the Democrat goal of “equality of outcome”. By creating a permanent group of citizens that are entirely dependent on government largesse, Democrats hope to ensure a fifty year lock on Washington to permanently destroy our freedoms and protections under the Constitution. I shudder to think what new entitlements masquerading as “positive rights” might flow from such a situation.

While I wouldn’t stop at 10, here is a list of “10 Terrible Provisions of Obamacare” that anyone concerned about the massive expansion of government into each of our lives should be aware of.

The Prez stiffs Catholics

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In spite of The White Houses’ best attempts at muddying the waters and shifting the contraceptive controversy to one of “women’s health” from “religious freedom” (and, frankly, some success with this, albeit in cahoots with their progressive brethren in the press, not to mention Democrats in Congress, who excel at press conferences masquerading as committee hearings) in order to get the public on board with his free birth control mandate, Mr. Obama is signaling that, like most anything else he decides he wants, he’ll say whatever he knows the press will echo loudly while doing exactly the opposite – namely, mollifying the religious community with worthless platitudes while giving them absolutely no real reason to think that anything has changed.

Not so fast, say Catholics.

Frankly, to this observer it almost appears as if… is it possible?.. the Prez really wants the Catholic Church and any other religious organization that provides health care of any kind, and objects to unconstitutional mandates that impact their religious freedom, to get out of the business of health care, completely and forever. And, close the door on your way out. To those who scoff at such a notion: the reason given for cutting the guts out of Tricare, the military health care system for active duty and retired military, is to move more people into the (Medicaid-style) Obamacare. So, I think it’s entirely plausible that the Prez isn’t interested in what the Catholic Church or any other religious organization that provides health care thinks: he just wants them out of the way.

As an aside, let me say to the Church: hey, I know exactly how you feel: I’m a health insurance agent.

Let’s recap: The Obama Administration announces the most restrictive definition of religious exemption possible, thereby guaranteeing him a collision course with anyone with a religious objection to mandatory contraceptive coverage. After a day or so of Catholic weeping, wailing, and gnashing of teeth, the President decides that, rather than the Church, insurance companies can pay for it. Problem solved, The One has spoken.

Problem is, Mr. Obama apparently either doesn’t know, doesn’t care, or doesn’t think the press will report on the most important fact of all: the Catholic Church is, for the most part, self-insured. There is no “insurance company” to pay for it, as they provide and pay for their own care for their employees, a fact pointed out by Cardinal Timothy Dolan, president of the U.S. Conference of Catholic Bishops, in a letter to his fellow bishops.

The rest of the letter is illuminating, most of all because the good Cardinal accurately points out that, as we have now seen demonstrated over the last week in excruciating detail, Democrats are busy painting the entire issue as one of “women’s health care” and abortion-inducing drugs rather than one of religious freedom, as evidenced by the vote on the Blunt Amendment. And obviously, there is little evidence in the “mainstream” media that the religion issue is even an issue, or even important. Why, the temerity of those Catholics, to attempt to discuss religious freedom when we all know that women need free contraception, if only to keep the nations’ birth rate down and help hold those health care expenses in check.

The fact that this Administration is doubling down on their position, by publishing the decision in the Federal Register, etc., points out that, on matters of ideology (as in, progressive action), there is no room for any accommodation that deviates from long-held and cherished policy goals of the left, no matter who they have to skewer. And Catholic Bishops, who stood by and actively supported Obamacare, have now learned that very important lesson. They have been used, and others should heed this warning. Republicans in the Senate, take note.


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