Obamacare descends into chaos

The deadline for signing up for Obamacare is December 15, if you need the insurance to kick in at the beginning of the year.  That’s less than a month away.  The website still doesn’t work, and the techs that are trying to fix it say they won’t get it done by the November 30 deadline.  Even if they do, that gives Americans without insurance just two weeks to sign up.  (There is a February 15 deadline for signing up without penalty, and an end-of-March deadline as the last chance to buy insurance on the exchanges.)  At last count, only 2% of those who need to have signed up so far.

If they can’t sign up, people whose independent policies have been cancelled will be left without insurance at the beginning of the year.  But President Obama’s decree that they should be able to keep their policies for a year is creating even more problems.

Insurance companies have already set their rates for next year, based on the assumption that those policies would be discontinued.  If those old policies are put back in place, that will throw off the quotes they have already been making.  This not only throws off insurance companies, it throws off the financial model Obamacare has been depending on.  Details after the jump.

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Health care and “broken markets”

Here is a different argument for the mandatory insurance requirement in Obamacare from Donna Dubinsky:

The private insurance market does not function as a normal market. If you are not employed and you want to purchase insurance in the private market, you cannot unilaterally decide to do so. An insurer has to accept you as a customer. And quite often, they don’t. Insurers prefer group plans, with lots of people enrolled to spread the risk. Can you blame them? The individual consumer is a lot of work, is a higher risk and produces relatively little revenue.

The Government Accountability Office studied this problem last year and found a range of denial rates that vary by state and by insurer. On average, 19 percent of applications nationwide are denied. One-quarter of insurers denied more than 40 percent of the applications they considered. These denials are not limited to deadly illnesses but include many minor reasons. Expect to be denied if you have asthma, if you take just about any prescription medication, if you are more than 15 percent overweight. Expect to be denied if a doctor has recommended any procedure for you, no matter how insignificant. Basically, expect to be denied.

I’m astonished that this information was not laid out in oral argument and that no questions were asked about it. I believe that lawyers on both sides of this argument, and the justices hearing the case, have always been employed and always been covered by employer-provided health insurance. Perhaps it simply does not occur to them that if they were to try to purchase insurance, they might not be able to.

The justices repeatedly asked: If the government can require you to purchase insurance, what else could it require you to do? What are the limiting conditions to this breadth of control?

The government muffed its response. To me, the answer is obvious. There are two simple limiting conditions, both of which must be present: (1) it must be a service or product that everybody must have at some point in their lives and (2) the market for that service or product does not function, meaning that sellers turn away buyers. In other words, you need something, but you may not be able to buy it.

Let’s test the examples presented to the high court: Can the government force you to eat broccoli? This proposition fails on both counts. Nobody must eat broccoli during their lives, and the market for broccoli is normal. If you want broccoli, go buy it. Nothing stops you.

Can the government force you to join a health club? Again, double failure. You don’t need to join a health club. Maybe you should, but you don’t have to. And, if you want to join one, plenty of clubs would be happy to admit you. Indeed, can you imagine a health club turning people down because they are too fat, the way insurers turn people down because they are too sick?

How about burial services? While this example passes the first condition — it is a service that everybody will need — it fails the second. There is a clearly functioning market for burial services. If you want to purchase a burial or a cremation, no seller of those services will turn you away.

The health insurance market meets both criteria. Everybody will need health services at some point. And as long as the United States doesn’t provide national health care, the only reasonable method for most people to pay for those services is through insurance. But here, the market simply does not work. Sellers of health insurance turn away purchasers, and in great numbers.

Although the Affordable Care Act is huge and enormously complex, the point of the legislation is straightforward. It aims to fix the market for health insurance by prohibiting sellers of the service from declining buyers. Why did Congress not pass a simple law just requiring insurance companies to accept all applications? Because such a law would not repair the market and would probably make it worse. With only sick people seeking insurance — because healthy people would wait until they got sick, knowing that insurance was guaranteed — coverage would become overwhelmingly expensive and impossible for most Americans to afford.

The only answer is to expand the pool and spread the risk, which lets insurers have a rational business model. Short of government-provided health services or a government-sponsored national insurance plan, the Affordable Care Act is the next best shot at fixing this broken market.

via The case for Obamacare – The Washington Post.

Could you answer this argument for Obamacare?

Compromise on insurance birth control mandate?

President Obama has announced a compromise he is willing to enact on his mandatory abortion pill and contraceptive mandate.  Employees of religious institutions that don’t believe in that sort of thing will have to ask the organization’s insurance company for the coverage, whereupon the insurance company will have to provide it free of charge without raising the institution’s rates.  Thus the insurance company, not the faith-based employer, will be paying for the morning after pills and contraceptives.  And the faith-based employer would not be directly providing for them.  Rather, the employee would get them off the books.

See White House compromise still guarantees contraceptive coverage for women – The Washington Post.

Does this really solve the problem?

Aren’t all of the expenses of an insurance company ultimately and necessarily passed on to the customers?

And isn’t the result exactly the same apart from the moral casuistry of trying to shuffle around the responsibility?

And the administration isn’t saying  how this would work with institutions, such as many non-profits, that are self-insured, in which employers collect premiums but then pay for employee health expenses themselves.

The Roman Catholic bishops note other problems:  The government’s apparent dispensations apply only to non-profit organizations.  A Catholic or other pro-life business owner would still have to directly provide free abortion pills and contraceptives, which would mean for the Catholic, being forced by law to be complicit in a grave sin.

Also church-related insurance companies (like Concordia Health Plan and its numerous Catholic equivalents) are not exempt from having to provide this kind of coverage.

Because of earlier H.H.S. machinations, the Morning After pill is now available over the counter.  What insurance plans cover non-prescription medication?  Your health insurance won’t pay for a bottle of aspirin or Nyquil.  And yet the Obama administration is insisting that this over-the-counter medication be covered free of charge, without even a deductible.  The agenda here is clearly that of pro-abortion fanaticism.

Church organizations must provide free contraception & abortifacients

Obamacare will force church-affiliated institutions to have insurance policies that will give employees free contraceptives (without even the usual co-pay!).  There will be no exemption for Roman Catholics who disapprove of birth control as a matter of doctrine:

Many church-affiliated institutions will have to cover free birth control for employees, the Obama administration announced Friday in an election-year move that outraged religious groups, fueling a national debate about the reach of government.

In a concession, Health and Human Services Secretary Kathleen Sebelius said nonprofit institutions such as church-affiliated hospitals, colleges and social service agencies will have one additional year to comply with the requirement, issued in regulations under President Barack Obama’s health care overhaul.

“I believe this proposal strikes the appropriate balance between respecting religious freedom and increasing access to important preventive services,” Sebelius said in a statement.

Yet the concession was unlikely to stop a determined effort by opponents to block or overturn the rule. If they fail, some predicted that religious employers would simply drop coverage for their workers, opting instead to pay fines to the federal government under the health care law.

“Never before has the federal government forced individuals and organizations to go out into the marketplace and buy a product that violates their conscience,” said New York Cardinal-designate Timothy Dolan, president of the U.S. Conference of Catholic Bishops. “This shouldn’t happen in a land where free exercise of religion ranks first in the Bill of Rights.”

via Birth control: Feds say many church-affiliated employers must cover but grant 1-year extension – The Washington Post.

Churches construed narrowly as houses of worship would be exempt, but not hospitals, schools, universities, and ministries.

Here is the kicker for Christians who may not oppose birth control but who do oppose abortion:  The government is classifying the Morning After pill, which prevents the fertilized egg from implanting thus killing the embryo, as a contraceptive! From the same article:

Workplace health plans will have to cover all forms of contraception approved by the Food and Drug Administration, ranging from the pill to implantable devices to sterilization. Also covered is the morning-after pill, which can prevent pregnancy after unprotected sex and is considered as tantamount to an abortion drug by some religious conservatives.

This means that Christian organizations that oppose abortion as a matter of  religious conviction will be required by law to pay for abortifacients and thus violate their religious convictions.

From insurance companies to utilities

If an insurance company is not allowed to factor in risk but instead is forced to cover everyone, regardless of physical condition, and charge them all the same rates, it ceases to function as an insurance company. Instead, it becomes a government-directed utility that just pays people’s medical bills. This is not really any different from government-run health care; it just uses private companies to administer the benefits. This is the point made by Charles Krauthammer:

By essentially abolishing medical underwriting (actuarially based risk assessment) and replacing it with government fiat, Obamacare turns the health insurance companies into utilities, their every significant move dictated by government regulators. The public option was a sideshow. As many on the right have long been arguing, and as the more astute on the left (such as The New Yorker's James Surowiecki) understand, Obamacare is government health care by proxy, single-payer through a facade of nominally “private” insurers.

Perhaps that’s what we want. If so, we might as well just adopt a nationalized one-payer system and cut out the middle-man.

via Charles Krauthammer – One year out: President Obama’s fall – washingtonpost.com.

Unintended consequences of health care reform bill

The House passed the Health Care reform bill, but with an anti-abortion amendment that would prevent the public option or insurance companies that get federal subsidies from paying for abortions. Now the bill goes to the Senate, which can also make changes, whereupon wheeling and dealing will take place to reconcile the bills.

Harvard economist Martin Feldstein explains that the health care bill may well do the opposite of what it was intended to do, sending insurance costs soaring while actually cutting down the number of people with health insurance:

Obamacare could have the unintended consequence of raising health insurance premiums and causing a decline in the number of people with insurance.

Here's why: A key feature of the House and Senate health bills would prevent insurance companies from denying coverage to anyone with preexisting conditions. The new coverage would start immediately, and the premium could not reflect the individual's health condition.

This well-intentioned feature would provide a strong incentive for someone who is healthy to drop his or her health insurance, saving the substantial premium costs. After all, if serious illness hit this person or a family member, he could immediately obtain coverage. As healthy individuals decline coverage in this way, insurance companies would come to have a sicker population. The higher cost of insuring that group would force insurers to raise their premiums. (Separate accident policies might develop to deal with the risk of high-cost care after accidents when there is insufficient time to buy insurance.)

The higher premium level would cause others who are currently insured to drop coverage, pushing premiums even higher. The result would be a spiral of rising premiums and shrinking numbers of insured.

Yes, the bill includes financial penalties for not getting health insurance, but Dr. Feldstein shows how the amount is so small that a rational person would be way ahead just paying the fine and not buying insurance until actually getting sick.

The other detail here surprised me: Not only may an insurance company not deny anyone coverage for a pre-existing condition, but “the premium cannot reflect the individual’s health condition”? How can that be financially feasible?

UPDATE: Well, here is one way around this problem that Democrats are proposing, the way of Dracon, the Greek lawmaker and patron of harsh punishment. Maybe throwing people who don’t buy insurance into prison for five years
will get them to buy health insurance:

Today, Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) released a letter from the non-partisan Joint Committee on Taxation (JCT) confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill (H.R. 3962, as amended) could land people in jail. The JCT letter makes clear that Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years.

I’m not sure if these penalties made it into the bill that passed. Does anyone know?


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