Even supporters need to realize that Obamacare needs a fundamental fix

The administration has confirmed that the individual policies that were supposed to be cancelled because of Obamacare can now remain in force another two years.

For months I have been saying millions of individual health insurance policies will be cancelled by year-end — most deferred until December because of the carriers’ early renewal programs and because of President Obama’s request the policies be extended in the states that have allowed it.

The administration, even today, as well as supporters of the new health law, have long downplayed the number of these “junk policy” cancellations as being insignificant.

Apparently, these cancelled policies are good enough and their number large enough to make a difference come the November 2014 elections.

As a person whose policy is scheduled to be cancelled at year-end, I am happy to be able to keep my policy with a better network, lower deductibles, and at a rate 66% less than the best Obamacare compliant policy I could get — presuming my insurance company and state allow it.

But for the sake of Obamacare’s long-term sustainability, this is not a good decision.

The fundamental problem here is that the administration is just not signing up enough people to make anyone confident this program is sustainable.

Yes, the law’s $20 billion “3Rs” health insurance company reinsurance program will prop up the program through 2016 — and even be enhanced because of these changes. But then the “training wheels” come off and the program has to stand on its own. As I have said on this blog before, I don’t expect the insurance industry to be patient past 2015 before it has to begin charging the real cost of the program to consumers.

The administration now claims that it signed up 4 million people as of late February. Of course, that number is inflated. It has been widely reported; including here at the New York Times, that about 20% of the people who enrolled in January never paid their premium and were cancelled. Carriers are telling me that another 2% to 5% of those January enrollments never paid their second month’s premium.

So, that 4 million Obamacare enrollment number is likely more like 3 million.

The Kaiser Family Foundation has said that 17.2 million people are eligible both for the new health insurance exchanges and eligible for a subsidy. Because the direct enrollment function hasn’t been working, the only place a person can get a subsidized policy is on the exchanges.

In reporting their enrollments in February, the administration said that 82% of the exchange enrollments were getting a subsidy.

That means only about 2.5 million subsidy eligible people (82% of 3 million) have so far signed up and paid for their coverage out of a total of 17.2 million eligible — or about 15% of the total the Kaiser Family Foundation estimates are eligible.

And many of these already had coverage — they aren’t coming from the ranks of the uninsured that are the people this program was really designed to get to.

Even if the administration gets 20%, or 25%, or 30% of the eligible group signed-up by March 31, that is nowhere near enough to create a sustainable pool. The long-time underwriting rule calls for at least 70% of an eligible group to participate in order to get enough healthy people to pay for the sick who will always show up first for coverage.

Supporters will cite the Congressional Budget Office (CBO) projections saying a third of the eventual participants will sign up each of the first three years. Why would they? If Obamacare, with all of the attention and promotion it is getting, is not attractive the first year, particularly because of its steep deductibles compared to the after-subsidy premium people must pay, then why would it be attractive in the third year?

The response might be that the fines for not buying coverage will eventually more than double and force these people to finally buy coverage. Think about that. People don’t want to buy this and the solution is to fine a family making $60,000 a year $1,500? If the cancelled policies are creating an election-year nightmare for the Democrats, think about how politically problematic big fines for not buying an Obamacare policy that consumers don’t want would be in the 2016 presidential election year.

The health insurance plans participating in Obamacare are a very worried group right now.

The employer mandate has been pushed back twice. Enrollment deadlines have been ignored and delayed. Now, the requirement to cancel non-compliant policies has been deferred twice.

The carriers need the average 35% baseline premium increase they were going to get by converting the old individual health insurance policies, that generally reflect a much healthier group, to Obamacare in order to offset the generally much sicker group that was always going to make up the new Obamacare risk pool.

Why should the insurers believe these policies would ever be cancelled and converted to Obamacare by the end of 2016? Will the Democrats have less of a political problem in 2016?

Will the administration next suspend the individual mandate and its fines for not buying a compliant policy? How can you let me off the hook with my old policy and force my neighbor to buy the more expensive policy?

If the administration is willing to let employers off the hook, and now these people who had individual coverage before, why won’t it let the people who don’t want to buy an Obamacare policy off the individual mandate hook rather than have them be angry in an election-year — 2014 and 2016?

All of these delays are just tinkering around the edges of a law that is deeply flawed.

The biggest flaw is that the product the Obama administration is trying to sell to consumers is not the product people want to buy.

Rejiggering deadlines until this thing is contorted like a pretzel is exactly the wrong thing to do.

Obamacare needs a fundamental fix.

I have to believe that even its most ardent supporters are coming to that realization.

Robert Laszewski is president, Health Policy and Strategy Associates and blogs at Health Care Policy and Marketplace Review.

Comments are moderated before they are published. Please read the comment policy.

  • http://www.ronsmithmd.com/ Ron Smith

    Hi, Robert.

    It is pretty surely dead by now actually. There is no fix when Obama has gutted the only part that could make it work..the mandate. If they couldn’t get people enrolled out of fear and deadlines, how is it that waiting two more years is going to improve that?

    This horse is twitching and needs to be humanely retired. The Dems know it and the delayed drop dead date is not intended to salvage the law, but rather to hang onto a flagging imperial political retinue.

    Warmest regards,

    Ron Smith, MD
    www (adot) ronsmithmd (adot) com

    • http://onhealthtech.blogspot.com Margalit Gur-Arie

      It’s not a horse. It’s a camel.
      If he had the courage of his convictions to present us with the horse he campaigned on, things would be looking much different right now….

  • wahyman

    Many complaints, but no solutions. Do you have any fixes to propose?

    P.S. Camels are very useful animals.

    • http://onhealthtech.blogspot.com Margalit Gur-Arie

      …in a desert :-)
      I’m sure neither Bob nor Ron would agree, but a Public option, would be a nice first step, and Medicare for all (including the poor), would be just right. But that ship has sailed….. and it will be a long time before another one materializes

      • Mengles

        Yes, bc the solution to the problem of govt. interference (a.k.a. Obamacare), is EVEN MORE govt. involvement (a.k.a. single-payer).

        • wahyman

          Yet still no solutions.

          • Dorothygreen

            There are solutions and they are not that difficult. If you have read through these posts there are links to the Swiss System. All the players have to agree to negotiated prices for basic care. Get rid of Medicaid and incorporate the poor into insurance program. Get rid of employer health care – make it optional to contribute. Check out what Vermont is doing. Some non-profits were started and are doing well because they cost less. But more were nixed by GOP. Most states had just a few of the Big Insures who previously dropped folks with pre existing conditions. Remember? Now they are charging too much because 1) they can and 2) their rates aren’t negotiated and they are afraid of having to pay for the flood of chronic PREVENTABLE diseases. Actually, they should be. It is the second travesty of the US – maybe the first – not having a universal health care system is the second.

            It is more tolerable to all to have a system close to Switzerland than France.

            And all physicians should lobby for a sugar tax like they did for a tobacco tax.

          • wahyman

            I agree. My comment was with respect to the Fox News crowd that can only be negative.

        • http://onhealthtech.blogspot.com Margalit Gur-Arie

          That’s another ship that sailed a long time ago. There will always be government involvement in health care. The question remaining is how to prevent the involvement from becoming interference.
          My guess would be that the best way to accomplish that (and a host of other good things) is to reform campaign financing laws.

  • Deceased MD

    I am suspicious of this article as it it looks like a lobbyist wrote it. With a title of “president of healthcare and strategy associates” it smells like a lobbyist to me. Certainly sounds like one cleverly disguised.
    This is separate from my feelings about the ACA. But articles like this i don’t think need to be on here. One can watch fox news.

  • NewMexicoRam

    The Supreme Court based it’s decision on ObamaCare because they called it a tax.
    Now that Obama has set so many of it’s mandates aside, including the individual mandate, where have the taxes gone?
    So, could this be brought back to the Supreme Court to decide again?

    • Deceased MD

      Aren’t they delayed mandates technically that supposedly will eventually be worked into the law? This happens more than one knows about i think. I am not a proponent of the law but after once speaking with an friend who is an attorney I was surprised to learn that most laws don’t really start working once they become law. The gov’t has to set up all kinds of steps to ensure that the law can actually be enforced.

      • wahyman

        In most cases this is what Regulations are. They define how the law will be implemented since few laws are that detailed–no matter how many pages.

  • http://onhealthtech.blogspot.com Margalit Gur-Arie

    No, oh no. Not at all.
    I want government to do what the government does in France or Switzerland, where most doctors are in private practice and all patients can pick whichever doctor or hospital they want and everything a doctor orders is paid for (at a fairly negotiated rate) by either the government or a bunch of financial entities that are barred from making profit from non-luxury non-elective medical care.

    • buzzkillerjsmith

      I sympathize with your view here, M.

      First, as you and I both agree, having docs work for CorpMed is the worst of all possible worlds. We will be unhappy, out pts will be unhappy, and CorpMed will gouge.

      Unfortunately, trusting the government is also hard to do. Right now Medi-Cal pays my neurology buddy $19 for a level 3 followup.

      You and I both know that fair negotiation requires equal market power. We don’t have that here.

      If everyone gets universal health care, paid through taxes, we might just have a chance that people with money and power in this country will force the government not to abuse docs. It might or might not happen.

      A lot of moving parts here, and I know many docs at this blog will disagree with me, but I think maintaining our salaries is less important than giving folks universal care. I also think that getting us out from under CorpMed, even if some of us make a little less, would be psychologically transformative for many physicians.

      My prescription: Universal HI funded by taxes, with options for people to buy extra insurance or pay on their own if they want extra service.

      • http://onhealthtech.blogspot.com Margalit Gur-Arie

        I like your prescription.
        As to your neurology buddy, the problem there is that we have separate “arrangements” for the poor, which effectively is asking physicians to subsidize poor people by themselves, or somehow shift the costs to those who are better off. I think this is a cowardly solution. If everybody had the same basic insurance, those that are better off and thus tend to vote in larger numbers would indeed ensure that doctors fees are more conducive to better service.

        • Deceased MD

          Fifty years ago MLK had a dream speech about equality among race. It’s odd today we now have a black president but our dream now is simply to have basic healthcare. Please Margalit, just tell me I’m having a nightmare.

          • http://onhealthtech.blogspot.com Margalit Gur-Arie

            We are having a collective nightmare and none of us will wake up before it’s all over.

      • Deceased MD

        Long ago i would have wanted to be paid well. Today I just don’t want morons that have no clinical training telling me how to practice. Now I’d just settle for peace of mind without Kafka and Orwell following me to work.“Big Brother is Watching You.”
        ― George Orwell, 1984

        • Dr. Drake Ramoray

          Isn’t that the truth

      • guest

        I completely agree with you and Margalit. People are unfortunately largely misinformed and clueless. They awake to reality when they are faced with a bad illness and have to navigate through our health care system. Unfortunately, entities like Fox news are not going away any time soon. For med students out there, it is good to train here, you have a chance to experience 3rd world medicine, neglected breast tumors, severe untreated mental illness, infectious disease eradicated in the rest of modern world…

    • ninguem

      The Swiss pay more out-of-pocket for healthcare than we do.

      Use the phrase “everything a doctor orders is paid for” with that in mind.

      Not that I’m necessarily opposed to the way the Swiss have organized their healthcare

      There was an article in Forbes a couple years ago, holding up the Swiss model as a potential model of consumer-directed healthcare.


      Problem is, the mentality in the USA is everything in healthcare should be 100% free.

      • http://onhealthtech.blogspot.com Margalit Gur-Arie

        If you want to understand the Swiss system, read this interview with the guy that made it what it is: http://content.healthaffairs.org/content/29/8/1442.full
        They pay quite a bit (out of pocket and taxes), but it seems that about half the country is subsidized. The major detail that Forbes is ignoring is that insurers cannot profit from the bulk of health care, which seems to make a huge difference in both the actual costs and in the costs of the manipulations and machinations that our insurers engage in on a regular basis.
        Note also that doctors bill the patients not the insurers, and in France it’s the same way, and I think they allow balance billing to a certain degree in France.

        As to the mentality in the USA, I don’t think Americans are expecting a free lunch any more than than the Swiss do. People just want a fair deal, and it goes way beyond health care.

    • Mengles

      So either way doctors have to accept fees that are low.

      • http://onhealthtech.blogspot.com Margalit Gur-Arie

        Not really. Just like everybody else, they have to accept fees that the “market” can bear. It may not be a free market for each individual doctor, but there is a negotiation step in there, which is more than we have here. And there is the freedom to set up your business, and if you are really good, the ability to charge more than the government “tariff” (in France), if people recognize your quality and are willing to pay for it.

        I really think it’s time for physicians in this country, regardless of their political affiliation, to recognize that the enemy is not government (tax) financed health care, but corporate greed. And that blatant inequality is hurting doctors as much as it is hurting the rest of the country (relatively speaking).

        • Dr. Drake Ramoray

          I am more open to single payer than some of my physician colleagues. I do caution drawing too much comparison to Switzerland (yes I approve of their system) but there are more people living in NYC than live in Switzerland, and as I have posted previously most of the countries with single payer and small populations have much more stringent immigration policies than the relatively open door one that we have in the US.

          As for single payer, I won’t support it without physicians ability to collectively bargain. I’m curious to know how many people who support single payer would be ok with a medical version of the teacher’s union. Medicare cut reimbursement for thyroid biopsy by about 40% this year. Regardless, I’m not confident that our government can do it correctly, and I have looked elsewhere to work before.

          • http://onhealthtech.blogspot.com Margalit Gur-Arie

            Agreed. I would think that a physician union has to be a lot stronger than the teachers union, because if it isn’t we’ll end up with a “public” system that is spotty at best and a private system for the wealthy, just like we have in education. That’s not what I have in mind for health care (or for education).

          • Dr. Drake Ramoray

            We are a bit off topic, but I have a genuine question. How would having a stronger teachers union improve the education system? It seems to me every time my taxes go up I just get more administrators and less funding for things schools actually need. I was more arguing for collective bargaining perspective as a necessary evil if single payer is coming. If patients and this country as a whole want the “shortcomings” of single payer for the “benefits” of single payer then I won’t do it without collective bargaining (me viewing this as making it have more red tape and messier but at least perhaps in my favor). I’m not sold on single payer but it’s not even on the table without collective bargaining.

          • guest

            I do not think we have the government. That is the problem. Our government is controlled by other entities. If we had a government that worked for the people we would not have this discussion.

          • http://onhealthtech.blogspot.com Margalit Gur-Arie

            I think teachers are experts at teaching, just like doctors are experts at medicine. I think we need to empower true expertise in every discipline, and I think that this should be the role of government, instead of stepping in and either directly micromanaging what it does not, and cannot, possibly understand, or delegating micromanagement to whoever is willing to pay more for the election/reelection of what used to be public servants.

            I like getting information directly from those who build things with their own two hands, instead of having it filtered by an equally corrupt media, so here is how one of the best education systems in the world was put in place: http://www.theatlantic.com/national/archive/2011/12/what-americans-keep-ignoring-about-finlands-school-success/250564/

          • Dr. Drake Ramoray

            Won’t dispute that the teachers are experts at teaching and that the physicians are experts at teaching. I’m curious if the Finnish are unionized for teaching? Again it’s a small homogeneous population with relatively closed borders that accomplishes things like this. I can’t imagine anything happening like that in this country, and Im with Buzz that medicine in this country will just be coporatized, and much like education we are moving a two tiered system in healthcare just like education.

            I’ve thought about it before, and my family is becoming increasingly open to the idea of moving over seas. I will not be a cog in a corporate machine, and I suspect as costs go up physicians will be vilified (specialists already are on these boards by their primary care colleagues) as things get worse. Every other nation with single payer has fee for service, this country is moving to a corporatized, pay for performance, ICD-10 (again the only country for physician billing), worst healthcare system to practice medicine. We might still get paid more (I doubt it), but it won’t be worth the hassles. Australia, or New Zealand is looking very attractive if my concierge plan doesn’t pan out.

          • http://onhealthtech.blogspot.com Margalit Gur-Arie

            Yes, they are unionized. I just found this article and it makes me sad and so very envious: http://www.huffingtonpost.com/justin-snider/keys-to-finnish-education_b_836802.html

            I agree with Buzz as well. We are on a bad, bad path to nowhere…

          • buzzkillerjsmith

            British Columbia sends recruiters to the Primary Care Update in Spokane. Health Match BC also exists. You can call them.

            I suspect there might be similar setups in other provinces. The Canuck docs seem much less stressed.

          • Dr. Drake Ramoray

            I have strong contacts in Canada. It’s on the short list. Not a huge fan of the climate. I do live in the South currently.

          • buzzkillerjsmith

            The climate is a minus, no doubt. Vancouver is not that cold but gets the Seattle scud with long periods of no sun. Inner BC, Alberta, etc are brutally cold, although the area around Kamloops BC has a small extension of the eastern WA high desert and it is a bit warmer. Not like the south though.

        • guest

          Have any of you seen this video of a canadian doctor teach US senators about Canadian health care. It will make you feel a little better that there is the rest of the world basically on our side.


  • Anthony D

    Read this great article that came out today! Its about how we should shorten the time to become a medical doctor!

    “Should It Really Take 14 Years to Become a Doctor?”

  • Bill Viner

    First you will need to do as Margalit stated and reform campaign finance laws, and possibly term limits? Then maybe you can provide basic universal coverage, private insurance option, doctors union, tort reform…

    I may be ignorant, but I still don’t understand how P4P is supposed to work.

    • Dr. Drake Ramoray

      Pay for performance’s goal is to shift the financial responsibility for patient care from the insurer to the physician. This is of course occurring because with the help of the government the financial burden has largely been shifted from the patient to the insurer (somewhat less so now with some very high deductible plans) and insurers are tired of holding the bag and being forced to raise rates. Insurers would much rather charger lower premiums, dictate what provider’s do (which they already do but isn’t enough to contain costs), and then pay based on some metric which has more to do with a patient’s compliance, socioeconomic status, and access to care. My patient’s in the rural south compared to an affluent suburb on the west coast. Sure pay for performance will work. Really it will. If you don’t think so your just not a team player, or embracing the wave of the future.
      Like most schemes it has little to do with the title, much like the Patient Centered Medical Home is a really a euphemism for the patient to get lost in a sea of administrators and red tape. This conveniently also pushes providers into the arms of big mega coporations and hospitals. Pay for performance is the wholesale takeover of medicine by the crony capitalism of government, insurance companies, and big pharma. There is a reason I post on here that I am in discussions with my family about emigrating to another country. Unless concierge works, healthcare (especially diabetes for an Endocrinologist) isn’t gonna be a pretty picture.

  • Lacie Lynch

    Fundamental fix demand from this author…yet he gives NO suggestion (how very conservative of him)! Here’s one from a layman…do AWAY with the greedy, self-serving middleman (insurance companies). The billions saved in their profits could go directly to paying doctors/increasing reimbursements.

  • SBornfeld

    You know, you can take the finest new automobile, and repeatedly throw rocks and hammers at it, and it will run like crap (if it runs at all) and then say it’s a piece of crap.
    The ACA was never the finest of cars–it is more like the horse built by committee. But it really never got a chance in this political environment. Still, the right stands around and calls it a piece of crap.

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