All Your Health Are Belong to Us
An ObamaCare progress report. Well, a report.
January 13, 2014
"Expect the unexpected" has been good advice
for anyone following American economic news since 2009. That news has
usually been bad, and almost always "unexpectedly" so. The surprise is a
product of ideological bias: With a kindred spirit in the White House,
liberal reporters expect (or at least hope for) good things to happen. A
cynical observer might suggest that there is an element of deliberate
spin involved, with reporters hoping to keep readers' expectations
afloat until next month's report.
This Reuters dispatch applies the practice to a new subject:
Health insurer Humana Inc said on Thursday that it projected its enrollment mix in private plans through the exchanges created by President Barack Obama's healthcare law will be, "more adverse than previously expected."
That was a quote from a Humana filing with the Securities and Exchange Commission, but Reuters also made it the headline. Humana didn't disclose any numbers, but a subsequent Reuters dispatch offered some industrywide (though not nationwide) numbers:
Data from seven states and the District of Columbia, which are running their own marketplaces, show that of more than 200,000 enrollees, nearly 22 percent are 18 to 34 years old, according to a Reuters analysis.
The administration had hoped that over 38 percent, or 2.7 million, of all enrollees in 2014 would be 18 to 35 [sic] years old.
Such results were in fact entirely expected by those, including your humble columnist, who warned of "adverse selection." ObamaCare
severely limits insurers' ability to set premiums based on
policyholders' risk profiles. They may not charge the already-sick more
than the healthy, and their ability to charge the middle-aged more than
the young is highly constrained.
That
means that young and healthy policyholders get soaked in order to
subsidize middle-aged and sick ones, so that the former--who had a low
propensity to be insured even when premiums reflected their low
risk--have a strong disincentive to purchase coverage. Given such a risk
pool, premiums can only become less affordable when insurers adjust
them in the coming years.
Reuters' figures are very close to those we found in November
when we looked at enrollment figures from California, supposedly
ObamaCare's great success story. The Golden State was boasting that
22.5% of its enrollees were between 18 and 34, slightly higher than that
age cohort's 21% of the state population. But the proper denominator to
use wasn't the total population but the nonelderly adult (18
to 64) population, since the elderly are covered by Medicare and many
children by Medicaid. The young cohort makes up 33.8% of California's
nonelderly adult population but, at the time we wrote, only 23.8% of
nonelderly adult ObamaCare enrollees. Greatly overrepresented was the far more illness-prone 45-to-64 set.
The
age distribution almost certainly understates the adverse-selection
problem. Sick people of all ages have a far stronger incentive to buy
insurance than do healthy ones--and since becoming sick no longer can
result in higher premiums or make you uninsurable altogether, healthy
people have even lesser incentives to buy insurance now than before
ObamaCare. But no one will know what the sick-to-healthy mix is until
insurers have compiled at least some months' worth of claims data.
Adverse selection isn't the only predictable ObamaCare problem now becoming a reality. National Journal
reports that "insurance companies had to spend a lot of money adapting
to Obamacare's botched rollout. And unless the White House intervenes,
the law could penalize them for doing it."
We identified this problem back in October. HealthCare.gov
and the other nonfunctional exchanges have been sending bad information
to insurance companies, requiring them to incur administrative expense
in order to piece together applications. They have also had to deal with
changes in the rules regarding cancellations of old policies that did
not comply with ObamaCare mandates.
The
additional administrative costs implicate the "medical loss ratio," an
ObamaCare requirement that, as National Journal explains, insurers "can
spend only 20 percent of their premiums on overhead and profit."
Insurers argue, not unreasonably, that they should get a break to
compensate them for the additional expense that the Obama administration
has imposed with its incompetence and capricious interpretations of the
law. But of course such a break would come at the expense of consumers.
There
are other potential sources of administrative expense. "Many folks who
signed up for coverage through the state and federal exchanges are
running into roadblocks now that they are trying to use their new
benefits," reports CNNMoney. The network cites the example of Jeanne Patterson, an unemployed Pennsylvanian who's covered by Independence Blue Cross:
Patterson's journey started New Year's Day, when she landed in the emergency room for a stomach ailment. The Independence policy number she received didn't work and the hospital required her to sign a form saying she would pay for care herself, though it agreed to bill her later. She then received an ID card for her HMO plan in the mail a few days later, so she made an appointment with her primary care doctor and a gastric specialist for follow up.
But when the 59-year-old went to her doctor last week, she was told he couldn't see her because she hadn't designated him as her primary care provider. If she wanted to be treated, she'd have to pay for the visit and lab work and request reimbursement. She spent an hour on hold with Independence trying to fix the problem and left the office without care.
Patterson, who has previously always had insurance, said she was not told she had to designate a primary care provider in Independence's system before seeing the doctor. When she got home, she went online and did that, but learned she'd have to wait until February to make an appointment.
She
started calling the insurer "three or four times a day, spending more
than an hour on hold each time hoping to get a representative to waive
the waiting period." She got nowhere. Finally she took her complaint to
the press. When CNNMoney contacted her, an Independence senior vice
president "reached out to Patterson and confirmed that she has had
coverage since Jan. 1 and her primary care doctor designation is in
order."
Which is good for Jeanne
Patterson, but obviously it would be cost-prohibitive for senior vice
presidents to deal with all customer complaints. CNNMoney reports that
the executive, Brian Lobley, "acknowledged that hold times have
increased to an average of 40 to 50 minutes, but said Independence has
increased its staff by 20% to 25% and has extended its hours to
accommodate the crush." What the report doesn't note is that the medical
loss ratio constrains the company's ability to hire enough people to
meet the demand for customer service.
"Zero Wing"/YouTube
If you're reading this, you can be
thankful at least that you don't have to rely on ObamaCare's
"Spanish-language" website. It's called CuidadoDeSalud.gov, which, as
the Associated Press
notes, literally translates as "For the Caution of Health." It sounds
as if Señora Sebelius relied on Google Translate--or maybe on the guys
who translated the Japanese videogame Zero Wing into English, creating
such comedy classics as "All your base are belong to us."
Among
the problems with the ObamaCaution site: It launched more than two
months late. "A Web page with Spanish instructions linked users to an
English form." And Adrian Madriz, a Miami ObamaCaution navigador,
tells the AP: "When you get into the details of the plans, it's not all
written in Spanish. It's written in Spanglish, so we end up having to
translate it for them."
The AP closes on a political note, if an implicit one:
Gabriel Sanchez, a political science professor at the University of New Mexico, said the problems hurt the credibility of federal officials and reinforce the belief held by some that authorities are indifferent to the plight of Latinos.
Sanchez said, "They will look at this, and think, 'Man, they really don't care about us.' "
And wait till they hear about los paneles de la muerte. Anyone know how to say "You have no chance to survive make your time" in Spanglish?
Life Imitates the Onion
- "Resentment, anger, and pity were among the emotions mutually felt by Burger King employee Duane Hesketh and customer Robert Lalley during a class-conflict-laden transaction Tuesday. According to sources, at 4:22 p.m. PST, the upper-middle-class Lalley approached the working-class Hesketh's register at the Beach Boulevard Burger King to order a meal. The two men instantly became locked in an icy showdown of mutual loathing and disrespect, each resenting the other and everything he represents. For the next seven minutes, the age-old conflict between the haves and have-nots was played out in a passive-aggressive verbal exchange that betrayed no trace of the roiling vortex of bitter hatred that lay just beneath the surface."--Onion, Aug. 1, 2001
- "For many years, Karen Paperno told me, she hadn't paid much attention to those variations and distinctions. . . . In 1996, she settled into work that made her happy, opening a store called Boing Boing in Park Slope, Brooklyn, catering to the needs of new breast-feeding mothers. . . . But about six or seven years ago, she began to feel uneasy. . . . 'I was still middle class," Ms. Paperno said, 'but no one else seemed to be.' . . . Mothers began to come in and ask for the sort of products that Ms. Paperno didn't carry because they offended her sensibilities. They asked for something called the Belly Bandit, for instance, a postpartum slimming belt that Ms. Paperno regarded as decidedly anti-feminist, and stroller blankets from 7 A.M. Enfant, which she found too expensive. She stocked these things reluctantly. . . . A story like this one reminds us that inequality is corrosive even when it isn't extreme, that the complications and confusions of class and position are as psychically affecting as anything else."--Gina Bellefante, New York Times, Jan. 12, 2014
Two Papers in One!
- "Jobs Data Gives Hope for Benefits Extension"--headline, news story, New York Times, Jan. 11
- "No Jobs, No Benefits, and Lousy Pay"--headline, editorial, New York Times, Jan. 11
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