Ten Lessons of ObamaCare

Posted November 7, 2013 By jpohl

I reprint this from the RealClearMarkets.com web site.

By Robert Tracinski
President Obama is still trying to downplay the launch failure of ObamaCare as if it were just a few glitches on a website.

No, it’s much more than that. It is a timeless demonstration of the failure of central planning, government regulations, and the entitlement state. It is a failure so total, so comprehensive, and so multifaceted that it will be studied by schoolchildren 50 years from now when their teachers explain to them why the giant welfare and regulatory state built up in the second half of the 20th century collapsed in the first half of the 21st.

The lessons of that failure will not be new lessons. They’re the ones we should have learned in the 20th century, when we had plenty of examples to draw from. But a generation has grown up that doesn’t remember the 1970s, the failures of socialism, or the depredations of Communism. And because those topics are not yet part of a standard school curriculum, we’ve had to relearn them in the School of Hard Knocks, with Professor Obama giving us a refresher course.

In the hope that we won’t have to learn this all over again another thirty years from now, here are ten big lessons from the launch of ObamaCare about why big government fails.

1. There’s no such thing as a free lunch.

We’ve already seen about a half-dozen stories like this one, in which an Obama voters declares, “I was all for ObamaCare until I found out I was paying for it.” Or as another one puts it: “Of course, I want people to have health care. I just didn’t realize I would be the one who was going to pay for it personally.” Well, who did he think was going to pay for it?

The entire middle-class welfare state, to which ObamaCare is the latest addition, is an attempt to make the middle class into a constituency for big government by promising them endless benefits, from free health care to a guaranteed income, with no costs, consequences, or trade-offs, and no strings attached. Everything is supposed to be paid for by “the rich,” which means anyone who makes a dollar more than you. But when the law is passed, a whole chunk of the middle class finds out that they are the ones getting fleeced for the benefit of anyone who makes a dollar less than them.

If you want to figure out the winners and losers of ObamaCare, it’s not so much about the rich versus the poor. It’s this: the more you are productive and self-supporting, the more likely you are to end up paying the freight for everyone else. That’s what promises of a free lunch always amount to: punishing the productive and rewarding the unproductive.

What do you suppose are the long-term consequences of that kind of system? Well, let’s start by looking at what the regulatory state does to productive people, which is our second lesson.

2. Regulation stifles production.

How did the president who deployed state of the art information technology for his re-election campaign manage to botch the website for his signature piece of legislation? Listen to this explanation from some of the Obama campaign’s own Web guys: “The government has to follow a code called the Federal Acquisition Regulation, which is more than 1,800 pages of legalese that all but ensure that the companies that win government contracts, like the ones put out to build HealthCare.gov, are those that can navigate the regulations best, but not necessarily do the best job.”

In other words, when you pass a lot of regulations, it only makes people good at following regulations. As I replied: “But what do they imagine ObamaCare is, if not a massive set of new regulations? If a mere 1,800 pages of federal procurement regulations cause 94% of federal IT projects to fail–how about the 2,000-plus pages of the Affordable Care Act?”

A truly creative, productive mind answers to only one “regulator”: reality. It looks at facts and results and figures out what is actually required to get things done, rather than following some arbitrary set of rules. But government regulations put precisely such rules between a worker’s mind and reality. That’s how the federal government ended up launching a system that had been tested against every clause and subsection of the Federal Acquisition Regulation–but hadn’t been tested to see if it would work in the real world.

This leads us to a wider observation about the inherent limits of the power of government.

3. The power to tax is the power to destroy.

The government’s only real power, the base for everything it does, is the power to take things away and to prevent people from acting. It is the power to tax, to confiscate, to ban, to jail, to kill–and not the power to build. Remember that all those pages of procurement regulations, meant to prevent any possible shade of wrongdoing by federal contractors, did nothing to help anyone actually build the ObamaCare website. Expand that to apply to the entire health care industry. Thousands of pages of regulations will prevent people from doing a lot of things, but it won’t help them to provide more and better care.

In fact, it will get in the way. There are already indications that ObamaCare will lead to a shortage of doctors because it’s paying them less to do more work: “Doctors must now see many more patients each day to meet expenses, all while dealing with the mountains of paperwork mandated by the health-care law.”

The essence of ObamaCare is summed up in the fact that millions of people are now being booted off of their existing health insurance plans–but the state and federal exchanges that are supposed to offer them new insurance aren’t even functioning. The Department of Health and Human Services has done an efficient job of destroying old insurance policies, but it has failed to provide new ones. That is the power of government summed up for you.

There’s an even more horrifying implication that follows from this: once the system is broken, it’s going to take a long time to rebuild it. This is another lesson of the 20th century. An Eastern European economist once explained the big challenge faced by his countrymen after the collapse of the Soviet Union. The old Communists justified their policies by declaring, “you can’t make an omelet without breaking a few eggs.” (By “eggs,” of course, they meant “skulls.”) This economist retorted: “If you have eggs and you want an omelet, it’s very easy. If you have an omelet and you want the eggs back, it’s very difficult.” This is a good analogy for what’s happening to the market for health insurance, and we’re going to spend years trying to unscramble this omelet.

Meanwhile, what about the people who scrambled it all up? That’s our next lesson.

4. No one is accountable.

Secretary of Health and Human Services Kathleen Sebelius, who was in charge of the ObamaCare launch, has told Congress that “I’m responsible” for its results–so long as she doesn’t have to resign or suffer any actual personal consequences. This is a bureaucrat’s conception of “accountability.”

If a private company had so completely bungled the launch of its biggest, most important product, with no prospect of recovery for months, the accountability would be rough and immediate: the company would go out of business. There would be no need to fire anyone. Everyone from the CEO to the mail boy would be out of a job, and more competent competitors would swoop in to grab their former customers. But the federal government faces no such market pressure. It has an endless amount of taxpayer money to draw from and a phalanx of civil service regulations to protect bureaucrats from the consequences of their incompetence. As for Sebelius, it is precisely the scale of her failure that protects her job: President Obama can’t fire her without admitting how big the problem is and facing an embarrassing Senate confirmation hearing for her successor. So it’s bad management practice to keep her on–but good management is overruled by politics.

The gap between Obama’s campaign technology and the implementation of ObamaCare is explained entirely by this difference between campaigning and governing. For politicians, manipulating you into voting for them is always going to be more important than actually delivering on the promises they made when they were campaigning.

That leads us to the next big lesson of this debacle. Brace yourselves, because this one is going to be a shocker.

5. Politicians lie.

Did I mention that none of these lessons are really new? The fact that politicians lie is a cliché, yet few people really take it seriously. If they did, they would realize one of its implications: when a politician promises you a cornucopia of benefits from some new government program, don’t believe him. He is simply telling you what you want to hear in order to get your vote, or get a bill passed, or get himself out of a jam.

But there’s more to it than that. An in-depth report in the Washington Post about the chaotic planning for the launch of ObamaCare indicates that the project was repeatedly undermined by attempts to hide the truth for political reasons.

“A larger number of states than expected were signaling that, under Republican pressure, they would refuse to build their own online insurance marketplaces and would rely on the federal one. The more states in the federal exchange, the more complex the task of building it. Yet, according to several former officials, White House staff would not let this fact be included in the specifications. Their concern, one former official said, was that Republicans would seize on it as evidence of a feared federal takeover of the health-care system….

“After the contract was awarded to CGI Federal, the administration kept giving states more and more time to decide whether to build their own exchanges; White House officials hoped that more would become willing after the 2012 election. So the technical work was held up. ‘The dynamic was you’d have [CMS's leaders] going to the White House saying, “We’ve got to get this process going,”‘ one former official recalled. ‘There would be pushback from the White House.’”

You can use this story to blame the Republicans for “sabotaging” ObamaCare, if you like, but that misses the point. If the government cannot successfully build something when there is political opposition, then the government of a free society cannot build anything ever, because there is always political opposition.

And it’s not just politicians who lie to the public. Politicians and bureaucrats also lie to each other as a part of their own internal political games. Thus:

“[O]n Sept. 5, White House officials visited CMS for a final demonstration of HealthCare.gov. Some staff members worried that it would fail right in front of the president’s aides. A few secretly rooted for it to fail so that perhaps the White House would wait to open the exchange until it was ready.

“Yet on that day, using a simplified demonstration application, the Web site appeared to work just fine.”

No wonder President Obama was blindsided by the website’s failure: nobody in the entire chain of command had the courage to tell him that it wouldn’t be ready. This is another big lesson from the 20th century. One of the reasons Mikhail Gorbachev pushed for his reforms of the Soviet system, in a last-ditch effort to save Communism, was because he discovered that the Politburo had no idea what was really going on in the Soviet economy. Lower officials all the way down would cover up problems and report inflated production numbers in order to burnish their reputations or avoid being thrown in the gulag. The result was that the central planners couldn’t plan, because they had no idea what was the truth and what was a lie.

President Obama faced the same problem with the ObamaCare website, being treated to a Potemkin demonstration of a “simplified” version of the site because officials lower down didn’t want to confess that the real website wouldn’t be ready in time.

But that’s not the kind of political lying everyone is talking about right now. The lie they’re talking about is bigger and more flagrant.

When President Obama promised over and over and over again that “if you like your plan, you can keep it,” it wasn’t an ordinary politician’s lie. It was a Big Lie, the kind where a politician looks you sternly in the face and wags his finger and declares that he will absolutely, positively do one thing-while behind the scenes he is already planning to do the exact opposite. We now know that the clauses in the law that were meant to grandfather existing insurance plans were interpreted so narrowly as to ensure that most of those plans would have to be dropped in favor of new, more expensive plans.

President Obama is still trying to dodge responsibility, blaming the cancellations on a few “bad-apple insurers.” You know, “bad apples” like this one:

“Since March 2007 United Healthcare has paid $1.2 million to help keep me alive, and it has never once questioned any treatment or procedure recommended by my medical team. The company pays a fair price to the doctors and hospitals, on time, and is responsive to the emergency treatment requirements of late-stage cancer. Its caring people in the claims office have been readily available to talk to me and my providers.

“But in January, United Healthcare sent me a letter announcing that they were pulling out of the individual California market. The company suggested I look to Covered California starting in October.”

Who could have predicted this? Well, a lot of us did, only to have those warnings ignored and dismissed–and not just by Democratic politicians. That brings us to our next lesson.

6. The press lies, too.

As Megan McArdle points out, the new line of defense on the cancellation of existing health insurance policies is that “everyone knew” this was going to happen. It’s just that nobody bothered to tell the public. It’s an example of the old Clinton Rules for how to dispose of a scandal: “it’s not true, it’s not true, it’s not true, it’s old news.”

This illuminates the extent to which the mainstream media, rather than being a check on the political system, is a part of it. When reporters come from the same cultural and ideological perspective as the politicians–and the Obama White House has been notorious for its revolving door between the administration and the press–then the watchdogs become lapdogs. That’s why the fact-checkers couldn’t be bothered to fact-check such an important and obviously false claim back when it would have mattered. They couldn’t fact-check it precisely because it would have mattered, because no one wanted to be responsible for undermining a piece of legislation all of their colleagues regarded as enlightened and “progressive.”

Of course, there are other reasons why the press wasn’t able to warn us about the consequences of ObamaCare, which leads us to our next lesson.

7. The Law of Unintended Consequences.

Thanks to Nancy Pelosi, ObamaCare will go down in history as the law we had to pass so we could find out what’s in it. It’s a law so big, so complex, and so vague–requiring thousands of pages of regulatory rulings to flesh it out–that no one knew or could have known exactly what it was going to do. Some of it we could guess at, like the fact that ObamaCare would wipe out a lot of existing insurance policies. Some of it comes as a surprise, like the fact that the whole law is totally dependent on building a complex, high-volume website. Then there are dozens of other things that we’re going to discover about the law in a constant drip-drip of news stories, week after week. The latest: ObamaCare subsidies create a huge marriage penalty.

Free-marketers recognize this as the Law of Unintended Consequences. Along with all of the things the law’s drafters and supporters thought they were going to do, there are many more things they didn’t know they were doing, which they failed to anticipate or couldn’t anticipate. With a law that runs to 2,000 pages and regulations running to thousands of additional pages, and all of that interacting with the implementation efforts of hundreds of bureaucrats and computer programmers, the business decisions of dozens of insurance companies, and the personal financial decisions of some two hundred million adults, it is simply impossible to project all of the consequences. Yet the hubris of central planners and regulators is to assume that they can anticipate and control these results.

In practice, this means that they end up passing the law so we can find out what’s in it, then tinkering with it endlessly afterward, with each ad hoc fix creating unintended consequences of its own. That’s how we end up “reforming” health care, or education, or finance, etc., etc., decade after decade, and somehow never getting it right.

That said, a lot of the negative consequences of ObamaCare don’t fall under the Law of Unintended Consequences, because they were, in fact, done on purpose. They fall under a different principle.

8. The Law of Intended Consequences.

I use the Law of Intended Consequences to remind us that many of the destructive consequences of government action turn out, on closer inspection, to be part of the original purpose of the law.

We’ve already seen some evidence–unguarded comments from Harry Reid–that the elimination of private insurance is one of the intended consequences of the Democrats’ “reform.” Or consider the defense we’re now hearing about why so many people are having their existing health-insurance plans cancelled: that this was intended all along because those insurance policies don’t count as “real” insurance, and because herding everyone into the government-run exchanges is better for the common good, even if a few individuals need to be sacrificed by being forced to pay higher rates.

That’s why “everyone knew” that President Obama’s promise wasn’t true, but none of them raised the alarm: they thought it was a good thing that people would be pushed off of their health insurance and onto the exchanges. They intended this consequence to happen. The only thing they didn’t intend was for the public to figure it out.

Or to put it in different terms, they intended to “help” us, without bothering to get our input or permission. That leads us to our next lesson.

9. The nine most terrifying words in the English language are “I’m from the government, and I’m here to help.”

So said Ronald Reagan. He understood that when government officials come to help you, they give you the kind of help they think you need, not the kind of help you think you need. Or worse: they do something intended to make a public show of their compassion, to make them feel good about themselves and to position themselves as morally superior to their political opponents–those cruel, heartless Republicans–without really caring whether it makes a positive difference for the supposed beneficiaries.

Charles Krauthammer recently described his personal journey from the political left to the political right, and one of the key steps was when the data came in about the consequences of the Great Society welfare state. It turned out that the War on Poverty did not, in fact, lift people out of poverty but instead trapped them in a cycle of dependence on government. The great symbols of this failed welfare state were the high-rise public housing projects, which turned out to be government-run ghettos more violent and hopeless than the ones they had replaced. There’s a reason most of those projects have since been demolished: nobody wanted the reminder. Perhaps we should have kept a few around, like the remaining sections of the Berlin Wall, as a museum to remind us of the horrors of government “help.”

Ayn Rand, who learned the lessons of 20th-century statism better than anyone, once described the architects of the welfare state as “monument builders.” Like the kings and dictators who preceded them, who laid waste to whole continents so they could build heroic monuments to their own vanity, modern politicians and bureaucrats use the welfare state as a costly monument to the moral vanity of their own self-proclaimed compassion.

ObamaCare is building another such monument. It will “help” millions of the uninsured by taxing them for their failure to buy health insurance through online exchanges that don’t work–and it will “help” millions of others by forcing them out of their existing health insurance and into plans where they pay more money for fewer benefits and a more restricted network of doctors.

The comparison of welfare-state politicians and bureaucrats to the old aristocracy indicates our final lesson.

10. Freedom is indivisible.

The lie about being able to keep our health insurance, and the left’s defense of that lie, lays bare the arrogant paternalism of big government. The message is that it’s OK to lie to us, because we don’t know enough to pick out our own insurance plans anyway, so the experts have to herd us into the plans that they know are really good for us. But notice how seamlessly the advocates of big government go from economic paternalism to political paternalism. If it’s OK for elites to control our economic decisions because we don’t know what’s good for us, then it’s a small step to say that it’s OK for them to lie to us to manipulate us into voting the way they want us to. That’s the most ominous lesson of Obama’s lie about keeping our insurance, and his ongoing lies about lying.

On a practical level, government regulation of economics is itself an encroachment on our liberty and gives the government leverage to impose further encroachments. On an ideological level, if we can’t be trusted to choose an insurance plan, why would the big-government elites trust us to choose a political leader or a political platform? In excusing the president for telling a Big Lie to the American people, the defenders of ObamaCare are declaring their hostility to freedom across the board.

As Margaret Thatcher used to say, “freedom is indivisible.” “Once the customer is dependent on the state for all his needs; once the worker can turn only to the state for work; once there is no possibility of the promotion of the arts except by patronage of the state; then, not only enterprise, but freedom itself is destroyed.” Read the whole speech, which stated this big lesson of the 20th century with timeless eloquence.

As ObamaCare is implemented, there will no doubt be many more examples of these ten lessons. We had better start learning them now, in the hope that this time they will stick and we will be spared the next big demonstration of the failure of big government.

Robert Tracinski is editor of The Tracinski Letter.

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Be Careful What you Wish for

Posted October 29, 2013 By jpohl

Sue Klinkhamer has a problem. It’s called Obamacare.

And the irony of her situation is not lost on her. In a recent email addressed to her former boss, Illinois Congressman Bill Foster, and other Democratic colleagues, she wrote:

“I spent two years defending Obamacare. I had constituents scream at me, spit at me and call me names that I can’t put in print. The congressman was not re-elected in 2010 mainly because of the anti-Obamacare anger. When the congressman was not re-elected, I also (along with the rest of our staff) lost my job. I was upset that because of the health care issue, I didn’t have a job anymore but still defended Obamacare because it would make health care available to everyone at, what I assumed, would be an affordable price. I have now learned that I was wrong. Very wrong.”

For Klinkhamer, 60, President Obama’s oft-repeated words ring in her ears: “If you like your health plan, you will keep it.”

Well, possibly not.

When Klinkhamer lost her congressional job, she had to buy an individual policy on the open market. Three years ago, it was $225 a month with a $2,500 deductible. Each year it went up a little to, as of Sept. 1, $291 with a $3,500 deductible. Then, a few weeks ago, she got a letter.

“Blue Cross,” she said, “stated my current coverage would expire on Dec. 31, and here are my options: I can have a plan with similar benefits for $647.12 [or] I can have a plan with similar [but higher] pricing for $322.32 but with a $6,500 deductible.”

She went on, “Blue Cross also tells me that if I don’t pick one of the options, they will just assume I want the one for $647. … Someone please tell me why my premium in January will be $356 more than in December?”

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Big Insurance Company Problems for Obamacare

Posted October 29, 2013 By jpohl

Big Insurance Problems for Obamacare

There has been a lot written about the Obamacare insurance “death  spiral”.  This is where there is not enough young people signed up to help subsidize the older population.  The theory goes that insurance pools are filled with some people that tend to use more services than others.  For example, most of us buy house insurance year after year.  The vast majority of us will never file a fire insurance claim.  However, a few will file claims so you could take the view that those of us that do not file claims subsidize those that do file claims.

It’s really all about statistics. Given large populations, insurance companies have pretty good idea of how many claims they will have to pay out each year given a certain amount of policyholders they have in their portfolio.  The same is true with their medical insurance.  Statistically the young tend not to need medical services as much as those that are older.  So if the government only allows community pricing and does not fully allow insurance companies to price based on age and prior medical condition, then they must have a pretty significant pool of healthy people to be able to spread the risk around.

ObamaCare Rules

All insurance carriers are not required to participate in the ACA exchanges.  However, if they do decide to get involved, they need to follow Obamacare rules.  They need to allow pre-existing conditions, they need to use community based pricing.  The carriers also must offer policies that conform to the laws rules and offer certain services like wellness check-ups and cover birth control pills.

Given the potential market of the ACA exchanges it was assumed that all insurance carriers would participate in the exchanges in states where they had a presence.  In effect, Congress and the Obama administration were assuming that all insurance carriers would get involved and all carriers would be running their business by the same rules.

A Funny Thing

It turns out that not all insurers have decided to jump into the Obamacare waters head first.  Some have dipped their toe’s in various states while others have avoided the exchanges entirely.  Some is because they are pre-occupied with their business lines of insurance.  Others did not want the red tape associated with the government.

The problem for Obamacare proponents is that it leaves an undesirable option for young people that are so keenly important to the success of the ACA.  Those carriers not participating on a state exchange can offer whatever insurance they want and citizens are free to buy them.

But The Rules???

Let’s use the example of Mike who is 28 years old and in good health.  Mike only wants coverage that protects him from catastrophic medical condition.  He would like something with a low monthly premium and a very high deductible….like $10,000 per year.  He does not care about things like wellness programs or vision care.

The ACA effectively does not allow these policies on the exchange.  So if a carrier participates in an exchange in a state, it cannot offer non ACA compliant policies.

Fear

The fear is that many of these larger insurance companies who did forego the opportunity to participate in the exchanges did so because they did not want to be regulated into what policies they could offer.  They may see an opening in which Mike (our example from above) may want to pay the penalty and get his non-aca approved health plan.  The cost savings of the plan may well easily pay for the “tax” owed on the non-conforming plan.

Not everything has been totally litigated when it comes to Obamacare.  There is a provision in the ACA which states that subsidies are only to be given in States that created their exchanges.  Thirty-six states decided to let the Federal Government set up their exchanges.  The suit will be adjudicated in the next couple weeks at the Federal court level and will probably end up in the Supreme Court of the United States no matter which way the federal judges and appellate judges rule.

If it should be ruled that the subsidies are not eligible to be given, conventional wisdom is that without subsidies in a state, there is no reason for a tax.  Hence the tax consequences could go away in more than half of the states.

It Needs to be Whole

The administration admits that the law needs to act as one giant mass to work correctly.  It has also been likened to a three legged stool in which all legs are needed.  If the young do not sign up because they don’t have to due to a supreme court ruling or they figure out ways to do things cheaper, the death spiral starts. I maintained early on that it makes more sense for a young person to get a really high deductible plan and if something comes up, get more insurance when you need it.  After all, pre-existing conditions are now covered.

Finally

Once again, this is an example of Democrats not thinking things out.  I and other conservatives do not begrudge those truly in need decent health care.  There are circumstances when people with pre-existing conditions should be able to get health care.  But let’s not lose sight of the fact that medical coverage is something we as individuals should be budgeting for just like we do for clothes and food.  However, we need to keep in mind that sometimes those medical bills can get out of hand and that’s why we buy insurance.  Let’s get closer to a system that models car and house insurance rather than some single payer government run health insurance system.

Updated: CBS News Story talking about big insurance companies avoiding the exchanges

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Thom Hartmann has lost touch with reality…Part 2

Posted October 25, 2013 By jpohl

Yesterday I pontificated about the outsourcing of the healthcare.gov web site and Thom Hartmann’s inexplicable reaction to the outsourcing concept.  Today I am going to discuss another rant that Thom has been yelling about for a few days.

It Could Have Been A Success

Thom has been telling everyone that will listen that the deployment of the healthcare.gov site would have been successful had each state done their own programming.  He makes the case that the original concept was that the Government healthcare.gov site was intended to be nothing more than a portal to each states web site.  He makes the point that individuals would log into the site and enter their state of residence.  The healthcare.gov site would then pass off the individual to their states exchange site.

So Far Thom is Correct

From everything I know, Thom is 100% correct.  Individuals would go to the main site then get transferred to their states site which would do all the “heavy lifting” of processing the individuals insurance request.

The issue is that each state has different rules for Medicaid eligibility.  Each state has different insurance providers which results in different offerings for individuals.  Each insurance carrier needs interfaces created that would allow the exchange to pass information back and forth between the different parties.  There are additional interfaces with government agencies with the primary one being the IRS to get annual earnings.  If the user needed to go the Medicaid route, the state would be intimately familiar with their own rules and be able to create programming for that task.

All of this makes total sense and was a good plan.

So How is Thom Wrong?

Thom’s rant deals with yelling at the states for not implementing their own rules.  His point is that 36 states chose to not implement their own state exchanges and left that task up to the federal government.  He points out correctly that many of those states had Republican legislatures and/or Governors that were only trying to make implementation more difficult.

My first off-the-cuff response is wondering why a liberal such as he does not welcome central government doing the job.  After all, most of his rants have to do with letting the Federal government be more in charge of our lives.

Supreme Court Ruling

Thom and other liberals are quite fond of saying that the ACA is the “law of the land”.  They argue that the law was passed by congress, signed by the president and eventually even vetted by the Supreme Court of the United States of America.

Once again our liberal friends are correct in their assertions but you must also accept that through this process, the Supreme Court ruled that the government was forcing a burden upon the states that they did not HAVE to accept.  Fourteen states and the District of Columbia did eventually choose to effectively partner with the federal government to expand Medicaid and also set up their own exchanges.

Gov. LePage of Maine is a Republican that decided not to set up the exchange.  His reasoning was as follows:

“The [federal health reform law] is full of federal mandates; as such, even a state-based health insurance exchange is actually controlled by the federal government,” LePage wrote. “In the end, a state exchange puts the burden onto the states and the expense onto our taxpayers, without giving the state the authority and flexibility we must have to best meet the needs of the people of Maine.

As noted, he is a Republican governor and may have political aspirations to help Obamacare fail.  On the other hand, he and other governors did do studies to see if the overall benefits outweighed the liabilities of the program.  As you can see from his quote, he did not think so.

Gov. Walker of Wisconsin stated similar reasons for not accepting the Federal Governments intervention offer:

Walker said a state-run exchange would put state taxpayers most at risk.

“If we take on the risk of running the exchange, it commits us to long-term spending obligations,” he said. “Eventually, as the federal funding dries up, costs for Wisconsin taxpayers could skyrocket.”

Operating the exchange would cost $45 million to $60 million a year, and federal funding is guaranteed only through 2014, Walker spokesman Cullen Werwie said.

These are elected officials that may or not be making decisions in the public’s best interest.  Voters on the left will think one thing and voters on the right will think another and arguing is probably not going to change either sides mind.  One thing that is definitely correct is that these states elected officials will have to face the electorate again and they will ultimately decide.

Bad Law

Mr. Hartmann has stated that the law was poorly written.  He understates that opinion.  The law was terribly written from the start and jammed through congress in a partisan effort.  Unlike laws like the Civil Liberty laws in the 1960’s, this law did not have either an understanding or support from the electorate.  People like Thom can argue that it is “the law of the land” but until the people accept it, it is merely a law that can be changed and repealed.

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Thom Hartmann has lost touch with reality…Part 1

Posted October 23, 2013 By jpohl

For those that are unaware of Thom Hartman, he is a liberal talk radio host.  On my ride to and from work each day, I tend to listen to both conservative and liberal talk radio.  I find that both are filled with equal amounts of hyperbole.  Of course there is the usual discourse from the right that Obama is bad and the left thinks otherwise.

On Tuesday Oct. 22nd, Thom Hartmann started railing against President Obama.  It is a bit surprising when I hear a liberal being critical of a Democrat president.  Usually the only time Thom is critical of President Obama is because he does not think the president moved far enough left on an issue.  This time his criticism was a bit different.

CGI

Mr. Hartmann was disappointed on two fronts with regard to the contracting of the Affordable Care Act web site.  He was outraged that the United States government decided to outsource the creation of the web site to a Canadian company.  The primary contractor for the web site was CGI and has a history of doing large scale software deployments.  Not all have been successful.  Apparently CGI was contracted to create a gun registry system in Canada and it was a failure.

In large part, it is a good that is being made.  I can understand a conservative arguing that the best and cheapest vendor be used as good stewards of conservative economics.  It seems a bit unusual politically for a Democrat to outsource any contract to another company let alone one that is so expensive and high profile.

The United States prides itself on being technologically advantaged so why did we not give the contract to an American company.  Details are still emerging so eventually we may get answers to this and other questions regarding the vendor selection process.

How Has Thom Lost Touch?

More to the point of this article is that Thom’s other complaint centered around his contention that the United States government should not have outsourced the web site build to anyone.  He stated that he believes that the government should have done the entire system themselves.  Thom thinks that we should have hired the talent to implement the software.

Thom has a governmental opaque view of how things should run.  He seems to love the idea of central government control.  His solution was that the government would have been able to implement the Healthcare.gov web site if it had done it “in house”.

My ultimate question to Thom would be, “What do you do with all those tech people once the site has been tested and put into production?”  Are you going to lay them off?  Are you going to keep them on the payroll in hopes of having another project to utilize their resources?  Maybe you hire them and as they quit you don’t fill their open positions?  I am not sure he has or had any concept of an exit strategy.

His further point was that when you contract outside of your organization, the employees still make the same amount of money.  The general overhead is theoretically the same except that the outsourcer is making a profit and thus there is additional costs to the government to pay those regular expenses PLUS the profit to the company.

If all those people would be needed on a perpetual basis, Thom would be accurate.  Thom fails to realize what companies have known since outsourcing started in the days of the dinosaur.  That companies that add value are usually cheaper in the long run.  That it is better to let people and companies do what they do best.

Where is the Value Add?

In this particular case, a huge value add is not having to worry about what to do with those employees once the job is completed.  Thom could argue that we hire them and then lay them off at the project completion but then that adds a lot to the unemployment insurance.

How much in insurance costs would be added to the government payroll by adding these temp employees?  How much effort would be involved in the government HR services to hire that many employees that would not be there past 3 years?  Would they have been affected by the government shutdown….after all, it would be hard to argue that this was essential government service.  By contracting out this effort, those services were insulated from the shutdown.

Standard Thought

It seems as though the standard thought in the liberal community is that the government is more efficient than the private sector. There are many instances where this may be true. However, there are countless more examples where the government is not only less efficient but may be even termed incompetent. All this is rooted in the motive to get things done. Ideally the motive to help out your fellow man would make the government efficient. However, there is a natural instinct to “take care of your own”. Taking that into consideration, the profit motive of the private sector tends to lend more efficiency systems and systems implementations.

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Obamacare Tales From the Web

Posted October 18, 2013 By jpohl

JoeBrown1 writes:

Putting aside the roll-out debacle of the Obamacare Web site, I now have a very clear undersatnding of  the impact of the affordable care act on my family. First my grandson who is working his way through college was notified that his hours were being cut back to 28 from 32 hours per week. Then my wife who is a nurse was notified by her employer not to expect any pay increases given the cuts in reimbursements for Medicare. And now we have received the insurance premiums to renew our coverage for 2014. It’s only an “affordable” increase of 18% or $100/mo because of all the addtional services that must be covered that we don’t need. Adtionally, the deductible has increased $2,000. So much for lower premiums. To be as emphatic as the president was in selling us on the ACA, im getting screwed:period!!!

 

ManApp99:

I live in one of the states that set up it’s own exchange. I logged in easily and found there were 7 family plans available for me and my wife. The cheapest bronze plan offered on the exchange is $1700 a month with a 10k deductible. I own a small business and my wife has pre-existing conditions keeping meaning she has no choices on the private market. The monthlies and the deductibles comes to 30k a year out of pocket or a little less than 1/2 of our adjusted gross of 65k. We are just above the level for subsidies. I will not be able to afford that and will be penalized on my taxes while still having no health insurance. What are people in our position supposed to do?

HDC7744 has a point….

In the past, the working poor were buying catastrophic coverage they could afford.  Now the feds are dictating what policies have to cover, and in order to keep rate increases at 200% or less, they instituted incredibly high deductibles.   Worst of all, if the individual employee’s cost of coverage is less than 9.5% of their pay, they get NO SUBSIDY to help pay for their radically more expensive insurance where they have access to far fewer doctors, specialists and hospitals than they did before. Expect the rate of medical bankruptcies to skyrocket. BTW, doctors are now starting to demand their fees up front because with $8K deductibles, they know insurance isn’t going to cover the bills, meaning even fewer people can afford to actually go to the doctor…

The top Republican on the Senate health committee has collected several official and media reports of the Obamacare horror stories Americans have encountered so far. They include:

– A $12,600 deductible. CNNMoney reported that one family “found a bronze-level plan for roughly $357 a month, after their subsidy, which they could swing. But it comes with a $12,600 family deductible.”

– Enormous rate increases. A research group found that a 30-year-old male nonsmoker “will see his lowest cost insurance option increase 260 percent.”

– Some who already buy their own insurance are receiving cancellation notices — and offers for expensive new policies. The Christian Science Monitor reported on a North Carolina family who had been buying Blue Cross and Blue Shield insurance for $380-a-month. “BCBS is offering them a new plan for three times the cost, $1,124.50 a month, still with an $11,000 deductible,” reports the paper.

– A California couple said that the Obamacare policy suggested to them included a 40 percent increase in their doctor’s office co-pay. “Our co-pay skyrocketed from 0 percent to 40 percent and the maximum out-of-pocket increased an additional $2,300,” according to a letter in the Fresno Bee.

– Kaiser Health News found a lack of competition in some pockets of the country. “Eighteen percent of counties have only one insurer offering plans and 33 percent of counties have only two insurers competing.”

— There is little uniformity to premiums charged around the nation. “For instance,” Kaiser also reported, “Cigna is offering 50-year-olds one of its midlevel plans for $614 if they live in Flagstaff, Ariz. That same plan, contracting with different hospitals and doctors, will cost $428 in Phoenix and just $395 in Nashville.”

 

Sean Hannity with Healthcare.gov operator:

HANNITY: They’re really telling you to tell us to check back in on the website in off-hours. Does that mean that I should go on at like three in the morning?

OPERATOR: It was saying early in the morning and late at night, but some people say they do that and still can’t get in.

HANNITY: So people are reporting to you the real deal?

OPERATOR: Yes sir, they are.

HANNITY: Have you ever got anybody that really likes it yet?

OPERATOR: Umm, no, not really.

[Hannity laughs]

Henry Payne of the Detroit News writes:

Last week I got news that my health insurance costs are going up. A lot. In 2014 my monthly premium for a family of four will increase 15 percent to $575, my deductible will double to $3,000 and I will lose my drug coverage, adding another $100 a month to my expenses. My story is typical for employees of Gannett, the Detroit News’ parent company, and other businesses across the country.

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New Problems With Obamacare

Posted October 4, 2013 By jpohl

**** Apparently the dead can sign up for benefits in Kentucky

Question 39 on the kynect: Kentucky’s Healthcare Connection printable application form for a single person health seeking either coverage or help paying costs, states: “If you are filling out this application on behalf of a person who recently passed away, enter the deceased person’s date of death.”

***** Obamacare Web Site outsourced to Canada

As Canada’s No. 1 IT provider, the company states on its website that “95 federal departments, agencies, and crown corporations and most of Canada’s provinces partner with” the firm.

The U.S. Department of Health and Human Services awarded CGI $55.7 million to launch Healthcare.gov, its central Obamacare health exchange website. Over the full five years of the contract, CGI could receive as much as $93.7 million.

*****Poor Not Able to Get ObamaCare

*****Obamacare trying to kill AZ Man

******Your Data not Safe in Obamacare

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Obamacare and the Sequester

Posted October 3, 2013 By jpohl

An interesting thing happened on the way to Obamacare implementation. The Sequester went into effect. This necessitated the across the board cutting of federal government programs. Staff has been reduced and services have been cut back. So how hard of a hit did Obamacare get hit?

NOTHING

There was no hit to Obamacare. To be fair, most of the provisions of Obamacare don’t get implemented till 2014. However, enormous amounts of resources are being directed by Health and Human Services (HHS) to get the exchanges created and ready by their Oct 1 due date.

Think about how many stories you have seen regarding HHS scrambling to get rules established, carriers signed on and infrastructure built. They are trying to put on a positive face and very well may be doing a good job.
However, you hear nothing about how the sequester has caused delays. You won’t hear about it either. That’s because there were NO cuts. Cut funding to air traffic controllers but not an unpopular law like Obamacare? Surely there were furloughs….

No Furloughs

You will not find anyone associated with Obamacare being furloughed. Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, said Wednesday that his office has not cut its workers’ hours and pay as a result of the automatic budget cuts that went into effect in March.

Whitehouse tours got cut but not Obamacare. Rep. Greg Harper (R-Miss.) stated that “The fact that ObamaCare officials haven’t been furloughed shows that the cuts are political”

“We’re talking about at least a 15 percent furlough of current air-traffic controllers, resulting in delays and perhaps safety concerns, but yet this has been a selective political item by the administration,” Harper said.
Additional Spending for Obamacare

It appears that although Obamacare is part of the federal government, it has special dispensation to not lose any funding. In fact, not only has it not lost funding, HHS just signed a reported $14 million dollar contract to publicize Obamacare.

I find it difficult to believe that there is somebody left in the United States that has not heard about the Affordable Care Act. Are we not responsible enough as citizens to find the information if we are interested? In the big scheme of things, $14 million is a drop in the proverbial bucket. However, all these little drops eventually turn into a river.

The flood of rain drops will eventually splash upon the United States economy. The projected savings are already evaporating. There will be no $2500 savings per person. In fact, projections are that the costs will be close to $2500 more than they were in 2010 when the bill was passed. That will mean a $5000 projection shortfall.

Maybe its cynical in general but rarely does the government accurately forecast costs. This will just be one more of those missed projections that we will blame on a former administration. However, this time you have been warned.

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Health Care Keeping Up With the Jones’s

Posted April 18, 2013 By jpohl

The 2014 election has started. Just when we were happy that the 2012 election had passed, some people are talking about the 2014 and even the 2016 elections. The prediction here is that the major topic of the 2014 election will be regarding the Affordable Care Act.

The Act was not popular when it was passed in 2010. The congressional elections in November of that year reflected an unhappy electorate. The Senate and Congressional elections in 2014 could be effected by the same topic and result in the same outcomes. It all depends on how things go with Obamacare through the first several months of 2014

Major Provisions Effective Jan 1

Although the Affordable Care Act became the law of the land in March of 2010, the major provisions of the law will not be effective until Jan. 1, 2014. This date was selected because of the time it was going to take to set up the government run health insurance exchanges as well as do some amortization of how the Act was going to be funded.

Businesses are currently looking to see how they are individually being affected by the Act. Some that are slightly over the 50 employee threshold are thinking of reducing the workforce to not be subject to the mandate of legally having to provide insurance.
Some businesses are considering dropping the option of family coverage and only providing individual coverage. It is a way that they can save premium money on one group of workers if they are required to provide insurance coverage on more workers.

Even more businesses are looking at the economics of dropping all coverage and paying the penalty (tax). With this scheme, they would both pay the tax and give the employee raises to help them buy the insurance through the exchanges. Surprisingly this is a popular option even with employees. This is because the employee receives a raise and may elect to not procure insurance and wait till health problems appear and then buy insurance (Remember, pre-existing conditions are not considered when an insurance carrier provides a policy). The company likes the idea because even though they may ultimately have the same cash outlay in raises and IRS penalties, they get out of the insurance business. They no longer have to spend time and effort working on insurance matters for their employees.

As of Oct 1, 2013, the Health Care Exchanges are supposed to be established and working to get citizens signed up and ready for coverage on Jan. 1, 2014.

Exchanges

The first electorate hurdle will be whether the exchanges are in place and working on Oct 1. So far Health and Human Services (HHS) has been confidently saying they will be ready in time. I personally am a bit skeptical of this but then again I am not privy to the inner workings of that department.
I just know that they have some major tasks to complete in what will be a short time span. Having witnessed government work in the past, I believe my lack of confidence is founded in history. They will have to create an Internet presence to be able to capture information from the people. They will also have to build phone support lines as well as ways for those without Internet service or access to interact with the department. These people need to be recruited and trained on all the provisions that could affect them. This will be going on while provisions are still being written.

Contracts with the health care insurers need to be finalized. These contracts would allow the carriers to be represented on the exchanges. Given that a large influx of people are expected, even a small provision in a policy could have a large economic impact. In other words, the carriers will need to make sure their bottom line is covered before they commit to the exchanges.

OPT Out

Some states have opted out of the exchanges. The AC A mandated that states had to join or created the exchange in their state. For this the government would pay the implementation cost as well as provide coverage at 100% for free. However it would greatly increase the number of state citizens covered. After the first three years, the government would pay 90% but would still continue to provide oversight of the exchange.

However, the Supreme Court of the United States got involved. They ruled that the states did not have to create and manage the exchanges. It was up to each state to decide if they wanted to join forces with the United States Government. Many states have subsequently decided it better to not go into partnership with the federal government and continue to provide health services as they have in the past.

So How Does This Effect the Election

Things may go just fine with the implementation subsequent to the Jan 1 start date. If things do go well, most people won’t care too much from a political perspective. Some people will reward Democrats that voted for the bill in 2010 with enthusiastic votes in 2014. However, if things go even slightly wrong and a large group of people are adversely affected, those voters will be vocal.

In business there is something called the Jones Principle. As a reader, you probably have experienced this yourself. The principle is that if someone receives abnormally good service or is abnormally happy with a product, they will reward the owner with a couple recommendations. They will generally tell 6-8 friends about how much they liked the business. However, if the product was not good or the service was less than expected, that customer will tell 30-50 people about it.

You can believe that if the act does not get implemented correctly or if it has provisions that adversely affect a good number of the electorate, there will be political jobs that will change hands in 2014. There will be Senators and Congressmen that may feel the full wrath of a basic business principle.

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Obamacare Promotes Medlining

Posted April 17, 2013 By jpohl

What is medlining?

Obamacare is filled with a lot of unintended consequences.  One of the newest ones is the concept of medlining.  It’s basically health care’s version of redlining.

History

Most people following the passage and implementation of the ACA are aware that all insurers within the same insurance plan must be charged the same premium regardless of expected health care costs.  The term “Community pricing” has been used to describe that concept.

In theory the concept is popular because now people with pre-existing conditions or who have been traditionally in a high risk health group such as the elderly, will now not be charged more than anyone else that I covered under the identical plan.

So far so good…..However, the costs still exist.  Elderly people will need more medical attention as a group more than the 20-somethings.  The medical insurance companies still will be classifying groups of people as they always have.  They are just losing a tool at their disposal which was to charge those most likely to use the insurance more money.  The insurance company will have to charge the healthy more money to make up for the people that are less healthy.

The effect will be that insurance companies will profit from healthy enrollees and incur losses on the less healthy.  All plans will have a perverse incentive to attract the healthy less costly patients while avoiding the sick and more costly patients.

Enter Medlining

How will the insurance companies gain a competitive advantage?  By medliningMedlining is the act of over-providing to the healthy while under-providing to the sick.  For example it may be common practice to offer  health club memberships, dental benefits,  and vision care which tend to be popular among a younger and healthier crowd.  To offset those increase costs, the insurance company will save money by limiting the number of specialists and services which may be associated with an unhealthy population.  Insurance companies may be required to have geriatric doctors in their system by the law but there is no provision of how many of those doctors are required.

So What’s Next?

If you are young healthy person, you will still be paying more on Jan 1, 2014 than you pay on Dec 31, 2013 for health insurance premiums.  For that increase in payments, that group will be receiving more benefits associated with their lifestyle.

Less healthy patients will have 2 choices.  They will be able to pay the lower amount to be in a insurance program that is less robust in areas they need OR they will have to pay more for a policy that is more appropriate for their needs.  Remember, the ACA only states that insurance companies cannot discriminate of price within the same policy. This will be yet another issue that the elderly will have to deal with once Obamacare goes into full effect.

Health insurance companies are not commenting on this.  They may not even intend to go down that path.  However, they will at some point look at ways to cut costs and/or increase revenues.   The most logical way would be to look at what is the high cost factors in your business and try to eliminate them.  We can assume that they are or have been reducing internal costs they currently have control over and will look at those that they do not have control over.  The question will be….how to control that group they thought they had no control over.

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