Epic Fail

With major insurers poised to pull out of the exchanges, out-of-pocket costs soaring, premiums rising across the board, the overall healthcare cost curve rising, and access to care constricting for millions, defenders of the unpopular Obamacare program have been clinging to the thin reed that the new law has at least provided coverage to millions of Americans. This is a weak argument, for two reasons: (1) The “Affordable” Care Act, by definition, emphasized affordability. The sales pitch was that the legislation would lower rates, improve care, and insure tens of millions — while reducing costs overall, and allowing anyone who was happy with their existing arrangement to keep it. A no-loss proposition. This was pure, dishonest fantasy, of course; the American people smelled a rat from the beginning, which is why disapproval of Obamacare has significantly outpaced approval ever since it was introduced in 2009. (2) Celebrating the fact that millions of people have signed up for coverage for which they are legally obligated to sign up isn’t exactly an achievement, especially when one considers how many people have run the math and chosen to pay for the privilege of remaining uninsured because they can’t afford the “Affordable” Care Act.  And when one considers how many of the “new” enrollees previously had insurance.  But even on the sign-ups metric, the law is failing, and failing badly. Decline:

ObamaCare will enroll significantly fewer people than expected in 2016, ending the year with about 13 million customers, the Congressional Budget Office (CBO) said Monday. The figure, which was included in an expansive budget report, is a decline of about 40 percent from last year’s enrollment prediction of about 20 million people. The latest projections confirm the Obama administration’s previous assessment that fewer people are signing up as the marketplace closes in on its third enrollment season — the final one under President Obama.


The New York Times also notes the dramatic downgrade, speculating that future projections are also likely to be slashed:

When the Affordable Care Act was drafted, the Congressional Budget Office expected people to sign up quickly for new health insurance. Now, two years into the law, it’s clear that progress is going to be slower. The Obama administration acknowledged as much in late 2014, and again in October, when it presented its own modest predictions. Monday, the budget office also agreed, slashing its 2016 estimate by close to 40 percent…It has proved harder to spread the word about new health insurance, and harder yet to persuade people to shell out money for new health insurance they hadn’t had in their household budgets… The budget office’s estimates for future years won’t be released until March, but it seems reasonable to assume they will also come down.


The Times story tries to salvage some good news from this disaster, desperately editorializing that this exodus “is not a sign that the health law is failing.” As evidence for this sweeping generalization that fails to adhere to most of the data, the “news” report cites sign-ups under the law’s Medicaid expansion program — which is already straining state budgets, redirecting precious resources from the truly indigent, and failing to produce superior health outcomes for its enrollees compared to uninsured people.  Republicans in the House and Senate recently passed a bill repealing almost all of Obamacare, which was immediately vetoed by the president. And as she attacks Bernie Sanders over the massive expense of socialized healthcare, Hillary Clinton stubbornly insists that the new law has been a success, vowing to pour more taxpayer money into itIowa’s CoOportunity Health, the second largest CO-OP in the nation, was shut down by the state’s insurance commissioner in January 2015 after losing $45.7 million in the previous 10 months.

(CNSNews.com) – Despite guidance from the Centers for Medicare and Medicaid Services (CMS) last year that allowed Obamacare Consumer Operated and Oriented Plans (CO-OPs) to use “creative” accounting and record “loans as assets in their financial filings,” “CO-OPs are failing left and right,” Senate Finance Chairman Orrin Hatch (R-UT) said during a hearing Thursday.

Last year, more than half of the 23 non-profit CO-OPs set up under the Affordable Care Act as an alternative to for-profit insurers were closed by state regulators after they failed to take in enough premiums to cover their costs.

“Of the 11 CO-OPs still in operation, there is reason to call their long-term financial viability into question. All but two of them are losing money,” Hatch pointed out during the hearing. “Not a single one of them had an underwriting gain through the third quarter of 2015.

“And as CO-OPs generally continue moving into weaker financial conditions, several show signs of running out of money this year,” Hatch said.

CMS has actually encouraged the CO-OPs to cook their books with some creative accounting. Last year, the agency issued guidance allowing CO-OPs to apply surplus notes to program start-up loans, which essentially allowed the CO-OPs to record loans as assets in their financial filings,” he continued.

“Taxpayers have been forced to foot the bill for the CO-OP experiment, to the tune of $2.4 billion in federal loans for 23 CO-OPs around the country.  And, to date, more than half of the CO-OPs have failed, while the vast majority of the others are in poor financial shape.

“As a result, hundreds of thousands of Americans have lost or will lose their health insurance and taxpayers are still on the hook,” Hatch added.

But acting CMS Administrator Andy Slavitt assured the committee that the remaining CO-OPs “have every opportunity to be successful long-term market participants.”

“For the CO-OPs that are closing, we are working closely with the CO-OP and state regulators to facilitate a smooth transition for consumers to retain access to coverage and ensure providers are reimbursed for covered services rendered to CO-OP enrollees. Affected CO-OP enrollees have access to a special enrollment period, and are able to shop for 2016 coverage on the Marketplace until February 28, 2016,” Slavitt told committee members.

A July 2015 report by the inspector general of the U.S. Dept. of Health and Human Services stated that “member enrollment for 13 of the 23 CO-OPs that provided health insurance in 2014 was considerably lower than the CO-OPs’ initial projections and 21 of the 23 CO-OPs had incurred net losses as of December 31, 2014.”

Sen. Chuck Grassley (R-IA) noted that CoOportunity Health, the first CO-OP to go out of business – leaving 120,000 people “scrambling for health insurance” – was in his home state of Iowa. If the second largest CO-OP in the country failed, Grassley asked Slavitt, how could CMS be sure that smaller CO-OPs would not face a similar fate?

“One of the things we learned there was how quickly things can happen, and how quickly things can deteriorate,” Slavitt replied, noting that the regulatory agency has learned valuable lessons from the failed CO-OPs.

“The reason that there were so many CO-OPs that closed last year was that we worked very aggressively with the departments of insurance to make a full-on, 12-month assessment, and even those that seemed like they were in pretty good shape at the time didn’t have the wherewithal to last through the end of the year,” he said. (CNS and townhall))

Political Cartoons by Lisa Benson
Political Cartoons by Bob Gorrell
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