Premiums Going Up Again. Now What?

ObamaCare Premiums Going Up. Again. Now What?

Megan McArdle,  title of Bloomberg article,  June 24, 2016

Where is it now, the glory and the dream?

William Wordsworth (1770-1850), Intimations of Immorality

President Obama has made no secret he wishes ObamaCare to be his immortal domestic legacy,   with its lowering of premium costs and Americans keeping doctors and health plan of their choice, as regulated by government.

But after persistent premium rises projected to soar 10% or more in 2017,  after 8% spikes  in 2016,  with outbursts of 20% to 50%  expected in some state markets,  his dream may not be realized.  Now what?

How Now and What Now?

As the elocution teachers might ask, “How now, brown cow?” or as Shakespeare might add, “If it be now, ‘tis not to come; it be not to come, it will be now; it if be not now,  yet it will come. Or as the Queen in  Lewis Carroll’s Through the Looking Glass might proclaim, “ Now! Now!”.

Where Goes the Glory and the Dream

Is something is not done quickly to contain premium  costs, when associated with unaffordable deductions, co-pays, and out-of-pocket costs  where will the glory and the dream of President Obama’s  health care legacy be?

Now What

As Megan McArdle points out in her excellent Bloomberg article  “ObamaCare Premiums Going Up. Again. Now What!” there are caveats .  State regulators might not approve premium hikes. 

Regulators  don’t like insurers going of business or leaving markets either,  leaving  insurance customers high and dry without insurance. 

Maybe  insurers will only ask for modest rate rises and will wait for health exchange markets to stabilize.  

Maybe  insurers  will swallow losses  as their  patriotic duty.

Maybe the feds will keep cutting checks to protect risk corridors and keep insurers in business. Or maybe customers will drop coverage and bear the risk themselves or get coverage through concierge or cash only practices, or retail outlets,  or treat themselves after scanning  the Internet cloud for the latest and greatest home remedies. 

Maybe the young and healthy will reverse course and enroll in health exchange plans , stopping the adverse insurance death spiral in its tracks.   

Maybe, just maybe, insurers will find a magic price at which customers can afford and at which insurers can make a profit.   God only knows, which will be which.  Government, insurers, and customers do not yet know the end of this bewhiching tale.   

Maybe is a  word of fate which conveys the thought that what will  come will come.

ObamaCare Narrative Gone Awry

The narrative, taken as a whole, may be unmeaning or untrue.

Francis Parkman (1823-1893), American historian

The ObamaCare narrative is clear -  standardize and homogenize  health care delivery across the country, while cutting costs by transferring risk from government to insurers, hospitals,  and physicians and shifting responsibility for caring for  growing Medicaid population to the states.

As outlined by Jeff Goldsmith and Bruce Henderson in a June 16 Health Care Blog, “All Risk Is Local,”  strategies for achieving this narrative include.

·          Making Fee-For-Service (FFS) disappear, thereby putting pay under federal control.

·          Replacing FFS with risk-based population health payments.

·         Forcing care systems to manage population health, often outside the wall of hospitals and physician offices.

·         Shifting from clinician-based “volume” based on FFS to data-controlled “value” systems.

·         Introducing health exchange plans to double or triple members on individual markets.

·         Creating Accountable Care Organizations (ACOs) to care for 70% of  Medicare’s 55 million enrollees., with hospitals and physicians  sharing the “savings” and absorbing the “risks” of non-performing ACOs.

·          Instituting a 40% Cadillac Tax on overly generous health plans and funneling enrollees into defining contribution plans.

·          Expanding  Medicaid  by 25% to one of 4 Americans and shifting responsibility for implementing the above strategies to the states to decrease FFS,  expand access,  manage and measure  population health,  and transfer care to medical homes,  ACOs,  and community health plans.

Failed Narrative

Well,  the narrative has gone awry.

Big Brother may think it knows best,  but at the local level,  insurers,  hospitals, and physician  are so far reluctant  to take the risks imposed upon them from above.    Insurers,  big (United, Humana and others), and small  federal  Co-Ops are pulling out of markets because of heavy insurer losses  and  CO-OP bankruptcies.   Only 8.8 million enrollees have paid exchange premiums vs projected 21 million. ACOs have enrolled only 8.3 million of Medicare’s 55 million beneficiaries and three-fourths of  32 of Pioneer ACOs have dropped out and a mere 40% of the 452 ACOs  have generated black ink for the government.    And  the vaunted “Cadillac Tax” has been postponed  by 2 years in a 90% bipartisan vote in Congress.

What’s Gone Wrong with the Narrative

What’s gone wrong?

Well,  local markets vary,  and care systems and state Medicaid programs  are unwilling or unable to take the risk of plunging  into untested federal risk waters. Predictable local markets are more powerful than imaged national megatrends.   Insurers and providers are unwilling to risk economic suicide  to please federal  ideologues.    Instead insurers and care systems,  to  satisfy investors and their missions of operating at a profit,  are seeking to managed clusters of people with common problems( (obesity,  diabetes,  mental health, and chemical dependency) one program at a time, and often in home settings.  Managing these problems outside the walls of hospitals and doctors’ offices in untested and costly untested  territory for providers and insurers, and they are understandably cautious.

Certain Things Are Obvious

 Medicaid is expanding at an unprecedented rate, and its fees are lower than either Medicare or private insurance.   Because of  the ObamaCare narrative and its underlying strategies,  Medicaid now has  70 million beneficiaries are growing fast.    It takes time and experience  for locals to advance the federal narrative  without going broke  and not meeting public expectations.    

Local payers and providers are watching  the federal narrative unfold  with guarded eyes, hoping for the best, fearing the worst.   In the interim,  the American public  at large,  especially the middle class in individual makets,, are seeing premiums and deductibles explode , and providers witnessing  federal reimbursement rates fall  for the 130 million not in Medicare and Medicaid programs,  are fearful  the federal narrative  will  narrow  individual choice,    and  regulate ,  standardize,  and homogenize  care, squelch innovation, and reduce their options  for providing quality care.

In Medicine, Politics Is All Local

All politics is  local.

Tip O’Neil (1912-1994), Democratic politician and Speaker of House of Representatives

I have spent much of my medical career trying to unify doctors and to get them to speak with one voice.    I have written 12 books on the subject, composed countless blogs,  spoken at many conferences,   tried to form organizations like the Integrated Health Organization , worked with the Physicians Foundation, brought my message to audiences in Minnesota, Oklahoma,  Connecticut,  and Boston – all to no avail. 

The problem?  Medicine is not perceived as a  national enterprise with a single voice.   The AMA has not done the job, perhaps because it  has tried to do too many things for too many people  and because  it has become an impenetrable and distrusted bureaucracy.    A new organization,  Unified Physicians and Surgeons,  is seeking to fill the void,  but it is too early to say if it will have any impact.

Why have doctors  failed to create a single unifying vision of the profession?  

There are many reasons. 

Here are a few of them.

·         By training and inclination . doctors are fiercely independent and prefer to be their own bosses free of outside influences.  In a business sense, we are our own worst enemies.

·          Most doctors are non-hierarchical .  Doctors  do not like structured organizations  with one leader calling the shots; they prefer doctor democracies with equal voices for all. 

·         Sad to say,  but doctors tend to be jealous of one another.  Perhaps this evolves from competition to get into medical school or into training programs or competition with each other. Quality to many is how I do things. Doctors do not reward their star performers.

·         Doctors have had little need to be unified.   They have done very well on their own – with incomes in the $200,000 to $400,000 range.

·         For the most part,  most doctors are not business or politically minded  on issues requiring organizational or management skills and self-sacrifice.

·         Doctors have  a latent  and deep distrust of government or large organization who  presume to manage  medical affairs from a distance.

·         Doctors have little training  or inclination to form overarching  management structures – with enough capital,  specialist resources,  and marketing reach – to get the job done.

Organizing doctors  and beseeching them to act in an organized  way, to use that tired cliché,   is like herding cats.  Cats are fiercely independent, even to their owners,  except when the cats  are being fed and petted by owners  and are being protected from competitive predators.

There are exceptions, of course -  the Mayo Clinic,  Kaiser,  Geisinger,  the Cleveland Clinic,  other large group practices,  big  academic centers, and affiliated medical-academic complexes like the Harvard complex  of hospitals and groups – that have able to unify doctors within their walls or jurisdictions.

Each region of the country  has its characteristics – the Minnesota and West Coast formation of huge group practices and integrated hospital systems,    Oklahoma City’s free-standing surgical center  manned by 40 surgeons  offering bundled services for cash,   and the New England tendency to be dominated by large integrated hospital systems featuring salaried physicians.

But,  by and large,  medicine  has not gone national, nor does it have a national vision across primary care and specialties.  That remains a local or regional matter.  Outside of national clinical laboratory companies,   we have few national   medical franchises,  national  physician companies offering specific products or procedures,   national corporations led by multimillion dollar CEOs.

Doctors perceive medicine as a profession, not a business. A profession, by definition, is an occupation requiring extensive education in a branch of science or the liberal arts and designed for service to the public. It does not require education in business or politics.

No Absolute  Truths

No part of the political spectrum has a monopoly on truth.

Max Boot,   “The Long War:  To Stop Future Attacks, Wall Street Journal, June 18-19, 2016)

A June 14-15 Gallup polls reveals the following:

U.A. Adults, Republicans, Independents, Democrats

             Causes of Orlando Tragedy:  ISIS or Gun Violence

             U.S. Adults   GOP      Independents  Democrats

ISIS             48%            79%                 44%                 29%

Guns           41%           16%                 42%                 60%

Both              6%             1%                   9%                   7%

The results could not be more stark.   Republicans and Democrats could not be more divided on the root causes of the Orlando massacre. 

And our political leaders – Barack Obama, Hillary Clinton, and Donald Trump,  could not be more wrong. “We Need Solutions from All Sides: Better Security and Surveillance at Home, a Vigorous Fight Abroad, and the Support of Muslim Moderates Everywhere.” 

A similar divide, less stark, applies to health care , Republicans favoring repeal of ObamaCare and less government intervention,   Democrats leading towards expansion of ObamaCare  and more government regulations, and Independents somewhere in the middle.

Truth be known, we need solutions  from all sides:   a  more efficient federal bureaucracy  will less emphasis on intervention  into doctor-patient relations,   a wiser widening of the social  safety net  where feasible,    and support of moderate Americans  for solutions  that do not threaten the individual liberties  or choice of doctors and health plans.

  

Those Unstable Health Exchanges

Nothing is so weak and unstable as a reputation for power not based on force.

Tacitus (66-120AD),Annals XIX

I  was reviewing the health care news for the day, and I ran across these two articles that  reinforced my impression that the government is not as powerful or stable as it seems when it comes ObamaCare. 

 I shall quote now quote the start of the two news pieces. .

One,  “As Premium Spikes Loom, White House To Dole Out $22M For States To Keep Insurers In Check”

Kaiser Health News, June 15, 2016

“The grants may inflame an already tense relationship with insurers, who say they've had a tough year on the ObamaCare marketplace. Meanwhile, the long-awaited Republican plan to replace the health law will lack concrete financial details, aides and lobbyists say.”

The Hill: White House Urges States To Resist ObamaCare Hike

“The White House is urging states to be more aggressive against health insurance companies as it looks to prevent expected and widespread premium hikes of 10 percent or more this year. The federal health department announced Wednesday that it will dole out about $22 million to boost state-level "rate reviews," considered one of the strongest weapons against premium increases. Under the system, health insurers are required to justify rate increases to state insurance departments, some of which have the power to reject “unreasonable” increases. With the new funding, federal health officials hope states can hire outside insurance experts to dig deeper into the proposed rates and prove the hikes are unjustified. “

From this quote,  it is clear the White House possesses  limited  power to keep premiums from soaring  and must rely in state health insurers to hold the line.    This is important because the hikes will be announced the week before the election.   Huge hikes could jeopardize Democratic chances.

Two.     Vann Newkirk II, “The Less Affordable Care Act,”  Atlantic, June 15, 2016

“ The Affordable Care Act in providing insurance coverage to the vast majority of Americans also underlines one of its core failures: That coverage remains unaffordable for many of those who don’t have employer or public insurance.”

“While a record number of people—around nine in 10 Americans—now have insurance, private insurers on ObamaCare exchanges have signaled to the federal government their intent to increase premiums by double-digit percentages this fall. Some insurers active on the exchanges have gone out of business entirely, and many have lost millions of dollars. As the fall looms, some enrollees might be facing as much as 50 percent increases on premiums. Whether or not the Affordable Care Act can live up to its name is a bit of an open question.”

“On the one hand, despite the ominous news from insurers, everything could still be going according to plan. Supporters of the ACA knew that it would shake up insurance markets in rather unpredictable ways. Specifically, opening up plans to direct competition via ObamaCare exchanges was likely to force some insurers out of the market; larger insurers that could afford losses would be tempted to accept them to provide artificially low costs to squeeze out competitors. Some major insurers that have left the exchange markets, such as UnitedHealth, either entered them late or did not adapt to the profile of exchange beneficiaries, which saddled them with sicker, costlier patients to cover.”

Where’s ObamaCare going,  and who can afford it?  As things stand now,  health exchange markets are unstable, insurers are edgy, many are leaving the market,  not-for-profit government-supported insurers are going bankrupt,  only about 25% of doctors are accepting exchange plans,  young people are not signing up in requisite numbers to stabilize the market,   and many people in individual markets will soon be unable to afford the affordable care act, with its  skyrocketing  premiums, deductibles,  co-pays,  and out-of-pocket costs.

 

Political Correctness and Political Incorrectness,  Updated

Political correctness is telling people what you think they want to hear in an ideal world.  Political incorrectness is telling people what they are reluctant to believe in the real world.

What follows are 6 examples of  political correctness vs. political incorrectness.

One

·         The Republican party is the real  enemy and is blocking progress towards solving the world’s problems because of its intransigent opposition  to present Obama and future Clinton-inspired solutions.

·         The enemy is not the Republican party, but federal regulations slowing the economy to a crawl,  failure  of effective international and domestic security measures,   and out-of-control health care costs. 

Two

·          Ineffective and inadequate gun control laws are the root cause of terrorist-related incidents. 

·         None of the highly publicized incidents – in Chicago, at Stony Brook,  Fort Hood,  San Bernadino, or Orlando – would have been prevented by strict gun control laws, except, perhaps, by a ban on assault weapons. 

Three

·         Thanks to Obama policies,   ISIS is in retreat around the world. What is needed is patience with the current approach – killing ISIS leaders with drones,  economic sanctions, periodic air strikes avoiding collateral damage to civilians, and avoiding U.S. troops on the ground.

·          John Brennan, head of the CIA,   says  ISIS is on the rise and is rapidly metastasizing outside of  its Middle Eastern and North African bases.   We need to tear out ISIL at its roots;  send in U.S. ground troops in concert with allied troops,  to do the job;  identify ISIL by its name “extreme Islamic terrorists”; and  either stop,  arrest,  and put ISIL-inspired dissidents under close surveillance. 

Four

·         Assiduous application of ObamaCare policies will ultimately increase quality,  lower costs, and expand access for all.

·         Thus far,  over six years into ObamaCare,  the health law has not increased quality, lowered costs,  or expanded overall access for the middle class, indeed, the opposite is true.

Five

·          Federal regulation, and impugning the motives of the medical industrial complex and  physicians,  will achieve its aim of improving  U.S. health system outcomes. 

·          To date,  CMS initiatives and regulations,  have not lowered costs or improved performance of Accountable Care Organizations or of primary care physicians, or increased  satisfaction of health care consumers ( “Early Performance of Accountable Care Organizations in Medicare,” “Two-Year Costs and Quality in the Comprehensive Primary Care Initiative,” NEJM, June 16, 2016).

Six

·         Sooner or later,  physicians and the American public will recognize the wisdom and effectiveness of federal intervention  into the health care system. 

·         Maybe, but we’re not there yet.   Other than a few groups, like  the 2000 members Physicians for National Health Care,  60% of physicians in national surveys are pessimistic about benefits of top-down government intervention.  So too, is the public at large, with more than 50% showing disapproval of ObamaCare.

Seven

·         The phrase “extreme Islamic terrorism” should never be used because it besmirches the entire Islamic religion and all Muslim.

·         The phrase “extreme Islamic terrorism” is  useful because it specifically identifies the enemy of Western civilization and clarifies what must be dome to defeat Islamic extremists, who are a tiny minority of all Muslims.

Eight

·         “Islamophobia” and “homophobia” are incendiary, hateful, linked hate words that express an  underlying attitude of American culture.

 

·         There is little evidence that Americans systematically hate its 3.3 million Muslim citizens or deprive members of the Lesbian, Gay, Bisexual,  Transgender community of their rights.
 

Nine

·         The New York Times  has accused Republicans of corrosive politics  that contributed to the Orlando tragedy and of the “complicity” and “exploiting of prejudices”  by  the NRA and by implication  Donald Trump in shaping the mindset of the Orlando assassin.

·         The Orlando tragedy is not the fault of any particular political party.  There is plenty of blame to go around, but most of it should be directed at ISIS,  and its policies of punishing the infidels and non-believers in Shiaria Law, not at a political party. 

Ten

·         The principle problem making the Orlando massacre possible was the availability of assault weapons and the failure of sufficient background checks to identify potential killers.  The killers at Sandy Hook and Savannah were, after all, not Muslims, but mentally unstable white men.

·         ISIS propaganda inspires lone-wolf martyrs to kill infidels.  Most Muslims are law-abiding citizens,  but unfortunately  recent mass killers – in Chattanooga,  Fort Hood,  San Bernadino, and Oregon – have been radical Islam extremists who have passed background checks and legally purchased guns.  Stricter  gun control  will  help, particularly banning assault weapon,s  but so would surveillance of mosques, stricter vetting of  Muslin immigrants,  and allowing the FBI and other law agencies to be less political correct in questioning and retaining suspicious Muslims.

Conclusion

When pondering the  performance and effectiveness of the Obama administration  and Republicans,  look not at the good intentions but at the tangible results.   In the words of Groucho Marx, who after catching his wife in bed with another man,  denied  anything was going on and asked  his wife, “Who are you going to trust,  me or your lying eyes?”