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Obamacare: ‘Train Wreck’ In Ohio

Posted by Larry Doyle on June 11, 2013 1:12 PM |

Your healthcare premiums were going to go down under Obamacare, right? Not so fast.

The benefits will far outweigh the costs, correct? Well, let’s navigate to America’s heartland and pose that question to the citizens of Ohio who will be picking up the tab. Might some — perhaps many — individuals who delivered the state for the President care to reconsider?

Recent news emanating from the Buckeye state would seem to indicate that when it comes to healthcare, the only thing that will be declining are the savings accounts of a lot of individuals.

If evidence from Ohio is indicative of what is likely to transpire throughout the nation, then the Obamacare ‘train wreck’ (the words of Senator Max Baucus, D-Mont) will be unrivaled in terms of Uncle Sam’s facilitation of many individuals getting fleeced like never before. Am I overreacting?

Are you sitting down?

Avik Roy of Forbes holds nothing back in exposing and excoriating the administration and supporters as he writes, Obamacare To Increase Individual-Market Health Premiums by 88%:

Democrats continue to try to dismiss the evidence that Obamacare will dramatically increase the cost of insurance for people who buy it on their own. But on Thursday, the Ohio Department of Insurance announced that, based on the rates submitted by insurers to date, the average individual-market health insurance premium represents an increase of 88 percent relative to 2013.

“We have warned of these increases,” said Lt. Gov. Mary Taylor in a statement. “Consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014.”

It’s called “rate shock,” . . .

Is that what it is called? I can think of a whole host of other phrases to define this “tax” being imposed upon those who purchase individual health care policies. One widely followed commentator defined it as “insurance rate rape.”

Some people have the impression that the main reason that rates are going up under Obamacare is because of the law’s requirement that insurers cover people with pre-existing conditions. But that accounts for only a fraction—around a quarter—of the rate hike.

The rest comes from all the other things that Obamacare does, such as forcing people to buy richer insurance benefits; to buy products with all sorts of add-ons they might not need; to pay Obamacare’s premium tax; and to pay a lot more, if they’re young, to subsidize older individuals.

That perpetual screeching sound you hear? Those are the brakes being applied to our national economy. When the reality of these premium increases go into effect, the brakes will be even more fully pressed to the floor. Were we lied to as Obamacare was pitched to the American public? Roy would maintain we were:

But the bottom line is this: President Obama and then-House Speaker Nancy Pelosi promised that premiums would go down for those who already have insurance. And yes, for those lower-income folks who benefit from the subsidies provided by other taxpayers, the costs they see may go down. But middle-class Ohioans will pay more in taxes to pay for those subsidies, and more in premiums.

Aside from the economy continuing to lag due to Obamacare, what else is going to get hit? Mark my words, watch charitable giving drop like a rock as many individuals determine that money that would or may have been given to a wide array of worthy causes is now directed to Obamacare.

The great law of unintended consequences knows no bounds.

Navigate accordingly.

Thank you to the regular reader who brought this story to my attention.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • SBD

    No Larry, you are not overreacting. That’s nearly impossible with ObamaCare.

    ObamaCare is a Calamity. And what amazing hubris for Obama & Pelosi to ‘promise’ that premiums will go down; especially in light of the Comedy of Lies this administration has become!

    I am always skeptical of projections that go beyond 6-12 months, especially for a plan with so many built-in, unprecedented changes to healthcare and society at large.

    The significant “individual mandate” (beginning in 2014) is certainly too far off. It will take at least until early 2015 to assess compliance with the mandate, and longer to harness reliable claims data as well as what particular mix of cost/benefits will produce the best/worst case scenario.

    There are those who predict or hope that the “law of large numbers” could add stability in-and-of itself. But my prediction is that it won’t play out the way many people believe because, unfortunately, the entire country is not being put into one large pool (or two-five pools). There will be many insurers, many plans and, naturally, the insurance death spiral will set in (elderly and infirm will cling to their premium benefits when premiums skyrocket….).

    It is not easy to tally the preexisting conditions part of the equation, as this cost often enters healthcare by way of un-reimbursed hospital admissions and other indirect routes. I would be too scared myself to state my prediction for a full 1/4th of premium increase assumptions.

    With respect to Milliman, predicting 55% – 85% seems to be a fairly wide margin. Or, at least, far from miraculous. The firm posits one of the two “biggest drivers” to be risk pool composition- “forcing” the healthy to subsidize the sick, etc. By definition, this is the principle of insurance. I do not see the logic in the excerpt/link to Forbes. Perhaps their full report fills in the logical aspect.

  • Dennis

    Hey Larry–

    Thanks for trying to “navigate” this issue. It’s very frustrating trying to reach a conclusion on whether or not Obamacare is good or bad for this country. Just the other day, I came across some article about how the plan was working out fine in California.

    Let me and everybody else know when you find an article with “experts” on both sides duking it out and responding the each other’s set of “facts.”

    In theory, it seems that “free market capitalism” would work to reduce premiums by permitting all health care companies to compete in all states. Yet, without government regulation, you’ll just have those companies competing over the best risks with the bad risks being ignored and/or gouged.

    I hope that you’re on board with the concept that the young and healthy have to participate. Like with all insurance, the ones who don’t use it “subsidize” the others. Yet, you never know when you’ll need it–young or old.

    And if you’re familiar with the “Jack Ass” culture on YouTube, you will know that hospitalization for the young is not so unlikely . . .

    An Honest Assessment of Obamacare at Age 3

    • LD

      Dennis,

      Thanks you for sharing this comment and the article.

      What particularly irks me is that the debate on healthcare was not one in which info was neither fully explored nor disseminated.

      Perhaps Obama and team knew that the fight would be difficult enough without adding that fuel to the fire but I think the process was a failed one.

      • Dennis

        Perhaps you’ve already covered this in one of your commentaries, or can direct me to a source, but what exactly are the examples of info from Obama being “neither fully explored nor disseminated” in the healthcare debate?

        I’m willing to be educated on this, but as I followed the road to passage of the bill, I saw so much opposition to it, that it seems highly unlikely that it could have passed if the multiple objections from multiple sources had not been addressed adequately.

        • LD

          Dennis,

          I heard little to nothing about a detailed delineation as to the projected costs and increased premiums along the lines of what is now being projected in Ohio and elsewhere.

          • Dennis

            Larry–

            But how can anybody–Obama people or otherwise–provide “detailed delineation as to the projected costs and increased premiums”? Surely you’ve seen “projected costs” about all kinds of programs and projects. When have they ever been accurate?

            You’ve heard of the Boston Dig fiasco. And that tunnel that Christie vetoed because of cost overruns. One exception that I can recall was the highway improvement at the Route 17 and Route 4 intersection a few years ago. If I recall correctly, it was done on time and within projected budget.

            And as the article mentions, “increased premiums” is not a valid criticism because the care will be better. Remember, all those people with pre-existing conditions (surely you know some) will be able to get affordable coverage. Isn’t that “bang for the buck”?

    • SBD

      I don’t see how Obama’s selling out to the insurance lobby is an example of introducing an additional element of “free market capitalism.”

      Compelling young, healthy underemployed PhD’s with a mountain of college debt and working-poor families to spend their modest disposable incomes on health plans that won’t necessarily protect them in the event of a major health calamity doesn’t fit my vision of capitalistic bliss.

      Will Obamacare put an end to medical bankruptcies amongst the so-called working poor (who go bankrupt even with health coverage)? Put an end to insurance “death spirals?”

      On the topic of implementation: Studies are well-underway to forecast the percentages of non-compliance with the coverage mandate, broken down by various social, cultural and other demographic data. Also, a big chunk (many millions) of what politicians refer to as the 30, 40 or 50 million uninsureds consists of people who are eligible for free care but don’t ‘get around’ to enrolling (perhaps they’re young and healthy)?

      In summary, Obamacare consists of countless unknowns and “leaps of faith.” A very risky gamble.

  • LD

    Dennis,

    I guess this all falls into the realm of just how effective and efficient can Uncle Sam be in almost anything which he undertakes. Having seen all too much cronyism and corruption within the financial regulatory world and knowing that fraud is rampant within Medicare I shudder to think that Obamacare will not take these failures, shortcomings, costs, (call them what you want) literally off the charts and that the total costs will far outweigh the benefits.

    There has to be a better way. If you can guarantee me that the cronyism, paybacks, kickbacks, and other forms of corruption are eliminated, then I am on board.

    Deal?

  • Dennis

    Larry–

    I am hoping that we agree that universal health care is a good thing for America.

    If so, to whom do you entrust this massive program: the government or the private sector? Neither is lacking in “cronyism and corruption.”

    It wasn’t the private sector that cleaned itself up so that the air and water we have now is cleaner than that of decades ago when we had fewer people and fewer vehicles. It was the government that made that happen.

    What recipient is complaining about the Social Security Retirement System that provides a safety net? Again, thank you Government.

    And who built those spacious highways up and down this country with the big blue signs? Thank you, Uncle Sam.

    I pay attention sometimes. Did I miss the private sector moon landing?

    In short, the government has succeeded with programs of massive scale.

    Is it so out of the question that we give the government a chance to do universal health care?

    Do you really believe that the governments of all those European countries who provide universal health care without flushing themselves down the “loo” are all more competent than our government?

    Indeed, are there some programs that are TOO important to be left to the profit-making imperative of the private sector?

    And, indeed, even if this country takes a financial loss (which is very much in debate) , isn’t that worth it to have a healthier population?

    Health IS wealth.

    • LD

      Dennis,

      You make some good points. Thank you.

      Where do we see a lot of the cronyism and corruption?

      From 4 industry groups: finance, health, oil, military.

      How about we implement the public financing of campaigns so we eradicate the big money out of that process and our public officials can try to serve the public interest rather than the large special interests within those industry groups that buy the legislation that lines their pockets while driving up the costs for everybody else and especially those who pay taxes.

      • Dennis

        Larry–

        Public financing? I’m with you.

        Democracy is messy. As Churchill said, “It’s the worst form of government, except for the others that have been tried.”

        Reducing the effect that money has on elections would be a helpful tweak to the system.

        Keep up the good work,

  • LD

    “The hardest question is will it be a good deal and will consumers be able to afford it,” said Marian Mulkey, director of the health reform initiative at the California Healthcare Foundation. “The jury is still out. It depends on their circumstances.”

    Obamacare: Is a $2,000 Deductible Affordable?

    • Small BD

      Affordability? Not that anyone asked, but I would say that any financial planner who does not include mitigating the cost of health & custodial care (beyond the wobbly long-term care insurance market) as a major component of retirement / emergency planning could justifiably be called negligent.

      Eventually, the only reasonable choice will be government takeover of healthcare. But the focus now is scatter-brained, and we are not preparing the infrastructure necessary for handling such a “Universal” system.

      But what about non-medical long-term care? Do we wait for Obamacare part II? Why are the alarm bells silent on this?

      • Small BD

        I know several people in the non-profit world who would be hard-pressed to scrape up that $2,000 deductible. Here in NYC (Chelsea, Soho, etc.) hoards of youngsters are committing themselves to a lifetime of poverty (relative to local cost of living). I have worked with these small non-profits (artists, healthcare advocates) and know that their career cap will be maybe $40,000. Many are below that.

  • James

    Nervous OFA Goes on Offense Over Obamacare

    Organizing for Action (OFA), the shadowy nonprofit activist group that evolved from the president’s campaign, is stepping up its defense of his controversial health care law, signaling to some that the group is increasingly worried about a political backlash against the law.

    OFA announced a seven-figure ad buy on Monday for a 30-second spot touting the law’s supposed benefits. It also rolled out an activist program called “Team Obamacare” to “stand up to the conservative attacks, and tell the story of how Obamacare is working.”

    The effort comes in the midst of news that Obamacare, as the Affordable Care Act is commonly known, will significantly raise insurance premiums in some states, and may increase rates for many hourly wage-earners.

    Implementation of the law has proved a headache for the administration. Even some of the law’s most strident supporters have said that it is “just beyond comprehension” and could be a “train wreck” if it is not implemented correctly.

    Problems with implementation and the law’s apparent failure to bring down insurance premiums, as its supporters routinely said it would, have Republicans convinced that their opposition to the law will be a political winner in next year’s midterm elections.

    Experts say OFA’s aggressive attempt to defend the law is a tacit recognition of its political pitfalls.

    Ben Domenech, a health care policy expert with the Heartland Institute, noted that recent polls show the law is more unpopular than it has ever been.

    “OFA is nervous about more than just the poll numbers,” Domenech added in an email to the Washington Free Beacon. “They need to convince enough young and healthy people to purchase insurance, or more expensive insurance, in the coming months in order to offset the premium rate spikes actuaries anticipate.”

    The law prohibits insurance companies from taking customers’ health history into account when setting insurance rates. It depends on an influx of younger, healthier insurance customers in order to offset the increased cost of insuring the less healthy.

    “With the public largely disengaged from the law’s new realities, the first year of implementation could prove particularly awful if the sick sign up and the young and healthy don’t,” Domenech said.

    The administration’s push to get people to sign up for health insurance has already sparked allegations by some lawmakers of official wrongdoing.

    Health and Human Services Secretary Kathleen Sebelius recently pressured major health insurers to donate to a nonprofit group with deep ties to the administration that is working to support Obamacare by signing people up for health insurance.

    Republicans see Sebelius’ activity as scandalous.

    “It fits into that narrative Republicans are building not only about incompetence in the executive branch but also dishonesty,” GOP strategist Matt Mackowiak told Newsmax.

    “This is a good issue for Republicans,” Mackowiak said. “We want to maximize it.”

    OFA’s push appears to be an attempt to reverse that trend and help Democrats reclaim the health care issue ahead of the 2014 midterm elections. The group did not respond to a request for comment.

    “OFA’s propaganda campaign might move the needle slightly, but it’s more likely that they’re preaching to the dedicated minority of Americans who already thought Obamacare was great,” Domenech said.

    “But they’ve got to try something,” he added, “because their argument that people need to buy more insurance than they need for a higher price than they ought to pay just for the sake of the public good isn’t very convincing.”






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