Affordable Care Act Potholes

aca_flagNew Orleans        Some twelve million people may have enrolled under the Affordable Care Act, but that doesn’t mean that Obamacare can catch a break.  Everywhere we turn there seems to be more potholes on the road.

Of course there’s the decision due in June by the Supreme Court on whether or not subsidies can be offered to the poor to enroll in the states where the federal government runs the marketplace.  Worse, dozens of current and former Congressman basically are saying that the four words that are in contention in this challenge were basically a “whoops, my bad” drafting mistake that was never part of debate or deliberation, but always assumed a “no brainer.”  Unfortunately that could still be enough to eviscerate health care coverage for lower income families in many states.

Now new studies and data are also pointing out the obvious problem with tax penalties not being effective in forcing enrollment when they come many months in the spring when taxes are due and long after the enrollment window has closed to gain coverage under the Act.  Interestingly, the lower income families seem more responsive to the penalties than those with more income hinting that the penalties might even be too low.

But, even past these almost technical problems, the concern we have often expressed that too much of the employer and marketplace coverage is simply too thin to cover the care is also becoming more obvious.   Too many people are woefully under-insured.

New estimates from the Commonwealth Fund Biennial Health Insurance Survey for 2014 found that 23 percent of 19 to 64 year-old adults who were insured all year – some 31 million people – had such high out-of-pocket costs or deductibles compared to their incomes that they were technically almost uninsured.  11 percent of privately insured adults had deductibles of $3000 or more in 2014, making any health insurance they might have, catastrophic at best.   The inability to limit deductibles is a huge crisis for lower income workers and their families with these low rider policies.

Normally, we could expect that what is broken could be fixed, but given the political season and the whooping and hollering that continues to be embedded in Congress in the far right efforts to deny healthcare to millions, there seem to be too many holes and not enough shovels.


Go Ahead And Die! (Pirates Of The Health Care-ibean)  Music by Austin Lounge Lizards

Narrow Networks Prove Price, not Choice, Rules Healthcare Decisions

WebNew Orleans          It’s becoming increasingly obvious that deep down without being willing to admit it, Americans are voting with their feet on the issue of health care and the tally is showing that their real preference would probably be the British National Health Service.  Now, there’s no likelihood of that happening of course but narrow and ultra-narrow networks are mimicking something very similar to that with the lowest price trumping choice at every turn.

In the marketplace offerings provided by the Affordable Care Act for 2014 almost half of the public exchange insurance selections were so-called narrow network options and 20% were ultra-narrow networks.   Narrow networks limit the insured consumer’s choice of hospitals and doctors within the network for their healthcare needs.  An ultra-narrow network provides even more stringent limits.   Of course seeking healthcare outside of that network is going to be more expensive so issues of transparency are central, but the ability of insurers to negotiate better pricing plans through narrowing in exchange for promising more volume of patients is working for both consumers and hospitals.

The McKinsey Center for Health Options quoted in the New York Times:

…found that 70 percent of the lowest-priced plans for 2015 were based on narrow networks of hospitals. They also had much lower rate increases in 2015, with a median increase of 4 percent, about half as much as broader plans.

McKinsey defines a narrow network as being composed of 31 to 70% of the hospitals in a geographical area and an ultra-narrow network as including 30% or fewer hospitals in an area.  Nearing 40% of consumers are choosing these plans and the industry is reporting only about 5% turnover between 2013 and 2014 choices, so that’s what they’re saying and they’re sticking to it.

It seems that consumers are saying two things.  First, that some health care is better than no health care, and, secondly, that the cheaper they can purchase adequate health care, the more that will drive their choices.

The industry would have us believe that this is a hand-clap for the general quality of health care in the United States, and perhaps this is one-hand clapping.  The industry’s earlier harangue about choice, echoed by many conservative politicians, seems on its way to being disproved on several counts. At one level when cost is driving the decisions there are no Marcus Welby’s and young Dr.Kildaires out there; it’s all about the money.  The same can be said about all of the super low end cheapo insurance policies that offered virtually no coverage and then would parade out consumers claiming they loved these worthless products; it’s all about the money.

Americans, like everyone, want to live without fear of dying, and that means believing they can go to a hospital when they feel sick.  In these days where it’s all about the money, they are going to increasingly look for the lowest cost for that simple guarantee, especially now that some kind of choice is mandatory.  In the meantime as the conservatives continue to rail about Obamacare, don’t let Americans know that in places like the United Kingdom and many other countries they can go to hospitals, regardless of income, and get quality care for free, or they might vote for that as well, if they were ever afforded the choice.


Begging for Change–Healthcare Blues

Uneven Results in North Carolina Indicate that New Nonprofit Hospital Rule Might Work

316261297889322-xlNew Orleans   A combination of factors has curbed some, but not all, of the appetite for nonprofit hospitals’ frenzy of legal actions against lower income families in North Carolina, giving hope that the new Affordable Care Act restrictions against draconian collection practices might actually be effective.

We have been following closely whether or not nonprofit hospitals are modifying their behavior around the country in the wake of the final IRS and Department of Treasury rules that will require them to be much more effective in allowing lower income families to access charity care at the peril of their own tax exemptions.  Much of what we have seen while examining IRS form 990s, which the hospitals are required to file annually with the IRS, has not been encouraging given that all of these institutions have known this was coming since 2010 when Obamacare became law.  The leisurely four years until the rules became finalized at the end of 2014 should have allowed mountains to be moved in normal behavior and now that we are entering the penalty phase, the battle lines are being formed.

North Carolina may become one of the more interesting ones.  The passage of the Act and its amendments involving charity care prompted an investigation in 2012 by the states big newspapers, including the Charlotte Observer, in the biggest city uncovered 40,000 lawsuits that the state’s nonprofit hospital has filed to collect debts.  The headlines led to a happy confluence of forces with the legislature passing a law restricting emergency collection practices much like the language in the federal statute.   An updated review of the court records by the newspapers indicates that some hospitals have attempted to comply, others are scofflaws, and some cleaned up their act completely.  On the whole that’s good news and a potential harbinger of good things to come for the rest of the country as well.

A recent story by Ames Anderson and David Raynor in the Charlotte Observer,

…found that lawsuits by the state’s hospitals dropped by more than 45 percent from 2010 through 2014 – from about 6,000 to 3,200. At Carolinas HealthCare System, the state’s largest hospital system, the drop has been even sharper. The Charlotte-based hospital system filed about 1,400 lawsuits against patients last year – roughly half the number it filed in 2010.  One hospital, Iredell Memorial in Statesville, has stopped filing lawsuits against patients. In 2013, it was one of the state’s most litigious hospitals, filing about 270 bill-collection lawsuits. Last year, it filed none.   Lawsuits have also slowed to a trickle at two other hospitals: High Point Regional Hospital, which has recently joined UNC Health Care, and Lexington Medical Center, owned by Wake Forest Baptist Health.

More than 3000 cases is still a lot, and 1400 in one year from the Carolinas HealthCare System is outrageous, but progress is progress, and now with a powerful stick coming into the hand of advocates and organizations in North Carolina that could threaten and remove the hospitals’ tax exempt status, we might see more hospitals devoting themselves to their nonprofit mission like Iredell Memorial.

This is clearly a fight, but seems increasingly like one that we can win.


Please enjoy Hurricane by Blues Traveler, Thanks to KABF.

Affordable Care Act Backwash

k10329New Orleans         Talking to Professor Adam Seth Levine of Cornell University on Wade’s World  about his new book, American Insecurity:  Why Our Economic Fears Lead to Inaction, about how our political and organizational communication can subvert our own message or “self-undermining rhetoric” in his words, I asked him for his opinion about how the Administration “sold” the Affordable Care Act in the first enrollment period.  Specifically, I was curious if he had paid any attention to the early avoidance of any discussion of penalties and their last minute shift of emphasis on the same issue to incentivize enrollment.  Professor Levine was careful in his response, since one of the groups where he surveyed message reactions was HCAN, Health Care for America Now, an advocacy supporter of Obamacare’s passage that included ACORN in many states.  Careful, but not conclusive, although increasingly the backwash on enrollment, including the impact of the penalties, income estimates, and overall individual costs, are becoming a major part of the story.

The Wall Street Journal relied on a survey by McKinsey & Company indicating that “12% of uninsured people would buy policies if informed of the penalty” though, although there seems to have been no question that asked how many that had signed up did so because of the penalty or a way to separate the twin programmatic dynamic between mandatory and penalty.   The same survey also found that 41% were “unaware of the penalty.”  Many opted to pay the penalty for the first year of $95 or 1% whichever is higher largely based on their own personal cost-benefit analysis.  31% didn’t believe they needed health insurance and embraced the penalty as a savings.  26% believed they needed insurance but couldn’t afford it and went with the penalty.   The Obama Administration has extended signup periods until April 15th, tax day, since the penalties are deducted from tax refunds.  An observer commented that the extension was “good PR,” but the inaction on signups might indicate that their ambivalence about banging on the penalties may involve Levine’s “self-undermining rhetoric.”

H&R Block found through February that half of its clients who had subsidies because of their income are having to repay some of their subsidy through their tax refunds, which isn’t as painful, but still stings. Block claims that more than half of its customers underestimated their income, leading to a higher frontend subsidy causing an average $530 in reduced returns or 17% by their numbers.   This was still a smart way for the Administration to handle this collection problem though, since as Block, Jackson & Hewitt, Liberty, and countless tax preparers could have told the government from their experience with predatory pricing on refund anticipation products, people are more forgiving about losing money before it gets in their hot hands.

The penalties will get higher in coming years, so we need more information, messaging, and more effective outreach that drives people into insurance, but the rub will continue to be the costs and the fact that there are no limits to the deductibles for qualified plans.  Congressman Paul Ryan and a host of Republicans are trying to come up with so-called alternatives, but most of them focus on bringing the zombie policies back to life with lower-cost, limited-coverage plans that are virtually worthless. Consumers are looking at the monthly costs along with $5000 and $6000 deductibles and too many of them, pressed for money, are concluding that if they can walk and talk still, they are better off saving the money now. Unless costs are addressed more aggressively and deductibles and copays are capped, as they are in Massachusetts, rising penalties will build a political base for worthless plans that only have value at best for catastrophic health crises, not for better health for all our people.



The Fight over Hours is a Surprising Conservative Endorsement of Obamacare

ObamacareEnrollmentCenterNew Orleans            Since the Republicans cannot realistically repeal the Affordable Care Act, one of the long predicted and now emerging fights in the new Republican Congress is over the definition of hours as a way to dilute the employer mandate to provide coverage.  Currently under Obamacare anything over 30 hours per week requires coverage and essentially defines full-time work.  Trial balloons have been floating over the Capitol since the November midterm ass whipping of the Democrats that the first shots would be aimed at pushing the definition of mandatory coverage up to 40 hours.

Now reports from Washington indicate there’s trouble in conservative paradise.  It now seems that some of both the young and old lions of the right writing in their bellwether journal, the National Review, are raising warning flags that moving to 40 hours from 30 could be a disaster.

And, this is where the precious irony arises.  The political and economic disaster predicted by some of the conservatives is that a 40 hour standard would make it too easy for employers to redefine hours at 39 or anything less than 40 and push millions off of employer provided coverage, the vast majority of whom have it now.  And, here’s the pleasure of the paradox, because that would mean these same workers, would find themselves pushed to the Obamacare marketplaces.  The Congressional Budget Office says such a move would add almost $74 billion to the federal deficit.

So, if forced by the Republicans into Obamacare, an indirect and previously unanticipated consequence of this hours fight is that the Republicans themselves would have implicitly just further increased the support for Obamacare, because these workers, having had insurance, would be thankful of having something, and ticked off at the Republicans for having upset their lives and health security.  No, duh!

I’m not saying the mega-domes of the right have conceded that or fully grasped these implications, but the beginning of the rift between the ideologues and the real policy people among the conservative wing, that is slowing down the train before it runs over the Republican future dead ahead on the tracks, means that full recognition of the impact can’t be far away from them now.  Some of them will realize sooner or later that it’s one thing to mess with a bunch of low waged workers trying to make it on less than 30 hours with Obamacare, but it’s a whole different problem at the heart of what’s still out there in the white, working-class conservative base for the Republicans, particularly in the South and Midwest, if the elephant people make millions ride the donkey’s health insurance program, bruised and battered as it already is.

They may be controlling Congress now, but they are about to wake up to the reality of America, and it’s not the spitball fight they have been having for the last six years where the only consequences are a yelling press conference.  They mess this up and they will be detained in study hall for a long time, looking at the White House from the classroom window.

Losing Money on the Obamacare Rollover

obamacare-reenrollingWaveland     The window opened on the Affordable Care Act for changes in policies and closed again after a short month. The reports from CMS indicate that some 9 million or so either renewed by their own volition or automatically rolled over their renewal with their existing carriers in mid-December. This is good news, but there are some clouds around this silver lining that are worth tying a reminder around the toe of new enrollees and everyone renewing next year. Bottom line: you may be spending money you don’t need to spend by not shopping on the marketplace to see if better deals have emerged for your health insurance.

James Surowiecki, the financial columnist for The New Yorker, called this the “inertia” factor, just letting the plan rollover for another year because it is such a hassle to go back on the website, reconcile your doctors to the plans, and navigate the myriad twists and turns of these policies. Throughout the year, we’ve referred to this as a consequence of “choice architecture,” providing the semblance of choices and the attraction of going with the default.

The record is clear about the lure of such automatic responses. Surowiecki cites the experience of both the Netherlands and Switzerland. In the Netherlands after managed competition was introduced for health insurers in 2006, “almost twenty per cent of the insured switched after a year. But by 2012, less than four per cent did.” Same-same for Switzerland where research has found the “average switch rate between 1997 and 2007 was three per cent.”

The price of inaction is severe in the early years of Obamacare because new companies are entering the marketplace who had watched and waited during the first year in 2014. Many of them are coming in with cheaper and more attractive benefits in order to catch up and gain a toehold in the healthcare market, and this includes both new players as well as historically big dogs in the business. On the other side of the coin, some of the players from the first year are jumping up the rates and counting on the fact that their new clients have been lured into the renewal pattern already. As the years add up, if anything, this is going to get worse. It’s going to be caveat emptor – let the buyer beware – on steroids.

One study “found that ‘fully informed’ consumers saved a couple of thousand dollars compared with those who were less well informed.” There are some possible fixes for this problem. Just looking is obviously one, but that’s more “I told you so” and a waste of breath, practically speaking, though for new enrollees over coming months, it’s worth remembering. Getting a letter from CMS would be helpful. One study mentioned by Surowiecki found that “when Medicare Part D consumers got a letter telling them that they could save money by changing plans the chance of their actually doing so rose by fifty per cent.” That seems worth a stamp to the troops, doesn’t it? Local 100’s Citizen Wealth Centers are also putting their shoulder to the wheel to help many of the people we enrolled last year.

It’s pretty much either get smart or get screwed now, so it’s worth the effort to not be on the losing end on either health insurance or the price you’re paying for the coverage.