Wednesday, January 15, 2014

The Law of Unintended Consequences

So hey, have you heard about this new national insurance plan the government is rolling out?  This narrative includes my actual experience with the ACA.

In his first Presidential campaign, Barack Obama spoke of his desire to reform healthcare, to make it more affordable for all and to bring insurance to those who currently did not have it or couldn't afford it. Introduced in Congress in 2009 as H.R. Bill 3962 and known as the Affordable Care Act (nicknamed "Obamacare"), it was, after heated debate, signed into law in March 2010.  It was a huge legislative victory for the President. However, to this point the law's reality has not matched its promise, for me at least.  The rollout has been problematic.

Let me say straightaway that no citizen of this country should be unable to get decent medical care. Therefore I do not begrudge the government its attempt to make healthcare a reality for everyone. Better health has attendant benefits that work for us all.   During the debate that preceded the vote that made the ACA law, even those opposed to its passage admitted that the current system was less than ideal.  However, given the bill's immense length (1990 pages) and complexity, opponents of its passage warned of unintended consequences.   The devil you know is preferable to the one you don't, they said.
 
In fact, the bill was so enormous that several lawmakers later admitted that they did not read it before voting, instead relying on staff briefings to acquaint themselves with the bill's particulars. Let's be honest here.  Even the most enthusiastic lawmaker or policy wonk could not be expected to wade through and understand every nuance of such a colossal piece of legislation. I daresay that even the most interested party could not speak expertly on all of the bill's facets without first undertaking years and years of study.  It appears that fears of unintended consequences were well founded.

To allay the fears of the populace, President Obama repeatedly assured the citizenry that the new law would allow those who liked their current healthcare insurance to retain that insurance.  Having at that time very little understanding of the new law's specifics, I will admit that those words were good enough to quell my misgivings.  After all, our household had a plan that covered our current needs and fit our budget.  If we could keep it while others could get plans that fit their own needs and budget, why would we have a problem with that?

It was about this time that everything started falling apart for the White House.  The website was a $600-million-dollar steaming pile of inoperability. Policyholders began receiving notices of cancellation, making it clear that "if you like your plan you can keep your plan" was a  presidential prevarication.  We learned that new plans were chock full of coverages that many didn't need or want but that had to be included so as to be compliant under the new law.

The owners of the Hobby Lobby, a privately-owned nationwide chain of arts-and-crafts stores, were mortified to learn that–contrary to their religious beliefs–the ACA-compliant insurance they are being required to offer employees includes coverage for certain types of birth control called abortifacients, drugs that induce abortion. Hobby Lobby has sued the government over this, raising some First Amendment issues. However, the case centers around a bill called the Religious Freedom Restoration Act that President Clinton signed into law in 1993. An excellent explanation of the Hobby Lobby case can be found here.  This unintended consequence has so many implications for the new law that the Supreme Court has agreed to hear the case.

Had the rollout gone smoothly, had the new law not been fraught with these types of unpleasant surprises, had social media not provided the perfect platform for viral replication of individual horror stories, maybe the public would have been more accepting.  I don't think that any American has a problem with any other American getting affordable healthcare insurance. What has transpired however, is that Americans (myself included) are waking up to the realization that this new healthcare law is not some magnanimous act from a beneficent Congress, but rather is a typically-bumbled government initiative that carries with it an unpleasant truth.  The ACA is another form of involuntary wealth transfer.  It's a tax.

While there is no doubt that the new healthcare law will benefit a previously uninsurable segment of the population, there also appears to be a segment that is being negatively affected. Who is going to pay for these previously uninsured people?  The government?  Where does our government get its money?  From its citizens. From businesses owned by its citizens. I wrote earlier that I believe that no American has a problem with any other American gaining access to affordable healthcare.  There's a caveat. No American has a problem with any other American gaining access to affordable healthcare, AS  LONG AS IT DOESNT AFFECT ME. That's the caveat and it's a pretty big one.

Healthcare insurance is deemed unaffordable if its cost exceeds 10% of annual income. The government, understanding that costs were going to rise for many Americans, has attempted to blunt the effect of these increased costs by offering subsidies to any family whose household income is between 100-400% of the Federal poverty level.  Subsidies exist for those households making less than $94,200 per year currently.  Above that and you are on your own. On December 20, the New York Times ran an excellent article detailing how many middle class Americans are finding themselves caught in a very uncomfortable no-man's land.

I was one of those who received a notice of cancellation. Under the new law my current plan is non-compliant. I am in the pool of workers that the government admits will be most negatively affected by the new law. I am an independent contractor and buy my own insurance.  Our household is not eligible for a subsidy.   Our current plan will be cancelled in December. I recently began my search for a new plan using my state's (Kentucky) healthcare exchange website.  This website and the state's implementation have been lauded in the press as being among the nation's best. 
 
Um, no.
 
I am able to search for plans as a website "guest" but so far have been unable to register my household with the site. I have spent several aggravating hours trying simply to enter the information that the website asks for.  However, I so far am unable to get past this roadblock:



I spent 62 minutes on hold one day before hanging up in frustration.   I may have been next in line when I hung up but there was no way to know because the hold message gave no estimate of wait time.   I tried the online help and after messaging back and forth with a seemingly nice person, he told me that my problem required "escalation" and that he did not have the proper credentials to assist me.  He gave me a number to call.  Yep, you guessed it, it is the same number that I had called earlier.  I am stuck in the helpline endless loop.

Anyway, I was able to search generically for plans after giving some very basic information.  Using my current plan as a template, I searched for a plan that was most similar to the one I have now.  Given the relatively good health of everyone in my household, and having made the decision that we wanted insurance to cover us only against something catastrophic, we currently have a plan that has very high deductibles for each person and also a high family deductible.  For this we pay about $400 per month.  Under the new law the best price I can find for a plan that generally is similar is more than $1200 per month. So now you can count me among those Americans who have a problem with the new law.  The new plans will not allow me the high deductibles that I currently have even though that is what I want.  And for that my premium is going to triple.


The fact is that my government is asking me to pay for the cost of insuring someone else.  The Affordable Care Act is a governmental program that is being funded by those who can for the benefit of those who can't. I am not immune to budgetary shocks is and this is shaping up to be a big one.  Oh, I am not alone.  Every wage-earning American will feel the pinch in some form or fashion.  That subsidy money has to come from somewhere and this is where it is coming from:




Given this, I now see the ACA for what it is. I now understand that the government is requiring me to fund other people's healthcare costs. Despite my wish for everyone in this country to have access to healthcare regardless of economic circumstance, I did not intend to pay for it in quite this way.  Sure, I may be a minority in that it appears that the new law works to my detriment, but am I supposed to just suck it up? Would you?  Do I get a pat on the back for being so helpful and generous?  Can I at least get a tax credit or something?
 
Furthermore, for this new law to work properly, Obamacare needs previously uninsured healthy young people to buy insurance.  So far, that is not happening at predicted levels.  Given their better health, their premiums are supposed to offset the costs associated with elder care. Without the young person offset, the system won't work as designed. That young people would continue to remain uninsured is currently an unexpected outcome with an unintended consequence.
Just 24% of the 2.2 million people who chose insurance plans through the state and federally run insurance exchanges by Dec. 28 were between the ages of 18 and 34, according to the Department of Health and Human Services, which released demographics data on enrollees for the first time on Monday. Health pros say that’s below expectations, with one estimate from the Kaiser Family Foundation finding that about 40% of the people expected to enroll in insurance plans would be in that age group.
If more young people don’t sign up for insurance before the end of the enrollment period on March 31, consumers may face higher insurance rates next year, experts say. That’s because insurance companies would find themselves without enough younger and healthier customers to help offset the costs of covering older and sicker Americans, says Caroline Pearson, vice president of Avalere Health, a strategic advisory firm. “But it is our expectation that the age mix will improve throughout the open enrollment period.”
                                                                                                – MarketWatch January 14, 2014


Many have predicted that this hybrid public-private approach will not work and that ultimately health insurance will become a government enterprise.  Obama's critics have argued that this single-payer system has been his intention all along.  The government will manage healthcare from end to end.
 
Is the devil you know better than the one you don't?  The new law has both its proponents and its detractors.  The Hobby Lobby Supreme Court case has the potential to hobble the new law.  The new law may collapse under the weight of its own missteps and unintended consequences.  What is beyond dispute is that the rollout has done nothing to quiet criticism. The burden of proof lies still with the law and its proponents.