Of the many provisions that make up the ObamaCare law, there are six that specifically pertain to the delivery of healthcare to new, as in the pool of this nation’s long term uninsured, customers which of course is the primary objective of ObamaCare. So let’s take a look at these six provision and see just how much of a bang we the people are getting for all our bucks that are finances this behemoth healthcare legislation.
Following is a short description of each of the provisions and a brief look at the effectiveness of each compared to the goals they were set to achieve. From this we will score each provision as either a success or a failure.
#1 Guaranteed Issue
Guaranteed issue is the provision in the ObamaCare law which prevents insurers from discriminating against an individual who suffers from a high risk/high cost medical condition. No longer are insurers able to ask for a person’s medical history and use that information to rate a plan or deny coverage.
The guaranteed issue provision went in to effect shortly after ObamaCare was passed in to law. It would not be until 2014 however, that individuals would be able to purchase a qualified healthcare plan through one of the health insurance exchanges. As a stop gap, the Department of Health and Human Services (HHS) put the Pre-Existing Condition Insurance Plan (PCIP) provision in place.
In the creation of the PCIP stop gap provision HHS projected that 375,000 individuals, suffering from a high risk/high cost pre-existing condition, would enroll on the plan. But sadly, at its peak, only 135,000 chose to participate. One of the primary reasons for the low enrollment was cost! Over the next two years PCIP rates were reduced by 20% yet there was a continued decline in the programs enrollment. By the time the health insurance exchanges rolled out, PCIP participation had dropped to roughly 108,000.
Low enrollment was not the only issue the PCIP provision faced. The cost to operate the program also became a major issued as HHS grossly underestimated the make-up of the risk pool which consisted mainly of those with very costly conditions such as advanced heart disease and cancer. The low enrollment issue in many was the saving grace for the PCIP provision as the 240,000 enrollment shortfall helped to offset the 250% error on cost projection and funding for the program. In fear of running the plan out of money, in February of 2013 HHS terminated new PCIP enrollment however, this was likely an unnecessary precaution as participation was well on the decline. At about the same time, HHS shifted more of the cost back to the customer in the way of higher premiums and out-of-pocket responsibilities.
And last, when it came time for those participated on the PCIP program to select a qualified healthcare plan and transfer over to the health insurance exchanges, only 80,000 did so over the 6 month initial open enrollment period and three granted extension periods.
When the closing bell ran, ending the PCIP program, there was a 41% loss in participation from the provisions peak to the number of those that transfer to a qualified healthcare plan through the health insurance exchanges. That’s right, for a large percentage of those with a high risk/high cost pre-existing healthcare issue, they still found insurance too costly to purchase. And with the price of the insurance plans having increased in 2015 and will again in 2016, it is not likely that the number of those with a pre-existing condition and still without healthcare insurance will improved any.
Considering all the shortcomings of the PCIP stop gap provision, (the low transfer rate to the health insurance exchanges and the continued rise in program cost) I don't think anyone can argue against the fact that the Guaranteed Issue provision of the ObamaCare law has fallen grossly short of its intended goal of bringing healthcare to those with a high cost/high risk pre-existing medical condition. It is because of these factors that we can, without hesitation, score the Guaranteed Issue provision as a complete and utter FAILURE.
#2 Minimum Standard
The minimum standard is the provision of ObamaCare to which without, the law could not exist.
Each and every healthcare plan sold, be it through an employer provided group plan; an individual plan purchased through the health insurance exchanges or a plan purchased directly from the private insurance marketplace must meet a certain minimum standard of coverage. Labeled as the “essential health benefits” (EHB) package, the answer as to what the purpose is of this package depends on who you ask.
For those who crafted the law and its staunch proponents, the story goes that the EHB brings a higher quality of healthcare to each individual, this by making it mandatory for healthcare providers to give FREE care away as well as being sure that every form of care that could ever be needed is included in your healthcare plan.
Of course, there is a cost associated with all those “extras” in a healthcare plan which often raises the question as to why a male adult would need child dental coverage or why a women of post-child baring age would need pre-natal care coverage. The list of unusable essential benefits goes on and on and leads us to the real purpose of minimum standard and EHB.
It would be wonderful to think that the crafters of ObamaCare bundled all the EHBs together in the best interest of all Americans but the reality is the EHB package, created to meet the minimum standard, only exists as a means to create the revenue stream needed to cover other obligations of the healthcare law, primarily the guaranteed issue. Now that insurers are no longer able to discriminate nor charge more for those with a pre-exiting condition, they needed a new revenue stream to pick up these costs.
The administration’s idea was to model individual healthcare plans similar to those offered to employer based, large group plans which already bundled most if not all of what was now being mandated in the EHB packages. The problem with this approach was however, the fact that the employer based plans cover a pool nearly six times as large as the pool which participated on the individual market, thus giving the employer based plans a significantly larger universe to spread costs over. Prior to ObamaCare, it was the insurer’s ability to offer an individual a plan, more tailored to their specific needs, that leveled the playing field and kept individual and employer provided policy costs on a parallel with one another. With this leveling mechanism taken away from insurers, the cost of individual plans had no place to go but up and up they went, substantially.
The minimum standard provision does accomplish it objective. However, it cannot be ignored that the Obama Administration’s intentional misrepresentation this provision as being a consumer benefit rather than the new revenue stream it actually is and for this we will have to score the Minimum Standard provision a FAILURE.
#3 Individual Mandate
With the potential to affect 25 million uninsured individuals, some would say that the individual mandate is the single most important provision of ObamaCare.
Under the individual mandate provision, everyone is now required to have healthcare insurance, with few exceptions. For those who are not provided healthcare insurance through their employer or through a government program, they are now required to purchase their own healthcare insurance or pay a tax penalty each year which they are not in compliance of the mandate.
The logic behind the individual mandate is simple and maybe a bit naive. The hope is that the bulk of those 25 million long term uninsured will be incented to obtain healthcare insurance now that it is federally mandated to do so and also to avoid facing a subsequent tax penalty they would incur for non-compliance.
As it turns out, the federal mandate to have healthcare insurance nor the tax penalty for non-compliance seem to have had much of an effect in incenting those 25 million uninsured to purchase a healthcare plan. After two open enrollment periods, totaling nine months in length, the number of American’s non-elderly, long term uninsured decrease by a mere 3 million. This equates to about a 70% shortfall from the administrations 2015 enrollment projection.
There are several reason for the lack of participation by these 25 million uninsured Americans, the largest continuing to be cost. Despite all the campaign rhetoric and promises of lower premiums, the cost of healthcare insurance for individuals is significantly higher now than prior to the passage of ObamaCare. Individual plan rates increased between 40 and 100 percent even before the mandate kicked in in January of 2014. Since that time premiums have continued to rise, pricing many more out of healthcare insurance before they ever obtained it. For the young and healthy this was especially true as, in the structuring of the insurance rates, they were burdened with the lion’s share of the load.
Even with subsidies (which we will discuss in a moment), most of the uninsured seem to find the cost of purchasing healthcare insurance too great a burden on their household finances. For other, the cost still remains too high to make healthcare insurance obtainable.
There is a bit of irony to the individual mandate as well. For those that followed the 2008 battle for the Democratic presidential nomination, you may recall the bitter swipes between Hillary Clinton and Barack Obama over the differences in their healthcare plans. Then Senator Obama strongly opposed the individual mandate, a key component of HillaryCare 2.0. Obama made many public statements condemning the mandate, calling it a government overreach that it takes away American freedoms. It was not until after now President Obama was told by his team that without the individual mandate they would never gain enough democratic support to pass a healthcare bill that the president fell head over heals in love with the idea of the individual mandate.
It is for this telling bit of irony and the failure to incent the uninsured into purchasing healthcare insurance that the Individual Mandate provision scores a DOUBLE FAILURE!
#4 Healthcare Insurance Exchanges
The concept of healthcare insurance exchanges is not new as several states have, in the past, tried the concept, all with less than desirable outcomes. The success of healthcare insurance exchanges is a delicate balance that relies on the creation of strong competition amongst participating insurers which in turn will create a large and stable risk pool thus minimizing adverse selection. This is by no means an easy feat to accomplish.
From the layman’s perspective, the healthcare insurance exchanges are little more than a portal to which customers can conveniently shop the variety of insurance plans private insurers are offering in their particular region. It is not mandatory for individuals to purchase healthcare plans through the exchanges however, to take advantage of any tax subsidies that may be available to them, the only way to do so is through the exchanges.
For HHS and the private insurers, the exchanges play a critical role in marketing and creating competition in the small-group and individual markets. The exchanges oversee the standardization of plan benefits and cost-sharing and also bear the burden of restraining premium growth.
On the surface, the ObamaCare healthcare insurance exchanges look quite successful with close to 12 million plans purchased through them during the 2015 open enrollment period. Unfortunately, only about 25% of those enrollments came from the 25 million in the pool of the long term uninsured, those in which the entirety of the law is premised. The make-up of the enrollees does not fall in favor of the healthcare insurance exchanges either with only 24% of those enrolled coming from the pool of young and healthy adults. To avoid the perils of adverse selection, target enrollment of the young and healthy was 39%, as stated by the HHS.
Politically, the saving grace for the exchanges has been the 75% of enrollees who transferred over from the individual marketplace, most of which were recipients of policy cancelation for non-ACA compliant plans, you know, those folks that did not get to keep their plan even though they liked their plan! Proponents of the law have used these 9 million policy transfers to claim a faux victory for the healthcare insurance exchanges. Insurers and opponents of the law see things quit differently however.
For insurers, there incentive to participate on the healthcare insurance exchanges was the prospect of as many as 25 million new customers, 10 million of which were projected to have signed up by the close of the 2015 open enrollment period, according to the non-partisan Congressional Budget Office (CBO). But with new customer enrollment currently around 3 million, insurers are not liking what they are seeing.
To protect themselves from loses, insurers are imposing significant rate hikes for 2016 thus dashing any hopes of the massive new enrollment surge needed to make future participation in this new insurance scheme possible. Also, insurers soon lose their protection from losses incurred on the exchanges as the risk corridors provision expires at the end of 2016.
Opponents see a moral responsibility attached to the healthcare insurance exchanges. Through the partisan deal brokered by Democrats, 16 million Americans are expected to have purchased a healthcare plan through the exchanges by the close of the 2016 open enrollment period. But the exchanges thus far have fallen far short of expectations and it looks as though they will struggle to insure even half of the intended uninsured population. This will leave millions of Americans, whom the law was intended to help, out in the cold. Opponents believe that the American people deserve better than to settle for the significant enrollment shortcomings being experience through the healthcare insurance exchanges.
It will take nothing short of a miracle for new enrollment to achieve even half of what was projected when ObamaCare was passed in to law. So for failing to control costs, adverse selection and most of all, leaving millions of uninsured Americans out on the cold, the Healthcare Insurance Exchange provision is scored as a FAILURE!
#5 Low Income Subsidies
Low income subsidies are an essential provision of the ObamaCare law. They are used to drive affordability into healthcare insurance plans for those that meet the low and middle income criteria established in the law. Distributed based on a calculation with which only the number of family members and income level are considered, the low income subsidies is not the kind of provision that can be scored as a success or failure. As to whether or not the low income subsidies are making healthcare insurance affordable, that’s a whole other story.
Unfortunately, due to a number of missteps by the administration to accurately anticipate the physical cost of a healthcare plans that would be offered on the healthcare insurance marketplace {the Gruber affect}, even with low income subsidies millions have still found it impossible to afford healthcare insurance. And in a sad but true bit of irony, many of those who had, for years prior to ObamaCare, purchased and paid in full for their healthcare plans, they are now paying even more despite receiving low income subsidies to offset the cost of their new healthcare plan.
Another unfortunate event tied to the low income subsidies provision is a misleading statements, made by the administration, as to how the cost associated with low income subsidies are far less than originally projected. This statement stemmed from the release of a cost projections update report by the CBO this past March. And while it is true that in the CBO report it stated that the low income subsidies cost 20% less than earlier projections indicated, the administration’s claim failed to include the qualifiers stated in the CBO report, the most significant being that the costs were lower due to low enrollment i.e. fewer subsidies being paid out.
So again, by the nature of the provision, the Low Income Subsidies provision cannot be scored as a success or failure. However, the administration’s success in creating mandates which drove the cost of healthcare insurance plans out of the reach of millions, even with subsidies, scores them one big giant FAILURE. And the administration also scores a FAILURE for their misrepresentation of the CBOs revised cost projections for the low income subsidies, labeling them a “cost savings”.
#6 Medicaid Expansion
And last, the Medicaid Expansion provision. The Medicaid Expansion is a provision in ObamaCare which increases the income threshold used to determine an individual’s Medicaid eligibility. In its original form, the expansion was projected to expand healthcare access to roughly 17 million low income adults and children across all 50 states and the District of Columbia.
The success of the Medicaid Expansion having brought access of healthcare to millions of low income individuals and children is indisputable. But does this mean the provision itself is a success? Let’s look a little deeper into the provision to see if it is meeting its intended goals before we make that determination.
Dating back to the infancy stages of the ObamaCare bill, many viewed the early language of the Medicaid Expansion provision as overreaching, challenging that the Federal Government did not have the authority to force individual states to comply with such a mandate. Those challenges fell on deaf ears and when ObamaCare was signed in to law the federal mandate for all states to expand Medicaid remained.
The administration was adamant about having the Medicaid Expansion be a federal mandate despite the clear overreach of Federal Government authority over the States, an overreach which was of course quickly challenged. And in June of 2012, the U.S. Supreme Court ruled it unconstitutional for the Federal Government to coerce states into compliance with the Medicaid Expansion. The Supreme Court did however leave the Medicaid Expansion intact, making its compliance optional by the states.
Some Democratic lawmakers may have believed that there was a slim chance that the federally mandated Medicaid Expansion would go unchallenged while most of those crafting the law not only knew the expansion would be challenged but also expected it to be overturned. None the less they went forward with the federal mandate for all states to expand Medicaid, and for good reason. The crafters of the expansion knew that they would lose the support of several key Democrats if they left the expansion to the discretion of the States which would have likely doomed the bill from being passed. As it was, it took every single Democratic vote that was received to pass a filibuster proof bill.
The administration also underestimated the number of individuals who would take advantage of the Medicaid expansion. They failed to recognize that the awareness campaigns, urging individuals to take advantage of the expansion, would also draw out thousands of individuals who were already eligible but were not taking advantage of Medicaid. As a result, Medicaid enrollment has far exceeded projections which now has the states participating in the expansion scrambling to figure out how they are going to pay for it. With few choices, expansion states will either have to cut something out of their budget or raise taxes, maybe both. The failure to accurately project new Medicaid participation can be attributed to little more than gross incompetence by those studying the numbers and those who signed off on them.
So, is the Medicaid Expansion provision a success of failure? From an enrollment standpoint, of course the expansion is a success, how could it not be. The states participating in the expansion are giving away FREE healthcare to those who qualify, this is not a real hard sell. As for the crafting of the Medicaid expansion, we cannot be so generous.
The approach taken by Democratic Lawmakers to sell the Medicaid Expansion was a dishonest one, both in its doomed but intentional federal overreach and in pushing bad enrollment numbers. If the crafters of the Medicaid Expansion did not intentionally provide the states with bad enrollment projections, it was their gross incompetence that missed the figures by such a large margin which now has expansion states scrambling to figure out how to pay for it. Lawmakers intentionally sold us a bad can of fish and it is for this reason that the Medicaid Expansion provision as scored as a FAILURE.
Adding Up the Scorecard
So, there you have it, of the six major provisions in the ObamaCare law, that specifically target the delivery of healthcare to the long term uninsured population of our nation, each has failed to achieve its intended goal. A shortsightedness of the administration to set achievable goals can be attributed to several of the provision failures, for others it is simply a matter of the administration failing to be an honest broker.
Regardless of reason, the results are the same and despite all the failures, the Obama Administration continues to try to convince every American that ObamaCare is one of the greatest successes stories of our time.
