Saturday, January 18, 2014

Obamacare weekend thread January 18 , 2014 ...... Will the Uninsured individuals essential to Obamacare being financially viable actually buy the insurance on offer ? Small business owners shying away from Obamacare exchanges - what a shocker ? Medicare enrollment claims overstated by thw White house - again , what a shocker ?


Aetna CEO: We might have to pull out of ObamaCare because it’s not attracting uninsured


One of the nation’s biggest health insurers is worried enough about a scenario in which it would have to pull out of Obamacare exchanges that its CEO is willing to talk about the possibility on national TV from Davos. It may be partly a signal to the administration to get this train moving, but it’s no doubt also a reckoning with reality. Obamacare is not attracting the uninsured, and if the administration would stop changing the rules long enough for insurers to get a handle on who is in the exchange population, they’d no doubt find that population is far more sick and expensive than it was supposed to be.
Aetna CEO Mark Bertolini told CNBC on Wednesday that Obamacare has failed to attract the uninsured, and he offered a scenario in which the insurance company could be forced to pull out of program.
The company will be submitting Obamacare rates for 2015 on May 15.
“Are they going to be double-digit [increases] or are we going to get beat up because they’re double-digit or are we just going to have to pull out of the program?” Bertolini asked in a “Squawk Box” interview from the World Economic Forum in Davos, Switzerland. “Those questions can’t be answered until we see the population we have today. And we really don’t have a good view on that.”
He said that so far, Obamacare has just shifted people who were insured in the individual market to the public exchanges where they could get a better deal on a subsidy for coverage. “We see only 11 percent of the population is actually people that were firmly uninsured that are now insured. So [it] didn’t really eat into the uninsured population.”
For Obamacare to work better, it needs more flexibility and choice of insurance programs, Bertolini said. “We need to make it a lot more simpler for people. There needs to be more choice. When you get more choice, you make it more of a market and you get more people in the program.”
Bertolini’s comments illustrate the bind the insurance industry is in—and, yes, they jumped in with Obama on this deal expecting a bunch of people to be forced to buy their product. Obamacare has failed in such a way as to force them to raise rates dramatically. If they raise rates dramatically, the very administration that needs them to stick with the program will be calling them bad apple patent medicine salesmen because vilifying them will be the only hope for politically extricating itself from its policy failure, at least temporarily. And, in the meantime, the industry can’t even get a handle on who is in the exchanges because the administration keeps changing the rules every five minutes. A couple of industry folks told me last week, even if the news about the make-up of the exchanges is bad, it’d be better to figure it out, get some experience with the population, and gauge what can be done for cost containment. Obama’s short-sighted game of switcheroo doesn’t allow much actuarial science to take place.
As to Bertolini’s prescription for more choice and market forces, something like this, perhaps?
This week, health care analyst and Obamacare opponent Megan McArdle went to the Upper West Side and debated the proposition that Obamacare is already doomed…and won. Her analysis, coupled with Bertolini’s message should be chilling to Obamacare fans:
Obamacare’s exchange facility was conceived as a “three-legged stool”: guaranteed issue, community rating, mandate. Guaranteed issue means that an insurer can’t refuse to sell you a policy. And community rating means that they can’t agree to sell you a policy — for a million dollars. The problem is that if you set things up this way, it makes a lot of sense to wait to buy insurance until you get sick, at which point premiums start spiraling into the stratosphere and coverage drops. Enter the mandate: You can’t wait. You have to buy when you’re healthy or pay a fine…
Unfortunately, whenever someone has voiced discontent with the way things are going, the administration has taken a hacksaw to another leg. For example, some folks who had policies they liked before were being forced to drop them and buy new policies they didn’t like so much. That caused an outcry, followed by an emergency grandfathering rule.
McArdle offers a timeline for Obamcare’s demise, stipulating that its few popular provisions will survive:
Many of the commentators I’ve read seem to think that the worst is over, as far as unpopular surprises. In fact, the worst is yet to come. Here’s what’s ahead:
· 2014: Small-business policy cancellations. This year, the small-business market is going to get hit with the policy cancellations that roiled the individual market last year. Some firms will get better deals, but others will find that their coverage is being canceled in favor of more expensive policies that don’t cover as many of the doctors or procedures that they want. This is going to be a rolling problem throughout the year.
· Summer 2014: Insurers get a sizable chunk of money from the government to cover any excess losses. When the costs are published, this is going to be wildly unpopular: The administration has spent three years saying that Obamacare was the antidote to abuses by Big, Bad Insurance Companies, and suddenly it’s a mechanism to funnel taxpayer money to them?
· Fall 2014: New premiums are announced.
· 2014 and onward: Medicare reimbursement cuts eat into hospital margins, triggering a lot of lobbying and sad ads about how Beloved Local Hospital may have to close.
· Spring 2015: The Internal Revenue Service starts collecting individual mandate penalties: 1 percent of income in the first year. That’s going to be a nasty shock to folks who thought the penalty was just $95. I, like many other analysts, expect the administration to announce a temporary delay sometime after April 1, 2014.
· Spring 2015: The IRS demands that people whose income was higher than they projected pay back their excess subsidies. This could be thousands of dollars.
· Spring 2015: Cuts to Medicare Advantage, which the administration punted on in 2013, are scheduled to go into effect. This will reduce benefits currently enjoyed by millions of seniors, which is why they didn’t let them go into effect this year.
· Fall 2015: This is when expert Bob Laszewski says insurers will begin exiting the market if the exchange policies aren’t profitable.
Emphasis mine, and Mark Bertolini’s.


Security Expert Hacks Obamacare Website In 4 Minutes; Accesses 70,000 Records

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Submitted by Michael Krieger of Liberty Blitzkrieg blog,
The hits just keep on coming for ObamaCare. It was less than two weeks ago that I highlighted the potential premium rate death spiral that ObamaCare faces due to the fact that only old and sick people are signing up for the program. Now it seems there are further security related concerns plaguing the site, as cyber-security expert David Kennedy recently claimed that “gaining access to 70,000 personal records of Obamacare enrollees via took about 4 minutes.”
It’s actually hard to be this incompetent if you tried. More from the Washington Times:
The man who appeared before Congress last week to explain the security pitfalls of took to Fox News on Sunday to explain just how easy it was to penetrate the website.

Hacking expert David Kennedy told Fox’s Chris Wallace that gaining access to 70,000 personal records of Obamacare enrollees via took about 4 minutes and required nothing more than a standard browser, the Daily Caller reported.

“And 70,000 was just one of the numbers that I was able to go up to and I stopped after that,” he said. “You know, I’m sure it’s hundreds of thousands, if not more, and it was done within about a 4 minute timeframe. So, it’s just wide open.”

“You can literally just open up your browser, go to this, and extract all this information without actually having to hack the website itself,” he said.

Mr. Kennedy testified before Congress Thursday that was “100 percent” insecure, Washington Free Beaconreported.
For some context on this very important issue, check out the video below:

Full article here.


Cyber security expert: “much worse off” now


David Kennedy has been sounding this alarm for months. The former Marine Corps cyberwarfare expert and now a private-sector entrepreneur in cyber security testified before Congress to the huge gaps in data security in, the Obama administration’s web portal for ObamaCare. After a large amount of frantic reprogramming in November, Kennedy thought the problems would worsen. After doing his own research into the web portal, Kennedy says he has confirmed that the site is now “much worse off” (via Daniel Halper at TWS):
KENNEDY: I have to completely disagree with her. And it’s not just myself that is just saying this website is insecure, it is also seven other independent security researchers that also looked at all of the research that I’ve done and came to the exact same conclusion. And these are folks that work really well in the industry. And they’re highly respected, have an extensive experience of working for the government. And, you know, if you read the testimony and you read what she had actually said, she said that it’s done end to end security testing. They don’t say what type of testing that is. It could have been an audit that just looks at paperwork. It could have been, you know, really rudimentary testing that looks for just basic things. But what is pretty evident right now is that the site itself is not secure.
WALLACE: All right.
KENNEDY: It’s much worse off.
Chris Wallace then asked Kennedy why, if the site is so vulnerable, there haven’t been any hacks against it. That was the question asked by Gary Cohen, the HHS manager overseeing, claiming that “there have been no successful attempts of what anyone has been able to attack the system and penetrate it.” Kennedy declared this defense of to be “one of my favorites,” and says … how do they know it hasn’t been hacked? Emphases mine:
KENNEDY: And that’s great. This is one of my favorite ones out of the whole testimony. And so they (inaudible) that there has been no successful hacks that they’ve been able to detect. If you look at — there’s November testimony by Congress that basically said that a third party company was contracted to build out what we call the security operations center, which is what would actually detect these types of attacks. As of November, it hadn’t even been started yet. So, if you look at how long these security operations centers take to put into play, it takes several months, if not years to actually implement and fully build the attacks out there. So, as of November we have no modern detection. And that, from my understanding, it’s still not happening to this date. So they’re accurate in their statement. They haven’t detected any attacks on the website,because they don’t have the capability to detect them.

So how does Kennedy know that the website is vulnerable? He’s glad you asked:
KENNEDY: That’s a great question. There is a technique called — what we call passer reconnaissance, which allows us to query — look at how the website operates and performs. And these type of attacks that, you know, I’m mentioning here in the 70,000 that you’re referencing is very easy to do. It’s a rudimentary type attack that doesn’t actually attack the website itself, it extracts information from it without actually having to go into the system. Think of it this way. Think of something where you have a car and the car doors are open and the windows are open, you can see inside of it. That’s basically what they allow you to do. And there is no real sophistication level here. It is just really wide open. So, there is no hacking actually involved. And 70,000 was just one of the numbers that I was able to go up to. And I stopped after that. You know, and I’m sure it’s hundreds of thousands, if not more and it was done within about a four-minute time frame. So, it’s just wide open. You can literally just open up your browser, go to this and extract all this information. Not actually having to hack the website itself.
You don’t need to hack the website. The data is right out there for anyone to gather, apparently.
The full interview is below, and well worth watching:
Update: It’s David Kennedy, not Doug Kennedy (an author). My apologies to both men for the confusion.

Only 11% of ObamaCare signups previously uninsured?


Remember when the uninsured in America contributed to the “fierce urgency of now” that demanded that the federal government seize control of health insurance? Only with top-down federal control of that market would those uninsured gain coverage. Since that was the case, we should expect that the new
enrollees sign-ups would tilt heavily toward the uninsured.
Instead, the Wall Street Journal reports, they may be as low as 11% of sign-ups (via United Liberty):
Early signals suggest the majority of the 2.2 million people who sought to enroll in private insurance through new marketplaces through Dec. 28 were previously covered elsewhere, raising questions about how swiftly this part of the health overhaul will be able to make a significant dent in the number of uninsured.
Insurers, brokers and consultants estimate at least two-thirds of those consumers previously bought their own coverage or were enrolled in employer-backed plans.
The data, based on surveys of enrollees, are preliminary. But insurers say the tally of newly insured consumers is falling short of their expectations, a worrying trend for an industry looking to the law to expand the ranks of its customers.
About 48 million Americans were uninsured in 2012. The health law is expected to cut 25 million from that total by expanding state-run Medicaid programs and the pool of privately insured people who buy through state marketplaces, also called exchanges.
Only 11% of consumers who bought new coverage under the law were previously uninsured, according to a McKinsey & Co. survey of consumers thought to be eligible for the health-law marketplaces. The result is based on a sampling of 4,563 consumers performed between November and January, of whom 389 had enrolled in new insurance.
Part of the difference is probably related to the actual status of the uninsured. Most of them were uninsured by choice or uninsured in transition, according to US Census Bureau data available in 2009. The estimate of those uninsured by economic circumstances and not covered by Medicaid was 14 million at most. That was about 5% of the American population, rather than the 16% assumed in the 48 million number.
When seen from that perspective, 11% looks a little like overperformance — if we see these as final numbers. But of course, they’re not the final figures, but the people who first came into the system. One would expect that the 14 million previously uninsured would have either enrolled right away in either the Medicaid expansion or the system. Instead, we’re at 2.2 million for private insurance sign-ups (not confirmed enrollments), and 3.9 million enrolling in Medicaid over the last quarter, which may or may not be too far off the regular pace of enrollments.
What we definitely aren’t seeing is a mad rush for government-run health insurance, such as we’d see if the problem of the uninsured was as dire as it had been advertised to be. And what we have seen is that the government solution to lack of insurance has thrown more people out of their existing insurance than it has solved the problems of the uninsured by a very wide margin. It’s yet another facet of this disaster that has become painfully obvious to anyone paying attention.
By the way, for those who aren’t rushing to sign up in, what’s the main impediment? A majority of 52% say … affordability.  Wasn’t that supposed to be the point behind the Affordable Care Act?
While we muse on that, let’s also ask this question: Were there no American firms who could rescue what the Obama administration screwed up?
President Obama spent $831 billion of taxpayer money on a stimulus plan for the economy. He gave nearly $50 billion in aid to GM to keep it afloat. He lost $500 million on energy company Solyndra. All in the name of saving jobs.
Yet when it comes to his own signature initiative, the president doesn’t care about American workers. He’s outsourced ObamaCare.
After the disastrous rollout of, the administration hired Accenture as the new lead contractor. The deal is estimated to be worth $90 million and is now in the hands of the poster boy for global labor arbitrage and offshore tax havens.
Accenture has 80,000 Indian workers, 35,000 in the Philippines and only 40,000 in the United States. Over 40 percent of their worth comes from outsourcing. In all probability, the tech jobs awarded under this contract and paid for with US tax dollars are going abroad.
“In all probability” doesn’t mean “confirmed.” This is conjecture, but conjecture based on numbers. Besides, this is the very thing for which Team Obama attacked Mitt Romney in 2012, is it not?

Maryland’s ObamaCare exchange has been directing customers to a Seattle pottery store


Mary Katharine mentioned the other week that Maryland’s state-run ObamaCare exchange — which crashed the first day it was launched last fall and has been stuck in an interminable loop of fail ever since —   had been accidentally directing Maryland insurance-seekers in search of help to other states’ ObamaCare navigators. Apparently, however, that was hardly the least facepalm-worthy of the website’s proffered misguidance, via the Baltimore Sun:
Critics said Saturday that the latest problem to hit Maryland’s online health exchange — an incorrect help-line number that directed hundreds of callers to a Seattle-based pottery business — was another symptom of the poorly operating website.
“You can’t make this stuff up, and I guess if it wasn’t so serious, it could be funny,” said Senate Minority Leader David R. Brinkley, a Frederick CountyRepublican.
The website mistakenly listed a 1-800 number that sent some Marylanders attempting to pick a health insurance provider to Seattle Pottery Supply instead of Maryland’s call center. The number appears under the words “State Advantage” and “call a representative.” The correct number for help shows up multiple times on the site before the incorrect number appears.
A state spokeswoman said Saturday that she had no update on efforts to fix the problem. Maryland officials were unaware of the problem until contacted Friday by The Baltimore Sun.
Way to stay on top of things, guys. Maryland is hoping to have 150,000 residents signed up for insurance by the end of March, but so far, they report that they have fewer than 23,000 enrollees with no definitive end in sight to the website’s glitchiness. The state legislature has been organizing hearings to try and figure out exactly what went wrong with the website’s construction, but in the meantime, the O’Malley administration finally ruled out one Congressman’s proposal to temporarily switch over to the federal exchange while the state-run version gets it act together. The CEO of Carefirst sent off a quick letter to Gov. O’Malley during that deliberative process which perhaps aptly demonstrates why they decided against it, via WaPo:
As a follow on to our recent communication, I just want to say that, while I know your frustrations with Maryland’s efforts on the Exchange have been great, a move to the Federal Exchange at this time would present substantial new risks and costs. Indeed, it may go so further complicate an already complicated situation as to make any near term remedy virtually unattainable.
We are dealing directly with the Federal Exchange in Virginia and have extensive day to day experience with it. We find that there are many serious and persistent operating and technical issues that undermine effective enrollment. Missing functionality limits the ability to do basic things such as correct and maintain life event changes for people once they are enrolled. We are concerned about the confusion, poor service and anger this will produce.
All things considered, my strong advice would be that the State stay its course and fix as much as it can with its own Exchange during this current open enrollment period. … It also greatly facilitates our efforts to support you since we are very familiar with the work that is being done by the Maryland Exchange and with the processes and technology that underpin it (however flawed).
What a mess.


( Crash and burn risk ? Obamacare Program goes completely sideways unless the nearly impossible task thrust on Accenture is finished in less than sixty days ! This year " March Madness "  will not be NCAA Men's Basketball......)

"Entire Healthcare Reform Program" Jeopardized Unless Accenture Fixes By Mid-March

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A few days ago, when we reported that the existing main IT contractor behind Obamacare, CGI Federal, was kicked out and replaced by Accenture, we wondered the reason was that the government was unable to go through the "full and open competition process" before awarding them with a $91 million contract. Recall that "because of time constraints, CMS is awarding the Accenture contract on a sole-source basis." Naturally in a process plagued with mistake after mistake, awarding an express contract with no RFP or contract bidding, is merely the latest one.
So how does the Federal government explain this scramble to hand over the "sole-sourced" IT contract (to a company made possible thanks to Enron) so late in the process? Simple: the usual mutually assured destruction tactic used so "effectively" in all other recent rushed decisions. As The Hill reports, unless Accenture finishes (and fixes) the back-end of the portal by mid-March, the healthcare law will be jeopardized, according to a procurement document posted on a federal website. The punchline: "It says insurers could be bankrupt and the entire healthcare industry threatened if the build out is not completed." In other words, a newly retained consulting company has less than three months to fix all the errors of coding by a different company, and make sure is working properly... all 500 million lines of's code?
Good luck.
The Hill has more:
The document says officials realized in December that the need to bring on Accenture is so urgent that there is no time to go through the “full and open competition process” before awarding them with a $91 million contract.

“There is limited time to build this functionality and failure to deliver…by mid-March 2014 will result in financial harm to the government,” the document says.

“If this functionality is not complete by mid-March 2014, the government could make erroneous payments to providers and insurers,” it continues. “Additionally, without a Financial Management platform that accounts for enrollments and associated program costs that integrates with the existing CMS Accounting platform, the entire healthcare reform program is jeopardized.”

Many of those who have signed up for ObamaCare are eligible for federal subsidies, which the government pays directly to the insurers. The document says that failure to complete the project by mid-March can result in “inaccurate issuance of payments to health plans which could seriously put them at financial risk; potentially leading to their default and disrupting continued services and coverage to consumers.”
Wow: so some pretty dire consequences if an outside third party fails at its task? So what exactly will Accenture have to fix :
According to the document, the system is vulnerable to “inaccurate forecasting” of the risk mitigation programs in place to pay insurers who enroll a higher-than-expected number of sick patients with expensive bills, “potentially putting the entire health insurance industry at risk.”

By mid-March, Accenture must build a financial management platform that tracks eligibility and enrollment transactions, accounts for subsidy payments to insurance plans, “provides stable and predictable financial accounting and outlook for the entire program,” and that integrates with existing CMS and IRS systems.

Accenture will also have to clean up some aspects of the project that CGI failed to complete, such as the notorious 834 enrollment transmissions to insurance companies that in October and November were transmitting inaccurate and garbled data.

In November, CMS deputy chief information officer Henry Chao told lawmakers that 30 percent of was still under construction, but the specifics and consequences remained murky.
Perhaps a better question is "what it won't have to fix" as it is absolutely impossible that in under three months the new consultancy will be able to fix all the errors in coding left over by the former contractor. Which is why we find it quite surprising that suddenly the fate of Obamacare and the "Entire Healthcare Reform Programlies in the hands of a measly $91 million contract. Although, if the intention is to merely have a scapegoat for a failed ponzi scheme, then this is precisely the way one would go about it. And if indeed Obama drops the hammer on Accenture, well... we hear the name Andersen Consulting is available.

Uninsured folks not drinking the Kool Aid ....

Obamacare Enrollments Show Low Uptake by Uninsured, Hoisting Insurers on Their Own Petard

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One of the few saving graces is that the health insurers’ scheme to enrich themselves known as Obamacare may be going pear-shaped from the standpoint of their profits.
First we had the mess of the website, and recall that fixing the back end was lower priority than improving the much-higher-profile consumer experience. So insurers had to process a lot of completed applications manually, which imposed unexpected costs on them. Second, many of the initial enrollees (and presumably a not-trivial proportion of the later ones) were assumed to have pre-existing conditions, as in have costly ailments that had gotten them denied. While insurers did expect to have that population sign up, they didn’t plan on them being vastly more enthusiastic about Obamacare than other target populations, since it would create an significant adverse skew in the insured population, potentially leading to a death spiral (in general, if an insurance pool does not have enough good risks to compensate for the poor ones, the cost of insurance is so high that the good risks drop out because the insurance is clearly uneconomical for them, leading to further rate increases and more thinning of the better risks).
The Wall Street Journal tells us that Obamacare looks to be falling short of insurers’ fond hopes on a third front, that of the level of participation by the uninsured. Remember, even after Obamacare, many uninsured were expected to remain uninsured, due to the fact that some low and moderate income individuals eligible for subsidies would still find the cost to them too high. Brookings last September summarized the projections: of 60 million uninsured, 17 million would obtain insurance via Medicaid expansion. Of the remaining 43 million, 22 million, or roughly half, were expected to sign up, leaving 20 million, or roughly half, still without coverage.
Now remember, the picture so far is incomplete, since the data in the Wall Street Journal story is only as of the end of December, when consumers have until March 31 to sign up. And these snippets come either from small scale surveys or from a few of the insurers themselves. But they paint a broadly similar picture: the uninsured are participating at considerably lower rates than anticipated.
And it’s not simply the gross numbers, the 2.2 million that have enrolled, but the composition. Various sources indicate that the overwhelming majority of enrollees were previously insured. Either they had employers who used Obamacare as an excuse to drop coverage, or their plan was cancelled for not meeting Obamacare coverage standards, or they dropped their current individual policy and purchased an Obamacare plan instead. While the first two categories could produce more revenues to the insurers, the last type, people who switched from a plan they’d purchased in the individual market to an Obamacare plan, almost certainly isn’t, since they buyer would choose it only if he thought it was a better deal given his circumstances. For instance, non-Obamacare plans permit different pricing for men and women, while Obamacare plans require the same pricing for men and women who fall in the same bucket otherwise (same age, geographic location, smoker/non-smoker status). But younger women actually incur somewhere between 10% and 60% more in healthcare care costs than men, which means they typically pay higher premiums. This group would be likely to give Obamacare a hard look relative to their current plans.
In fairness, there’s a lot turnover in the individual insurance market (as in they might obtain a job with a large employer who provides insurance and thus drop coverage, or have a change in personal circumstances that leads them to upgrade or downgrade their coverage). That means you’d expect a fair number to switch over to Obamacare. But even allowing for this behavior, the proportion of uninsured enrolling is much lower than anticipated. A McKinsey survey found that only 11% of Obamacare enrollees had been uninsured. An agency, Health Markets, said that 35% the coverage it arranged was for the uninsured. A survey by Priority Health found only 25% had not had coverage before.
This gives an idea of how severely enrollment of the uninsured so far is undershooting expectations:
Michigan insurers collectively expected 400,000 of the state’s 1.2 million uninsured people to join private plans this year, Ms. Budden said, citing an internal analysis of insurers’ rate filings. As of the end of December, only 76,000 enrollees had arrived, many of whom were previously covered.
The McKinsey survey also didn’t give great cause to be hopeful. Of the people who’d looked at plans but decided not to buy, 52% found them to be unaffordable. Another 30% had “technical challenges”. It’s possible that many in that cohort will figure out how to surmount those problems and will sign up by the end of March.
Some experts saw that the uninsured might reject Obamacare. A January 13 post on Bob Laszewski’s blog (hat tip Lambert) observed:
But what if most of the uninsured literally don’t buy Obamacare?….
As I have reported on this blog before, many working class and middle class subsidy eligible people will find health insurance premiums on the exchanges, after federal subsidies, at about 10% of their after-tax income. The average standard Silver plan deductible is almost $2,600 and the average Bronze deductible is $4,300 according to Avalere Health.
More than two-thirds of Silver plans sharply reduce the number of hospitals in their provider networks over typical employer plans according to a McKinsey study. That means most of the second lowest cost Silver plans––the plan the subsidy is tied to––will be a narrow network plan.
It therefore becomes a difficult decision deciding whether to buy or not buy a health insurance policy.
The Journal oddly placed the best summary in the middle of the story:
“I don’t know we’re growing the number of people with insurance here, so much as we’re just adding complexity,” said Geoff Bartsh, vice president for policy at Medica Health Plans in Minneapolis.
And since complexity generally means more cost, the insurers may not come out of their little scheme to get the government to drive new customers to them anywhere near as well as they’d hoped.


Obamacare: To Buy Or Not To Buy–––An Entrepreneur Would Have Done It Differently

Now that consumers can generally make an efficient health insurance purchase at and most of the state-run exchanges, we can finally get to the real question.

Are the healthy uninsured going to buy it?

The big health insurance changes Obamacare made to the individual and small group market were arguably done in order to get everyone, sick and healthy, covered in a more equitable system.

To be clear, no one I know of wants to go back to the prior health insurance market that excluded people from being covered because of pre-existing conditions.

But what if most of the uninsured literally don't buy Obamacare?

Then people will question whether or not all of this change was worth it: Why did those who were in the old individual and small group market have to accept all of the expensive changes, narrower networks, higher deductibles, and fewer choices if the uninsured largely don't want it?

Are we moving away from a system where only the healthy could buy health insurance to a system where only the sick want to buy it? 

As I have reported on this blog before, many working class and middle class subsidy eligible people will find health insurance premiums on the exchanges, after federal subsidies, at about 10% of their after-tax income. The average standard Silver plan deductible is almost $2,600 and the average Bronze deductible is $4,300 according toAvalere Health.

More than two-thirds of Silver plans sharply reduce the number of hospitals in their provider networks over typical employer plans according to a McKinsey study. That means most of the second lowest cost Silver plans––the plan the subsidy is tied to––will be a narrow network plan.

It therefore becomes a difficult decision deciding whether to buy or not buy a health insurance policy.

A recent Washington Post article, "Health Law Provides a Comfort to Those at Risk," told one side of the story. It recounted the relief a number of people had to finally be able to buy a health plan because they could not any longer be excluded.

One fellow intended to have gall bladder surgery as soon as his coverage was effective this month. Another needs surgery for endometriosis. Another women, with high blood pressure and a congenital heart defect, signed up as soon as she could. Another lady making $11,000 a year, with a health history that put her into debt, was able to get into Medicaid and be covered for the first time in eleven years.

About the same time, there was an article at Kaiser Health News, "One Texan Weighs Obamacare Options: High Deductible Vs. 'Huge Fear." It describes a 43 year-old women who is healthy and spent only about $1,500 for minor health care services last year. The best deal she found on the federal health insurance exchange would cost her $178 a month and would have a $5,000 deductible.

She hasn't bought a policy yet.

She was quoted as saying, "I don't smoke, I'm relatively healthy, so I was pretty insulted when I saw this [the price]. I was extremely angry actually. I felt hoodwinked by the insurance companies: 'Oh, here's this wonderful insurance plan but by the way you need to come up with $6,000 out-of-pocket first before we pay anything."

Listening to people defend Obamacare I get the sense that they think this was the only way we could have done health insurance reform.

I will suggest that the Obamacare architects put most of their emphasis on deciding for consumers that they should have a mandate rich health plan. That in turn drove the cost up, which in turn drove the deductibles up and narrowed the provider networks.

An entrepreneur might have taken a different approach.

In business, this is often referred to as a market driven approach rather than a product driven approach.

A product driven approach is one where the developer tells you what is good for you because they know better. It generally does not lead to a successful business venture.

The market driven approach starts by asking what people really want and then figuring out how to deliver it.

In this case, the entrepreneur might have gone to the woman in Texas––really lots of people in her category–– and asked what she wanted. Then the entrepreneur would have recognized that the federal government was willing to pay something toward the premium in the form of the subsidy.

What kind of deductible would she consider reasonable? What kind of premium would she be willing to pay for a plan with her preferred deductible? What kind of first dollar benefits would she value? What kind of catastrophic benefit would make sense?

Then, with her premium, the federal premium, the deductible she considers reasonable, and the first dollar benefits she would value, what kind of plan could we build for her––and the many healthy people who think like her?

That plan would not have the long list of Obamacare mandates. It would not be "as good." It might even be considered "substandard" by many. But she would value it, particularly because she could afford it, and she would likely buy it.

Would having these kinds of choices lead to anti-selection? They could. But the health insurance industry has a long track record of offering policies people have liked and clearly wanted to keep because they offered lots of choice and variety. After all, Medicare Advantage and Medicare Part D offer lots of attractive choices in a regulated market and they work.

Obamacare is in trouble. The person who needs gall bladder surgery this month bought it. The person who is healthy felt "hoodwinked."

At its core, what's wrong with Obamacare? It is a product driven not market driven enterprise.

Until the people who run Obamacare start listening to the people who aren't buying it, Obamacare won't work.

Small business concerns.....

Why Small Business Owners Are 

Staying Away From Obamacare 


An Affordable Care Act navigator in Princeton, Ill., on Dec. 18
Photograph by Daniel Acker/Bloomberg
An Affordable Care Act navigator in Princeton, Ill., on Dec. 18
The Small Business Health Option Plan, the Obamacare program intended to help insure employees of businesses with fewer than 50 workers, is off to a rough start. Technical problems caused the federal government, which is operating SHOPs in 36 states, to delay launching online marketplaces by a year, until this November. State-run SHOPs that managed to launch online have seen low enrollment.
Alex Wayne writes for Bloomberg News today about just how slow the uptake has been. Kentucky, which garnered praise for the launch of its state exchange amid’s rocky rollout, had enrolled just 14 companies in SHOP plans. Colorado had enrolled 101 companies, and Connecticut 106. In New York, about 5,000 employees at companies with fewer than 50 workers had signed up for Obamacare’s small business plans. It’s hard to guess total SHOP enrollment, but it almost certainly pales compared with the 2.2 million people the government says obtained private insurance through individual exchanges through Dec. 28.
The problem with SHOPs is bigger than building working online marketplaces. Many small business owners renewed existing, pre-Obamacare plans at the end of last year, hoping to avoid higher premiums as new portions of the reform law took effect. With small business owners staying away from SHOPs, there may not be enough demand to attract insurers. And small business owners who have looked at SHOPs don’t always like what they find, writes Wayne:
David Allen, the CEO of Flatirons Practice Management, a medical billing company in Boulder, Colorado, said he tried using the state’s health exchange to buy a new policy for his employees and didn’t like what he found. While he could have paid a lower premium, the deductibles were too high for the exchange plans, he said.
“It felt like the wrong thing to do, because we were shifting the burden off of me to my employees,” Allen said in a phone interview. “I don’t need the insurance exchange to do that for me.”
It’s unclear how all this will play out. Small business owners won’t be able to renew their pre-Obamacare plans again for 2015, unless the plans are grandfathered, meaning they haven’t changed substantially since before the Affordable Care Act passed four years ago. That means many may come back to SHOPs late this year, perhaps around the same time that the federally run small business exchanges are finally coming online. Increased demand could bring more insurers to compete for customers on SHOPs, lowering premiums. Or not.
On a related note, many small business owners will be losing their pre-Obamacare plans next fall. If there’s a wave of canceled small business policies that echoes what happened to individual health plans in 2013, and business owners don’t find better choices in the new marketplaces, SHOPs may be a thorny issue for Democrats in midterm elections.

Desperation ? Has it com down to Richard Simmons as Obamacare prop  ? 

Video: Who’s up for an ObamaCare enrollment dance-off featuring Richard Simmons?


To cleanse the palate, via Red Alert Politics and Ace, skip to 19:30 for five minutes of corporeal poetry that’ll change the way you see soaring premiums and taxpayer bailouts. Evidently, the people at California’s O-Care exchange thought the way to nudge twentysomethings to sign up was to hold a six-hour online telethon that kicked off with Richard Simmons and a guy in mom jeans and a shirt from 1972 trying to out-dance each other. Which raises a key question: How is Richard Simmons not the worst-dressed person in this clip?

Ace makes a fair point that, in the age of viral media, there’s little difference between bad publicity and good publicity. If the point is to catch people’s attention so that they start thinking about insurance, it doesn’t really matter if your clip is brilliant or the health-industry equivalent of “The Star Wars Holiday Special.” Right, but … six hours? Did they think the three people who watched any significant chunk of this would be on the fence for the first four hours, only to capitulate in hour five? They would have done better virally at a fraction of the cost with some dumb “Doge” Twitter riff on ObamaCare than with this car crash. “So adverse selection. Much death spiral. Very single-payer. Wow.

Medicaid enrollment claims unraveled....

WaPo gives 3 Pinocchios to Medicaid-enrollment claim … and itself


ObamaCare rolled out in October. In the following two months, 3.9 million people enrolled in Medicaid. How connected are those two facts? The White House, its allies, and some in the media want people to assume a direct causation — and initially, Washington Post factchecker Glenn Kessler did just that. Kessler used the figure to combine up with the 2.1 million who have signed up for ObamaCare to say that Republican claims that more people have lost insurance than gained it were faulty.

Yesterday, however, Kessler began to have second thoughts, based on Sean Trende’s analysisfrom earlier this month:
The 4 million new beneficiaries seems to be taking on near-canonical status, even being used by the fact checkers at the Washington Post for evaluating GOP claims.
This is odd, because after looking carefully at the numbers cited, the Medicaid figures are the weakest of the bunch. It’s a virtual certainty that the number of enrollments attributable to Obamacare is an order of magnitude less than the 4 million sign-ups implied, and the number of people [on Medicaid] who would actually lose their insurance if Obamacare were repealed is probably around 200,000 to 300,000.
The problem is identified in this Ezra Klein column (emphasis mine):
“Meanwhile, in October and November alone, more than 4 million people signed up for Medicaid coverage. This number will be much higher when December’s totals are released. It’s hard to say exactly how many of those Medicaid enrollments Obamacare is responsible for – the government’s numbers don’t distinguish between people who signed up through Obamacare’s Medicaid expansion and those who entered the program through pre-existing channels. But the fact remains that Medicaid enrolled well over twice as many people as signed up for private insurance through the exchanges.”
(Note: Klein has just published more to this effect.)
This is really important stuff. The statistics tell us how many people signed up for Medicaid, period, in October and November. The problem is that people are always signing up for Medicaid. Even without the ACA, we would have had people signing up in October and November. Lots of them, in fact: Medicaid is a program that services 60 million citizens, so the number of monthly enrollments that keep a relatively stable population is pretty substantial.
In other words, the numbers fail to account for the normal enrollment flow. The question at hand isn’t whether people can sign up for Medicaid at all; it’s the number who would have not otherwise enrolled signed up because of ObamaCare and its expansion of Medicaid. In that sense, the statistics look more like mere correlation:
The above chart tells us that 1.7 million people were determined eligible for Medicaid in November of this year alone. The charts at the end tell us that 780,000 of these enrollees were in states that have undertaken the Obamacare expansion, while 960,000 of them were in states that have not done so.
So, of the November enrollees, 55 percent are in states where the Obamacare expansion of coverage didn’t occur and the ACA is therefore very unlikely to be directly responsible for their coverage. If we look at the October numbers, a little less than half (49.82 percent) were in states that didn’t expand coverage. Therefore, in total, of the 3.9 million individuals newly covered by Medicaid in October or November, only about 1.9 million are from states that expanded Medicaid.**
The next question is: How many of these 1.9 million are eligible directly because of Obamacare’s Medicaid expansion, and how many were just “normal” Medicaid enrollees? As Klein notes, we’d love to have October and November data on enrollment from last year, but unfortunately we don’t.
Kessler issued himself 3 Pinocchios for using this data unquestioningly, and to everyone else who did as well:
Essentially, then, it is ridiculous to suggest, as the @BarackObama tweet does, that the people who have selected a health plan in the exchanges are in anyway equivalent to the 3.9 to 4.2 million who were deemed eligible for Medicaid.
Soon, CMS will release the Medicaid numbers for December. Presumably the new numbers will reveal as little about the impact of the Affordable Care Act as the 3.9 million figure. Reporters need to be very careful about using the new figure in any sentence that includes a reference to the new health-care law.
We’re awarding Three Pinocchios to everyone, including The Fact Checker, who improperly used this number or left the wrong impression about it.
However, there is one more point which Kessler misses. The 2.1 million number for non-Medicaid ObamaCare enrollments which he uses for the other end of his equation is also highly questionable. Those are sign-ups within the exchanges and not confirmed enrollments. As testimony yesterday made clear, the Obama administration actually has no idea how many enrollments have actually taken place — where the insurance company has the correct data, has issued the policy, and where the consumer has paid the premium. The government is supposed to know this, but they haven’t built the back-end systems to track that yet.
What we do know is that between five and six million people lost their health insurance plans in 2013, thanks to the ObamaCare mandates. And what these figures and their context strongly indicate is that we are still far from the break-even point for the lost coverage.

Most ObamaCare enrollees already had health plans, report says ^ | January 18, 2014 | 

Posted on Sat Jan 18 2014 06:59:24 GMT-0500 (EST) by grimalkin

The majority of the more than 2 million Americans who signed up for health insurance under ObamaCare through the end of December were already enrolled in employer-sponsored plans or had previously bought their own coverage, The Wall Street Journal reported Friday.

Early data from insurers, brokers and consultants suggest that the marketplaces are popular with consumers who were previously covered elsewhere, raising questions about a law intended to expand coverage to millions of healthy, uninsured Americans to help offset costs.

A survey by management consulting firm McKinsey & Co. found that only 11 percent of consumers who purchased new coverage under ObamaCare were previously uninsured. The survey was based on a sampling of 4,563 consumers between November and January, according to The Wall Street Journal.

HealthMarkets Inc., an insurance agency that signed up about 7,500 people in exchange plans, reported that 65 of its enrollees had prior coverage, the report said. Fifteen percent of enrollees had their individual plans canceled, and 40 percent switched over from previous individual plans.

"One of the intents of the law was to address the uninsured problem in our country," David M. Cordani, chief executive of insurer Cigna told the newspaper. Some insurers said the early data on newly insured consumers is falling short of expectations.

(Excerpt) Read more at ...