The Wrongologist

What’s
Wrong Today:

How
many times did Mr. Obama apologize yesterday? You probably lost count, but it
was 10 times. Apparently, he needed to call for allowing people to keep their health
plans, because members of his party are freaking out as they head home today to
face what they assume will be angry constituents.

There
will be a vote in the House today on the Upton Bill which is another way to effectively
end Obamacare. The bill will never become law, but it is more Republican sport
as they turn from their huge defeat (the shutdown) to find political gold.

It’s not just
the website that is hurting Mr. Obama; it’s the cancellation of pre-existing
policies. He told people they could keep their policies, but that decision
was never his to make. It was up to insurance companies. Since there is no
robust public option, Mr. Obama does not have any significant leverage over the
insurance companies. There is nothing he can do to them, so insurance companies
are doing what is in their best interest.

Most of
the carnage about canceled plans affects those people who purchase insurance as
an individual, or as part of a group made up of individuals, or (very) small
businesses. A little-known fact about the policies that these individuals or small
groups hold is very few keep them for very long. The WaPo Fact Checker blog notes that less than 4.8% kept their plans longer
than 44 months. Why is that important? Because the Obamacare law
“grandfathered” plans obtained before March 23, 2010, which was 44 months ago. The DHHS knew this when they were
drafting the bill. From Fact Checker: (emphasis by the Wrongologist)

Moreover,
HHS relied on a study by Health Affairs, “Patterns Of Individual Health Insurance
Coverage, 1996–2000”. The study noted that, for most people, buying
individual insurance is itself a temporary condition: (emphasis by the Wrongologist)

A “spell”
means a period of insurance coverage. Maybe we are under another kind of
“spell” by our politicians.

The study
showed that only half of those holding individual policies have to buy private
insurance for longer than 6 months. The turnover in that market is already very
high so “keeping your policy if you
like it” may not even be relevant for most of them.

Translating all this,
less than 5% of individual health insurance policy holders have kept their
policies long enough to be grandfathered under the ACA. This means about 95%
percent of people now getting cancellation notices almost certainly purchased
their plan after the effective date of
the law.

So, Mr.
Obama is losing the messaging war. The perception is that Obamacare cancelled
people’s policies and is raising everybody’s rates.

• Obamacare
  hasn’t canceled anyone’s policy…That was done by an insurance company.

• Obamacare
  hasn’t raised anyone’s rate…That was done by an insurance company.

Mr. Obama
is losing the messaging war either by not knowing the facts, or by not paying
attention. He thought he could make deals with the insurance companies, and still
make sure everyone wins. Maybe not this time. Obamacare was designed to be a
windfall for the insurance companies. They were to get millions of new insureds.
But, they seem to want to bite the hand that feeds them. 

The ACA legislation
was the result of stakeholder unwillingness to sacrifice anything to
achieve “health care reform”. Legislators heard from people who had
health insurance and were not willing to give it up. Some 85% of the voters in
this country had employer provided health insurance, and they did
not want “Medicare for all” to take over. Those who were on Medicare
deluged legislators with demands that Medicare not be changed. Many voters balked
at the idea that taxes might be raised, or the deficit increased.

The insurance
companies, medical providers and the pharmaceutical companies were adamant that
their profits could not take a hit.

The legislators
were pragmatic. Reelection demanded that they meet all of these criteria: Those
with insurance could keep it; employer-provided insurance would be kept;
Medicare would not be changed; reform would be done at no cost; and corporate
profits would be protected. The result is a gigantic, unsatisfying kluge; but
that’s what you get at the “free lunch” counter.

What
Insurance companies should have advocated for, if they were honest and/or
concerned about the people, is something like what the Swiss or Germans do,
which is fixed policies, with fixed profit rates, and fixed everything else
(very few real options, but good insurance), all done through the private
sector.

That way,
insurance executives and sales people could keep their jobs, the companies could
siphon off their share of profits, and everyone could have been covered. That
was a way to get the windfall and not go single payer. But, that’s not what the
industry chose to advocate for. Of course, those in the insurance industry
boardrooms and hospital administrative suites are going to squeeze the Obamacare
teat for all its worth and then some. That is the nature of modern corporatism.

The Republicans
are taking full political advantage of the situation, but mostly for sport.
They have never had any intention of truly replacing Obamacare; they simply
want to hang the Obamacare albatross around Mr. Obama’s neck and that of his
party.

But, Mr. Obama
is proving to be more than capable of placing the bird’s carcass around his own
neck.