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TxSIP     CALA

PPACA up in smoke?

There is a lot of schadenfreude going around these days over the implosion of healthcare.gov, but it is not something I can bring myself to partake.  It would be different if I thought this would bring about the end of Obamacare as we know it.  But, it will not.  The administration is "all in" on Obamacare and has been from the start.  Yesterday, we learned that after six people signed up on day one of healthcare.gov, a full month later less than 27,000 have signed up through the federal exchange.  The state exchange enrollments have also been dismal with just 79,391 signing up through the state exchanges.  The administration had initally predicted almost 500,000 would sign up in the first year.  Only number that starts with a five so far is 5,000,000, the number of people who have lost their current insurance plan due to ACA rules and requirements.  

The administration ran to its favorite comparator Massachusetts for comfort to compare its poor showing in the first month of the Massachusetts exchange.  But, that should provide them little comfort because the Massachusetts exchange enrollment in 2007 was 44,948 (more than enrolled under the federal exchange and 27% of the first year total enrollment.  The ACA has just 1.3% of its projected first year enrollment.

So what?  This is a rocky start, nothing more, right?  Maybe.  The next shoe to drop is whether they can actually get the federal exchange up and running as promised by the end of November.  Again, the guys working on this remind me of the contractors Tom Hanks hired to remodel his home in the Money Pit.  "Two weeks" was their estimate for everything.  But even if they actually make that deadline, the task ahead is daunting.

80% of the new enrollees in the state exchanges have not actually purchased a health plan.  Instead, they have enrolled into Medicaid.  People have to buy the private plans offered on the exchange to create a stable pool for insurance.  If that ratio does not dramatically change in the next few months, the insurance carriers offering plans on the exchange are going to get extremely nervous.

Moreover, no one is talking about what people are actually buying on the exchanges.  The focus has been on premiums.  The numbers routinely offered are premiums for silver level plans which after subsidies can be less than $100 or even $50 per month depending on your age.  But, these silver level plans still leave the insured to cover 30% of their medical expenses and have deductibles that most people will consider very high ($3000 and above).  Unless you are eligible for a cost sharing subsidy (below 250% of federal poverty level), you will be responsible for these expenses.  In addition, there is very little information being shared on the networks accessed by the exchange and the providers within those networks.  For example, M.D. Anderson Cancer Center is available on the exchange DEPENDING on the plan you buy.  Not every plan will be able to access M.D. Anderson.  Do you think that will be important for people to know?  

How likely are the young and healthy to jump into this pool of unknown issues?  Highly unlikely, I think.  Yet, these are precisely the people they need to participate to make a sustainable market.

Apparently, the President will make an announcement about some sort of accommodation for people losing their plans.  More to come on that!

UPDATED: 

The announcement has come.  Via some magical process outside the boundary of modern legislative process, the President will allow some of the people receiving cancellation notices to keep their plans if they like them . . . for a year.  I doubt he consulted with the insurance carriers sending those cancellation letters in advance.  Thus spake Zarathrustra!  So, they must act!  This is farce.  First, having spent years preparing for this moment, it is highly unlikely that any significant number of carriers will follow through on this 12 month license. Second, even if they do, you have just kicked the can to next year.  What have you accomplished?  My guess is the administration is desparately trying to take the wind away from the sails of the legislative efforts to allow people to really keep their plans.  In addition, I suppose he can now say, "hey, I gave the carriers the option to allow these plans, it was their choice to terminate them."

 

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