Monday, July 31, 2017

Today in Government Healthcare: Obamacare Price Fixing Scheme Backfires; ER Room Use Not Reduced Under O'Care; Medicare Going Bankrupt & Carriers Run from Exchanges

I spent the morning getting caught on the latest industry news and am left with four telltale stories about the ineptitude of government healthcare:

1. Fewer and fewer insurers are even applying to offer Obamacare Exchange plans each yearIt was down 19% last year and another 38% this year.  Even an 'Obamacare Lawyer' can follow that math.  So, any bets on whether it will be down 57% next year or 76%?

2. The federal government's attempt to fix prices in Obamacare backfired as a University of Chicago study reveals that the Medical Loss Ratio Rules (MLR) have had no impact on premiums at all.  In fact, in some cases things were probably made worse as insurers make more money if they spend more on medical claims. Thus it benefits insurers to spend more on claims and ameliorates their incentive to engage in claim cost control or fraud prevention. Lastly, prior to Obamacare insurers were less afraid to be more aggressive with pricing in some years because they knew if they made a mistake they could raise rates the following year.  Under the new rules they are far more constrained from doing so.

3. According to an independent analysis from the Society of Actuaries, the Medicare trust fund is projected to be depleted by 2029.  The paper goes on to state:
  • Total Medicare spending will continue to grow faster than the economy, increasing the pressure on beneficiary household budgets and the federal budget and threatening the program’s sustainability.
  • Changes are needed to improve Medicare’s long-term solvency and sustainability. The longer corrective measures are delayed, the worse the financial challenges will become and the greater the burden that might be imposed on beneficiaries and taxpayers.
But how many politicians will tell you that?  Don't touch my Medicare!  Good luck with that.

4. No, Obamacare's passage and Medicaid expansion did not reduce emergency room visits - even when specifically studied in a state that expanded Medicaid.  As Politifact concluded, "there’s strong evidence that emergency room usage hasn’t declined much, if at all, since the [ACA] largely took effect in 2013. There’s also evidence that it has increased."

This was not that hard to foresee, by any means.  In true life or death situations people will go to the emergency room.  That dataset will not change much pre or post ACA.  However, for those inconvenient, nagging injuries or illnesses that sit on the borderline, one stays away from the emergency room when they are uninsured and concerned at a massive resulting bill.  However, once that person is shielded from the cost of that decision by Medicaid or an Exchange Plan, the calculus changes.  This phenomenon is only exacerbated by Exchange Plans and Medicaid's notoriously low reimbursement rates reducing the number of doctors willing to see patients.  Eventually (or maybe even as a first option, as the case may be) the ER room becomes the go-to for fast and convenient care.