Obamacare: ‘The reports of my death are greatly exaggerated’

FactCheck.org reported, GOP’s Obamacare Obituary: Premature:

In reality the law — specifically the ACA marketplaces for those buying their own coverage — is ailing, but still very much alive.

Federal officials announced a few days ago that 12.2 million people were signed up to be covered by Obamacare health insurance policies sold through the federal and state ACA marketplaces, or exchanges, this year — down less than 4 percent from the 12.7 million who signed up during the same period a year earlier. That’s a pretty lively corpse.

Furthermore, this year’s sign-up figure is expected to rise; it doesn’t include “waiting in line” sign-ups that California and three other states allowed for people who had started the enrollment process before the Jan. 31 cut-off. Also, part of the difference is due to Louisiana’s recent expansion of Medicaid, which now covers some who had obtained coverage in 2016 through the Obamacare exchanges.

Indeed, independent experts predict that the Obamacare exchanges — should the GOP Congress fail to repeal the law as promised — likely will remain stable for many years.

“If nothing else changed they would probably stabilize at a lower level of enrollment,” says Mark V. Pauly, a professor of health care management at the University of Pennsylvania’s Wharton School.

That’s also the judgment of the nonpartisan Congressional Budget Office, which said in its analysis of the House bill to replace Obamacare that the market for individuals to purchase policies “would probably be stable in most areas under either current law or the [GOP replacement] legislation.”

In theory, a health insurance market goes into a “death spiral” when too many sick people take out insurance, driving up premiums that in turn cause healthier people to drop out. But under Obamacare, CBO said, the subsidies, coupled with the law’s tax penalties for those who don’t obtain coverage, “are anticipated to cause sufficient demand for insurance by people with low health care expenditures for the market to be stable.”
Wharton’s Pauly says rising premiums could drive out everyone who isn’t heavily subsidized, but that wouldn’t cause a spiral. “The taxpayers will have to pay more so they could object but that is not what we usually mean by instability,” he says.

A still-living Mark Twain wrote in 1897 that “the reports of my death are greatly exaggerated.” The same can be said of GOP claims that Obamacare is fatally ill. If they want it dead, they’ll probably have to kill it themselves.

The New York Times follows up today with this report, No ‘Death Spiral’: Insurers May Soon Profit From Obamacare Plans, Analysis Finds:

In contrast to the dire pronouncements from President Trump and other Republicans, the demise of the individual insurance market seems greatly exaggerated, according to a new financial analysis released Friday.

The analysis, by Standard & Poor’s, looked at the performance of many Blue Cross plans in nearly three dozen states since President Barack Obama’s health care law took effect three years ago. It shows the insurers significantly reduced their losses last year, are likely to break even this year and that most could profit — albeit some in the single-digits — in 2018. The insurers cover more than five million people in the individual market.

After years in which many insurers lost money, then lost even more in 2015, “we are seeing the first signs in 2016 that this market could be manageable for most health insurers,” the Standard & Poor’s analysts said. The “market is not in a ‘death spiral,’ ” they said.

It is the latest evidence that the existing law has not crippled the market where individuals can buy health coverage, although several insurers have pulled out of some markets, including two in Iowa just this week. They and other industry specialists have cited the uncertainty surrounding the Congressional debate over the law, and the failed effort two weeks ago by House Republicans to bring a bill to the floor for a vote.

It is the constant sabotage of Obamacare by Tea-Publicans that “causes uncertainty in the marketplace”  — you know, that horrible thing Tea-Publicans always complain about.

The House G.O.P. leadership went home for a two-week recess on Thursday, unable to reach a compromise between conservative and moderate members over the extent of coverage that should be required for the very sick.

If the markets were to falter without a resolution in Congress, the risk of eroding public opinion before the midterm elections next year is bound to increase. The latest monthly Kaiser Health Tracking Poll by the Kaiser Family Foundation showed that more than half of Americans now believe that the president and Republicans own the health care issue and may shoulder the blame for any failings. The survey reported that more than half now support the Obama health care law.

The S.& P. report also buttresses the analysis of the Republican bill by the nonpartisan Congressional Budget Office, which said the markets were relatively stable under the current law, contradicting some Republican assessments of volatility.

“Things are getting better,” Gary Claxton, a vice president at the Kaiser Family Foundation, said of the insurance markets. The foundation has been closely tracking the insurers’ progress.

Although it took longer than expected, the insurers appear to be starting to understand how the new individual market works, said Deep Banerjee, an S.&P. credit analyst who helped write the report. The companies have aggressively increased their prices, so they are now largely covering their medical costs, Mr. Banerjee said. They have also significantly narrowed their networks to include fewer doctors and hospitals as a way to lower those costs.

In 2016, the number of companies whose medical costs exceeded their premiums fell by half, to nine of the 32 Blue Cross companies included in the S.&P. analysis. The improvement signaled the potential for profit margins to increase. A few plans, notably Florida Blue, are already profitable. The report released on Friday did not include Anthem’s for-profit Blue Cross plans, which span 14 states.

Mr. Banerjee warned that the market is still fragile, and he said insurers needed more time to figure out how to make the business work. While the market is very much alive, he said, it is “still in critical care. It still needs time to improve.”

The S.& P. report represents some good news in a market that has proved more than challenging to the health insurers. Most insurers have struggled to make money, and several companies reported losses that ran into the hundreds of millions of dollars.

News media have reported on insurers that are giving up. Aetna and UnitedHealth Group were among the first major insurers to largely pull out, but, early this year, Humana announced it would stop selling policies in 2018. That could leave parts of Tennessee without any insurers, an outcome that some senators on both sides of the aisle are trying to address.

Just this week, two of the three largest insurance companies in Iowa, Wellmark Blue Cross and Aetna, said they would stop selling individual policies in the state next year. That could leave nearly all of Iowa with only one carrier.

* * *

It is unclear what Mr. Trump and Congress will do to fundamentally change the insurers’ projections for next year. While Mr. Banerjee predicted insurers would probably raise their prices only moderately next year, he said questions over whether there would be as much government financing could lead to much sharper increases. The companies appear likely to make money in 2018, but “there are external events that could stop that,” he said.

External events like this bizarre lawsuit that could still blow up the ACA insurance markets:

A pending court case, House v. Price (née House v. Burwell — and so much turns on the name change), has given the administration a bomb it could use to blow up insurance markets across the country. At stake is the legality of the payments the federal government makes to insurance companies to help cover the medical expenses of low-income people.

Destroying those markets, however, carries huge political risks. Trump’s full-throated support for a reckless replacement bill has convinced millions of Americans that he’s intent on taking away their insurance. If their insurance does go away, they’ll probably blame him. It’s his presidency, and his problem.

By moving to defuse House v. Price, the Trump administration could signal that it means to make the best of Obamacare. At the same time, however, the case may represent the last best chance to rip the statute up from the roots. Skittish insurers are watching closely to see what the administration will do. Time is short: Insurers will have to decide very soon whether they want to participate on Obamacare’s exchanges in 2018.

The administration thus faces a stark choice, and its approach to the litigation could shape the future of health reform.

House v. Price was conceived in July 2014, when the Republican-controlled House of Representatives voted to sue the Obama administration. The House accused it of making billions of dollars in illegal “cost-sharing” payments to insurance companies.

* * *

Here’s the catch. The Constitution says that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Under the persnickety rules governing appropriations law, it’s not enough for a statute to order the government to make a payment. Congress must adopt a law that specifically appropriates the money to make that payment. And while the Affordable Care Act does link the premium subsidies to an existing appropriation, it’s silent about the cost-sharing reductions.

In the view of House Republicans, that rendered the reimbursements illegal.

* * *

[M]ost observers expected the House’s lawsuit to be dismissed on standing grounds. The House, however, got lucky. It drew a district court judge who was sympathetic to its argument [forum shopping] that unless the court intervened, President Obama could keep flouting the Constitution with impunity.

And so the court ruled that the House had standing. Six months later, in May 2016, the court issued a second opinion on the merits: It held that the cost-sharing payments were unconstitutional and ordered the payments stopped.

Had the district court’s injunction taken immediate effect, it would have created havoc in the insurance markets. But in issuing its decision, the district court stayed its injunction — it put it on pause — to allow the government to appeal.

Shortly after the Obama administration filed its opening brief to the appeals court, however, Donald J. Trump won the presidential election. With the appointment of Tom Price to run the Department of Health and Human Services, succeeding Sylvia Mathews Burwell, the tenor of the case changed significantly (as did its name). It’s been languishing ever since.

The House of Representatives asked for the appeals court to put the case on hold, arguing that health care policy was likely to change significantly in the new administration. The appeals court agreed to do so, and ordered status reports every 90 days. The next one is due on May 22.

Now House v. Price offers a back door to undoing Obamacare’s exchanges.

To destabilize the ACA insurance markets, all the administration would have to do is dismiss its appeal and stop fighting the case. At that point, the district court’s injunction — its order to stop making the illegal cost-reimbursement payments —would spring into effect.

Faced with enormous financial losses, many insurers would flee the market. Recall that the Affordable Care Act would still require insurers to cut their low-income enrollees a break — it’s just that insurers wouldn’t get reimbursed. The only way to make the numbers work would be to jack up premiums on everyone. In that scenario, the Urban Institute estimates that premiums would rise, on average, by $1,040, and that hundreds of thousands of people would lose coverage.

The Trump administration may well decide that’s too politically risky. If so, the conventional wisdom is that the House of Representatives and the administration could cut some kind of deal to keep the cost-sharing payments flowing.

* * *

Of greater concern, the case’s very existence makes insurers nervous. Until its resolution, House v. Price hangs over the individual market like the sword of Damocles, giving a mercurial president the power to destabilize the exchanges with the stroke of a pen. Will insurers want to sell coverage in such a vulnerable market? Unless Congress appropriates the money, that’s far from clear — even if officials at Health and Human Services do their best to soothe insurers’ jangled nerves. At a minimum, insurers will hike their premiums to compensate for the systematic risk.

All of which underscores the folly of allowing the House of Representatives to bring this lawsuit in the first place. House v. Burwell was once a rallying cry for conservatives. Now House v. Price may become an albatross around Republicans’ necks.

Meanwhile, the health insurance of millions of Americans hangs in the balance.

Under the Republican proposal, called the American Health Care Act, several provisions could upend coverage for a variety of customers, Mr. Claxton said. The insurers could be selling to a new group of customers, if lower-income customers lose the subsidies they now receive and cannot afford higher prices.

Mr. Claxton warned that there could be markets that would have no insurance companies offering coverage, particularly in rural areas where there were not many to begin with. “How to fix that was always going to be an issue,” he said.

Caroline Pearson, a senior executive at Avalere Health, predicted that more insurers would decide there was no real future for the market, given the political environment. Even if they are close to making money, they may decide it is not worth the headache. Many of the companies are still losing money or are at risk of losing money if they sign up too many people who are sick.

“If you are an insurer and think the exchange is here to stay, your tolerance for annual losses is higher,” she said, “and it’s a long-term strategy.”

Americans increasingly say to “fix” Obamacare and to “make it work” as intended (before Tea-Publicans and conservative courts sabotaged it). But ideological Tea-Publicans in Congress are still hellbent on killing Obamacare, which will disrupt the health insurance marketplace for everyone.

U.S. health care spending grew 5.8 percent in 2015 (most recent available year), reaching $3.2 trillion or $9,990 per person. As a share of the nation’s Gross Domestic Product, health spending accounted for 17.8 percent. Centers for Medicare & Medicaid Services. Disrupting the health insurance marketplace for everyone by repealing Obamacare will have a huge negative economic impact on the economy, not to mention the impact on the lives of people who no longer have health insurance coverage.

Congress is on constituent recess for the next two weeks over the Easter holiday. Contact your member of Congress and Senators and tell them to fix Obamacare and to make it work as it was intended. Tea-Publican efforts to sabotage and to kill Obamacare must end.

UPDATE: As Congress’ two-week spring break gets underway, the Save My Care campaign is launching television ads targeting seven House Republicans — Reps. Mike Coffman (Colo.), Carlos Curbelo (Fla.), Darrell Issa (Calif.), Tom MacArthur (N.J.), Brian Mast (Fla.), Martha McSally (Ariz.) and David Valadao (Calif.) — over their party’s health care plan. Here’s a sample of one of the spots. (h/t Steve Benen).

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