A couple of months ago before President Obama suspended the employer mandate, my local newspaper had an article supporting Medicaid expansion in Ohio. In that article the journalist interviewed a couple of supporters including a local business man who ran a janitorial firm and a hospital administrator. The local businessman wanted the Medicaid expansion because it would lower his employer mandate penalty. Since he had a significant number of employees who qualified for Medicaid and was planning on paying the employer mandate penalty, his penalty would be smaller with the Medicaid expansion. The hospital administrator wanted Medicaid expanded because some of the uncompensated care patients would be eligible for Medicaid. The businessman want Medicaid expansion to lower his penalty and the hospital administrator hopes that it will reduce hospital costs. To make matters worse “a new Harvard University study finds that enrollment in public program significantly increases enrollees’ use of emergency departments”. Since hospitals and doctors have been complaining that they are losing money on Medicaid patients, an increased amount of Medicaid services should create bigger losses.  The elephant in the room is whether Medicaid will improve health care outcomes for the poor. In hindsight it is interesting to note that the journalist did not make the argument that the Medicaid expansion was going to improve health care for the poor.  One of the architects of the Affordable Care Act, Jonathon Gruber, makes that argument at Wonkblog while trying to downplay the increased health care cost problem.

“I would view it as part of a broader set of evidence that covering people with health insurance doesn’t save money,” says Jonathan Gruber, a health economist at the Massachusetts Institute of Technology, who has also studied Oregon’s Medicaid expansion but is not affiliated with this study. “That was sometimes a misleading motivator for the Affordable Care Act. The law isn’t designed to save money. It’s designed to improve health, and that’s going to cost money.”

One of the shinning lights of the Affordable Care Act has been the Medicaid expansion. The Medicaid expansion was the proverbial “free lunch” which for relatively little cost expanded and improved health care for the poor. It sounded too good to be true and it was. Affordable Care Act supporters might say that they expected people would be unhappy when they found out that they could not keep their health plans or doctors but they appear to be totally unprepared for the Medicaid expansion being bad for hospitals finances. In a sense we are expanding the free health care clinic market so we should expect similar reactions by the patients and health care outcomes. If free health care clinics is such a good idea, why are we expanding Medicaid? If we assume that hospitals are losing money or breaking even on Medicaid patients, then expanding Medicaid will be bad for hospital finances. It was assumed that changing patients from uncompensated care to Medicaid would be good for hospital finances. If an increased number of Medicaid visits impacts hospital finances then the hospitals will attempt to shift their costs to other patients. This is bad news for insurance premiums. State and federal Medicaid administrators should be getting pretty nervous that the Medicaid expansion might cost 40% more than expected. The Oregon Medicaid expansion study showed patients made 40% more trips to the emergency room and shattered hopes that they would start using primary care physicians for their routine health issues. Mr. Gruber might dismiss saving money as a misleading motivator for the Affordable Care Act but the Medicaid expansion is shaping up to be a disaster for hospitals, insurance premiums, and Medicaid budgets.

As Hillary Clinton might say, “What difference at this point does it make?” I doubt the Affordable Care Act will implode in 2014 since there are so many safety nets but it will be a painful subject. After the election it is likely that both sides will try to reform health care in 2015. The Affordable Care Act seems to have created more problems that it has solved. The biggest problem for the Affordable Care Act is that over half of the people in the country believe that number one issue for health care reform is that it should make their health care more affordable and it hasn’t. Their costs have gone up. When it comes to reducing health care costs the Affordable Care Act has transformed that strange coalition of big government and insurance companies into a trust problem with the American people. The cost and trust problems are cascading. The Affordable Care Act supporters sold the Medicaid expansion as a way to reduce uncompensated hospital care and cost shifting. The expansion was supposed to be an easy win-win for improving cost and trust. Now it looks like that may not be true.  It looks like more of the same old promises. Maybe by 2015 we will have some accurate cost data and smarter administrators that will allow us to make smarter decisions about expanding Medicaid and improving health care outcomes. Maybe a little less of the big government view and a little more state government and free market view will reduce the risk and improve the decision making. The old way does not seem to be making health care better and a single payer system would be far more disruptive than the current mess. The two lessons I hope we have learned from the Affordable Care Act is that the cost does matter and any idiot can expand health care if they are allowed to ignore health care costs.

I realize that the gift came a little early for Christmas but for all of the fans of small government the thought is appreciated. It has been practically impossible to convince the majority of the people that big government can be a big part of the problem until we saw the stumbling, bumbling failures surrounding the rollout of www.healthcare.gov. The Affordable Care Act supporters did something to the American people that the Tea Party could never accomplish. They convinced the American people that when it comes to health care reform, if you want a really big scandal you need a federal program! This week a Pew poll confirmed that “seventy-two percent of Americans say big government is a greater threat to the U. S. in the future than is big business or big labor, a record high in the nearly 50-year history of this question”. When I started working in 1976 only 38% of Americans viewed big government as a greater threat to the future of the U. S. With health care expenditures in the United States at about 18 percent of GDP, is this an indicator that we are winning the race to the bottom and we need to stop doing health care the way we have done if for the last fifty years. When you combine the allegations of mismanagement and lying with the thought that we are asking the IRS to force individuals and businesses to buy health insurance, part of the problem can now be laid at the feet of big government and federal programs. It is very easy to dismiss the Affordable Care Act as more of the same with more subsidies rather than an attempt at health care reform. It was a missed opportunity for big government to demonstrate that they can improve health care better than local or state governments. As the people who purchase health insurance in the individual market have found out, you should be very worried when someone says we are from the government and we are here to help!

My health insurance plan’s grandfather status expires in 2014. Before the end of 2014 I will have to choose a new plan and since I can take advantage of the subsidy available from the exchange I will either purchase the new policy from the exchange or go without health insurance. Since I recently went without health insurance for nearly ten years both options are reasonable financial options for my family. For the past five years I worked for a small business who offered a $6,000 per year HRA to their employees. I used $4,700 of this money to purchase a silverish-bronze plan health insurance plan with $3,000 deductible and a $5,000 out of pocket cost. Since I had $1,300 still left in the HRA to cover miscellaneous health care costs my net financial liability was approximately $1,700. As a healthy family my out of pocket costs from 2008 to 2013 has been zero. Naturally I would like to duplicate this strategy in 2015.

When I look at the current premium costs available through the exchange I am confronted with this premium versus deductible versus out of pocket cost dilemma. Here are my choices using 2014 premium rates to guide me.

1. I can achieve the same results with the lowest cost bronze plan(Healthspan HMO) with a $6,350 deductible. I will still have $1,300 for miscellaneous out of pocket costs which may be pretty handy with a narrow network HMO. I view this insurance as catastrophic care coverage or a slightly improved version of Medicaid. In fact several insurance companies participating in the exchanges specialized in serving the Medicaid market. To achieve the same piece of mind I had in 2013 I will have to save an additional $4,650 and put that into an emergency fund to cover the larger deductible. The good news is that the first $1,300 is already covered.

2. To achieve the same results with a silver plan(Anthem PPO cbey) I will have to shell out an $124 per month in addition to the company contribution because the silver plan is more expensive. Since there will be no excess funds left in the HRA and the insurance deductible is $5,000, I will have to save an additional $3,300 to achieve the same piece of mind.

When I look at the out of pocket costs and the network restrictions both the bronze and silver plan are inferior to my 2013 plan but better than going without insurance. If the subsidy disappears or if health insurance premiums significantly increase then the going without health insurance plan becomes the better financial alternative. If I have to choose a new plan and I do not have problems with a narrow network HMO then it makes more financial sense for me to trade down to bronze plan than to trade up to the silver plan. Regardless of which plan I choose I will have to increase my savings to cover the additional uncovered risk the Affordable Care Act has brought to the table.

The Affordable Care Act and I have never gotten along. As a healthy person who purchases their health insurance in the individual market, I had a target on my back. For the Affordable Care Act supporters there is something evil about healthy people that needs to be suppressed. I don’t understand their quixotic logic but wishing it would go away is not helping. So I reluctantly assumed the position of designated whipping boy in their quest for health care reform. I was told to overlook my plight and remember that my sacrifice will usher in a whole new era of health insurance for for the uninsured and chronically ill. My inner cynic said that it seemed more of power grab than a genuine concern for the good of others. It reminded me of this line out of the novel, 1984.

“The Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power, pure power.”

Still I was comforted by those conservative principles expressed by the President and other Affordable Care Act supporters that said I could keep my insurance and doctor if I wanted to. I even took the President up on his offer to look for a better health insurance plan offered in the exchanges. Surely the supporters would carry over enough of the old system to avoid an unnecessary introduction to Murphy’s Law. At the very least, they would offer a more affordable insurance option through the exchange. I looked, analyzed the plans, and finally decided  that for the President and the Affordable Care Act supporters, words are cheap! It was just a means to the end. I was happier when I thought I was the only Affordable Care Act loser and am disheartened to see that they seem to have gone out of their way to piss off people. So let me identify my first five losers you may not be aware of. I am keeping number 6 for another day.

1. The subsidies for the individual market come from that odd political threesome of Medicare Advantage “overpayments”, a tax on medical devices, and extending Medicare tax on incomes up to $250,000. So let me see if I understand this. We are taking money away from Medicare to subsidize insurance for the young in the hope that if enough young people sign up we will have enough money to subsidize those folks who have pre-existing conditions who are predominately elderly. If that is not weird enough for you, the only bipartisan agreement in health care debate is to revoke the tax on medical devices since it will likely increase health care costs. The only sustainable part of this plan that does not increase health care costs elsewhere is to increase the Medicare tax on the wealthy. It may be gallows humor but it sure looks like the politicians are gleefully looking forward to a massive to a passive, aggressive experience.
2. I was surprised to find that even with a subsidy I had to choose a HMO plan with a pretty narrow hospital network that I am not familiar with or pay a lot more money for a PPO that covers my network. As Ezekiel Emmanuel might say, “You can keep your PPO if you willing to pay more money”.  Is my preferred hospital network a loser? What made them a villain?
3. I was surprised and humbled to find that the insured but chronically ill people can be losers, too. I never expected that the Affordable Care Act would screw the chronically ill! If the doctor or hospital you are using is not part of the exchange insurance plans, you are going to have to change. In other cases the doctor and hospitals are covered but at a much higher cost.
4. As Emmanuel and Gruber will readily admit, it was part of the Affordable Care Act plan that a lot of insurance plans would be canceled and replaced with insurance plans that covered the “Essential Benefits”. The first phase was to cancel the health insurance available via the individual market. I suspect that the people with canceled plans are in shock. Since they are forced to be Early Adopters of www.healthcare.gov and pay higher insurance costs, they are responding with a very typical passive, aggressive response. A typical response by these designated losers is that the Affordable Care Act was supposed to screw “other people”, not them. At least they had showed the individual responsibility to purchase their own health insurance without a government subsidy. The second phase is going to get a lot more dicey since many of the grandfathered individual and group plans will be canceled in 2014. I doubt our politicians want to go to town meetings with a large group of people who have just found out that they are Affordable Care Act losers.
5. I am still puzzled how does one replace Medicaid with a subsidized health insurance plan? I have a relative who is struggling with getting her life back together again after multiple bouts with unemployment. If she goes to www.healthcare.gov she will be automagically enrolled in Medicaid if she tells the truth about her income. If she knows the Medicaid income limits and purposely lies about her income, she can get a subsidized plan. I was curious what she might do since I believe that she is a good prospect to purchase and maintain health insurance. In her transition from part-time to full time employment this would be a nice personal goal. It certainly would enhance her self-esteem if there was a path for her to start paying for health insurance that did not require lying. I realize that the Affordable Care Act plan was to automagically enroll people in Medicaid if they have insufficient income. This fulfills a quest by Affordable Care Act supporters to reduce the number of people without health insurance but it creates a new problem.  How do we encourage people to transition people from Medicaid to subsidized health insurance to normal health insurance? Between these two quests which is the greater good or can we do both? Is this a case where life imitates art and “you can check out anytime you like, but you can never leave”?

Image courtesy of Wikipedia.