The Federalist had an article that caught my attention, The Most Popular Republican Talking Point On Health Care Is Wrong. In that article Mr. Clancy says, “Of all the various Republican health care reform ideas, the most popular by far is letting people buy health insurance across state lines.” If this is the best the Republicans can come up with I think we are pretty safe from health care reform in 2014 and at least for me, that is a good thing. Here is my comment and a graph from a previous post,

As a healthy person who buys his health insurance in Ohio I doubt that I could get a more affordable health insurance plan from another state. Every year eHealth puts out a report on health insurance prices in the 48 states they sell polices in and as long as you are not living in Massachusetts or New York the costs are pretty close. You have to admire the rich irony of this Republican talking point. The people who stand to benefit the most are from those blue states, Massachusetts and New York. I think it is pretty safe to say that selling health insurance across state lines is not going to save me money and if this is the best the Republicans can come up with then we are pretty safe from more misguided health care reforms in 2014.

The most interesting thing happening in November is that we will probably know the insurance rates for 2015 and how many healthy people are still paying into the system. Unlike auto insurance health insurance has a very large redistribution and political component to it. That is its fatal flaw. Since 1976 when I started working I have seen large group plans struggle to work around this flaw. Over the years the large group plans became increasingly more stupid about health care until we got to the present situation where we lead the world in health care spending per capita. When I look at a graph health care spending per capita by various countries, we are off the chart bad. What does the future hold for us in health care reform? Politics and government incompetence are the most important drivers. If the Administration continues to postpone the Affordable Care Act taxes and healthy people seep out of the exchanges, the exchange funding question will rear its ugly head. Although politically inconvenient I expect based on past history that the Administration will kick this can down the road and postpone most of the Affordable Care Act through 2017. This is the politically smart thing to do since the Republicans do not have much of an appetite for health care reform. For people seeking to repeal the Affordable Care Act this the next best thing but it does lead to an interesting endgame scenario. My health insurance policy is grandfathered and it costs me less than exchange plans since it does not cover maternity care and other things I have no use for. Since my insurance company does not participate in the exchange, I expect my insurance company will continue to do what ever they can to offer me the best rates to keep me from buying a plan on the exchange. This is good for me since I need affordable health insurance but bad for the exchanges since they desperately need healthy people like me. In this scenario I am best served if the Republicans and Democrats do as little as possible. Eventually the exchanges will suffer a TennCare-like funding breakdown. This is not pretty but it is the most likely scenario.

Last month I wrote a post, Year-Round Sales Of Health Plans, that acknowledged a common fallacy I heard from folks looking at going without health insurance is that they could go get a health insurance plan anytime they needed one. John Goodman wrote a nice article on the subject, You Can’t Buy Insurance Until Next November, at The Independent Institute. Here was my comment,

Nevada mandates year-around sales of health plans, http://www.kaiserhealthnews.or…. It may sound counter-intuitive to Affordable Care Act supporters but insurance companies and exchanges should grab customers whenever they can if they want to reduce the number of uninsured. The biggest threat to the exchanges is that healthy customers might get comfortable going without health insurance. I asked my state representative to submit a bill mandating year-around sales of health plans and he said he would look at it.

I hate to give advice to Affordable Care Act supporters since I am pretty happy with all of the delays but my inner MBA says if you want the exchanges to work, you have to start running them like a business. I have seen Christmas stores that are open longer during the year than the exchanges.

One of the advantages of having a grandfathered health insurance plan is that you can look around and kick the tires of the new health insurance market place. A common fallacy I have heard from folks looking at going without health insurance is that they could go get a health insurance plan anytime they needed one. That is incorrect for most states. Most states allow health insurance to be sold without restriction only during the “open enrollment” period which recently went from October 1^st to March 31^st. The only state that mandates year-around sales of health plans is Nevada. The argument against year-around sales is the impact of adverse selection. The interesting question is how does this reduce adverse selection and health care costs?

Let us look at an example. Suppose in August your wife gets a call from the hospital and they say there is a dot on the mammogram and they recommend a biopsy. The earliest they can schedule the operation is in September. Is the insurance company better off if their prospective new customer delays their operation to October? In the immortal words of Hillary Clinton, what does it matter? How are they avoiding adverse selection by delaying treatment to October?  For  better or for worse the Affordable Care Act has made adverse selection a moot point for insurance companies. For those who are curious my wife’s diagnosis was just another false positive. Hmm… Maybe I need to write my state representative and see if he wants to piss off his party some more.

I was surprised when Neil Cavuto announced on Thursday night on Fox Business(FBN) that the 7.1 million enrollee figure the White House was celebrating was celebrating was off. How much off were the numbers? Here is what FBN said.

Try about a million enrollees.

Not a million fewer enrollees. A million net new, paying enrollees.

Yes, we crunched the data, separated out as best we could those who already had insurance, so weren’t exactly “new” to getting insurance. Then, with the help of an expert, separated from the remaining group those actually paying for the coverage.

And lo and behold we arrived at that slightly more than 1 million paying ObamaCare customers.

Now, the White House fumed that we were leaving out the millions signing up for Medicaid and kids staying on their parents’ policies longer, thanks to ObamaCare. Fair enough, we told them, which is also why we excluded the millions more Americans who lost their health care coverage altogether.

As a numbers guy I was surprised. Obviously they were not getting the numbers from the Administration so I started looking for details how they came up with their number and what is so important with the 7 million number?

My best guess is that the 7 million number was an arbitrary goal set up by the Administration last year that they thought would indicate an approximate health of the Affordable Care Act(ACA) process and in particular the viability of the exchanges. I don’t think anyone put much thought into the 7 million number. It has always been more of a political goal rather than an operational goal. Considering the ambiguous nature of this number I do not have a problem with the Administration celebrating this achievement since they have so few accomplishments to celebrate. Achieving this goal is something you celebrate at Happy Hour while reminding yourself that the blind pursuit of political goals breeds incompetence. If you really want the ACA to work, you have to throw your political hat into the closet and put on your manager hat . It is time to start managing for success and the road to success starts with effective goal management. If we recognize that the people who signed up for Medicaid is a separate and distinct issue from the issues affecting the viability of the exchange then we can see why FBN  focused on the new, paying enrollees who were previously uninsured. There lies the difference. FBN has the manger hat on and the Administration still has the political hat on and the goal posts have vanished. Obviously the number of new, paying enrollees who were previously uninsured is probably a more important to the health of the individual health insurance market than the Administration’s number of enrollees. It was hoped that the demographics of the new enrollees  would be dominated by healthy millennials to assure the viability of the market. Although it will probably take several months before we get a report on the demographics, Fox and others can and should start making initial assessments based on the information that is available. If FBN’s report of a about a million new, paying enrollees is correct then we probably have too few new people in the market regardless of the demographics. If exchanges are going down a path that looks like a lot like a slow motion death spiral, maybe it is a good time to start looking at a different way to pay for pre-exisiting conditions before it actually becomes a death spiral.

Earlier this week in the Fiscal Times article, Hospitals Plot the End of Insurance Companies, they described the “Kaiserification” of our health care system. Today I caught up with Michael McConnell’s answer to whether Hobby Lobby could avoid a substantial burden on its religious exercise by dropping health insurance and paying fines of $2,000 per employee? Here is what the Fiscal Times said about the Kaiserification of our health care system.

Dr. Ezekiel Emanuel, chairman of the Department of Medical Ethics and Health Policy at the University of Pennsylvania and one of the architects of the Affordable Care Act, agreed, saying that we’re beginning to see what he called the “Kaiserification” of our health care system.

He was referring to the Kaiser Permanente health care consortium, which combines a health insurance company with subsidiary hospitals and medical practices to create a fully integrated health care delivery system. He noted that large insurer Wellpoint recently completed the acquisition of a health care company in California, apparently with an eye toward replicating the Kaiser model in some form.

Emanuel said we’re witnessing “the end of insurance companies as we know them” and that if they want to survive, they “will have to get into the business of providing care.”

He predicted that in the world of health care, “the wave of the future is integrated delivery systems ”“ integrating insurance with delivery function.”

I agree with Dr. Emanuel on this point. I argued in the past that a local health care plan would be best for me and wondered out loud why we are using a federal solution to an inherently local solution. Here is what I said in my post, Health Care Reform for the Forgotten Man.

My perfect health care plan is an individualized health care plan issued from my local hospital that includes my local doctor. The perfect plan for the business I work at is a defined contribution plan. If we combine both of these together we arrive at the conclusion that if health care is to evolve to a more perfect system then it will be primarily a local solution with possibly some state-wide or regional features.

As much as I like the “Kaiserification” solution there are a few problems with it for both local and nationwide companies like Hobby Lobby.

1. How do you create and maintain adequate cost and quality competition in a region? Hospitals seem to be clueless about cost and quality control. Are health insurance companies a necessary evil till hospitals, government plans, and insurance companies can settle on one price for a service?
2. How do you compensate doctors and hospitals in other states if the patient wants to use them? My nephew had a chronic problem that was not resolved until he went to a doctor in a different state who specialized in the diagnosis and correction of that problem. His surgery was out of network. A similar but different problem exists for people living in a tri-state area. I can get to a highly rated hospital in Kentucky faster than I can get to one in downtown Cincinnati.
3. How do you manage health insurance benefits for a company with employees working nationwide? Hobby Lobby has about 561 stores and 21,000 employees.
4. How important is the health insurance benefit to attracting and keeping employees?
5. How disruptive would it be for a company to drop its health insurance benefit?

As Mr. McConnell pointed out the last two questions are important reasons for why Hobby Lobby, Walmart, Starbucks, and others will continue to offer a more attractive health insurance benefit to their employees than is offered via the exchange. Once again the conservative, go slow approach to reforming employer sponsored health insurance benefit continues to be more attractive to both employers and employees rather than the progressive, faster, less understood changes of the Affordable Care Act. The $2,000 penalty and “Kaiserification” of health care may be an appealing tradeoff for small companies with health care plans very similar to exchange plans. For large group plans the “Kaiserification” of health care is a confusing message to the existing employees and is becoming an unforeseen obstacle in hiring new employees. For large companies like Hobby Lobby their ability to hire directly affects their ability to grow. Justifiably these companies are proud of their existing health care plans and are probably getting upset that their existing and prospective employees are wondering who is telling the truth about health care. These are the people who were supposed to be able to keep their health care plans and be excluded from health care chaos! Unfortunately Dr. Emanuel’s talk of companies dropping health insurance as a good thing is just adding to the skepticism towards the Affordable Care Act. If there was any remaining good will in the public towards the Affordable Care Act, the polling says it is quickly fading. The obvious solution to the religious objection question is to allow the exchange to create a “Medicare Advantage-like” solution and let these large companies get back on track with the “go slow” approach to health care reform. Abortion benefits was not one of the big problems the Affordable Care Act was trying to fix. This would allow Hobby Lobby to offer a plan that complies with their religious beliefs and the government to offer a plan that complies with their religious beliefs. The solution is not pretty but does it matter when 27 parts of the ACA are postponed? As some point the judicial branch is going to get tired trying to fix the Affordable Care Act.

Once again I am reminded me of this old nursery rhyme.

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.^[1]

Rick Caird had this to say about the Affordable Care Act over at Althouse …

We need a like button. I liked Mead’s comment of “… all I got was this lousy insurance requirement”.

We shouldn’t forget that ObamaCare was written in the dead of night by Harry Reid’s office, voted on, unread, by the Senate hours later and sent to the House which passed it “as is” so it would not have to go back to the Senate where Scott Brown’s vote would have killed it.

Therefore, there was no internal consistency check. There was no opportunity for clarifying amendments. There was no opportunity for anything Harry Reid did not think was appropriate. That is why we keep finding these unintended consequences that Obama tries to paper over with Executive Orders.

That is why the idea of “fixing” ObamaCare is a very bad idea. There are so many traps in the bill (as well as in the stacks of “rules”) that no one could untangle the mess. This is just like a badly designed web site. Best to start all over than try to add undocumented patch upon undocumented patch in a vain attempt to fix it.

If the Republicans get control of the Senate, they should identify what the minimum requirements of a health care system should be, and create a much simpler, easy to understand bill and send that to Obama.

As a fan of the KISS principle I agree with his fix for our health care system although I am very skeptical that the right political environment will exist in 2015 or 2016. The unsubsidized health insurance price increase for healthy people is a problem that is just not going to get solved without major changes to the Affordable Care Act. It is a sign of insanity when Affordable Care Act supporters chase away the best customers and expect our health care system will become sustainable.

For kicks I went over to the Kaiser Health Subsidy Calculator again and here is what I found. I am paying $407 per month for a silverish-bronze unsubsidized, grandfathered plan with a $3,000 deductible. For the mathematically challenged that is $4,884 a year. So why does a $12,627 plan with a $6,927 subsidy make sense for a healthy person or the country? The country would be paying $6,927 more for something they got for free in 2013. I would be paying $816 more for a silver plan. The silver plans I looked at had a higher deductible, too. The winners in this environment are those folks who think the biggest problems facing health care reform will be fixed by throwing more money at it. I remain skeptical that this shell game approach to health care reform will fix anything. This leads me to the conclusion that repeated delays is the simple, popular, and successful political answer to fixing the Affordable Care Act.

Mark this as another Affordable Care Act fix I do not understand. Politics makes for strange bedfellows. As the “perfect” insurance customer the Affordable Care Act needs people like me to participate in the exchanges to make them sustainable. As a 60 year old gym rat I pay about three times more to the exchange than a millennial. Don’t get me wrong if we are not going to repeal the foolish thing then this is the next best solution. On the other hand I am the most likely prospect to go the uninsured route. Once again here are my reasons.

1. My health care costs excluding insurance premiums over the last five years amounted to about 7% of my total health care bill. With health care costs this low I have not made a claim on my health insurance plan.
2. When I compare my PPO plan with the narrow market HMO plans on the exchange I prefer my old plan. At this time it costs almost as much as the lowest cost bronze plan with the subsidy but has a lower deductible and out of pocket cost. For most major medical situations I am financially better off with the old plan.

Here is what the Yahoo article, Obama Said to Allow Two-Year Renewal for Old Health Plans, said.

Americans who kept health plans that don’t comply with Obamacare requirements will be able to renew those policies for two more years, according to a person familiar with the matter.

The Obama administration, which has been deliberating the issue since November, is expected to announce today the extension of the health plans, said the person, who asked not to be identified because the decision wasn’t yet public.