A new article at The Apothecary details how many well-intended (but misguided) government policies have increased health insurance costs. As costs increase, more people drop health insurance or opt-out either because they cannot afford the higher prices or the do a simple cost-benefit analysis and decide that the benefit is no longer worth the cost. In either case, it is government mandates and policies that drive up costs with the end results being fewer people with insurance. ObamaCare repeats many of the failed policies of the past which will make the problems associated with higher cost health insurance even worse. Read the full commentary here.

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One of Forbes more liberal commentators, Rich Ungar, has a new commentary in which he foolishly praises ObamaCare's medical loss ratio - calling it a "bomb" - and cheers the coming death of the for-profit insurance industry. 

The medical loss ration (MLR) is a provision of ObamaCare that requires insurers to spend at least 80% of premium dollars on actual medical care (not overhead, marketing and profits).  HHS has denied the request of the insurance companies to include insurance agent commissions as part of the MLR. Ungar praises the move suggesting that commissions are unrelated to health care costs. He is wrong! 

One of the key concepts in health insurance is the so-called "risk pool." As a pool dwindles in size, an individual insured who has a serious health problem can have a big impact on the solvency of the pool and, in turn, on premiums. Insurers need to continue to attract new insureds (through marketing, sales and some overhead) simply to maintain adequate pool size - this, in turn, helps reduce risk and keep premiums down. Marketing makes it possible to keep costs down - it helps spread the risk.

In an ObamaCare-dominated health system, everyone who has private insurance will eventually be forced to leave their current insurance pool at age 65 (the Obama Administration is suing a group of seniors in federal court to force them to enroll in Medicare). So if an insurance company can't spend money to help replace those who leave the pool, private insurance will eventually die.

This too is something that Ungar praises. He says ObamaCare's "medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry." (And he later contradicts himself saying that those who fear "universal health care" shouldn’t fret as "there will always be a for-profit health insurance industry for those who want to pay for it." How he reconciles those two statements is beyond me).

The problem with ObamaCare is that it seeks to destroy the entire free-market healthcare system which today serves the overwhelming number of Americans quiet well (and would be even better with some market-based reforms) and replaces it with something that cannot work well for nearly as many people. ObamaCare: (1) interferes with the rights of Americans to enter into a contract to freely buy a product they want (an insurance policy is a contract); (2) compels each and every American to give up something that works for them and then to buys something that doesn't; (3) forces Americans to subsidize the insurance costs of others (costs made higher by mandates and other governmental policies, or lack thereof); and (4) takes down a path from which we will not be able to return. 

If the great big experiment of government-run, nationalized healthcare is a dud - every American will be captive to a broken system that the political process cannot fix. That is a big gamble to take when your health is on the line.   

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According to a new Weekly Standard article, 4.5 million Americans have lost their health care insurance since ObamaCare became law. This has occurred despite the President's promise that if you like your health insurance you can keep it.

As the article points out, the Congressional Budget Office had predicted that nearly 6 million more Americans would have health insurance in 2011 than in 2010 - including 3 million more people as a result of ObamaCare. So the Washington beancounters are off by a net total of 10.5 million people.

Read the full Weekly Standard article here.

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Every single candidate running in the Republican Presidential Primary should be talking about what is wrong with ObamaCare (well, except maybe for MItt Romney that is).  It fits with the Republican Party's election year narrative.  Job-Killing Taxes? Check! Over Regulation? Check! Size and Scope of Government? Check! So why aren't the candidates talking about it? 

Michael D. Tanner with CATO has more to say on the subject. You can read his commentary here.

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According to the actuaries at CMS, health care costs and insurance costs will grow faster under ObamaCare than without.  Here is what some commentators had to say about the CMS numbers:

• Our friends at Docs4PatientCare write: "Under the PPACA, spending to fund government health care bureaucracy and administration will increase dramatically (14.6% growth in 2014), growing more than twice as fast as spending on health care itself. For comparison, spending on hospital care is expected to grow by 7.2 percent and physician and clinical services by 8.9 percent. (It is also worth noting that the increase in spending on bureaucracy is 16.2 times greater than the nation’s anticipated population growth).
• Avik Roy writes for Forbes that: "contrary to the President, the actuaries find that Obamacare will dramatically increase the near-term growth rate of health care costs. In 2014, the actuaries find that growth in the net cost of health insurance will increase by nearly 14 percent, compared to 3.5% if PPACA had never passed. The growth rate of private insurance costs will rise to 9.4 percent, from 5.0 percent under prior law: an 88% increase."
• Sally Pipes writes about this latest information: "So ObamaCare is certainly fueling the expansion of government health care. But as the Medicare actuaries’ work shows, it’s also driving up health costs for private payers as well. In 2014, costs in many major sectors of the health care market are expected to be much higher than they would be without ObamaCare’s 'reforms'"
• Docs4PatientCare also notes: "According to the report, “out-of-pocket” spending [on health care] is projected to decline by 1.3 percent.... But this is not good news..... This kind of shift is not without costs, as it will: reduce incentives for patients to seek less expensive alternatives; make the health care system less transparent; and lead to more expensive health insurance." 

UPDATE 1: While perhaps related, South Carolina has decided to raise the amount of premiums required to be paid by the state's workforce for their health insurance.

UPDATE 2:  See HealthAffairs blog on the same subject (more numbers, less analysis).

UPDATE 3: Senate Finance Committee staff has a breakdown on these numbers as well.

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On August 2, 2011, Senator Lisa Murkowski (R-AK) was joined by Senator Lamar Alexander (R-TN) and Mike Enzi (R-WY) in introducing a new bill - S. 1500 - to allow for the sale of child-only policies across state lines. One of the consequences of ObamaCare is that many insurers have stopped selling child-only policies (COP) in many states because ObamaCare prohibits the denial of coverage for any pre-existing conditions.

At first blush, one might think that the Murkowski bill is a good thing because it advances the Republican idea of allowing insurers to sell across state lines. That is a short-sighted view of the legislation.   In fact, Murkowski's legislation is horribly misguided for the following reasons:

1. It addresses a symptom, rather than fixing the problem. The problem is ObamaCare and the way it bans denial of coverage for pre-existing conditions (it lets people wait to get sick before buying coverage rather than limiting the guarantee of coverage only to those who maintained continuous coverage). The way to correct the problem would be to repeal the offending provisions of ObamaCare, including those related to denial of coverage for pre-existing conditions in child-only policies (the fact is that the pool is too small for these policies to bear this kind of risk).
   
2. Rather than expand coverage for child-only policies, it will likely have the opposite affect leading to fewer COP policies being available.  How? Assume a scenario where an insurer in Tennessee is still selling COPs but there are no insurers selling these policies in the states surrounding Tennessee.  Parents of a child with a pre-existing condition from Mississippi, Alabama, Georgia, North Carolina, Kentucky, Arkansas and Missouri will rush to Tennessee to buy a COP as the only affordable source of insurance for their very sick child. This will negatively affect Tennessee's risk pool, leading to increased premiums, parents of healthier kids will drop out of the pool, leaving only the very sick.  This will lead to a death spiral for COP policies as insurers in TN would stop offering the COPs altogether.  End result: fewer, not more, kids would have insurance.   
3. It signals a capitulation by moderate Republicans that ObamaCare is here to stay. Murkowski and Alexander are often the first among Senate Republicans to cave in to Democrats and Enzi has worked regularly over the past decade, including with the late Teddy Kennedy (D-MA), to advance big government policies.
4. S. 1500 fails to understand the intended purpose of allowing for the sale of insurance across state lines.  The idea is intended to reduce the impact of state government regulations and mandates that drive up costs. Letting consumers buy across state lines let them migrate from high-cost, high-regulated insurance policies in their home state towards more affordable policies in another state that are free from heavy government regulation.  So allowing for the sale of insurance across state lines will effectively encourage competition to help reduce costs in the face of oppressive state regulation.  Murkowski-Alexander is misguided because they are trying to use the sale of insurance across state lines to circumvent the impact of onerous federal regulations, something that will ultimately prove impossible as long as the federal law remains in place.  
5. Politically, it gives Democrats a chance to play politics.  If the Democrat-controlled Senate holds a vote on the bill, Democrats who support the law would be able to  say they "fixed" the problem (the same one they created) - despite the fact these Democrats know this fix would only lasts for 2 years until ObamaCare fully kicks in.  After two years, child-only policies will die off as people will rush to the exchanges at a tremendous cost to taxpayers. 

Ultimately, Murkowski and Alexander would let the Democrats off the hook so that they never have to face the consequences of the Democrats' misquided ObamaCare policies.  All Americans will suffer in the long run.  This is the Republican version of the Obama Administration's waiver policy - politically motivated and horribly misguided - it fails to address the real problems in the insurance market that were created by ObamaCare in the first place.

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The White House has begun to push back on the McKinsey study that shows nearly a majority of employers are likely to drop their employer-sponsored health insurance as a result of ObamaCare.  The White House has called the study an outlier.  It is not.  Similar studies by groups on both sides of the spectrum, like American Action Forum (led by Douglas Holtz-Eakin) and The Urban Institute, have reached similar conclusions to McKinsey.

Avik Roy at The Apothecary has a piece that pushes back in greater detail on this issue.

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AHEC's good friend, Bob Beauprez, writes on his blog, A Line of Sight, that the McKinsey study (that shows as many as 50% of employers may stop offering employer-sponsored health insurance) is proof that ObamaCare is simply a precursor to a single-payer, government run health care system.

Bob writes:  "The phony budget projections used to sell ObamaCare were based on just 2.5 percent of workers with current employer provided plans to switch – not 30 or even 50 percent! The real resulting impact to the federal treasury will be in the trillions according to former budget officials Douglas Holtz-Eakin and James Capretta. That's another big budget buster that Obama and the Democrats kept hidden behind the curtain when they rammed the bill through Congress.  The end of employer provided health insurance benefits and consolidation into government controlled programs is a big step toward government controlled single-payer health care which has long been the not-so-subtle objective all along. Never mind that the we'll be bankrupt when we get there."

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Grace-Marie Turner of the Galen Institute has a new article in The Wall Street Journal that explains how ObamaCare threatens people with the loss of their private health insurance.

Turner write that: "ObamaCare will lead to a dramatic decline in employer-provided health insurance—with as many as 78 million Americans forced to find other sources of coverage.  This disturbing finding is based on my calculations from a survey by McKinsey & Company. The survey, published this week in the McKinsey Quarterly, found that up to 50% of employers say they will definitely or probably pursue alternatives to their current health-insurance plan in the years after the Patient Protection and Affordable Care Act takes effect in 2014. An estimated 156 million non-elderly Americans get their coverage at work, according to the Employee Benefit Research Institute."  It turns out no matter how much you like your insurance you will likely not be able to keep it.

These figures demonstrate just how unaffordable ObamaCare is.  When Congress passed the law, CBO projected that 9 to 10 million people would receive ObamaCare's subsidies.  Turner notes that last year Douglas Holtz-Eakin wrote last year that 35 million more Americans would likely end up using the subsidies at a cost of $1 trillion more over the decade (or $100 billion more per year).  Turner's latest project a doubling of that number of people which would triple ObamaCare's cost.  Meaning that instead of costing $1 billion as originally projects, 70 million more people accepting subsidies could bring the cost of the bill to $3 trillion in a single decade.

Avik Roy at the Apothecary has also written about this study. He concurs with AHEC's concerns over the budget implications.  Roy writes: "The problem is that, under Obamacare, a huge chunk of the country will be eligible for government subsidies, if they buy insurance on their own. If more people attempt to take advantage of those subsidies than the government projects, and employers recognize they will save money by dumping their workers onto the federal dole, the Congressional Budget Office has underestimated Obamacare’s costs by trillions of dollars."

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