Category Archives: Health

Is it Possible to Insure Everyone in a For-Profit Health Insurance Market?

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By Bikna Huang

Over the past two days, we have been examining the Affordable Care Act in light of the impending Supreme Court decision on the individual mandate provision.  Overall, the issue at hand is how to maintain a for-profit private health insurance system while requiring insurers to essentially return to the community rating system that they had basically abandoned by the 1960s. Earlier this month, President Obama stressed that there were only two ways to fix the health care system, by implementing the individual mandate or a single payer system. The single payer system would be another solution presented by President Obama and the Democrats.

“One way is a single payer plan. Everybody is under a single system like Medicare. The other way is to set up the system in which you don’t have people who are healthy but don’t bother to get health insurance and then we all have to pay for them in the emergency room. That doesn’t work, and so as a consequence we’ve got to make sure that those folks are taking the responsibility seriously – which is what the individual mandate does.” – President Obama

Another solution is Representative Paul Ryan’s plan.  Ryan’s proposal, transforms Medicare and creates a premium support plan. This plan will essentially give premium support for senior citizens to choose from varies providers for their Medicare coverage. The goal of this plan is to reform the Medicare system and “to create—a market so robust we can finally begin to control costs.” Under Ryan’s plan, those who do not purchase health insurance will not be penalized.

We have looked at different aspects of Obamacare through this series, focusing primarily on the individual manadate.  However, in the broader context, the fate of the individual mandate is simply one piece of a problem that needs to be addressed. The United States is ranked as one of the top nations in the world in terms of its GDP and standards of living; however, this is surprising when the health care system in the United States is ranked thirty-seven. When President Obama took office in 2008, the prospect of health care reform seemed closer than ever and the compromise plan that emerged, the Affordable Care Act, seemed like the solution. But in order to maintain the private system, the individual mandate, proposed in the 1980s by the Heritage Foundation seemed to be the most practical way.  There is much to be known about the Affordable Care Act, and the constitutionality of the act is still being decided. What do you think about the individual mandate? Will Obamacare be a push in the right direction for health care reform?

Bikna Huang is an intern with TheFactFile.com who studies at CalPoly in San Luis Obispo, California.

Could the Affordable Care Act survive if the individual mandate Were Eliminated?

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By Bikna Huang

In March 2012, the United States Supreme Court heard oral arguments about the Affordable Care Act, popularly known as “Obamacare.”  Most of the argument was about the individual mandate provision,  which bothered the states who had brought the original individual law suits that were heard together before the Supreme Court.  Once fully implemented in 2014, the individual mandate requires the 50 million uninsured Americans to obtain health insurance.

The idea behind the mandate is to bring costs down for everyone by bringing generally younger and healthier Americans who would not normally buy health insurance into the market which has the effect of spreading the costs for expensive care over a larger population and thereby reduces the average costs for everyone and thereby lowers premiums.  A secondary argument is that it keeps the uninsured out of emergency rooms which is generally where the uninsured get their care.  The reason this is important is that emergency room treatment is extremely expensive compared to normal medical care.  Thus, the mandate was added as a method to require Americans who are generally healthy to buy insurance they would not otherwise buy. There are some studies to support the notion that the mandate is important to cost containment.  For example, a study published in the journal Health Affairs noted:

“We estimate that if the mandate were lifted, premiums in the individual market would increase by 12.6 percent—somewhat less than other estimates—with 7.8 million people losing coverage, versus other estimates for coverage loss of 16–24 million people. In sum, the Affordable Care Act would still cover 23 million people who would have been uninsured without the law.”

While cost containment is the reason for the inclusion of the individual mandate, we wondered whether The Affordable Care act could survive if the Supreme Court strikes down that provision.  That is, without the individual mandate, is Obamacare still Obamacare?  There are a number of possibilities, however, removing the individual mandate would remove the central feature of the plan—premium cost containment.  If the Supreme Court strikes down the individual mandate, Congress can either  fix or abandon the bill by transforming the mandate into a tax (or tax rebate) that is clearly within Congressional power. The Court could also simply order that the references to the individual mandate be stricken, that would leave the rest of the act in place.  In that case, the most popular provisions of the ACA would remain, people with pre-existing conditions would have guaranteed insurability, low income people would receive subsidies for health insurance. Of course, the individual mandate itself is a way to provide revenue for the insurance companies in exchange for insuring everyone without regard to risk (pre-existing conditions) so in the most dismal outcome, striking the individual mandate could lead insurance companies to bankruptcy.

Bikna Huang is an intern with TheFactFile.com who studies at CalPoly in San Luis Obispo, California.

Mandates, Cost Curves and Obamacare

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by Bikna Huang

In March 2012, the United States Supreme Court heard oral arguments about the Affordable Care Act, popularly known as “Obamacare.”  The argument centered on the individual mandate provision, which (once implemented in 2014) would require every person to be covered by some sort of health insurance. The question for the Supreme Court to decide is whether Congress has the power to require millions of uninsured Americans to get health insurance.

According to many proponents of the law, including the Obama administration, Congress has the power to require the individual mandate under the Commerce Clause because the uninsured will still use health services which would have an impact on commerce. Opponents, however, argue that the individual mandate falls under the “general police powers,” which is only for states.

The government has argued that the individual mandate will reduce costs and lower premiums, which had been increasing at rates outpacing inflation for several years, because health insurance companies usually raise premium prices to cover unpaid expenses. However, many have argued that the individual mandate will increase premiums and the cost of health insurance. Jonathan Gruber, MIT economists, predicts that Obamacare would reduce costs for the young and the old and increase for adults in between.

Paul Clement, arguing in opposition to the individual mandate, stated that the individual mandate will cause insurance premiums to “skyrocket.”  The argument proceeds that the proof is there, we have already seen increases in health insurance premiums since passage of the Affordable Care.  However, as we noted, the individual mandate is still two years away, as it will not become effective until the law is fully implemented in 2014.  Confronted with that fact, opponents argue that health insurance will increase even more then, which is at odds with a central goal of Obamacare, providing affordable health insurance.  Of course, if the Obama Administration is correct and the Affordable Care Act’s requirement for health insurance brings in a younger healthier pool who currently forgoes insurance because they are younger and healthier and thus have less need for medical care, then premiums will decrease.  It will be interesting to see whether the individual mandate stands, and which side is correct about the cost, if it does.  We at TheFactFile.com will be watching.

Bikna Huang is an intern with TheFactFile.com who studies at CalPoly in San Luis Obispo, California.

The Affordable Care Act Celebrates its Second Birthday at The Supreme Court

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Last week, the Affordable Care Act (ACA) celebrated its second anniversary, and today, the Supreme Court will take up arguments brought by states questioning whether the Federal Government has the right to require individuals to purchase health insurance policies.  The key issue is whether this mandate is justified by the Commerce Clause of the Constitution, as the Administration argues.

Ironically, the individual mandate itself is an idea that stems from a 1989 report from the conservative Heritage Foundation.  In that report, Stuart Butler (Heritage’s health care expert at the time) argued that under the “Heritage Plan” a mandate was necessary because “[s]ociety does feel a moral obligation to insure that its citizens do not suffer from the unavailability of health care. But on the other hand, each household has the obligation, to the extent it is able, to avoid placing demands on society by protecting itself… A mandate on households certainly would force those with adequate means to obtain insurance protection.”  This was, of course, a central element of Mitt Romney’s Massachusetts plan as well as his 2008 defense of this plan; in the 2008 ABC News debate, Governor Romney stated, “Here’s my view: If somebody – if somebody can afford insurance and decides not to buy it, and then they get sick, they ought to pay their own way, as opposed to expect the government to pay their way….And that’s an American principle. That’s a principle of personal responsibility.”

To assist with the complexity of this issue, we have posted a series of videos below from the Alliance for Health Care Reform.  The Alliance for Health Care Reform, is a nonpartisan, nonprofit group, that according to its mission statement, “does not lobby or take positions on legislation.”  In their statement accompanying the release of the videos to coincide with the second anniversary of the Affordable Care Act, the Alliance for Health Care Reform wrote something near and dear to TheFactFile.com (emphasis added), “Although the Affordable Care Act is two years old today, it’s obvious that millions of Americans don’t understand it. This is a bipartisan problem. So, believing that people should argue about policy but not facts, [The Alliance for Health Care Reform created] videos to help…explain…how the law affects” young adults, small employers, people on Medicare or Medicaid, uninsured with pre-existing conditions and primary care providers.  TheFactFile.com found these videos extremely informative and we hope our readers will as well.

YOUNG ADULTS (3:01)
featuring Sara Collins, vice president for the Affordable Health Insurance Program at The Commonwealth Fund

SMALL EMPLOYERS (3:40)
 featuring Terry Gardiner, vice president for policy and strategy at Small Business Majority

PEOPLE ON MEDICARE (3:04)
 featuring John Rother, president of the National Coalition on Health Care

PEOPLE ON MEDICAID (2:44)
 
featuring Diane Rowland, executive vice president of the Kaiser Family Foundation

UNINSURED PEOPLE WITH PRE-EXISTING CONDITIONS (2:44)
 
featuring Deborah Chollet, senior fellow at Mathematica Policy Research

PRIMARY CARE PROVIDERS (3:02) featuring Kevin Grumbach, MD, professor and chair of the Dept. of Family and Community Medicine at the Univ. of California, San Francisco

What is the “Doc Fix” and Why is It a Perennial Issue?

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Recent news coverage has focused on the so-called Medicare “Doc Fix,” so we thought we would take some time to explain what it is and why it comes up so often. The roots of the Doc Fix are in the Resource Based Relative Value Scale (RBRVS), a fairly complex cost-saving measure for Medicare enacted in 1997 that basically cuts physician reimbursements automatically to keep them in line with a congressionally established Sustainable Growth Rate (SGR). This year, the legislation to increase payments to doctors under Medicare was tied to the legislation for the payroll tax holiday (payroll taxes and premiums fund Medicare, so linking the two seems appropriate). In the past, these fixes have come as part of another spending bill, unrelated legislation, or as standalone measures.

How Congress accomplishes the fix is of less importance than the fix itself. That is because the fix relates to access: if Congress allowed the automatic cuts to go into effect, it is doubtful doctors would be able to accept Medicare as a method of payment and continue to stay in business.

In 2010, the fix averted a cut in the reimbursement rate of 21 percent for doctors, and this year the rate would have been cut by 27 percent. The fix this year is not in addition to the 21 percent, but rather a cumulative adjustment that includes the 21 percent from 2010. The reason for that is the underlying law, the RBRVS, has not changed; the fixes are always temporary in nature. Instead, its pricing targets under the SGR established along with the RBRVS system have changed so that reimbursements under the RBRVS would now be 27 percent lower than the basic market rate.

The problem for members of congress is that permanently fixing the fee schedule comes with a large cost. The Medicare Payment Advisory Commission (MedPAC), a congressionally established bipartisan commission that advises Congress on Medicare, has generally remained silent on this issue. But in October, MedPAC suggested a permanent fix to the SGR that would cost $200 billion over ten years with built in doctor payment raises of 2.2% per year. Congress has yet to act on that recommendation. Thus, until the underlying law is changed, or a correction is made permanent establishing a new baseline, the periodic Doc Fixes will continue.

OECD Health Data: Americans are OECD’s Most Efficient Eaters

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Current Events 2011

It should come as no surprise to any of our readers (especially those of you who are regular viewers of Jamie Oliver’s Food Revolution) that the United States has a bit of a problem with obesity. According to data from the U.S. Centers for Disease Control and Prevention, in the period 2007-2008, 33.9% of U.S. adults were obese, 5.7 % extremely obese, and an additional 34.4% of the population overweight (but not obese). These figures mark a remarkable increase since 1960, when “only” 13.4% were obese, 0.9% extremely obese, and 31.5% overweight.

The high incidence of obesity in the U.S. made us curious about how this country stacks up against other OECD countries. According to OECD’s Society at a Glance 2011, the answer is…not so well:

Note: Obesity is defined as having a body mass index (BMI) of greater than 30 kg/m2, based on height and weight.

 

As this chart shows, the obesity rate in the U.S. is twice as high as the OECD average of 17%. (Our closest competitors were New Zealand (26.5% in 2007) and Chile (25.1% in 2009). That said, a separate OECD working paper shows that the U.S. isn’t the only country that has seen “growth” in its population: the percentages of obese and overweight have been moving upward in every country and among both men and women.

While Americans clearly love to eat in terms of quantity, on average we spend far less time cooking and cleaning up per day (30 minutes, which is the lowest average in the OECD) as well as less time eating per day (74 minutes, the 3rd lowest in the OECD):

 

In this age of politicians constantly espousing American exceptionalism, when it comes to efficiency in eating (i.e., lots of food in little time), America is certainly number one.