Discussion: (0 comments)
There are no comments available.
View related content: Health Care
A remarkable truth about Obamacare is how many aspects of its initial programs and initiatives are already in disarray.
The Obama team is woefully behind its own schedule for implementing features of the legislation. The critical regulations outlining what the Obamacare insurance benefit will look like was supposed to be out more than six months ago. Now it looks like this regulation won’t be dropped until after the election. This is just one key aspect of the program that is way behind the administration’s own timeline.
These facts alone should give proponents of the law pause. But the early experience with the elements of Obamacare that have already kicked in is downright dismal.
“But the early experience with the elements of Obamacare that have already kicked in is downright dismal.” -Scott GottliebThe core of Obamacare doesn’t get started until 2014, when state-based exchanges are supposed to be formed as places for consumers to buy the legislation’s tightly regulated, subsidized coverage. But early features of Obamacare are already failing.
•The temporary “high risk” pools that Obamacare created, to provide a way for those with pre-existing health conditions to get insurance immediately, are undersubscribed yet way over budget. The Congressional Budget Office estimated that the $5 billion allocated to these pools could enroll 200,000 consumers. They envisioned enrollment growing to more than 400,000. But only 77,877 have signed up as of July, yet the program is way over its budget. More than a quarter of these state-based risk pools are short on cash.
• The CLASS Act, which was supposed to provide consumers government-financed long-term care insurance has been abandoned, blowing an $86 billion dollar hole in Obamacare’s cost estimates. The CLASS Act was never financially viable. Its costs would have outstripped revenue as soon as it was in full operation. But since it took in money five years before it started to pay out benefits, budget gimmickry let Mr. Obama capture that revenue and use it to finance Obamacare. In abandoning the measure, the President’s own health secretary called the scheme “unsustainable.”
• The crown jewel of Obamacare’s effort to contain healthcare costs, the creation of Accountable Care Organizations, is so unwieldy that major provider groups have said they won’t participate. The idea is to consolidate doctors, turning them into employees of large systems, and then pay these systems lump sums of money to take care of groups of patients. A letter from 10 major medical groups that previously ran similar programs said, “it would be difficult, if not impossible” to accept the financial design created by Obamacare. In another rebuke, an umbrella group representing premier medical organizations said 90 percent of its members wouldn’t partake.
• New regulations Obamacare puts on insurers have been so unworkable that the Obama team has had to dole out 1,231 waivers. These exemptions are granted when the Obamacare rules are projected to raise healthcare premiums more than 10 percent, or create a “significant decrease in access to healthcare benefits.” These waivers haven’t been doled out consistently. Entities winning the preferences are over-represented by plans offered by unionized businesses and other administration allies.
• Obamacare can’t even settle on an affordable definition to the term “affordable” — creating the prospect that millions of middle class families will get priced out of coverage. According to a recent editorial in the New York Times, “the people left in the lurch would be those who had lower incomes but were not poor enough to qualify for Medicaid.” Because of the way Obamacare defines what’s “affordable” to these families, many working-class people would be unable to afford family coverage offered by their employers, and yet they would not qualify for subsidies provided by the law.
Probably out of recognition of this poor track record, the President points largely to the insurance reforms he passed when he is stumping for Obamacare. The story isn’t much better here. Some of these new rules cost insurers money, such as regulations ending lifetime limits on medical claims. Others, such as enabling young adults to remain on their parents’ policies, can be downright lucrative. But these popular changes, which Mr. Obama touts as a success, have also been badly implemented
We’re in a terrible economic climate, where medical utilization trends are way down. The cost of healthcare coverage should be falling as well. But premiums have risen far faster than overall inflation or GDP growth since Obamacare’s passage. The regulations kicked in with no offsetting incentives to get people into the insurance pool to help absorb the costs. If the President wants to take credit for these costly insurance market reforms, he also has to accept blame for the rising costs.
So what’s left for the President to tout?
Not much. Obamacare isn’t even in full swing, and at every turn, the program is crumbling. The President’s team is banking on a second term to try and right all of its fiascos but there’s an emerging truth that the scheme is simply unworkable.
American Enterprise Institute (AEI) Resident Scholar Scott Gottlieb, M.D. is a practicing physician. He previously served in senior positions at the Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS).
There are no comments available.
1150 17th Street, N.W. Washington, D.C. 20036
© 2015 American Enterprise Institute for Public Policy Research