Augurs and augering in

I’m not going to be posting anything for at least a week; in fact, I won’t be on the Internet at all. Not only have I driven myself crazy trying to figure out which way the country will jump on the ObamaCare debacle,* I’ve clicked and copied and written so much my poor arm is screaming in protest. (Darned pre-existing condition!) Clearly this is a sign from the universe to stop obsessing about this and think about something else for a while.

Over the next month or so, I’ll be doing what I always do when I get near my health insurance plan anniversary date: I’ll be comparing the available policies. This time around, I’ll also compare them to my no longer available current plan. As I get those comparisons done, I’ll post them. I can say right now, without looking at specific copays and deductibles, that the new coverage, at least from Blue Cross Blue Shield, is worse across the board than my current coverage.

How do I know? The new policies have no out-of-network coverage except for emergencies and prescription medicines. My current policy does. I’ve never used enough out-of-network care to hit my deductible but it’s a great comfort to know that if I need or want the kind of care I can’t get in-network, I can still get it without bankrupting myself.

It may be that other New Jersey insurance companies are selling individual policies that do have out-of-network coverage - I’ll have to figure that out as I go along.

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Notes:

* This is something fascinating about blogs, both reading and writing them. There seems to be an irresistible drive to predict what’s going to happen, to figure out what the country really thinks, to look for signs that the blogger’s (or reader’s) preferred point of view has been adopted, is being adopted, will be adopted. Yet no one can predict that and, really, all we have to do is wait and see. Very odd.

Teal deer

Wending my way through the Internet, I found a comment that led me to John Cochrane (The Grumpy Economist) and a paper he has written entitled “”After the ACA: Freeing the market for health care” (pdf). I had intended to read through it carefully (I’ve just skimmed parts of it) and pick out points to discuss; however, that’s not going to happen anytime soon so I’m just going to offer it up as a resource. What I did read was interesting, particularly Cochrane’s review of the current landscape.

Here’s how the paper begins:

Most health-economics policy discussion takes for granted the bulk of our regulatory structure. Opponents of the optimistically-named Affordable Care Act delight in pointing out its unintended consequences, mangled incentives, and exploding budgets. Fans work to patch it up with new layers of regulation or “reforms.”

I take a ground-up, first-principles approach instead. I survey the supply, demand, and market for health care, and health insurance, to think about how those markets should work to provide quality care, low cost, and technical innovation. A market-based alternative does [exist], and it is realistic.

I have no idea how much I’ll agree with once I have time to go through this thoroughly but after a month of reading quick posts on ObamaCare, the thought of sitting down with a 28-page document is very appealing.

(Reconstructing how I got to the pdf was kind of fun:

The top post on Greg Mankiw’s blog (which I get to on my own) sent me to

The Obamacare Suits/Geeks Divide which is well-worth reading itself, if only for his first point:

1. There is zero chance that rewriting five million lines of code is the answer. Either the solution is a lot simpler or there is no solution other than to start over.

Amen, brother. Scrolling through the comments there, I found:

this comment by someone called Shayne Cook which sent me to:

Shayne’s comment at EconLog which sent me to:

a post at the Grumpy Economist blog which sent me to:

the pdf.

Whew!

Black-market insurance

[To reiterate what I said in my previous post: This post is based on what I think I know about ObamaCare. It doesn’t have links to back up my understanding because I’ve picked up and integrated this understanding from lots and lots of reading over the past month (and previously) and I can’t easily find where I read what. I may be wrong about some or all of my understanding and if so, I hope someone lets me know. I can say I’ve read everything I claim to know somewhere; however, part of the problem with ObamaCare is that even people who should know how it works and/or who claim to know how it works often seem not to. So take everything in here with a large grain of salt.]

Back in February, I posted a comment over at Grim’s about what I called “Disaster Insurance” or, alternatively, "Failure To Sign Clients Up For Health Insurance In A Timely Fashion" policies. I described such insurance thusly:

Under Obamacare, I can elect not to get coverage and pay a fairly small fine/tax - certainly less than coverage would cost me. Then if I get a condition like Alzheimer's or cancer or congestive heart failure, I just buy health insurance.

The risk is that I'll suffer some sudden condition: heart attack, stroke, hit by a bus. If I'm unconscious as a result, I'll incur huge medical expenses before I'm well enough to buy health insurance.

So I wondered if it would be possible to sell something called perhaps "Disaster Insurance". I sign up, pay a small annual fee, and - if I get hit with one of those sudden conditions - the Disaster Insurer signs me up for health insurance and pays whatever charges I incur before I'm signed up.

This would require that I keep insurance applications on file with the Disaster Insurer and that the DI have some type of arrangement with hospitals to be notified if I show up in their Emergency Rooms - or perhaps I wear something like a MedicAlert bracelet that says I'm a DI customer. [snip]

Technically, they wouldn't be health insurance policies at all. They would be "Failure To Sign Clients Up For Health Insurance In A Timely Fashion" policies. That is, the policy doesn't say it will pay my health care costs; it says it will sign me up for health insurance as soon as I need it. Should it fail to do so - for any reason, including my being hit by a bus - it will make good what it has cost me.

Tricky but I suspect it could be made to work.

When I wrote that, I thought ObamaCare would have a 24/7/365 open enrollment period. That is, I believed that if I was diagnosed with leukemia or hit by a bus on June 23, I could sign up for health insurance on June 24. Once I realized that wasn’t the case, that ObamaCare open enrollment periods would be the usual brief window late in the year, I stopped thinking my DI idea would work. Now we weren’t talking about paying my health care costs for a few days or a couple of weeks. Rather the DI would be at risk of having to pay them them for up to almost 13 months.*

Interestingly, however, someone else is now thinking along those lines and seems to think such an idea will work. Martin Feldstein (via Greg Mankiw) is writing about what he calls “Obamacare’s Fatal Flaw”. He considers “the biggest danger to Obamacare’s survival” is the possibility (perhaps probability) that many healthy people who could buy in the individual market will pay the fine rather than pay for health insurance. If and when they become seriously ill, they will simply purchase health insurance then since they can’t be turned down for pre-existing conditions. This “wait-to-insure” strategy, he says, will work out well for the individual if the illness is something that doesn’t require immediate expensive treatment. On the other hand, conditions that do require immediate expensive treatment - like being hit by a bus or having a heart attack - would expose these individuals to huge bills and fear of this exposure may well drive people to sign up for health insurance as a precaution.

However:

...private insurance companies could solve that problem by creating a new type of “emergency insurance” that would make enrolling now unnecessary and allow individuals to take advantage of the wait-to-insure option. Such insurance would cover the costs that a patient would incur after a medical event that left no time to purchase the policies offered in the Obamacare insurance exchanges. Emergency insurance might also cover the cost of care until the “open enrollment” period for purchasing insurance at the end of each year (if political pressure does not lead to the repeal of that temporary barrier to insurance).

This type of insurance is very different from existing high-deductible policies. Given the very limited scope and unpredictable nature of the conditions that it would cover, the premium for such a policy would be very low. It would not satisfy the broad coverage requirements that Obamacare mandates, forcing individuals to pay the relatively small penalty for being uninsured and to incur the subsequent cost of buying a full policy if one is needed later. But the combination of emergency insurance and the wait-to-insure strategy would still be financially preferable for many individuals, and the number would grow as premiums are driven higher.

An interesting proposal (she said modestly). However, I think it’s illegal. As I understand it, health insurance companies are forbidden to sell any health insurance policies except the ObamaCare metallics: Platinum, Gold, Silver, Bronze, and Restricted To The Young And The Somewhat But Not Totally Poor Fake Catastrophic policies. The type of insurance policy Feldstein is describing is none of those and thus it would be illegal to sell such a policy in the United States. In other words, the problem isn’t just that an individual buying such insurance would still have to pay the fine/tax for being “uninsured”; it’s that selling such a policy is against the law.

I keep thinking I must be wrong about this because surely Greg Mankiw and Martin Feldstein must know what ObamaCare does and does not allow. But I read posts like this (Peter Suderman citing Kaiser Health News) and it seems pretty clear-cut to me:

In 2014, plans sold on the individual and small group markets will have to meet new standards for coverage and cost sharing, among other things. In addition to covering 10 so-called essential health benefits and covering many preventive care services at no cost, plans must pay at least 60 percent of allowed medical expenses, and cap annual out-of-pocket spending at $6,350 for individuals and $12,700 for families. (The only exception is for plans that have grandfathered status under the law.)

Maybe this is just Expertopia shorthand for “plans sold on the individual and small group markets will have to meet new standards for coverage and cost sharing, among other things in order to spare those purchasing them the fine/tax for being uninsured”. If so, I wish someone would say so. If that is the case, then there is no prohibition on kinds of health insurance policies insurance companies can offer so long as those who buy them are willing to be considered “uninsured” by the IRS. That would be nice to find out but I just can’t quite bring myself to believe it. (It’s very frustrating and seems a metaphor for the whole ObamaCare mess that there isn’t someone I can call or email and be assured of getting a definitive, unspun, guaranteed accurate answer to questions like these.)

On a happier note, Feldstein ends with what sounds like an endorsement of the McArdle plan. After warning that the ObamaCare unraveling that would result from the “wait-to-insure” strategy could lead to renewed calls for a single-payer system, he offers an alternative:

But it might also provide an opportunity for a better plan: eliminate the current enormously expensive tax subsidy for employer-financed insurance and use the revenue savings to subsidize everyone to buy comprehensive private insurance policies with income-related copayments. That restructuring of insurance would simultaneously protect individuals, increase labor mobility, and help to control health-care costs.

And on a lighter note, I feel moved to quote another one of my comments from that Grim’s Hall thread (emphasis added here):

Obama demonstrated conclusively during his run against Hillary Clinton that he was clueless about health care and insurance (and incapable of logic). Obamacare seems to suffer from the same flaws. It's fascinating to see how many utterly foreseeable problems are baked in the cake.

I didn’t know the half of it.

(My thanks to T99 for the title of this post.)

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* After the extended enrollment period from October 1, 2013, to March 31, 2014, ObamaCare’s open enrollment period will be from late October of each year until early December of the same year for insurance beginning the following year. Thus if I were to be hit by a bus the day after the open enrollment period ended in early December, my DI wouldn’t be able to enroll me until late October of the following year and my insurance wouldn’t kick in until January of the year after that. Unless, of course, my DI could arrange for me to experience a “life event” that would trigger an enrollment window. Getting me married off, moving me to another State, something like that.

The Bronze Age

[This post is based on what I think I know about ObamaCare. It doesn’t have links to back up my understanding because I’ve picked up and integrated this understanding from lots and lots of reading over the past month (and previously) and I can’t easily find where I read what. I may be wrong about some or all of my understanding and if so, I hope someone lets me know. I can say I’ve read everything I claim to know somewhere; however, part of the problem with ObamaCare is that even people who should know how it works and/or who claim to know how it works often seem not to. So take everything in here with a large grain of salt.]

Marc Thiessen is writing about those who are currently insured seeing their policies cancelled due to ObamaCare. He agrees with me that the penalties, at least in 2014, are too weak to force “a healthy person who does not think they need insurance” to buy a policy. He then says (emphasis mine):

So the administration needed some way to force currently insured healthy people into the exchanges. How serendipitous, then, that millions of mostly healthy people are suddenly seeing their health plans cancelled. If they cannot afford the skyrocketing prices to keep similar coverage, they have no choice but to join the exchanges. The result? A massive involuntary transfer of Americans out of private health insurance they were happy with into Obamacare plans.

I don’t think that bolded claim is correct; people whose insurance is being cancelled have other choices. They aren’t good choices but they may be better than the exchanges.

First, of course, they can elect to go without health insurance. I don’t imagine I would ever do so but for some people it may make sense. As T99 points out:

In the past, I always defined "medical catastrophe" as expensive medical treatments that would be needed for years and years, possibly for the rest of our lives, which might well be decades.  Now, a medical catastrophe is only what we may be faced with for a year of treatment, after which we can sign back up, assuming Obamacare is not repealed--and when are entitlements ever repealed?

She also talks about the options of medical tourism and of simply refusing very expensive medical treatment. Forgoing health insurance is not a path I would take but a possibility.

The second choice other than the exchanges is to buy health insurance directly from an insurance company, without going through the exchanges. With one possible exception (which I discuss next), the prices will be the same as buying through the exchanges. If someone is eligible for a subsidy, he cannot get it if he buys direct but if not, there’s no advantage to putting all that personal information into a insecure government data base - assuming you can even get it in there. Financially, for a non-subsidizable person it makes no difference to the individual or, as far as I can tell, to the insurance company if he buys direct: the premiums are the same and the direct buyers go into the same risk pool as the exchange buyers.

The third choice is the most intriguing. As I understand it, if an insurance company elects to sell policies via the exchange, the company must offer a range of policies. They have to offer a Silver policy; I believe they also have to offer a Bronze and a Gold, or possibly at least one or the other. Behind the scenes, participants in the different metals go into one big risk pool. The Silver plans are likely to attract sicker people than the Bronze plans (Silver is better coverage) so an insurance company offering a Silver plan - that is, any insurance company selling via the exchanges - must figure on a sicker pool of insured than they would see if they could offer only Bronze policies.

From what I’ve read, this will result in the cost of the Bronze plans being higher than they would be if the company offered only Bronze plans; I do not know whether this is because ObamaCare restricts the premium differences between the plans; because the subsidies are pegged to Silver plans (I can’t figure out how that would make a difference but trying to think it through makes my brain hurt so I give up early); or because it simply makes sense to the insurance company to spread the risk out across the whole pool. Anyhow, that’s the story with companies who want to sell through the exchanges: they can sell in the exchanges and out of the exchanges but they must sell the same plans both ways, and they must offer a Silver plan which drives up the rates on their Bronze plans.

However. An insurance company can choose to forgo selling on the exchanges and sell only direct. As far as I know, they must still offer only plans that meet the ObamaCare parameters. They cannot sell true catastrophic coverage or coverage without maternity benefits or coverage that makes the insured pay for a wellness visit and so on. In other words, even insurance companies who are not going to sell on the exchanges can only offer Platinum, Gold, Silver, Bronze, and Restricted To The Young And The Somewhat But Not Totally Poor Fake Catastrophic policies.

However. A company selling only outside the exchanges does not have to offer a range of metals; they can elect to sell only Platinum or only Gold or only Silver or only Bronze or, presumably, only RTTYATSBNTP Fake Catastrophic policies. If an insurance company elects to sell only Bronze policies they can reasonably anticipate that they will be selling only to healthier individuals because the Bronze policy provides the least coverage. Therefore, they can also reasonably anticipate that their insured pool will pose less risk and therefore they can offer Bronze policies at a lower premium than those insurance companies who are also offering Silver and/or Gold polices.

So a third option for someone who is currently insured and whose policy is being cancelled is to buy a Bronze policy from an insurance company that is selling only Bronze policies. Or at least to make sure his comparison shopping includes looking for such companies. He may find that a Bronze policy from a non-exchange seller is cheaper than a Bronze policy from an exchange seller and may find that to be the case even with a subsidy (depending, of course, on the size of the subsidy).

As I said, these are not great options but they are alternatives to joining the exchanges. I think having choices, even lousy ones, is always better than being trapped. If nothing else, it can cool incandescent rage down to mere white-hot anger and that has to be better for our health.

I read Robert Laszewski (without realizing who I'm reading for a while)

Somehow - I have no idea how - I ended up reading Robert Laszewski’s blog, Health Care Policy and Marketplace Review. The particular post I was directed to is entitled “The Commitment to Fix Obamacare’s Computer Systems by December 1 - Because It Can Be Done By Then or Because Is Has To Be Done By Then?” The point embedded in the title is a good one, I think: it’s awfully convenient that the date promised is the date needed to be sure people can actually get insurance as of January 1. The whole post - in fact all the posts there than I read - are worthy reading in full but there were a couple of other points I want to comment on. One has to do with delaying the individual mandate:

Some Senators, Democrats as well as Republicans, are talking about passing legislation to defer the individual mandate for as much as a year because of the computer problems. That makes some sense given the problems consumers are having. But will that legislation also appropriate money for the insurance companies that would be required to cover the sick while the healthy sit it out for a year?

I’ve said before that I don’t think delaying the mandate (really, I think, the fine/tax) will make a big difference in how many health people sign up. That is, I’m not convinced anyone would sign up simply to avoid the fine/tax. I think the problems with the rollout make it even less likely the young invincibles would sign up anyhow. I’m in the minority apparently. Peter Suderman, for example, shares Laszewski’s concerns.

Laszewski’s other point consists of two suggestions for the new ObamaCare Czar’s to-do list. One is to get the 834 transactions (the backroom transmission to insurers) cleaned up before anything else is fixed. As he points out, if system is fixed enough so that lots of people can sign up but that information doesn’t get to the insurers cleanly, there is going to be quite a mess.

His second suggestion is:

Focus on the private exchanges and health insurance companies with their own websites that still cannot connect to healthcare.gov for things like subsidy calculations. The companies have been begging for this capability from the beginning. If it had been done, they could now be serving as an effective work-around giving consumers an efficient means to get signed-up. This should have been Plan B in the first place in case the Obamacare site did not work.

I’m not quite sure what he’s saying here. Is he simply referring to giving insurance companies help telling their customers what subsidies they can get; or is he advocating letting people do the whole sign-up process with their insurance company, removing any need for anyone to ever use the ObamaCare website/exchanges? If the latter, I agree; if the former then, yes, that would reduce the anxiety for people who are looking at big premium changes and can’t figure out if they’re going to be subsidized. (Although there are free-standing subsidy calculators available on the Internet - here and here, for example. These aren’t official numbers but they are both from reputable sources so would presumably at least be in the ball park.)

The “Commitment” post went up at Laszewski’s site a few days ago. Today he posted “Mr. President: I like My Health Insurance and I Would Really Like to Keep It - Can You Help Me Out Here?”. He talks about the excellence of his current plan and reports receiving a letter telling him he cannot keep it “because my plan isn’t good enough under Obamacare rules.” The new plans he can buy have worse coverage than his current plan. And to cap it all off:

And, wait all you people telling me rate shock does not exist, it far more restricted plan costs 66% more than our current monthly premium. Mr. Rate Shock got rate shocked––and benefit shocked to boot.

Odd. This seems not to back up the claim that all of us who are losing our current insurance have sub-standard crap or the claim that if we are going to have to pay more it’s worth it because we’ll be getting more.*

Laszewski has also done a couple of interviews with Ezra Klein. In one of them, dated October 23, he makes this point:

But they have to get the backroom fixed before they open the front door. If they open the front door before that back room is fixed, you’ll have a catastrophe. People are going to be signing up and seeing their banks accounts debited multiple times, or their insurance won’t come through. The White House is meeting with insurance industry executives today, and I can tell you what they’re talking about. They say you need to get this fixed, because you’re setting us up for a real fall with our customers. They’re not going to blame Kathleen Sebelius if they walk into their doctor’s office and the doctor doesn’t know who they are. They’ll blame the insurance company. And I’m sure what the insurers are telling the White House today is we will not let you put us in that position.

I suspect the White House doesn’t care what the insurers are saying. I’ve always believed that one of the worst features of ObamaCare and yet one that has great benefit for its supporters is the involvement of the insurance companies. Large corporations, especially large insurance corporations, make great scapegoats.

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Notes:

* I want to say, for the record, that even if both these claims were true they would still not be valid arguments for making me buy what someone else thinks I should. I get to decide what is and is not sub-standard for me. I get to buy sub-standard crap if I really want to. I get to decide I’m willing to live with less rather than paying more. I get to go without if nothing I can buy suits me. My money, my health, my decision.

Revetment

Jonathan Bernstein has a Link up at Salon called “GOP’s Obamacare conspiracy: Sabotage from the inside”. In it, he argues there are “eight ways that Republicans attempted, perhaps successfully, to undermine the ACA”. Neoneocon refers to this as “just-sad”. She’s right but there are a lot of people out there who are going to love his article.

I’ve begun to see those on the Left as firing and falling back in the ObamaCare rollout fiasco. First, they argued there weren’t really problems. When that position was overrun, they argued that it was all volume, just proof of how incredibly much Americans wanted ObamaCare. When they were forced out of that position, they fell back on the claim that the problems were frustrating rather than disastrous; I call this the “when Amazon is glitchy, it’s annoying but it’s not a big deal” stance. Being overrun by counterfactuals there, they argued that no one - no one - was more angry, more frustrated than President Obama and Secretary Sebelius. Now that position has proved to be too enraging or too ridiculous - or both - to hold back attacks, so they are rallying to their usual bunker: it’s all the Republicans’ fault.*

Bernstein’s article provides a great revetment for this last position. His claims about what Republicans did to cause this mess are incredibly vague but therein lies their value for all those who will never, ever concede that ObamaCare doesn’t seem to be working out too well. His arguments will be believed because people want, desperately, to believe them and, since the arguments are not themselves facts, they can’t be refuted by opposing facts. These arguments allow those on the Left to avoid the cognitive dissonance that would come from having to admit Obama’s one big accomplishment is a mess.

All that said, I am going to push back on one of his arguments:

Passing on state-run exchanges: With over half the states refusing to set up their own marketplaces, the job of the federal government was much larger than originally envisioned.

In what way? The legislation clearly anticipated setting up a Federally run exchange so the creation of HealthCare.gov was “originally envisioned”. I am left to assume that Bernstein thinks making the Federal exchange website handle twenty-seven States is a significantly bigger job than making it handle one State. And it may be: if you’re just handling one State you can hard-code everything. Real programmers will cringe (and probably throw up) and you’ll be in big trouble when stuff like premiums and benefits change next year, but, hey, deadlines are deadlines. However, handling twenty-seven States shouldn’t really be a bigger job than handling two States. Why? Tables.

It’s been a long time since I was writing application programs but - call me crazy - if I were designing the Federal exchange website, I’d write just one program rather than twenty-seven different ones - or twenty-seven different State pieces of one. And I’d have that one program read tables from the various States and insurance companies to get the information I needed to do my calculations and display my results. And the amount of work would be the same whether I was handling one State or all fifty-seven.

Except for testing, of course, but the kind of testing needed for multiple States is different from testing whether the data could flow through the website from beginning to end. That is, you get the system pushing data through quickly and cleanly and once that’s happening - that is, once the exchange appears to be working - you start testing specific cases for accurate output. Needing extra time to be sure the tables for each State produced accurate output might have meant the Federal exchange came up providing wrong answers - although that kind of testing actually is something you can throw extra manpower at - but it wouldn’t mean the Federal exchange basically didn’t come up at all.

So maybe I’m missing something but I’m unable to see how the lack of State exchanges had anything to do with the ObamaCare rollout crashing and burning. Unless, of course, President Obama and Secretary Sebelius and Jonathan Bernstein were delusional enough to believe they’d never have to create the Federal exchange website at all.

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Notes:

* There also seems to be a side skirmish of blaming Republicans because “Democrats really wanted single payer”. I would like to think this will be harder to sell since, as T99 points out, ObamaCare passed on a straight Democratic Party vote and thus could have taken any form the Democrats wanted. However, I fear even this ludicrous argument will be uncritically accepted by those whose first priority is avoiding reality.

If you like it

Senator Ron Johnson (R-Wisconsin) has announced he will introduce an ”If You Like Your Health Plan, You Can Keep It Act” bill next week. According to Senator Johnson’s press release:

One of the most important promises made by President Obama and Democrat congressional leadership to promote the Affordable Care Act was that Americans who were satisfied with their health plans could keep them.  That promise has been broken.  More than a million Americans have been notified that the plans they like with the coverage they have chosen have been canceled.  Millions more Americans will have the plans of their choice canceled in months to come.

Americans want the freedom to choose their own plans and want to be in control of their own health care.  They don’t want Obamacare destroying what they have and what they like.  They don’t want their personal choices regarding their health plans and their families’ health plans canceled by Obamacare.

The “If You Like Your Health Plan, You Can Keep It Act” will amend the law to make Obamacare live up to the promises of the politicians who sold the plan to the American public.  I will file the bill in the coming week and hope to garner support from fellow Senators of both parties who truly want to make sure President Obama honors his promise that every American has the freedom to keep his or her own health care plan.

I hope you’ll contact you Senators and Representative and ask them to co-sponsor this bill or at least support it. If you’re not sure how to contact your Congressmen, here’s how to find that information:

Find Your Senator

Find Your Representative

To me, this bill is worth supporting for two reasons. First, it’s the right thing to do for people whose current insurance has been cancelled and who will be significantly negatively affected by having to spend more and/or get less when they are left with no options but Obama-approved health insurance policies. In other words, it’s the right thing to do for people who are getting a raw deal.

Second, it asks a version of what I believe is the most important question in the ObamaCare issue, one that should be asked of the President, Secretary Sebelius, every Congressman who voted for this bill, and every one of our fellow citizens who support ObamaCare: Who the hell do you think you are, to tell me what to buy with my own money?