Friday, April 25, 2014
by Jeffrey Dorfman
April 5, 2014
We have finally (almost, sort of) reached the end of Obamacare signups. The White House is claiming over seven million people have signed up with several million more now on the Medicaid rolls. Democrats are desperate to find a success somewhere in the Obamacare narrative, so reaching seven million is the story of the moment. However, as bad as the open enrollment period and its infamous healthcare.gov website was, the real problems are about to begin. Now people are going to try to use their new insurance.
The problems that will create the next headlines will come in three main flavors: lack of access to doctors, failures of the system to verify coverage and pay claims, and the incredibly high deductibles and copays on many of the exchange insurance policies.
Insurance companies believed that people shopping for health insurance on the government exchanges were very price sensitive so that low prices were needed to attract buyers. Thus, the insurers only signed up doctors and hospitals willing to agree to low reimbursement rates to their exchange-offered plans. That means that many of the plans, especially the silver and bronze ones, come with much more limited networks than Americans are used to. The newly insured are likely to find that, similar to Medicaid patients, it will be hard to find doctors who accept their new insurance. Having health insurance does not mean you can get care; you actually need a doctor for that, and a lot of people are in for a nasty surprise when they realize how limited their choices of providers are. U.S. Senator Tom Coburn finding out his cancer doctors were not part of his new Obamacare plan is just one famous example of this access issue.
Similarly, it was hard for people on Medicaid to find providers who accepted Medicaid before. Now there are several million more people competing for space in the same number of doctors’ waiting rooms. Obviously, the problem of accessing care with your Medicaid coverage just got worse.
While the infamous healthcare.gov website eventually worked well enough to get seven million people enrolled, the back end to the system apparently still is more fictitious than functioning. That means that insurance companies are not sure who they are supposedly covering. Figuring out who has or has not paid their first premium and therefore actually has insurance is complicated. Doctor’s offices are having a hard time determining which patients they can see and then get paid for. As these newly insured people try to use their health insurance we are already getting stories about nightmares attempting to verify coverage. Again, if the provider cannot verify your coverage, you are not really going to have access to care.
Finally, there is the enormous problem of deductibles and co-pays. Depending on the level of coverage selected and the amount of subsidy a family is receiving, the out-of-pocket expenses can vary significantly. Still, many people are going to find that they have a deductible as high as $6,000 and are expected to pay 40 percent of the cost of their treatment as a co-pay. According to Scott Gottlieb, families qualifying for the largest subsidies face limits that can still be as high as $4,500 in total out-of-pocket spending for a family. If you did not previously have insurance because you could not afford it, why would policy makers think that you can now suddenly come up with several thousand dollars to cover such large deductibles and co-pays?
In reality, many people have surely signed up for coverage through the exchanges because they are receiving a subsidy and the monthly premium cost to them is a figure they can afford (thanks to taxpayers and young people for covering the rest of the true cost). When these people first use their new coverage and a health care provider explains they owe a deductible and co-pay there is going to be a sudden and steep learning curve. Many doctor offices request immediate payment of these monies and many newly insured patients are going to be unable to make such payments. If they could afford a $6,000 deductible and 40 percent co-pays, they would have already had insurance.
In the past there have been protests over proposals to raise Medicaid co-pays by even a few dollars. In Georgia, many state employees are facing higher out-of-pocket costs due to a change in their health care plan, and the protests are underway. These are people with pretty good jobs, but facing thousands of dollars in out-of-pocket expenses is not what they expect from their health insurance. Yet, increased deductibles and co-pays are one of the few features appearing in the health insurance market that might bend the cost curve downward.
The reality is, if you bought insurance through a new health care exchange, providers will be limited, the administrative, back-end stuff will not work for a while, and people will not be able to pay their deductibles and co-pays. Thus, as Obamacare moves from sign ups to actual usage it will all start to fall apart. Given the push for health care to be a right and to be more equally and universally provided, calls will arise to force providers into networks and for lower cost to patients. Now that health care is a “right,” people will want it to be better, more available, and cheaper (to them).
Thus, expect calls to change the plans so that deductibles and co-pays must be lower. Failure of Obamacare will be seen not as a failure of government involvement in health care but as failure to go far enough. Single payer will return to the policy arena as the “obvious solution” to these problems.
That’s right; my prediction is that an epic government failure will spur calls for more government involvement to fix the problems caused by government involvement. The question is with Republicans poised to add Senate control to their current House majority will a Republican Congress and a Democrat, lame-duck president whose name is synonymous with the law in question agree on anything that fixes the problem?
Given Washington’s track record, I doubt it. Therefore, expect Obamacare nightmares to continue for a while. As far as problems with this law, we are still in the early days.