Friday, October 28, 2016

The Devil Is In the Headlines

There’s a saying that the devil is in the details. This is predicated on the oft-true assessment that when something seems too good or too easy, a closer examination reveals faults and shortcomings which makes the thing in question less good or less easy.

But ignoring the details is no escape from the devil. The devil is equally at home in the smooth shiny surface of whatever easy solution there is to any problem. The devil is at home in the headlines that feed us talking points instead of actual information to help us make an informed decision.  

This past week saw headlines informing us that rates for health insurance under Obamacare are going up 25%. This news was red meat to Republicans who have long since used Obamacare as their favorite whipping boy for their position that the federal government is bad and the federal government under Obama is worse. The headlines of this rate increase were followed by more headlines that Obamacare was in crisis, in a death spiral, was going to crash and burn.

But what is the story behind the headlines? Let’s break this down a bit.

  • The increase is 25% if only the main benchmark plan is factored into the equation. The increase is actually 22% if all plans offered under Obamacare are considered.
  • The increase is an average. Yes, this means some individuals will see increases of more than 22% or 25%. Some will see less. That’s the way averages work. At least one state (Indiana) will see premiums decline by 3%.
  • Only some of the millions of people insured through Obamacare will see increases. The increase in premiums is not across the board for all insureds.
  • Of those seeing an increase in premiums, most will receive an increase in government subsidies to offset the increase in premiums.
  • Many of the increases are on rates which were well below average to begin with as insurers sought to entice new customers to purchase insurance through the exchanges set up through the Obamacare website.

Yes, the increase in premiums by an average of 22 to 25% is cause for concern and reflects inherent weaknesses in the Obamacare structure. One key component needed for the program to be a success is getting younger, healthier people to buy health insurance. In fact, the Affordable Care Act (ACA) provided tax penalties for those who did not have health insurance coverage. This infusion of participation from this demographic was necessary for health insurance companies to remain viable and profitable in the face of providing benefits in compliance with the ACA such as not denying insurance to people with pre-existing conditions.

However, younger, healthier people are not getting health care coverage, instead taking the tax penalty hit instead. So health insurance providers have a smaller pool of insured persons. And those who are getting health coverage are using it which means a larger portion of that pool is taken up by people who are receiving benefits from that coverage. In short, health insurance companies providing coverage through Obamacare are taking in less money in premiums that anticipated and paying out more money in benefits than expected. The result is insurers either pulling out of the Obamacare market or increasing premiums to make up for losses.

The short term, federal subsidies are sufficient to keep pace with increasing premiums but the long term prognosis is not good for Obamacare if these trends cannot be reversed.

And people have benefited from this program. The number of people uninsured in this country has decreased significantly which is important for controlling medical costs. People without health insurance are less likely to seek out preventative care and more likely to need more expensive emergency care when a medical problem arises and cannot be avoided.

The protections for people with pre-existing conditions are also an important part of the plan.

No, Obamacare is not perfect. But those who call for it to be repealed and replaced are pretty damn forceful about the "repeal" part but less specific about the "replace" part. As flawed as it is, there are important benefits for Americans in this plan and the key is to improve what can work better and fix what is broken.

But its hard to make that case when the headlines tell you Obamacare is doomed.

I heard a person on the radio Tuesday morning who said that these premium increases for Obamacare would make him vote for Donald Trump. But this person also admitted to a couple of important details:
  • He is not insured under Obamacare.
  • He had not read the article; he admitted he had only read the headline.

As an official with the Department of Health and Human Services noted, these premium increases for Obamacare health policies would only affect a small portion of those covered by such plans. But everybody would see the bad headlines.

And sometimes the devil isn't hiding in the details; sometimes, the devil is smiling in plain sight on top of a headline.

That's all I have for today. Back with another post tomorrow. Until then, remember to be good to one another. 

Carl Kasell

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