Tuesday, October 29, 2013

The embattled Affordable Health Care Act

It should be noted at the outset of this commentary that the writer supports insurance some intelligent and rationed healthcare coverage in a reasonable form for all constructive American citizens who want it or need it.  The writer views himself as an independent and as a libertarian on many issues.  The writer votes for any viable independent thinkers, but since they are rarely available, by default he mostly votes for Democrats, sometimes holding his nose.  I say all of that to put the disappointment voiced here in perspective.

The initial implementation of the Affordable Health Care Act(Obamacare) has been a disaster.  As everyone knows now, computer systems with several years of lead time to develop have been largely a failure, insurance companies are sending out policy cancellations to existing account holders whose agreements do not fulfill Obamacare requirements which are essentially "one size fits all" in approach, renewing such policies that are cancelled is more expensive, many areas where the program is just beginning are seeing higher costs rather than lower costs due to, it is said, limited competition in their areas, and the ability to understand the plan is far from clear to many people.

The program is to date a debacle of incompetence, a scandal of lack of communication and misrepresentation, and a possible corrupt procurement system.How could a Canadian company named the CGI group that most people have never heard of have been made the lead consultant and highest paid consultant on the exchange contracts and the systems that support it.  What about Silicon Valley or Cambridge, Austin or the Research Triangle, where many companies with experience in complex implementations exist.  At the same time CMS, the Health and Human Services group with responsibility for Medicare and Medicaid technology and run by a former Virginia human services role player with limited experience, a Marilyn Tavenner that nobody has ever heard of, was the on the ground creator of the online insurance marketplace.  She worked under Virginia governor, now Senator, Tom Kaine and her biggest fan seems to be Eric Cantor, no doubt an expert in technology as he thinks he is in everything else.

Sitting above all of this with apparently no involvement except for political promotion of his Health Care Plan is the smooth talking President, with his Secretary of Health and Human Services, Kathleen Sebelius, playing the same role as her boss, a promoter and not a hands-on manager.  Now we are told that the systems will be fully functional by the end of November(that's two months late), but wait a minute that was yesterday, now it's up to "95%" functional.  The big question will be whether the current system is so flawed that all fixes will just be patchwork, not a good long term solution.  An uninformed guess here is that just starting over from scratch would be the optimum solution and that, of course, is not possible at this point.

The biggest surprise may be yet to come.  Obama's premise is that competition for new enrollment in the insurance plan will lower costs.  To my mind and based on my experience in banking, that is not how insurance companies work.  Insurance companies don't work to have more customers than others or attract by having the lowest costs.  They are not like car companies or appliance makers and many other consumer products.  Despite what the insurers' advertising implies,  measures of general market share are not crucially important.  Those companies that are successful do everything they can to let other companies pick up the riskier components of market share.  Obamacare promises to subsidize those who can't afford the insurance that the exchanges offer, but the ultimate cost of meeting the needs of the clients will be borne by those insurance companies with the worst book of business.  It will be interesting to see how this supposed competition will work out, how steep the government subsidies will need to be to cover many of the uninsured, and how rough the government will be in negotiating fees with doctors and hospitals for those that they are subsidizing.  These issues have no doubt(?) been thoroughly analyzed by the government but information on their estimates is lacking.

The other aspect of this that should be no surprise is that the whole plan is in fact a "hidden" tax increase on that part of the middle class that has saved for retirement and the upper middle class broadly.  In order to meet Obamacare requirements, insurance rates for that segment will continue to rise, probably at a faster pace than what already exists.  It will be the same for the really wealthy but not obviously a major hit to their retirement plans or lifestyle.

What should be troubling to all who have saved and planned for their current lifestyle in the way that was simply viewed as responsible or as advisers have suggested to them,  for the college costs that may be on the way, or their retirement, the big concern is whether this whole healthcare plan concept is the first major foot in the door of means testing, a concept that if applied to medicare, veteran's benefits, or disability benefits could make all of that prior planning meaningless.

This bill has been passed but has a long way to go to be functional, way beyond just getting the software working adequately.  Buried in those more than 2000 pages of regulations are gems of government authority that will continue to surprise many, and may be damaging to certain segments of individuals, companies, and the economy.

We will see over time, but so far things don't look so promising.

Postscript one --- a prominent Democratic pollster said that cancellations of policies taking place now affect only a "distinct minority of voters".  Now that's the real Obama political thought process laid out.  On the PBS newshour tonight an MIT based Obama supporter made the same point, and said that 80% of Americans are covered by plans offered by the businesses that they work for or the governments that they work for.  He should know that while government premiums paid don't seem to budge, private businesses pass on part of the increase in insurance costs to their employees each year.  The insurance stays but the costs will rise more than usual as Obamacare kicks in.

Postscript two --- the choice of the unheard of Canadian firm CGI to be the primary consultant on website integrations of the exchanges was supposedly partially based on their experience with the Canadian healthcare system.  Should that have been high on the level of relevance?  Canandians are unified for the most part in support of their longstanding program of broad government funding and control of healthcare.  Canada is a nation of 35 million people, the U.S. around 315 million.  The U.S. has 50 states with streaks of independence to say the least, Canada has ten provinces and three territories, with the only major on again off again conflict being between the French heritage and English heritage areas.  CGI?  Whose brainy idea was this?




Post a Comment

<< Home