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$474M for 4 failed Obamacare exchanges
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Nearly half a billion dollars in federal money has been spent developing four state Obamacare exchanges that are now in shambles — and the final price tag for salvaging them may go sharply higher.
Each of the states — Massachusetts, Oregon, Nevada and Maryland — embraced Obamacare, and each underperformed. All have come under scathing criticism and now face months of uncertainty as they rush to rebuild their systems or transition to the federal exchange.
The federal government is caught between writing still more exorbitant checks to give them a second chance at creating viable exchanges of their own or, for a lesser although not inexpensive sum, adding still more states to HealthCare.gov. The federal system is already serving 36 states, far more than originally anticipated.
As for the contractors involved, which have borne most of the blame for the exchange debacles, a few continue to insist that fixes are possible. Others are braced for possible legal action or waiting to hear if now-tainted contracts will be terminated.
The $474 million spent by these four states includes the cost that officials have publicly detailed to date. It climbs further if states like Minnesota and Hawaii, which have suffered similarly dysfunctional exchanges, are added.
Their totals are just a fraction of the $4.698 billion that the nonpartisan Kaiser Family Foundation calculates the federal government has approved for states since 2011 to help them determine whether to create their own exchanges and to assist in doing so. Still, the amount of money that now appears wasted is prompting calls for far greater accountability.
Where has that funding left the four most troubled states?
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The high costs of complexity in health care reform
Posted Sept. 19, 2013, at 10:45 a.m.
I have great admiration for the political courage of President Barack Obama and the congressional leaders who were willing to take on health care reform, justifiably called the “third rail” of American politics. Our system cries out for reform. But they made a fatal mistake in allowing the law to be drafted by Congress, which is composed of 535 members with vastly varying values, goals and interests.
Consequently, the resulting law is a conglomeration of ideas from across the political spectrum, thrown together and lacking any coherent conceptual framework. (Congress is usually a better editor than author.) This lack of coherence has resulted in a law that is far too complicated and therefore too expensive to manage, full of holes, will be applied unevenly and unfairly, be full of unintended consequences, and be easily exploited by those looking to make a quick buck.
It has been credibly estimated that administrative costs make up more than 30 percent of our national health care bill, most of it unnecessary. The waste in this area alone is equivalent to around $400 billion annually. That is more than enough to provide health care to every uninsured person living in our country. Some of these costs result from the slicing and dicing of Americans into ever-tinier and more confusing categories, the inevitable result of applying the principles of insurance to health care.
But the costs go beyond dollars to a lack of basic fairness, and of public understanding and support.
A plurality of the public still views the law negatively. Even many experts are confused by it. The law tries to deal with this confusion by providing a host of federally funded “navigators” to help people find their way through the maze it creates. While this provision will provide many well-paying jobs, it uses health care funds but does not pay for any health care — an example of your health care dollars not at work.
The ways in which the costs and benefits of the law are distributed are patently unfair. Even if it is perfectly implemented, it will leave around 30 million Americans without health care coverage. Some of this was intentional, but some wasn’t. The Affordable Care Act’s architects intended the federal government to expand the Medicaid program and make it more uniform to cover the poorest among us on a fairer basis.
But the Supreme Court found that requiring the states to expand their Medicaid programs would be unconstitutional, thereby gutting that provision. About half the states, including Maine, have declined the Medicaid expansion. They have decided to forgo the 100 percent federal funding (dropping to 90 percent after three years). That has created the anomalous situation where some of the poorest Mainers will receive no help, while those who are slightly wealthier will receive federal subsidies to buy insurance.
Similarly, some people who make too much money to qualify for any federal assistance but cannot afford increasingly expensive health insurance on their own will continue to pay state and federal taxes to finance Medicare, Medicaid, the VA and other programs for others. They will also pay higher federal taxes to compensate for the fact that private insurance for union members, corporate executives, and others with employment-based coverage, some of it quite comprehensive, is tax exempt.
The ACA does not go nearly far enough in restraining ballooning health care costs or reforming the way we pay those providing health care products and services. These abuses have been brilliantly and persuasively documented in Steven Brill’s Time Magazine cover story “ Bitter Pill.” Health care prices are completely out of control and the uninsured, many of them the least able to pay, are often the only ones charged full sticker price.
The only persuasive reason that has been given for our failure to address these glaring problems is that the power of the health care industry (that spends three times as much on lobbying as the defense industry) is too great. Pretty pathetic, and yet another example of your health care dollars at work — this time against you.
It doesn’t have to be this way. It is now well-documented that Medicare, a far simpler program than the ACA, spends much less on administration and is much more effective in controlling prices than private insurance. Apologists for the existing system of private insurance claim that it preserves “choice” of insurers, and that Americans want that choice.
But the choice people really want is a choice of health care providers, not insurance. Medicare beneficiaries can already choose any participating provider they wish. I have never heard a single Medicare patient complain about not having more choice of insurance companies.
Even Sen. Harry Reid, one of the ACA’s architects, now admits that it must be a way-station to a Medicare-like, single-payer plan. He has said he thinks the country has to “work our way past” insurance-based health care.
Fortunately, in Maine we have a couple of ways to do that. Next year, hearings will be held on L.D. 1345, co-sponsored by Rep. Charlie Priest and Sen. Geoff Gratwick. That bill would start us on a path toward a statewide nonprofit, unified and universal health care system, similar to the route recently taken by our neighbors in Vermont.
Failing approval of that measure, Maine (unlike Vermont) has a referendum process, a direct vote of the people for sanity in health care. If we were to follow either path, Maine would once again have the right to say “Dirigo” — I lead — and set a historic example for other states to follow.
Physician Philip Caper of Brooklin is a founding board member of Maine AllCare, a nonpartisan, nonprofit group committed to making health care in Maine universal, accessible and affordable for all. He can be reached at pcpcaper21@gmail.com.
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Medicine’s Top Earners Are Not the M.D.s
Who Makes What
High Charges By Doctors May Or May Not Be Red Flags For Fraud
Scientists will look to certain diseases to measure the effectiveness of the Affordable Care Act.
Charting the number of deaths from diseases that could have been prevented if the patient had access to appropriate health care, called the “amenable mortality” rate, shows that the United States is far behind European nations. These diseases — like heart disease, diabetes and certain cancers — are tracked because early treatment significantly increases the likelihood of survival.
Health care spending rose at the fastest pace since 1980 in the first quarter as the new health insurance law prompted many more Americans to visit doctors and hospitals.
Analysts say the sharp increase reflects other trends that should continue to drive up both medical spending and costs in 2014 after years of slow growth.
Health care expenditures climbed at a 9.9% annual rate last quarter, mostly because of increased spending at hospitals, the Bureau of Economic Analysis said last week. That's the biggest jump since 1980's third quarter, and it followed a 5.6% increase in the fourth quarter.
The higher health outlays made up more than half of last quarter's 3% increase in consumer spending and helped prop up a generally weak economy. The economy grew just 0.1% in the quarter and would have shrunk by about a percentage point if not for the surge in health-related spending.
Most of the increase can be traced to the roughly 8 million Americans who signed up for health insurance under the Affordable Care Act mandate since late last year, says George Miller, a fellow at the Altarum Institute's Center for Sustainable Health Spending. Many probably began visiting doctors and hospitals, though it's unclear how many of the 8 million were previously uninsured.
Further increases in health spending are likely in the second quarter, in part because the ACA's sign-up deadline was extended to as late as April 15 for many people, says economist Omair Sharif of the Royal Bank of Scotland. Sharif is concerned that consumer spending could slow this year as the number of new insurance enrollees levels off.
Some analysts say other factors will continue to push up spending and costs. Faster job growth is leading to more health-related spending for many Americans who went without insurance or used few medical services while unemployed, says Dan Mendelson, CEO of consulting firm Avalere Health.
"The improved economy could result in individuals having the resources to spend on health care services," American Hospital Association spokeswoman Jennifer Schleman says.
Also, Mendelson says, upward pressures on health care costs, such as the growth of expensive high-tech treatments, are re-emerging after falling for several years. Costs had fallen because the ACA gave hospitals incentives to be more efficient, and insurance companies shifted more costs to patients, prompting many to visit doctors sparingly, he says.
The amount consumers pay for health care also may drift higher. Annual medical inflation has fallen since the recession and was well under 1% in March. The decline was partly due to the expiration of a large number of drug patents in 2011 and 2012, causing expensive branded drugs to be replaced by cheaper generics.
Fewer patents will expire in the next two years, so drug prices will increase, says Paul Dales of Capital Economics.
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