Outside Liberal La La Land, Obamacare is Sputtering

By Shikha Dalmia of Reason. Excerpt:

"For starters, the exchanges have enrolled about 3 million fewer people than the Congressional Budget Office projected in 2010. And far fewer of the enrollees are from the ranks of the uninsured than hoped. Medicaid enrollment is lower too, for the simple reason that states refused to expand the program.

The core of President Obama's sales pitch to America was that the program, which he called the Affordable Care Act, would "bend the health care cost curve" and save an average family $2,500 on their premiums each year. How would it accomplish this feat? Essentially, he said, by forcing uninsured "free loaders" who show up in the emergency room to obtain free care to either buy (subsidized) coverage on the insurance exchange or sign up for the expanded Medicaid program. The point was that if they had coverage, they'd get cheaper care sooner in a doctor's office rather than more expensive care later in a hospital emergency room.

Things don't seem to be working out that way. ObamaCare is indeed bending the cost curve—but up, not down. There is no better evidence of this than the recent rate filings by insurance companies.

Every year, companies selling coverage through ObamaCare's exchanges have to ask state regulators to approve their premiums for the following year—a practice more appropriate for the Soviet Union than an allegedly free-market economy. And this year, according to several news reports, some are requesting increases of over 50 percent."

"Why is this happening?
There are many reasons: One is that insurers are anticipating the cost of having to absorb pricey drug therapies such as Sovaldi, a new generation cure for Hepatitis C. There is also pent-up demand from the years of economic downturn when people were foregoing care because they couldn't afford the co-pays and deductibles.

But the biggest culprit by far that companies cite is that the exchange population is weighted too heavily toward riskier and older patients with multiple chronic conditions than what is needed to hold rates steady. Washington Examiner's Philip Klein reports that carriers needed 40 percent of their enrollees from the crucial 18-to-34 demographic, but they have only 28 percent.

What's more, these hikes are likely just a prelude to far bigger ones in future years. Why? Because two programs—risk corridor and reinsurance—that were meant to "stabilize" rates in ObamaCare's first few years so that insurers could obtain the right mix of enrollees are set to expire next year. (The risk corridor program slaps a fee on insurance companies that have lower-than-expected medical losses, and compensates those that have more. The reinsurance program imposes a fee on insurance policies and funnels it to insurers with high-risk individuals.) With these programs gone, the challenge of maintaining a balanced risk pool will become even harder.

The expanded Medicaid program is no picture of robust health, either. It has produced no cost-saving decline in emergency room visits, nor has it contributed to hospital profitability, as was hoped.
Three-quarters of ER doctors surveyed in March by the American College of Emergency Physicians said that ER visits to their hospitals had increased in the last year. Why? It could be that many hospitals have shut down (which itself would be a terrible sign), causing those still in business to pick up the slack. But the bigger reason is that Medicaid reimbursement to physicians is so low that they turn away Medicaid patients, consigning them to ERs, just as before.

But that still at least means that hospitals seeing these new Medicaid patients are getting compensated, right?

Yes and no. Their expenses due to uncompensated care have gone down 13 percent since last year, saving them a total of $9 billion. But that doesn't seem to have much to do with ObamaCare. Why? Because that number has declined both in states that opted for a Medicaid expansion and those that didn't, according to a Moody's Investors study. However, hospitals in states that expanded Medicaid also incurred $28 billion in added costs, of which only half was reimbursed—leaving them about $5 billion in the hole. It's possible that the hole would be even bigger without Medicaid (because hospitals would have to swallow more uncompensated care costs)—or it's possible that because the previously uninsured now have coverage, they are even quicker to go to the ER.

So, to recap: ObamaCare has fallen short of its enrollment target, hiked insurance premiums, failed to cut down on ER visits, and flopped in its attempt to improve hospitals' bottom line."