Take Two Aspirin and Blame Everything on Obamacare

How the health care law became the scapegoat for everything.

A goat eats weeds at the Urban Renaissance Agency condominium complex in Machida in western Tokyo on November 14, 2013. A Japanese condominium complex has decided to ditch noisy lawnmowers and their paid pushers for a more natural option: goats.   
National Journal
Sam Baker
Dec. 12, 2013, 2:13 p.m.

Wel­come to the Obama­care era.

The healthy are sub­sid­iz­ing the sick. In­sur­ance com­pan­ies are tight­en­ing ac­cess to doc­tors. Plans with low premi­ums have high de­duct­ibles. Some­times it rains, Nick­el­back is still a band, and people con­tin­ue to die lit­er­ally every day.

But just be­cause something is hap­pen­ing and Obama­care ex­ists doesn’t mean it’s hap­pen­ing be­cause Obama­care ex­ists — even in health care.

Don’t tell that to the law’s crit­ics: The Af­ford­able Care Act has be­come the go-to scape­goat for just about everything people don’t like about health care, if not in the eco­nomy over­all. The law is be­ing blamed for trends, eco­nom­ic in­cent­ives, and ba­sic real­it­ies that it did not cre­ate and that were part of the health care sys­tem long be­fore Pres­id­ent Obama was even elec­ted.

There’s not a big dif­fer­ence between “how Obama­care works” and “how health in­sur­ance works” — and that, health ex­perts said, is what makes the law such a con­veni­ent tar­get.

Un­der Obama­care, if you like your doc­tor, you can’t al­ways keep her.

Con­sider the com­plaint du jour about the Af­ford­able Care Act: You might not be able to keep your doc­tor. There’s some truth to this charge, be­cause many plans sold through the law’s in­sur­ance ex­changes have set re­l­at­ively nar­row net­works of doc­tors and oth­er pro­viders. There’s no ques­tion that nar­row net­works are com­mon in Obama­care ex­change plans — but they were com­mon be­fore, too.

“Nar­row net­works were hap­pen­ing already. There has been kind of a re­sur­gent in­terest in nar­row net­works,” Kais­er Fam­ily Found­a­tion Pres­id­ent Drew Alt­man said.

Nar­row net­works are one of the tools in­surers use to keep premi­ums low. Doc­tors want to be paid as much as pos­sible, while in­surers want to keep their costs down so they can charge a lower premi­um and at­tract more healthy cus­tom­ers. To get there, in­surers will some­times ex­clude ex­pens­ive pro­viders, un­less those doc­tors are so pop­u­lar that people are will­ing to pay more for a plan that in­cludes them.

“Where you have had a choice, people have made trade-offs,” said Sab­rina Cor­lette, a seni­or re­search fel­low at the Geor­getown Uni­versity Health Policy In­sti­tute.

By cre­at­ing new mar­ket­places where mil­lions of people are sud­denly shop­ping for in­sur­ance — and by cut­ting off oth­er levers in­surers could use in the past (like re­fus­ing to cov­er sick people) — Obama­care has “ac­cel­er­ated” the shift to nar­row­er net­works, Alt­man said. But he said the pen­du­lum already seemed to be swinging in that dir­ec­tion.

In­surers tried to nar­row their pro­vider net­works in the ‘90s us­ing HMOs, and con­sumers hated the plans so much that in­surers ul­ti­mately backed away. That could hap­pen again this time — the Af­ford­able Care Act doesn’t re­quire nar­row net­works and it doesn’t dic­tate how much in­surers pay doc­tors.

“No one has ever heard of an HMO? Net­works have been around forever,” said Aaron Car­roll, dir­ect­or of the Cen­ter for Health Policy and Pro­fes­sion­al­ism Re­search at In­di­ana Uni­versity. “The idea of net­works as some­how new or gov­ern­ment-cre­ated is strange…. I un­der­stand why people don’t like it. They nev­er have. But it’s not the fault of the Af­ford­able Care Act. It’s the fault of try­ing to keep spend­ing to a min­im­um.”

Un­der Obama­care, de­duct­ibles are rising.

A sim­il­ar dy­nam­ic is play­ing out with Obama­care’s next big scare: rising de­duct­ibles. Re­pub­lic­ans have trum­peted re­ports about high de­duct­ibles to ar­gue that the plans aren’t ac­tu­ally af­ford­able. And many plans sold through the ex­changes do have high de­duct­ibles — of­ten right up to the max­im­um al­lowed by law.

But de­duct­ibles were already on the rise, pre-Obama­care. In the mar­ket for em­ploy­er cov­er­age, which Obama­care barely touches, de­duct­ibles have been grow­ing stead­ily. In 2006, ac­cord­ing to the Kais­er Fam­ily Found­a­tion, 10 per­cent of work­ers covered by an em­ploy­er plan had an an­nu­al de­duct­ible of $1,000 or more. By 2010, the year the Af­ford­able Care Act passed, it was up to 27 per­cent. By last year it had reached 38 per­cent.

Shift­ing costs to in­di­vidu­als is an­oth­er tool to keep costs and premi­ums low, and an­oth­er area where the law has “ac­cel­er­ated” an ex­ist­ing trend but not caused it, Alt­man said.

The Af­ford­able Care Act will res­ult in a surge in the num­ber of people with high-de­duct­ible plans, as well as in the num­ber of plans with nar­row net­works — be­cause that’s where the mar­ket has pushed private in­sur­ance, and cheap plans in par­tic­u­lar.

And, for what it’s worth, high-de­duct­ible plans have long been a ten­et of con­ser­vat­ives’ health care plans. They’ve called for more “skin in the game,” mean­ing more out-of-pock­et spend­ing and looser be­ne­fit man­dates.

“While con­ser­vat­ives feel they’ve been los­ing big-time with Obama­care and they don’t like it at all, the plans in the ex­changes rep­res­ent just the kind of skin-in-the-game sys­tem that con­ser­vat­ives have al­ways sup­por­ted,” Alt­man said.

Em­ploy­ers are cut­ting be­ne­fits.

Em­ploy­er plans aren’t sub­ject to some of the law’s most ex­pens­ive re­quire­ments — they don’t have to cov­er “es­sen­tial” be­ne­fits, for ex­ample, par­tially be­cause most of them already do. But that hasn’t stopped private-sec­tor em­ploy­ers from cit­ing the health care law when they have cut health be­ne­fits. UPS, for ex­ample, said the law was part of the reas­on it would not of­fer its health plan to em­ploy­ees’ spouses who had their own of­fer of em­ploy­er-based cov­er­age.

Health care ex­perts aren’t so sure the law is re­spons­ible.

On av­er­age, em­ploy­ers’ health care costs are grow­ing at near-re­cord lows — about 4 per­cent per year, ac­cord­ing to Kais­er’s an­nu­al sur­vey of em­ploy­er plans. That’s par­tially be­cause health care costs have slowed over­all, but also be­cause em­ploy­ers have gradu­ally taken steps like UPS’ — shift­ing more costs to em­ploy­ees, adding or in­creas­ing de­duct­ibles, and scal­ing back be­ne­fits.

“I think in the broad­er em­ploy­er mar­ket we’re see­ing a lot of things that were hap­pen­ing any­way be­ing blamed on the law be­cause it’s a con­veni­ent scape­goat for changes they wanted to make any­way,” Alt­man said.

Obama­care makes healthy people sub­sid­ize sick ones.

“Par­tic­u­larly harmed are young people try­ing to climb the eco­nom­ic lad­der…. Obama­care de­pends on young, healthy people be­ing forced to pay high­er premi­ums in or­der to sub­sid­ize the premi­ums of older, less healthy people,” Sen. Ted Cruz, R-Texas, said in a re­cent op-ed.

Every private health care plan de­pends on healthy people sub­sid­iz­ing un­healthy people. Safe drivers sub­sid­ize bad drivers, homes that don’t burn down sub­sid­ize those that do, and people who don’t file health care claims sub­sid­ize those who file a lot of them.

“That is every risk pool in the world — that’s how health in­sur­ance works,” Car­roll said.

The law only al­lows in­sur­ance com­pan­ies to charge older con­sumers three times more be­cause of their age, while some states al­lowed them to charge five times more. So the sub­sidy from young to old might be a little big­ger, but it’s not new.

So, what does Obama­care do?

For the most part, Obama­care has simply turned up the volume on ex­ist­ing mar­ket forces. But there are still plenty of con­crete trade-offs that did really start with the Af­ford­able Care Act.

It truly did force in­sur­ance com­pan­ies to can­cel mil­lions of health care plans, for ex­ample. As much as the White House tried to paint that as in­surers’ busi­ness de­cision, the law cre­ates new stand­ards for in­sur­ance plans and makes a con­cer­ted ef­fort to push people in­to those plans. Wheth­er those stand­ards are a good or bad thing for con­sumers is a mat­ter of opin­ion, but there’s no ques­tion the Af­ford­able Care Act made it im­possible for mil­lions of people to stay on the plans they had.

That might have been a smal­ler polit­ic­al prob­lem if Obama hadn’t prom­ised that people could keep their plans. And even with trends the law didn’t cause, his sales pitches could still come back to bite him. Obama also prom­ised that you could keep your doc­tor — something he couldn’t guar­an­tee with or without Obama­care.

The Af­ford­able Care Act makes a com­plic­ated series of trade-offs to make health care more ac­cess­ible, and some people will get a worse deal as a res­ult. But many trade-offs that seem like Obama­care are really just the health care sys­tem.

“Obama­care gets the blame for much of the bad stuff hap­pen­ing any­way in the health care sys­tem, and also little of the cred­it for the good things it’s do­ing,” Alt­man said.

{{ BIZOBJ (video: 4623) }}

Under Obamacare, if you like your doctor, you can't always keep her.

Con­sider the com­plaint du jour about the Af­ford­able Care Act: You might not be able to keep your doc­tor. There’s some truth to this charge, be­cause many plans sold through the law’s in­sur­ance ex­changes have set re­l­at­ively nar­row net­works of doc­tors and oth­er pro­viders. There’s no ques­tion that nar­row net­works are com­mon in Obama­care ex­change plans — but they were com­mon be­fore, too.

“Nar­row net­works were hap­pen­ing already. There has been kind of a re­sur­gent in­terest in nar­row net­works,” Kais­er Fam­ily Found­a­tion Pres­id­ent Drew Alt­man said.

Nar­row net­works are one of the tools in­surers use to keep premi­ums low. Doc­tors want to be paid as much as pos­sible, while in­surers want to keep their costs down so they can charge a lower premi­um and at­tract more healthy cus­tom­ers. To get there, in­surers will some­times ex­clude ex­pens­ive pro­viders, un­less those doc­tors are so pop­u­lar that people are will­ing to pay more for a plan that in­cludes them.

“Where you have had a choice, people have made trade-offs,” said Sab­rina Cor­lette, a seni­or re­search fel­low at the Geor­getown Uni­versity Health Policy In­sti­tute.

By cre­at­ing new mar­ket­places where mil­lions of people are sud­denly shop­ping for in­sur­ance — and by cut­ting off oth­er levers in­surers could use in the past (like re­fus­ing to cov­er sick people) — Obama­care has “ac­cel­er­ated” the shift to nar­row­er net­works, Alt­man said. But he said the pen­du­lum already seemed to be swinging in that dir­ec­tion.

In­surers tried to nar­row their pro­vider net­works in the ‘90s us­ing HMOs, and con­sumers hated the plans so much that in­surers ul­ti­mately backed away. That could hap­pen again this time — the Af­ford­able Care Act doesn’t re­quire nar­row net­works and it doesn’t dic­tate how much in­surers pay doc­tors.

“No one has ever heard of an HMO? Net­works have been around forever,” said Aaron Car­roll, dir­ect­or of the Cen­ter for Health Policy and Pro­fes­sion­al­ism Re­search at In­di­ana Uni­versity. “The idea of net­works as some­how new or gov­ern­ment-cre­ated is strange…. I un­der­stand why people don’t like it. They nev­er have. But it’s not the fault of the Af­ford­able Care Act. It’s the fault of try­ing to keep spend­ing to a min­im­um.”

Under Obamacare, deductibles are rising.

A sim­il­ar dy­nam­ic is play­ing out with Obama­care’s next big scare: rising de­duct­ibles. Re­pub­lic­ans have trum­peted re­ports about high de­duct­ibles to ar­gue that the plans aren’t ac­tu­ally af­ford­able. And many plans sold through the ex­changes do have high de­duct­ibles — of­ten right up to the max­im­um al­lowed by law.

But de­duct­ibles were already on the rise, pre-Obama­care. In the mar­ket for em­ploy­er cov­er­age, which Obama­care barely touches, de­duct­ibles have been grow­ing stead­ily. In 2006, ac­cord­ing to the Kais­er Fam­ily Found­a­tion, 10 per­cent of work­ers covered by an em­ploy­er plan had an an­nu­al de­duct­ible of $1,000 or more. By 2010, the year the Af­ford­able Care Act passed, it was up to 27 per­cent. By last year it had reached 38 per­cent.

Shift­ing costs to in­di­vidu­als is an­oth­er tool to keep costs and premi­ums low, and an­oth­er area where the law has “ac­cel­er­ated” an ex­ist­ing trend but not caused it, Alt­man said.

The Af­ford­able Care Act will res­ult in a surge in the num­ber of people with high-de­duct­ible plans, as well as in the num­ber of plans with nar­row net­works — be­cause that’s where the mar­ket has pushed private in­sur­ance, and cheap plans in par­tic­u­lar.

And, for what it’s worth, high-de­duct­ible plans have long been a ten­et of con­ser­vat­ives’ health care plans. They’ve called for more “skin in the game,” mean­ing more out-of-pock­et spend­ing and looser be­ne­fit man­dates.

“While con­ser­vat­ives feel they’ve been los­ing big-time with Obama­care and they don’t like it at all, the plans in the ex­changes rep­res­ent just the kind of skin-in-the-game sys­tem that con­ser­vat­ives have al­ways sup­por­ted,” Alt­man said.

Employers are cutting benefits.

Em­ploy­er plans aren’t sub­ject to some of the law’s most ex­pens­ive re­quire­ments — they don’t have to cov­er “es­sen­tial” be­ne­fits, for ex­ample, par­tially be­cause most of them already do. But that hasn’t stopped private-sec­tor em­ploy­ers from cit­ing the health care law when they have cut health be­ne­fits. UPS, for ex­ample, said the law was part of the reas­on it would not of­fer its health plan to em­ploy­ees’ spouses who had their own of­fer of em­ploy­er-based cov­er­age.

Health care ex­perts aren’t so sure the law is re­spons­ible.

On av­er­age, em­ploy­ers’ health care costs are grow­ing at near-re­cord lows — about 4 per­cent per year, ac­cord­ing to Kais­er’s an­nu­al sur­vey of em­ploy­er plans. That’s par­tially be­cause health care costs have slowed over­all, but also be­cause em­ploy­ers have gradu­ally taken steps like UPS’ — shift­ing more costs to em­ploy­ees, adding or in­creas­ing de­duct­ibles, and scal­ing back be­ne­fits.

“I think in the broad­er em­ploy­er mar­ket we’re see­ing a lot of things that were hap­pen­ing any­way be­ing blamed on the law be­cause it’s a con­veni­ent scape­goat for changes they wanted to make any­way,” Alt­man said.

Obamacare makes healthy people subsidize sick ones.

“Par­tic­u­larly harmed are young people try­ing to climb the eco­nom­ic lad­der…. Obama­care de­pends on young, healthy people be­ing forced to pay high­er premi­ums in or­der to sub­sid­ize the premi­ums of older, less healthy people,” Sen. Ted Cruz, R-Texas, said in a re­cent op-ed.

Every private health care plan de­pends on healthy people sub­sid­iz­ing un­healthy people. Safe drivers sub­sid­ize bad drivers, homes that don’t burn down sub­sid­ize those that do, and people who don’t file health care claims sub­sid­ize those who file a lot of them.

“That is every risk pool in the world — that’s how health in­sur­ance works,” Car­roll said.

The law only al­lows in­sur­ance com­pan­ies to charge older con­sumers three times more be­cause of their age, while some states al­lowed them to charge five times more. So the sub­sidy from young to old might be a little big­ger, but it’s not new.

So, what does Obamacare do?

For the most part, Obama­care has simply turned up the volume on ex­ist­ing mar­ket forces. But there are still plenty of con­crete trade-offs that did really start with the Af­ford­able Care Act.

It truly did force in­sur­ance com­pan­ies to can­cel mil­lions of health care plans, for ex­ample. As much as the White House tried to paint that as in­surers’ busi­ness de­cision, the law cre­ates new stand­ards for in­sur­ance plans and makes a con­cer­ted ef­fort to push people in­to those plans. Wheth­er those stand­ards are a good or bad thing for con­sumers is a mat­ter of opin­ion, but there’s no ques­tion the Af­ford­able Care Act made it im­possible for mil­lions of people to stay on the plans they had.

That might have been a smal­ler polit­ic­al prob­lem if Obama hadn’t prom­ised that people could keep their plans. And even with trends the law didn’t cause, his sales pitches could still come back to bite him. Obama also prom­ised that you could keep your doc­tor — something he couldn’t guar­an­tee with or without Obama­care.

The Af­ford­able Care Act makes a com­plic­ated series of trade-offs to make health care more ac­cess­ible, and some people will get a worse deal as a res­ult. But many trade-offs that seem like Obama­care are really just the health care sys­tem.

“Obama­care gets the blame for much of the bad stuff hap­pen­ing any­way in the health care sys­tem, and also little of the cred­it for the good things it’s do­ing,” Alt­man said.

{{ BIZOBJ (video: 4623) }}

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