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The latest news on Obamacare from Business Insider

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    obamacare

    (Reuters) - California Governor Jerry Brown signed a bill into law allowing unauthorized immigrants to buy health insurance on a state exchange created under the U.S. Affordable Care Act, making the state the first in the country to offer that kind of coverage.

    The law lets the state request a waiver from the federal government that will be needed to allow unauthorized immigrants to purchase unsubsidized insurance through Covered California, the state's healthcare exchange.

    "Today we ask the federal government to remove another barrier to health insurance access that discriminates against some of our residents on the basis of their documentation status," said Senator Ricardo Lara, the bill's author, in a statement.

    Brown, a Democrat, signed the bill on Friday, according to the governor's website. His office was not immediately available for comment.

    The Los Angeles Times reported that if the waiver is approved, it would allow as many as 390,000 immigrants to purchase healthcare insurance through the state's exchange.

    Opponents of the legislation have said it would unnecessarily cost California taxpayers and strain the state's healthcare system.

    About 7 percent of California's population, or 2.6 million people, lack legal immigration status. In 2012, the state spent more than $600 million on emergency room and other health-related services for people living in the state illegally.

    (Reporting by Brendan O'Brien in Milwaukee; Editing by Muralikumar Anantharaman)

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    Demonstrators in favor of Obamacare gather at the Supreme Court building in Washington March 4, 2015. REUTERS/Jonathan Ernst

    If Republicans finally make good on their vow to repeal the Affordable Care Act -- but without adopting a suitable replacement -- 24 million Americans would be removed from the health care insurance rolls in 2021. And federal spending on health care would decline by $927 billion over the next decade, according to a provocative new study by the Urban Institute and the Robert Wood Johnson Foundation.

    Donald Trump, the presumptive GOP presidential nominee, has vowed to repeal Obamacare as one of his first acts, although neither Trump nor Republican congressional leaders are anywhere close to a consensus on replacement legislation that wouldn’t leave millions of Americans in the lurch. House Republicans are planning to release the outline of a plan later this month.

    Projecting the impact of the repeal of Obamacare is not idle speculation. Last January, the GOP controlled House and Senate finally approved a measure to end the ACA, but without including an alternative approach. President Obama vetoed the legislation. But if Trump is sitting in the White House next January and the Republicans manage to retain control of the House and Senate, then Obamacare could go by the boards.

    If that were to happen, 14.5 million fewer low-income people would lose Medicaid coverage while 9.4 million people would lose federal tax credits to purchase private health insurance on Obamacare exchanges, according to the new report. More than eight in ten of those losing coverage would be members of working families; 63 percent would have incomes below 200 percent of the poverty level and 40 percent would be young adults.

    While on the surface, at least, the federal government would save nearly $1 trillion over the coming decade, state governments, hospitals and other medical providers would take a severe economic beating, as sharp reductions in federal spending for expanded Medicaid coverage for the poor would likely be offset by state spending increases of $68.5 billion between 2017 and 2026.

    donald trump

    Thirty-two of the 50 states agreed to expand their Medicaid coverage for poor adults as part of the Affordable Care Act, with the federal government initially picking up the entire cost and the states eventually kicking in 10 percent. But if the Republicans succeeded in repealing Obamacare, most of those states would have to absorb massive losses in Medicaid, the Children’s Health Insurance Program and other benefits.

    Although the fiscal implications of a repeal of President Obama’s signature health insurance  program has received scant attention to now, GOP leaders in Washington could end up feeling the heat from Republican as well as Democratic governors in state legislatures – as well as hospital and physician groups – if they try to  pull the plug on Obamacare.

    “Modest- and low-income families would forgo health care because of cost and lack of coverage, and health care providers would end up paying for more uncompensated care,” the report states.. 

    Matt Buettgens, a senior research associate in the Urban League’s health policy center and a lead author of the report, said in an interview Monday that repeal of Obamacare and its support of expanded Medicaid could lead to “state budget shortfalls.” Huge new budgetary burdens on hospitals, doctors and other care providers would be forced to absorb the cost of treatment of indigent patients who turn to them for help.

    Some states, including New York, Minnesota and Vermont that expanded Medicaid coverage on their own before the Affordable Care Act was enacted six years ago, would likely continue to provide the coverage even without the federal support. But other states’ that expanded Medicaid with the promise of full funding by the federal government would likely pull back, leaving health care providers, state prison systems and others holding the bag.

    “The uncompensated care issue would hit the states and health care providers very hard,” Buettgens said. “The loss of Medicaid expansion would also have an adverse impact on employment in many states where state hospitals are major employers” and might have to cut back on personnel to meet the added cost of care for the indigent.

    obamacare

    Moreover, many states have reported net budget savings because of expanding Medicaid, the report says, especially in the treatment of patients incarcerated in state prison. Without Obamacare, those facilities would suffer budget shortfalls.

    If the ACA were repealed with no replacement, the federal government would spend $90.9 billion less on health care for the non-elderly in 2021 than otherwise, according to the study. That includes $78.1 billion less in Medicaid and CHIP and $39.3 billion less in Obamacare premium tax credits and cost sharing.

    However, those decreases would be partially offset by about $26.5 billion of additional federal spending on uncompensated care for the uninsured.

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    obamacare

    WASHINGTON (AP) — Premiums for popular low-cost medical plans under the federal health care law are expected to go up an average of 11 percent next year, said a study that reinforced reports of sharp increases around the country in election season.

    For consumers, the impact will depend on whether they get government subsidies for their premiums, as well as on their own willingness to switch plans to keep the increases more manageable, said the analysis released Wednesday by the nonpartisan Kaiser Family Foundation.

    The full picture on 2017 premiums will emerge later this summer as the presidential election heads into the home stretch. The health law's next sign-up season starts a week before Election Day. Democrat Hillary Clinton wants to build on President Barack Obama's health overhaul, which has reduced the uninsured rate to a historically low 9 percent. Republican Donald Trump wants to repeal it.

    The Kaiser study looked at 14 metro areas for which complete data on insurer premium requests is already available. It found that premiums for a level of insurance called the "lowest-cost silver plan" will go up in 12 of the areas, while decreasing in two. The changes range from a decrease of 14 percent in Providence, Rhode Island, to an increase of 26 percent in Portland, Oregon.

    Half of the cities will see increases of 10 percent or more. Last year, only two of the cities had double-digit increases.

    "Premiums are going up faster in 2017 than they have in past years," said Cynthia Cox, lead author of the analysis.

    Among the cities studied, the monthly premium for a 40-year-old nonsmoker in 2017 will range from $192 in Albuquerque, New Mexico, to $482 in Burlington, Vermont.

    Final rates may change if regulators push back on the requests from insurers. The foundation plans to analyze major cities in all states as more data becomes available.

    Most workers and their families are covered by employers, but about 12 million people get private coverage through HealthCare.gov and online insurance markets run by states. Nearly 7 in 10 pick silver plans, a mid-tier option that allows consumers with low to modest incomes to also get financial help with out-of-pocket costs when they receive medical care.

    Income-based premium subsidies designed to keep pace with costs will cushion the impact for many. But not all consumers get help. About 2 million marketplace customers make too much to qualify for the subsidies. And an estimated 3 million to 5 million people who buy their policies outside of markets like HealthCare.gov do not receive financial assistance.

    For both the subsidized and the unsubsidized, willingness to switch plans and insurers may be crucial in keeping premiums more manageable next year.

    The lowest-cost silver plan in a community often changes from year to year, and Cox said the estimated 11 percent increase is based on an assumption that consumers will switch.

    "If they stay in their same plan they may see a higher premium increase," she said.

    The premium increases come after major insurers reported significant losses on their health-care business. Enrollment was lower than hoped for, new customers were sicker than expected, and the government's system to help stabilize the markets had problems.

    Medicare and Medicaid administrator Andy Slavitt, whose agency also oversees the health law, said in a speech last week that the health insurance markets are still in an early trial-and-error stage. He estimated that could go on for another couple of years, or well into the next president's term.

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    Online:

    Kaiser Family Foundation study - http://tinyurl.com/hmpwjyf

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    Amid reports that consumers could be hit with Obamacare health insurance premium hikes of 10 percent or more, the administration is providing state insurance regulators with $22 million to encourage them to beef up their reviews of requests for rate hikes from the health insurance industry.

    The decision announced on Wednesday to provide states with additional resources to evaluate and challenge rate increases, in addition to undertaking other activities related to Obamacare, appears to be as much a political maneuver as another attempt to bend the health care cost curve.

    A new Kaiser Family Foundation analysis of Obamacare insurance markets in roughly a third of major metropolitan areas projects that premiums on the most popular silver plans will increase by an average of 10 percent to 11 percent next year, twice the rate of increase approved last fall. And that doesn’t include almost certain increases in co-payments or other out-of-pocket costs to consumers.

    Obama administration officials reportedly are wary of the political impact of a rash of double-digit premium increases so close to the election, despite warnings from major insurance providers they will need higher revenues in order to remain in Obamacare. Millions of Americans are likely to get their first notice of Obamacare premium rate increases for 2017 shortly before the November election.

    The Centers for Medicare and Medicaid Services said that the $22 million in grants will help in the planning and implementation of select federal market reforms and consumer protection, as well as “bringing down the cost of health care coverage.”

    “State departments of insurance are vital to the oversight of health insurance plans,” the federal agency said in a statement. “These departments are responsible for making sure that premiums are reasonable and justified, ensuring company solvency, and protecting consumers.”

    The federal government has no direct say over premiums charged in the Affordable Care Act exchanges. However, nearly all states and the District of Columbia have insurance departments or commission with the legal authority to review proposed rate hikes.

    Under this approach, health insurers are required to justify proposed rate increases to state insurance departments, some of which have the authority to deny “unreasonable” increases. By providing additional funding, federal health officials hope to encourage states to retain outside insurance experts to closely scrutinize the proposed rates and see if the hikes are justified.

    A man looks over the Affordable Care Act (commonly known as Obamacare) signup page on the HealthCare.gov website in New York in this October 2, 2013 photo illustration. REUTERS/Mike Segar

    But insurance industry advocates and some health care experts suggest the administration’s latest initiative is primarily designed to minimize a political backlash this fall, just before the election.

    “I’m sure that any state would be happy to take free money, there’s no question about that,” Joseph Antos, a health care expert with the American Enterprise Institute, said in an interview on Thursday. “But this certainly has the looks of the administration wanting the insurance commissioners to bear down hard because it wouldn’t look good for the election to have really big rate increases.”

    The new federal grants, touted by the administration as a way to “hold insurance companies accountable for unjustified hikes,” are likely to intensify tensions between the administration and health insurers, as The Hill first reported Wednesday.

    Battered by soaring drug and health care costs and tumultuous changes in the market, U.S.  health care insurers have been warning since April about the probability of double-digit increases in premiums next year. They say the premium hikes are needed to overcome serious losses that are driving some major companies, including industry giant UnitedHealthcare, out of Obamacare insurance exchanges and that forced the closing of nearly half of the 23 non-profit co-ops.

    Many companies have also complained that they have received far less in federal “risk pool” reimbursements than they had counted on to offset unexpected losses in providing health insurance to an older and sicker population than anticipated.

    For all those reasons, America’s Health Insurance Plans (AHIP), the major trade association for insurers, objects to the administration’s decision to try to toughen state rate increase reviews throughout the country. 

    Clare Krusing, an AHIP spokesperson, told The Hill she was concerned that the increased federal assistance to state insurance regulators would turn the review process into “a political football."

    "We believe the current rate review process is sufficient,” she said. “It needs to focus on the underlying cost-drivers of premiums." 

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    Paul Ryan

    House Speaker Paul Ryan and other GOP leaders this week intend to unveil their latest vision for replacing the Affordable Care Act, trying once again to make good on a pledge to not only jettison President Obama’s signature health care program but offer a credible alternative.

    Almost from the moment the ACA was enacted in 2010, GOP leaders and presidential candidates have called for “root and branch” repeal of every facet of the program.

    Republicans and their allies can give chapter and verse on why Obamacare must be extinguished — the government costs are too high, new taxes are too onerous, people weren’t allowed to keep the insurance of their choice, premiums and co-payments are going through the roof, experimental non-profit co-ops proved to be a disaster and so on.

    But for years House and Senate Republicans repeatedly failed to explain how to replace the program without leaving millions of people once again without insurance coverage and without committing the government to even higher costs and liabilities.

    Stuart M. Butler, a senior fellow in economics at the Brookings Institution who has spent decades tracking health care policy in Washington, said that Republicans have been flummoxed until now in crafting a realistic alternative that doesn’t leave millions of Americans in the lurch because “it’s really hard to square the circle” with budget and funding numbers acceptable to a highly diverse, conservative group of Republican lawmakers.

    “It’s real hard to figure out how you get no significant reduction in health care coverage if you get rid of the individual mandate [to purchase insurance] and you try to repeal some of the taxes in the program,” said Butler, who previously headed the Center for Policy Innovation at the conservative Heritage Foundation. “So there’s tough decisions that have to be made if you’re really putting forward an alternative that claims to reduce people’s costs and not end up with a lot of people becoming uninsured.”

    Ryan and several key House committee chairmen believe they have finally come up with a concept and plan that could be used as the basis for the replacement of Obamacare, provided of course that Donald Trump succeeds President Obama in the White House and the Republicans can retain control of the House and Senate in the November general election.

    Obamacare Protest

    The new plan set for release this week reportedly will include a refundable tax credit that could be used by low and moderate-income families or others who don’t have the benefit of employer-provided coverage to purchase health care insurance in the private market. One version getting a lot of attention provides a universal tax credit adjusted by age, so that the older you are the bigger the tax credit.

    The proposed GOP tax credit would mark a significant departure from the refundable credit currently available under Obamacare, which is based on a sliding income scale and can only be used to subsidize the premiums on health care insurance plans purchased within state and federal Obamacare exchanges.

    The proposal would also raise billions of dollars in revenue for the new program by imposing a cap on the federal tax exclusion on employer-based health insurance. Currently, premiums paid for employer-sponsored health insurance are excluded from taxable income. That reduces the amount that workers owe in income and payroll taxes by about $250 billion a year. The House Republican plan would substantially cut into that major tax break.

    While GOP leaders may argue that a cap on the tax exclusion for employer-provided insurance is justified because it would eliminate a glaring tax loophole while helping to fund new health insurance initiatives, businesses and employees throughout the country would likely protest the move that would greatly increase their tax bill.

    Ryan’s health care reform ideas are part of his larger effort to set a new GOP policy agenda for the upcoming general election and beyond. But in a tell-tale sign that the Republicans are still struggling to agree on a replacement for Obamacare, the plan will not include specific dollar figures on some of its core provisions, as The Hillnewspaper reported last week.

    “It will not include specific dollar amounts on how large the tax credit would be, nor will it note which employer health insurance plans would be subject to taxation,” The Hill reported, based on interviews with health care industry lobbyists and congressional aides.

    That lack of specificity has led to very low expectations among health policy experts, who have often been promised detailed Obamacare replacement plans only to be presented with vague ideas and slogans.

    “The proper attitude about this is great cynicism,” said Harold Pollack, a health policy expert and professor at the University of Chicago’s School of Social Service Administration. “It’s been more than six years since ACA was passed, and Republicans are still trying to come up with a coherent response to it.”

    Demonstrators in favor of Obamacare gather at the Supreme Court building in Washington March 4, 2015. REUTERS/Jonathan Ernst

    Given the lack of specificity, he said, “We’re discussing vaporware, and I strongly doubt that they will go beyond that point.” This has been going on for years, he said. “They’re still refusing to put any kind of meat on the bone, so it is very difficult to comment on it.”

    Pollack said that the failure to address the fallout from eliminating the individual mandate has been a running problem for the GOP’s proposals.

    “A credible plan to replace Obamacare needs to offer some form of universal coverage, or state that tens of millions of people will be uninsured,” Pollack said.

    That gets to a hard truth. One of the harsh political realities for the Republicans is that once a major social program like Obamacare is enacted and implemented, and the public has begun to draw benefits from it, it is very hard to completely do away with it. Past efforts to dismantle major health care programs like Medicare and Medicaid and the Medicare Part D prescription drug program failed miserably because people didn’t want to give up their benefits once they got them.

    The core elements of the Affordable Care Act include federal tax subsidies to purchase health insurance on government exchanges, protection of people with pre-existing medical conditions from being denied coverage, authorization for children to remain on their family’s health care policy through age 26 and other features that families would be reluctant to give up.

    “A number of those provisions individually are very popular,” said Bill Hoagland, a vice president of the Bipartisan Policy Center and an expert on health care, said in an interview. “It always struck me when I looked at the polling on this that if you just ask generically about Obamacare, you get this sharp division between Democrats and Republicans. But if you start talking about specifics, I think this is where it gets a lot more difficult for Republicans.”

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    Paul Ryan

    WASHINGTON (Reuters) - U.S. House of Representatives Speaker Paul Ryan unveiled a Republican healthcare agenda on Wednesday that would repeal Obamacare but keep some of its more popular provisions.

    The proposal is part of Ryan's blueprint, titled "A Better Way," which offers a Republican alternative to the Democratic Party on policy issues ahead of the Nov. 8 election.

    Earlier this month, Ryan, the country's highest-ranking elected Republican, released initiatives on national security and combating poverty. Proposals on regulation, tax reform and constitutional authority are expected in the coming weeks.

    Republicans have challenged President Barack Obama's signature healthcare law, the Affordable Care Act, since it was enacted in 2010 after a bitter fight in Congress.

    "Obamacare has limited choices for patients, driven up costs for consumers, and buried employers and health care providers under thousands of new regulations," a draft of the Ryan plan said. "This law cannot be fixed."

    But Ryan's proposal would keep some popular aspects of the law, including not allowing people with pre-existing conditions to be denied coverage and permitting children to stay on their parents' coverage until age 26.

    obamacare

    The Obama administration says some 20 million Americans have become insured as a result of the Affordable Care Act.

    The Ryan plan recycles long-held Republican proposals like allowing consumers to buy health insurance across state lines, expanding the use of health savings accounts and giving states block grants to run the Medicaid program for the poor.

    For people who do not get insurance through their jobs, the Republican plan would establish a refundable tax credit. Obamacare, by contrast, provides subsidies to some lower-income people to buy insurance if they do not qualify for Medicaid.

    The Republican proposal would gradually increase the Medicare eligibility age, which currently is 65, to match that of the Social Security pension plan, which is 67 for people born in 1960 or later.

    Like Obamacare's so-called Cadillac tax on expensive healthcare plans offered by employers, the Republican proposal would cap the tax deductibility of employer-based plans.

    The Republican plan includes medical liability reform that would put a cap on non-economic damages awarded in lawsuits, a measure aimed at cutting overall healthcare costs.

    Under Obamacare, many states expanded the number of people eligible for Medicaid. The Republican plan would allow states that decided to expand Medicaid before this year to keep the expansion, while preventing any new states from doing so.

    (Editing by Peter Cooney)

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    paul ryan

    U.S. House of Representatives Speaker Paul Ryan unveiled a Republican healthcare agenda on Wednesday that would repeal Obamacare but keep some of its more popular provisions.

    The proposal is part of Ryan's blueprint, titled "A Better Way," which offers a Republican alternative to the Democratic Party on policy issues ahead of the Nov. 8 election.

    Earlier this month, Ryan, the country's highest-ranking elected Republican, released initiatives on national security and combating poverty. Proposals on regulation, tax reform and constitutional authority are expected in the coming weeks.

    Republicans have challenged President Barack Obama's signature healthcare law, the Affordable Care Act, since it was enacted in 2010 after a bitter fight in Congress.

    "Obamacare has limited choices for patients, driven up costs for consumers, and buried employers and health care providers under thousands of new regulations," a draft of the Ryan plan said. "This law cannot be fixed."

    But Ryan's proposal would keep some popular aspects of the law, including not allowing people with pre-existing conditions to be denied coverage and permitting children to stay on their parents' coverage until age 26.

    The Obama administration says some 20 million Americans have become insured as a result of the Affordable Care Act.

    The Ryan plan recycles long-held Republican proposals like allowing consumers to buy health insurance across state lines, expanding the use of health savings accounts and giving states block grants to run the Medicaid program for the poor.

    For people who do not get insurance through their jobs, the Republican plan would establish a refundable tax credit. Obamacare, by contrast, provides subsidies to some lower-income people to buy insurance if they do not qualify for Medicaid.

    The Republican proposal would gradually increase the Medicare eligibility age, which currently is 65, to match that of the Social Security pension plan, which is 67 for people born in 1960 or later.

    Like Obamacare's so-called Cadillac tax on expensive healthcare plans offered by employers, the Republican proposal would cap the tax deductibility of employer-based plans.

    The Republican plan includes medical liability reform that would put a cap on non-economic damages awarded in lawsuits, a measure aimed at cutting overall healthcare costs.

    Under Obamacare, many states expanded the number of people eligible for Medicaid. The Republican plan would allow states that decided to expand Medicaid before this year to keep the expansion, while preventing any new states from doing so. 

    (Reporting by Eric Beech; Editing by Peter Cooney)

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    Paul RyanHalf a decade after winning back the House of Representatives, Republicans in Congress have yet to pass a bill to fully repeal and replace the Affordable Care Act.

    They have failed to do so both because the party is barely cohesive enough to carry out the elementary functions of government—like moving basic spending bills—and because giving an up-or-down vote to actual health care legislation requires getting specific about the potentially unpopular trade-offs in their approach.

    But because Speaker Paul Ryan wants to provide some semblance of an intellectual counterweight to Donald Trump's frothing lunacy, he has been unveiling a series of policy proposals he hopes will help define the modern GOP. And on Wednesday, we got a paper outlining a Republican substitute for Obamacare.

    It contains little that is new. It is also missing what is by far the most important detail of the entire plan—namely, how much money it will give Americans to buy coverage.

    The truth is that Republican policy thinkers have long had a basic outline for how they would replace the ACA. Erstwhile presidential candidates like Marco Rubio and Scott Walker offered variations on it during their campaigns. Even Donald Trump sort of haphazardly managed to follow its contours when he issued his extremely bare-bones health reform agenda. It goes something like this:

    1. Eliminate Obamacare. Kill it dead.
    2. Allow Americans to purchase health insurance across state lines, so they can find cheap, catastrophic plans in states that allow companies to sell coverage with limited benefits.
    3. Give Americans who don't get insurance through their employers, Medicaid, or Medicare a refundable tax credit—which is to say, a monthly subsidy—to help them purchase said catastrophic coverage.
    4. Expand tax-exempt health savings accounts so that people with cheaper insurance can (maybe) afford to pay out of pocket for routine care, like check-ups.
    5. Create special, state-subsidized “high-risk” pools to cover people with pre-existing conditions.

    These are the main ingredients in the burrito bowl that is GOP health policy. You can add garnishes if you like. Most Republicans would like to gradually cut Medicaid spending and hand control of it over to the states by turning the program into a block grant, which would be a massive change to the welfare state but also basically tangential to replacing the ACA, sort of like dumping a double order of guac on top of your carnitas. The major questions all concern how much money Republicans would be willing to spend to make their system work, since that will determine the kind of insurance Americans will find affordable, and whether anybody would actually order this particular hodgepodge off the menu.

    The plan Ryan debuted Wednesday checks off all of the major GOP health care boxes: insurance across state lines, health savings accounts, high-risk pools, tax credits. Meanwhile, it keeps some of Obamacare's most popular features, like allowing young people to stay on their parents' health plans through age 26 and preventing insurers from canceling insurance for customers who get sick.1

    obamacare

    The document also includes one very important number: $25 billion. That's the minimum that Ryan would be willing to spend in order to fund those high-risk pools. That may or may not be enough, and it's unclear that rabid anti-government Republicans would really vote for such a sum, or the taxes to pay for it, but it's at least a hard number that can be debated.

    But again, one number is conspicuously absent. The GOP plan does not spell out how much Americans can expect to receive in tax credits to buy coverage. Instead, it merely says that, "Given the increased flexibility in the insurance market, the new fixed credit would be large enough to purchase the typical pre-Obamacare health insurance plan.”

    This is vague to the point of meaninglessness. In 2013, before Obamacare's major reforms were finally implemented, Americans on the individual market paid an average premium of $235 per month. Last year, the average Obamacare insurance subsidy was $268 per month. If the ACA's subsidies are supposedly an unaffordable expense for the federal government, as Republicans generally seem to feel, it is difficult to imagine that they really plan to give people enough money to buy a “typical” pre-reform plan. What they actually intend is left to our imaginations.

    The Republican health care plan, as it has been for years now, is to give Americans a small amount of money capable of helping them purchase cheap, not very comprehensive insurance. The most important question is: How cheap? Paul Ryan still isn't willing to give us an answer.

    1The plan says it would stop insurers from denying coverage to people based on pre-existing conditions but doesn't mention whether it would allow companies to charge new customers higher rates for being sick,

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    obama obamacare doctors

    Prior to the passage of the Affordable Care Act, there were some dire warnings about its potential affect on the jobs market.

    Lawmakers opposed to it raised concerns that small businesses would be reluctant to hire employees for fear of hitting the threshold for providing insurance or that hourly employees would have their hours cut back to avoid hitting full-time status.

    Those fears, however, have not come to pass, according to B. Ravikumar, of the Federal Reserve Bank of St. Louis, and Lin Shao, of Washington University in St. Louis.

    "The aggregate data cast doubt on the proposition that an increase in labor costs due to labor market regulations has been the reason for the slow recovery from the 2007-09 recession," Ravikumar and Shao wrote in a research paper for the St. Louis Fed.

    To reach this conclusion, the researchers looked at the recovery out of the 2001 and 2007-09 recessions and the real cost of labor following both of those economic downturns — the idea being that if regulation were onerous on employers, it would make labor costlier per worker and affect hiring trends.

    "After the 2001 recession, labor cost per hour rose approximately 5 percent but after the 2007-09 recession remained essentially flat," the researchers wrote.

    "As shown in Panel B of Figure 1, a similar pattern holds for labor cost per employed person: It also grew at a slower rate after the 2007-09 recession than after the 2001 recession."

    Screen Shot 2016 07 07 at 1.39.42 PM

    This also holds true for the number of hours worked, said Ravikumar and Shao. After the 2001 recession, total hours worked bounced back just 5% in the next 20 quarters, while they increased by 8% after the 2009 recession.

    While there are some caveats to add here, the main one is that the financial crisis caused a deeper recession, so there is a lower benchmark and it's impossible to know what the recovery would have looked like without Obamacare.

    On the other hand, the labor market recovery has been robust — in fact, it has set multidecade records. So on balance, the effects may cancel each other out.

    Regardless, based on this analysis, Ravikumar and Shao said that Obamacare wasn't as much of a job-killer as feared.

    SEE ALSO: The country's largest health-insurance company is almost entirely quitting Obamacare

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    WASHINGTON (AP) — President Barack Obama is laying out a blueprint for addressing unsolved problems with his signature health law, including a renewed call for a "public option" to let Americans buy insurance from the government.

    Obama's assessment of the Affordable Care Act comes in an eight-page article in the Journal of the American Medical Association, a peer-reviewed publication. The article debuted Monday on the journal's website, and Obama plans to echo the themes in public events and speeches in the coming weeks.

    Replete with academic-style citations, the article is largely a self-congratulatory look at what Obama sees as the accomplishments of his law: millions of Americans who have gained coverage, slower growth in overall health costs and better coordination of care to improve quality.

    Yet it's also a memo for Democrat Hillary Clinton on how she can build on his legacy if elected president. Obama's latest ideas are likely to be dismissed by Republicans, who remain committed to repealing the health care law. In polls, "Obamacare" continues to divide the public.

    Despite progress under his administration, "too many Americans still strain to pay for their physician visits and prescriptions, cover their deductibles or pay their monthly insurance bills," Obama wrote. Others struggle to navigate the "bewildering" health system. Too many still lack insurance coverage, he added.

    Obama urged lawmakers to "revisit" the public plan, especially in areas of the country where there is little or no competition among private insurers participating in HealthCare.gov and state-run marketplaces created by the law.

    Many experts consider that at least three insurers are needed for a competitive market. But many small towns and rural areas have only one option. The problem is growing, as some commercial insurers scale back their participation in the health law's markets, and more than a dozen nonprofit insurance co-ops have collapsed.

    Kristie Canegallo, White House deputy chief of staff, said Obama will keep making his case for a public option to voters, but he doesn't plan to send the Republican-run Congress new legislation to implement it.

    "This Congress is not going to act on a proposal like that," Canegallo said.

    During hard-fought negotiations in Congress before Obama signed the law in 2010, liberals pushed vehemently for a public option, in which Americans could opt for a government-run plan similar to Medicare. It was scuttled to secure enough votes from moderate Democrats to pass the bill.

    obamacare

    Now, Obama aims to influence the debate about health care in the presidential election.

    A public health insurance option would stop well-short of the government-run system that Vermont Sen. Bernie Sanders turned into a rallying cry of his campaign. But some liberals believe it could be a steppingstone. Clinton has said if elected she'd work with interested governors to implement state-based versions of the public option.

    Republican Donald Trump has said he'd end "Obamacare" and replace it with something better, though he's been vague on the specifics. A recent nonpartisan analysis found that the plan Trump has outlined would make 18 million people uninsured.

    The health care law has been the major driver in reducing the nation's uninsured rate to about 9 percent, a historic low. It provides subsidized private health insurance to people without workplace coverage across the country, and offers a Medicaid expansion that states can use to cover more low-income residents.

    In the article, Obama repeatedly blamed "hyperpartisanship" for preventing more progress, pointing out that the 19 states that have refused to expand Medicaid under his law haven't done as well reducing the number of uninsured residents. He urged more of those mostly GOP-run states to accept the Medicaid expansion.

    Obama also urged lawmakers to make the subsidies for private health insurance more generous. And citing the high cost of prescriptions, he called for new legislation to force drug companies to disclose more information about their production costs, as well as to give the government authority to negotiate prices for some high-priced medications.

    Those proposals basically align with ideas that Clinton has already put forward.

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    obama health care

    WASHINGTON (AP) — The nation's health care tab this year is expected to surpass $10,000 per person for the first time, the government said Wednesday. The new peak means the Obama administration will pass the problem of high health care costs on to its successor.

    The report from number crunchers at the Department of Health and Human Services projects that health care spending will grow at a faster rate than the national economy over the coming decade. That squeezes the ability of federal and state governments, not to mention employers and average citizens, to pay.

    Growth is projected to average 5.8 percent from 2015 to 2025, below the pace before the 2007-2009 economic recession but faster than in recent years that saw health care spending moving in step with modest economic growth.

    National health expenditures will hit $3.35 trillion this year, which works out to $10,345 for every man, woman and child. The annual increase of 4.8 percent for 2016 is lower than the forecast for the rest of the decade.

    A stronger economy, faster growth in medical prices and an aging population are driving the trend. Medicare and Medicaid are expected to grow more rapidly than private insurance as the baby-boom generation ages. By 2025, government at all levels will account for nearly half of health care spending, 47 percent.

    The report also projects that the share of Americans with health insurance will remain above 90 percent, assuming that President Barack Obama's law survives continued Republican attacks.

    The analysis serves as a reality check for the major political parties as they prepare for their presidential conventions.

    Usually in a national election there are sweeping differences between Democrats and Republicans on health care, one of the chief contributors to the government's budget problems. But this time the discussion has been narrowly focused on the fate of Obama's law and little else.

    Republican Donald Trump vows to repeal "Obamacare," while saying he won't cut Medicare or have people "dying in the street." Democrat Hillary Clinton has promised to expand government health care benefits.

    Both candidates would authorize Medicare to negotiate prescription drug prices, which the report says will grow somewhat more slowly after recent sharp increases.

    obamacare

    Obama's health care law attempted to control costs by reducing Medicare payments to hospitals and insurers, as well as encouraging doctors to use teamwork to keep patients healthier. But it also increased costs by expanding coverage to millions who previously lacked it. People with health insurance use more medical care than the uninsured.

    Despite much effort and some progress reining in costs, health care spending is still growing faster than the economy and squeezing out other priorities, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan group that advocates for reducing government red ink.

    "No serious candidate for president can demonstrate fiscal leadership without having a plan to help address these costs," she said. "No matter whether a candidate has an agenda that focuses on tax cuts or spending increases, there will be little room for either."

    The $10,345-per-person spending figure is an average; it doesn't mean that every individual spends that much in the health care system. In fact, U.S. health care spending is wildly uneven.

    About 5 percent of the population — those most frail or ill — accounts for nearly half the spending in a given year, according to a separate government study. Meanwhile, half the population has little or no health care costs, accounting for 3 percent of spending.

    Of the total $3.35 trillion spending projected this year, hospital care accounts for the largest share, about 32 percent. Doctors and other clinicians account for nearly 20 percent. Prescription drugs bought through pharmacies account for about 10 percent.

    The report also projected that out-of-pocket cost paid directly by consumers will continue to increase as the number of people covered by high-deductible plans keeps growing.

    Wednesday's report was published online by the journal Health Affairs.

     

    SEE ALSO: The White House is spending millions to battle rising Obamacare rates

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    hillary clinton

    Imagine traveling on the maiden voyage of the RMS Titanic, the ship that its makers famously bragged was unsinkable. The ship has just hit a massive iceberg, its famed compartment design has failed to contain the breach, and the bow is getting dangerously close to the water. Suddenly, one of the crew rushes up to you and says, “I know exactly what will save us …. Another iceberg!” 

    This week, that is exactly what advocates of the Affordable Care Act (ACA), including President Barack Obama and Democratic presidential nominee Hillary Clinton, prescribed for the ailing, byzantine Obamacare system. As the few remaining Obamacare co-ops collapse, despite billions in federal subsidies, Democrats want to revive a controversial component of their party’s original plan: the public option. 

    Citing competition concerns, Obama urged lawmakers to revive a Medicare-esque government plan, at least in smaller markets. “Adding a public plan in such areas would strengthen the marketplace approach, giving consumers more affordable options while also creating savings for the federal government,” Obama wrote in the Journal of the American Medical Association. “I think Congress should revisit a public plan to compete alongside private insurers in areas of the country where competition is limited.” 

    The Daily News reported over the weekend that Hillary Clinton has backed the idea, although she has been less explicit about the idea. During the Democratic primary, Clinton opposed Bernie Sanders’ demand for “Medicare for all” as far too costly. Her campaign now says that she favors state-based, government-run plans to provide more competition. 

    Recall that the initial ACA proposals included the public option to combat the supposed corporate greed that drove health-insurance underwriters. A government-provided plan in each market, based loosely on Medicare, would act to keep excessive profits in check by forcing insurers to lower premiums. Profit margins for health insurers at that time were hardly at windfall levels; the average was a modest 3.3 percent in 2008, far lower than, say, the legal profession (14.3 percent). 

    Opponents of the public option accused the Obama administration of using the public option as a Trojan horse for nationalized health care by undercutting prices and forcing insurers out of the industry. Even some advocates admitted as much. At that time, Rep. Anthony Weiner (then D-NY) told Joe Scarborough in August 2009 that of course single-payer was the end game

    “You actually do want the federal government to take over all of health care,” the MSNBC host said. “I want Medicare for all Americans,” Weiner replied – a slogan that reappeared during Bernie Sanders’ campaign for the Democratic presidential nomination in 2015. A month after Weiner’s admission, the Democrat-controlled Senate Finance Committee put an end to the public option. In its place, however, came federally subsidized co-ops. They filled the same role as the public option where they existed, and had two purposes – one explicit, the other less so. 

    The more explicit purpose, or at least the one touted by ACA advocates, was to provide more choice outside of the for-profit industry, in exactly the same manner that Obama demanded in his JAMA argument. The less explicit purpose was to prove that the government could run a health insurance plan better than private-sector corporations, despite their experience and investment in risk-pool management. 

    Demonstrators in favor of Obamacare gather at the Supreme Court building in Washington March 4, 2015.  REUTERS/Jonathan Ernst

    Unfortunately for Obamacare cheerleaders, almost every co-op has hit their own icebergs over the past year. In the past two weeks alone, two of the few remaining (in Oregon and Illinois) have closed their doors, leaving both patients and providers in the lurch. They have blamed a decision by Congress to limit risk-corridor payouts to taxes collected on “excess profits” by other insurers, but that acknowledges a core criticism of the public-option concept: they are incapable of sustainable operations without large infusions of federal subsidies. 

    As critics predicted in 2009, the public option in the form of co-ops turned out to be unsustainable. The biggest problem for Obamacare advocates is that they turned out to be far less sustainable than private-sector insurance, even under the onerous conditions imposed on insurers in the ACA’s mandates. The icebergs turned out to be so large that the government’s ships sunk immediately without general-fund dollars to keep them afloat, making arguments that the government could operate better than private-sector insurers. 

    The irony of using the competition argument for the public option should not be overlooked. As noted, the underlying motive of establishing the public option was to crowd out private insurers, but even apart from that, Obamacare has been the biggest threat to choice. During the debate over the ACA in 2009-10, Democrats argued that setting up exchanges and establishing national mandates on coverage would improve competition. Republicans argued that eliminating laws barring interstate sales of insurance would work better. 

    The results speak for themselves. After three years of attempting to work within the ACA’s framework, insurers are now walking away from numerous markets, and some suggest that an exit from Obamacare altogether may not be far off. They can see the icebergs on the horizon better than the government, and know that they cannot avoid them forever. 

    The argument for a public option now amounts to a back-door opening for the single-payer system that Democrats wanted all along. Unlike the co-ops, which didn’t have direct access to general-fund spending, public-option plans would allow the executive branch to direct funds on a nearly unlimited basis as an entitlement program, removing the barriers to a sea of red ink. All it does is rearrange the deck chairs on a sinking ship – and like the Titanic, there won’t be nearly enough lifeboats for the rescue needed from the coming disaster.

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    health care costs money

    Last year, health care spending in the U.S. claimed 17.8 percent of the overall economy and held relatively steady.

    But within the coming decade, health care will consume 20 percent of the overall economy, marking an important turning point for government policy makers.

    new report by the Centers on Medicare and Medicaid Services (CMS) released this week projects a 5.8 percent annual growth rate in health costs between now and 2025.

    That is a more robust rate than we’ve seen throughout most of the Obama administration that would exceed the overall economic growth rate by 1.3 percentage points.

    Among the reports more salient findings:

    • Health care spending will average in excess of $10,000 a person this year – the highest level ever --and continue to climb.
    • Medicare and Medicaid spending for seniors and low-income people will rev up in the coming decade after something of a lull.
    • Prescription drug prices will continue to increase sharply, especially the pricey specialty drugs.

    Moreover, the Great Recession of 2007 to 2009 served as a restraint on health care costs because many people struggling to make ends meet simply put off seeking medical assistance, prescription drugs or elective surgery. But as the economy has gradually improved, more and more Americans have purchased health insurance and sought better and more expensive medical attention.

    “The health sector is in the midst of a unique transition, in which various forces are exerting differential pressures on health spending growth,” the report states. “Economy-wide and medical-specific price growth have been very low, helping restrain inflation’s impact on health spending, and the Medicare program is experimenting with various alternative payment approaches.”

    At the same time, millions of Americans have gained access to health coverage for the first time through the Affordable Care Act, with nine in ten Americans now enjoying some coverage. Obama administration officials say that the Affordable Care Act not only has extended coverage to many people but has also helped to restrain overall health spending, even though premiums and copayments have gone up in recent years.

    Yet the longer-term trends outlined in the report  suggest mounting pressure on state and federal budgets and the national debt, especially as more and more baby boomers retire and seek health care benefits. “By 2025, as economic, legislative and demographic influences play out, the health spending share of the economy is projected to reach 20.1 percent . . . and governments are anticipated to sponsor 47 percent of health spending, up from 45 percent in 2014,” the report states.

    Take the Medicare program for instance. Federal spending on the premier health care program for seniors totaled roughly $647.3 billion in 2015, which was a 4.6-percent increase over the 2014 spending level. 

    obamacareBy 2025, spending on Medicare will skyrocket well beyond that, with roughly one in five Americans enrolled in the program, according to the new report. Currently, about 15 percent of all Americans qualify for the program. Medicare will spend an average of about $18,000 a year for every beneficiary by 2025, compared to about $12,000 in 2015.

    As for Medicaid, the federal and state program for lower income and disabled people, spending will average nearly $12,500 per year for enrollees in 2025, or well up from $8,000 last year.

    The new report prepared by health care professionals at the Department of Health and Human Services is a cautionary tale about the long-term challenges to Congress and the White House of meeting the fast growing demands for health care without continuing to drive up the debt.

    The Congressional Budget Office on Tuesday issued a warning that the national debt is running ahead of previous projections and might reach an historic 141 percent of the Gross Domestic Product by 2046.

    Among the major factors, according to the CBO: Government spending on Social Security, Medicare and other major health care programs to serve an aging population. At the same time, CBO said, health care costs per beneficiary will rise more quickly than the overall growth in the economy.

    Entitlement programs are expected to grow so much within the coming three decades that people over 65 years of age will account for roughly half of all federal spending other than interest on the debt, according to CBO.

    And of course, that doesn't include additional programs that might be added in the coming years. Presumptive Democratic presidential nominee Hillary Clinton recently unveiled some new proposals to woo liberal voters, including expanding Medicare to people 55 and over and spending $40 billion more in the coming decade on community-based primary health care centers in hard to reach areas.

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    doctor and patient

    Californians have largely escaped big Obamacare premium increases during the past two years, with premium hikes weighing in at roughly 4 percent a year.

    But rising health care costs and mounting concern among major insurers about diminished profits have finally caught up to residents who will be hit with their first double-digit premium increase in the 2017 insurance season.

    Officials of Covered California, the California version of the Affordable Care Act, announced on Tuesday that the premiums would rise an average of 13.2 percent next year for the 1.4 million taking part in the program, as the Los Angeles Times reported.

    The increase is startling to some because it is three times as much as the previous two years’ increase, yet it is well in line with analysts’ forecasts of substantial Obamacare premium increases throughout the country in the coming year.

    During a press briefing, Covered California officials largely blamed the rate increase on the rising costs nationwide of providing health care to subscribers, especially pricey specialty drugs such as Gilead Sciences’ Sovaldi and Harvoni, used to treat people with the Hepatitis-C virus that can cost as much as $1,000 a pill. What’s more, some of the state’s largest insurers have been struggling with disappointing revenues from Obamacare and are under pressure to either raise premiums or pull out of the market.

    According to the Los Angeles Times, two of California’s biggest insurers – Blue Shield of California and Anthem Inc. -- sought and received approval for the biggest rate hikes of all in the state. Premium costs for health care coverage offered by Blue Shield will rise on average 19 percent next year while Anthem’s premiums will go up an average of more than 16 percent.

    A person receives a test for diabetes during Care Harbor LA free medical clinic in Los Angeles, California September 11, 2014. REUTERS/Mario Anzuoni/File Photo

    But that only tells part of the story. The premiums will vary significantly, depending on where the policy is sold in the state and the level of insurance a consumer purchases. California is divided into 19 price regions, with some of them likely to raise rates above the average while others will come in below the average. Moreover, rates can vary even with the same region.

    In the Sacramento area of Northern California, for example, premium rates will rise an average of 13.4 percent overall, according to Kaiser Health News. Yet rate increases within the region have a greater swing -- from an average 5.8 percent for a Kaiser Permanente plan to 23.1 percent for a Blue Shield of California plan.

    About 90 percent of all Obamacare participants are eligible for sliding-scale tax credits if they make no more than 400 percent of the federal poverty level, which reduces the overall cost of the health insurance. However, policies providing lower levels of coverage frequently have significant deductibles that add to a consumer’s overall costs. And all policies include certain out-of-pocket costs that affect the overall annual cost.

    A recent preliminary Kaiser Family Foundation analysis of Obamacare insurance markets in roughly a third of all major metropolitan areas showed that premiums on the most popular subsidized plans would rise by an average of 10 percent next year. That is twice the rate of increase approved last fall.

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    obama frown disappointed

    Aetna, the third-largest health insurer in the US, said Tuesday that it was reconsidering its offerings on the state exchanges that make up the backbone of the Affordable Care Act, the healthcare law more commonly known as Obamacare.

    Here's a quick rundown of the announcement:

    • Aetna will not expand its Obamacare offerings into the New Jersey and Indiana state exchanges in 2017, as it originally planned.
    • Aetna's CEO also said the company was "undertaking a complete evaluation" of the Obamacare business.
    • On its conference call, the company said it expected an annual loss on its ACA business "in excess of $300 million."
    • The move comes after the US's largest health insurer, United Healthcare, said in April that it was abandoning the exchanges almost completely.
    • The Department of Health and Human Services responded saying insurers are "adapting to these changes" of the ACA at different paces and the state exchanges are still sustainable.

    In a conference call following the company's earnings announcement, CEO Mark Bertolini said the firm had halted its plans to expand into New Jersey and Indiana in 2017 and was looking into the reasons for losses in the exchanges it was already participating in.

    Here's Bertolini (emphasis ours):

    "In light of the disappointing year to date performance and updated 2016 projections for our individual on and off exchange products, combined with the significant structural challenges facing the public exchanges, we believe it is only prudent to reassess our level of participation on the public exchanges. Our initial action will be to withdraw our 2017 public exchange expansion plans. Additionally, given the deadline to attest to our final rate filings for 2017, we are also undertaking a complete evaluation of our current exchange footprint as the poor performance of these products warrants such an analysis."

    Aetna operates in 15 states. Its decision to limit its expansion comes less than four months after the nation's largest insurer, United Healthcare, decided to roll back almost all of its Obamacare offerings after sustaining losses and after the Department of Justice denied Aetna's proposed merger with the insurer Humana.

    The move could also be worrying for consumers, since the number of insurers offering plans in a state is tightly correlated to the price of insurance.

    UPDATE: Following Aetna's earnings call, the US Department of Health and Human Services (which oversees the implementation of the Affordable Care Act) provided a statement to Business Insider saying that it has the "full confidence" that the exchanges will be sustainable in the future and that insurers are simply "adapting to these changes at different rates."

    Here is the full statement from HHS Press Secretary Marjorie Connolly:

    "We have full confidence, backed by data, that the Health Insurance Marketplace will continue to thrive for years ahead as a place where insurers compete for business and consumers have access to a range of affordable coverage options. In its first year, the ACA nearly doubled the size of the individual market, and the Marketplace has continued to grow since then, creating major business opportunities for insurers who serve this market well. At the same time, the ACA changed the nature of insurance market competition, from avoiding people with pre-existing conditions to competing on cost and quality. It’s no surprise that insurers are adapting to these changes at different rates. But with issuers across the Marketplace introducing new provider contracts, care management approaches, and other innovative strategies, and with the help of Administration actions that will strengthen the Marketplace and broaden the risk pool, consumers coming back to shop for 2017 will continue to have a robust set of choices. And over the long run, it’s consumers’ choices that will drive which insurers succeed in the Marketplace and benefit from the growth opportunities it continues to create."

    SEE ALSO: The government is suing to stop two colossal health insurance mergers

    SEE ALSO: Obamacare isn't the jobs crusher it was made out to be

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    medicare

    The implementation of major legislation such as the Affordable Care Act (ACA) often results in fiscal outcomes that differ significantly from prior projections.

    Whenever this happens it leads to many questions, much confusion, and several claims and counter-claims.

    Rarely is it immediately clear whether the law is working differently than envisioned, or whether the unexpected outcomes are due to inevitable projection errors having nothing to do with the law.

    On rare occasion, however, a prior projection proves so far off that its significance must be noted. Two weeks ago my colleague Brian Blase uncovered such a development with respect to the ACA’s Medicaid expansion.

    Recall that the ACA considerably expanded Medicaid eligibility – an expansion made optional for the states in a later Supreme Court ruling.

    It turns out that the 2015 per-capita cost of this Medicaid expansion is a whopping 49 percent higher than projections made just one year before.

    This disclosure can be found on page 27 of the 2015 Actuarial Report for Medicaid, released this July. Here is how the report described the issue:

    “While the newly eligible adult per enrollee costs in 2014 were slightly lower than estimated in last year’s report ($5,488 compared to $5,517, or about 1 percent lower), the estimated per enrollee costs for 2015 in this year’s report are substantially greater ($6,366 compared to $4,281, or about 49 percent higher).”

    How can a projection be this far off after only one year? To understand, let’s first discuss more of the “what” of the projection, and then proceed to the “why.”

    The 2013 Medicaid report was the last one reflecting expectations prior to the 2014 expansion. Medicaid’s actuaries then expected that the initial per-capita costs of covering newly eligible adults would be comparable to those for previously-eligible adults, but would later become substantially lower. The explanation given in the 2013 report was:

    “The estimated average benefit costs for adults who enroll as a result of the expanded eligibility criteria in the Affordable Care Act are significantly lower than those for the average beneficiary. This difference arises partly from the fact that adults in poor health often suffer a loss in income, increasing their likelihood of qualifying for Medicaid under the pre-Affordable Care Act criteria.”

    Translated into layman’s terms this just means that sicker people tend to have less income. Thus, the lower-income people previously eligible for Medicaid were more likely to be in poor health than the relatively higher-income people in the expansion population. This higher-income expansion population, being in better health, would be less expensive to cover.

    It was also thought then that among the newly-eligible population, the sickest would enroll first and the healthier individuals later, causing per-capita costs to drop during the next few years. The 2013 report projected that the per-capita cost for newly eligible adults would be just 1 percent lower than previously-eligible adults in the first year, but a good 28 percent lower in the third.

    But this isn’t what happened. First, the initial per-capita cost came in much higher than expected. Here’s how the 2014 report described it:

    “Newly eligible adults are estimated to have had average benefit costs of $5,517 in 2014, 19 percent greater than non-newly eligible adults’ average benefit costs of $4,650. These estimates are significantly different from those in previous reports, in which average benefit costs for newly eligible adults in 2014 were estimated to be 1 percent lower than those of non-newly eligible adults.”

    The 2014 report offers some explanations for the unexpected cost increase, but I’ll return to those after discussing the results for 2015. Heading into 2015 the actuaries still expected costs per newly eligible adult to drop (by 22 percent, from $5,488 to $4,281) as healthier individuals enrolled. But instead they rose by 16 percent (to $6,366). Thus 2015 per-capita costs are 49 percent higher ($6,366 over $4,281) than previously predicted.

    Why were 2015 costs so high? The 2015 report speculates that some costs incurred in 2014 were reported in 2015. But reporting those costs in 2014 wouldn’t have meant they were any less underestimated. It would just mean that more of the underestimation happened in 2014 than 2015.

    The report attempts to explain the underestimation as follows:

    “Many States included adjustments to reflect a higher level of acuity or morbidity among newly eligible adults compared to non-newly eligible adults. In most States, these adjustments were positive (in other words, newly eligible adults had a higher level of acuity than non-newly eligible adults), and in some cases the adjustments were substantial. States also included other adjustments in the capitation rates for newly eligible adults. Many States projected increased costs due to pent-up demand, expecting that many enrollees would have been previously uninsured and would use additional services in the first several months of coverage. Some States also included adjustments for adverse selection with the anticipation that the persons who were most likely to enroll in the first year would be those with the greatest health care needs.”

    Again a translation may be in order: Basically states established far higher expenditure requirements for the expansion population than the federal government expected, by positing that beneficiaries would be in need of more health services.

    Why did this happen? Remember, the ACA established an initial 100 percent federal matching payment for state Medicaid expansion costs, contrasting with historical federal match rates that averaged 57 percent. Even when the feds paid 57 percent of the bill there was a longstanding concern that states were insufficiently accountable for their cost-expanding decisions, with much of that cost being shifted to federal taxpayers.

    But the ACA’s current 100 percent match means that states make the decisions about expanding Medicaid while the federal government picks up all the costs. Even after the ACA is fully phased in, the feds will still pay for 90 percent. Under such arrangements, cost overruns are predictable.

    The fact that the states set payment rates higher than the federal government expected carries additional implications. If the states set payment rates too high for the expansion population, then per their risk-sharing arrangements with insurance plans some money will flow back to the federal government.

    If this happens to the extent the Medicaid actuaries expect, recent per-capita costs will be about 9 percent less than shown in the 2015 report – though still dramatically higher than estimated last year.

    medicaid expenditures per enrollee

    The rising cost of Medicaid expansion leads to worsening budgetary evaluations for the ACA. Contained in CBO’s recent projections are harbingers of this:

    annual projected costs of aca medicaid expansion

    The slight uptick in CBO’s latest cost projections reflects higher enrollment as well as growth in per-capita costs. If the latest Medicaid actuaries’ report is any indication, future cost projections may well get significantly worse.

    Thus far CBO’s adjustments to per capita costs do not appear to fully reflect an increase of the magnitude shown in the latest Medicaid report.  

    Remember also that the program’s actuaries still assume that due to risk-sharing payments and other factors, per-capita expansion costs will decline in 2016 and 2017. If this assumption proves incorrect, future costs will be higher still.

    Having federal taxpayers pick up between 90-100 percent of the cost of state Medicaid expansions was one of many questionable policy decisions made in the ACA. It’s also proving to be much more expensive than the federal government expected.

    This piece was originally published in Economics 21, a website of the Manhattan Institute.

    SEE ALSO: America's 3rd-largest health insurer is losing $300 million a year on Obamacare

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    Obama sad frown

    Aetna, one of the five largest health insurers in the US, announced on Monday evening that it would be pulling out of nearly 70% of the counties in which it offers coverage under the Affordable Care Act.

    The firm said a review of its public-health-exchange business caused it to determine that the nearly $300 million in pretax loss it was sustaining on an annual basis was not worth the business.

    In its new plan, it will offer healthcare options through the public exchanges in just 242 of the 778 counties where it now operates. These will be mainly in Delaware, Iowa, Nebraska, and Virginia.

    In 2016, Aetna offered plans in 15 states.

    The firm had announced it was conducting a review during its second-quarter earnings call on August 3.

    "Providing affordable, high-quality healthcare options to consumers is not possible without a balanced risk pool," Aetna CEO Mark Bertolini said in the statement. "Fifty-five percent of our individual on-exchange membership is new in 2016, and in the second quarter we saw individuals in need of high-cost care represent an even larger share of our on-exchange population.

    "This population dynamic, coupled with the current inadequate risk-adjustment mechanism, results in substantial upward pressure on premiums and creates significant sustainability concerns," he said.

    Aetna isn't the only company concerned about the exchanges created under the Affordable Care Act, the healthcare law widely known as Obamacare. Its rival big-five companies United Healthcare and Humana have also said they will dramatically reduce their presence in the exchanges.

    Many companies have said the patients coming to the exchanges are older and more expensive to cover and there are not enough young people to offset the costs.

    The decision by the three companies to scale back is problematic for customers because the number of insurers competing through the exchanges is closely linked with the affordability of the plans.

    Aetna is the largest Affordable Care Act player of the three, with 911,000 people covered through the exchanges at the end of 2015, according to the company's first-quarter earnings call. United covered 750,000 people through the exchanges before its cutback, and Humana covered about 500,000. The other two of the big-five insurers, Cigna and Anthem, cover 185,000 and just under 1 million people through the exchanges.

    Aetna has been pursuing a merger with Humana, but the US Department of Justice filed a lawsuit in July to block the proposed merger.

    Here is the statement from Aetna in full:

    "Aetna Chairman and CEO Mark T. Bertolini made the following statement with regard to the company's 2017 participation in the Affordable Care Act individual public exchanges:

    "Following a thorough business review and in light of a second-quarter pretax loss of $200 million and total pretax losses of more than $430 million since January 2014 in our individual products, we have decided to reduce our individual public exchange presence in 2017, which will limit our financial exposure moving forward. More than 40 payers of various sizes have similarly chosen to stop selling plans in one or more rating areas in the individual public exchanges over the 2015 and 2016 plan years, collectively exiting hundreds of rating areas in more than 30 states. As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision.

    "Providing affordable, high-quality health care options to consumers is not possible without a balanced risk pool. Fifty-five percent of our individual on-exchange membership is new in 2016, and in the second quarter we saw individuals in need of high-cost care represent an even larger share of our on-exchange population. This population dynamic, coupled with the current inadequate risk adjustment mechanism, results in substantial upward pressure on premiums and creates significant sustainability concerns.

    "The vast majority of payers have experienced continued financial stress within their individual public exchange business due to these forces, which also are reported to have contributed to the failure of 16 out of 23 co-ops. We are encouraged by a recent announcement that the U.S. Department of Health and Human Services will explore new options to modify the risk adjustment program, and remain hopeful that we can work with policymakers from both parties on a sustainable public exchange model that meets the needs of the uninsured.

    "We are committed to a health care marketplace that gives every American the opportunity to access affordable, high-quality care. We will continue to evaluate our participation in individual public exchanges while gaining additional insight from the counties where we will maintain our presence, and may expand our footprint in the future should there be meaningful exchange-related policy improvements.

    "Aetna will reduce its individual public exchange participation from 778 to 242 counties for the 2017 plan year, maintaining an on-exchange presence in Delaware, Iowa, Nebraska and Virginia. The company will continue to offer an off-exchange individual product option for 2017 to consumers in the vast majority of counties where it offered individual public exchange products in 2016.

    "This decision does not impact Aetna's products, services or benefits for the 2016 plan year. The company will communicate options to impacted members before the 2017 open enrollment period begins, and provide resources to assist them in transitioning to other plans as appropriate."

    SEE ALSO: This is the impact of the nation's largest insurer leaving Obamacare

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    obamacare

    Some companies in the Empire State say they are slowing down hiring because of Obamacare.

    According to a new survey by the Federal Reserve Bank of New York, 20.9% of manufacturing firms in the state said they were employing fewer workers because of the Affordable Care Act, the healthcare law known as Obamacare, while 16.8% of respondents in the service sector said the same.

    As the New York Fed noted, this still leaves a vast majority of businesses unaffected, but even a one-in-five change is significant.

    "The vast majority of respondents in both surveys said they were not changing the proportion of part-time workers or the amount of work outsourced to other firms,"the New York Fed report said.

    "Most respondents also said wage and salary compensation and other benefits were not being affected by the ACA, though more respondents said they were being cut than raised."

    Firms responding to the New York Fed survey said they anticipated an 8% increase in healthcare costs for 2016 and a 10% increase in 2017. The 2016 number is lower than the projection made by New York firms last August, when the survey was also conducted.

    The increased costs were not entirely caused by Obamacare, however, as the New York Fed noted.

    "Some of the more widely mentioned factors driving up costs included increased premiums from insurance providers, higher costs for prescription drugs, the ACA, and an aging workforce," the report on the survey said.

    The respondents from the two sectors also said they were changing their plans at similar rates. Thirty-nine percent of manufacturing and 42% of service respondents said they were leaving their healthcare offerings unchanged, while 41% and 39%, respectively, said they were making modifications. About 15% in both sectors said they were switching providers.

    The most popular adjustments being made by both sectors included raising out-of-pocket costs for employees, increasing deductibles, and increasing total premiums.

    Some data-based studies have shown that the impact on the labor market of the ACA has been negligible, and survey-based measures can be affected by a variety of factors, but it would be unwise to dismiss the findings.

    The news comes the day after Aetna announced that it would remove itself from 70% of the counties in which it now offers health insurance on the exchanges created under Obamacare, making it the third of the five biggest insurers in the US to make drastic cuts to their ACA business.

    SEE ALSO: Aetna, one of the country's largest health insurers, is ditching 70% of its Obamacare business

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    donald trump

    A huge Obamacare decision by one of the nation's largest insurers is becoming political fodder.

    In a statement from Dan Kowalski, the deputy national policy director for Republican presidential nominee Donald Trump, the campaign said Aetna's decision to remove itself from about 70% of the counties where it offers policies under the Affordable Care Act was another sign of the end for Obamacare.

    "Aetna's decision to leave the Affordable Care Act's public marketplaces is the latest blow to this broken law that is slowly imploding under its regulatory red tape,"the statement said.

    While Aetna is leaving most the counties where it offers ACA plans, it will remain in 242 of the 778 counties in which it currently does ACA business.

    The Trump campaign statement also said "millions" of Americans had lost their health insurance and businesses have had to "shutter their doors" because of the law.

    It was unclear what specifically Trump was referring to in the reference to "millions" losing insurance, as there have been over 12 million sign-ups through the exchanges and the total uninsured rate in the US has fallen significantly since the law was enacted.

    But the news of Aetna's pullout is a blow for the reputation of the law, and it will affect a large number of the 911,000 Americans who currently receive health insurance from Aetna's offerings on public exchanges. Aetna is the third of the big-five US health insurers to remove itself from a large portion of the exchanges in the past year, along with Humana and United Healthcare. The three insurance giants cited multimillion-dollar losses for their decisions to pull back ACA coverage.

    At the same time, it appears that smaller insurers have been profitable, and another of the big-five insurers, Anthem, has reported profits from the ACA business.

    Still, Aetna's move allowed the Trump campaign an opportunity to reiterate its call for a repeal of the ACA.

    "Mr. Trump has vowed to repeal and replace Obamacare,"the statement said.

    "The bureaucratic mess is costing Americans more everyday. Affordable coverage for evey [sic] American will be the top priority, and under a Trump presidency the government will work for the people again."

    SEE ALSO: Aetna, one of the country's largest health insurers, is ditching 70% of its Obamacare business

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    obama loretta lynch

    On Monday night, news broke that one of the five largest insurers in the US, Aetna, was leaving 70% of the counties in which it offers insurance through the Affordable Care Act's public healthcare exchanges.

    The move was seen as a huge blow to the future of the act, making Aetna the third large insurer, after United Healthcare and Humana, to significantly reduce its Obamacare business.

    Aetna cited the large losses that the company has incurred from the exchange business — $200 million in the second quarter alone — when explaining its decision to roll back its business.

    These statements, however, appeared to be a dramatic turnaround from the company's first-quarter earnings call in April, when CEO Mark Bertolini said the firm planned to stay in the exchanges and that the company was "in a very good place to make this a sustainable program."

    Now, however, it appears a large reason for the shift in tone was the Department of Justice's lawsuit to block Aetna's merger with rival Humana.

    A July letter, acquired by Huffington Post reporters Jonathan Cohn and Jeffrey Young, outlined Aetna's thinking on the public exchanges if the deal with Humana were blocked. The letter from Bertolini to the DOJ outlined the effect of a possible merger on its Affordable Care Act business.

    For one thing, Bertolini notes that the cost savings from the Humana deal would allow the companies to further expand coverage into parts of the US.

    "As we add new territories, given the additional startup costs of each new territory, we will incur additional losses,"the letter said. "Our ability to withstand these losses is dependent on our achieving anticipated synergies in the Humana acquisition."

    Additionally, the letter seemed to foretell the move on Monday. Here's the key passage (emphasis added):

    "Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses. Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint.

    "We currently plan, as part of our strategy following the acquisition, to expand from 15 states in 2016 to 20 states in 2017. However, if we are in the midst of litigation over the Humana transaction, given the risks described above, we will not be able to expand to the five additional states.

    "In addition, we would also withdraw from at least five additional states where generating a market return would take too long for us to justify, given the costs associated with a potential breakup of the transaction. In other words, instead of expanding to 20 states next year, we would reduce our presence to no more than 10 states."

    In other words, the cost of fighting the DOJ would make Aetna unable to sustain the losses incurred from the public exchanges.

    According to a letter from the DOJ provided by Aetna, the DOJ asked the company what the effect would be on the firm's Affordable Care Act business if the merger were not completed. Thus, Aetna responded with its letter.

    A spokesperson for Aetna said the decision to roll back the coverage was not because of the DOJ's lawsuit, but rather realizing the full details of the losses. The statement from the spokesperson reads, in part:

    "In the time since we submitted our written response to DOJ and provided a courtesy copy to [the Department of Health and Human Services], we gained full visibility into our second quarter individual public exchange results, which — similar to other participants on the public exchanges — showed a significant deterioration. That deterioration, and not the DOJ challenge to our Humana transaction, is ultimately what drove us to announce the narrowing of our public exchange presence for the 2017 plan year.

    "If the Humana transaction is eventually blocked, which we don't believe it will be, the underlying logic of our written response to DOJ would still apply with regard to the public exchanges where we will participate in 2017."

    In the original letter from Aetna to the DOJ, Bertolini said that if the company lost the lawsuit and the deal were eventually scuttled, Aetna would drop its remaining Affordable Care Act business and leave the public exchanges entirely.

    The DOJ declined to comment.

    The DOJ blocked the merger between Aetna and Humana, along with the merger of fellow big-five insurers Anthem and Cigna, on the grounds that consolidating the industry would lead to lower competition and higher costs for consumers.

    "They would leave much of the multitrillion health insurance industry in the hands of just three mammoth companies, restricting competition in key markets," Attorney General Loretta Lynch said when announcing the lawsuit to block the mergers.

    Typically the number of independent options available to consumers is correlated with lower costs.

    "If the big five were to become the big three, not only would the bank accounts of the American people suffer, but the American people themselves," Lynch said.

    The companies countered that the merger would not affect consumers and would allow the combined firms to be more cost-efficient and sustainable.

    Read the full letter from Bertolini, via The Huffington Post, here »

    SEE ALSO: Aetna, one of the country's largest health insurers, is ditching 70% of its Obamacare business

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