ObamaCare Open Enrollment Begins: Fraud-Enabling Front End, Collapsing Co-Ops, Constitutional Challenge

By Lambert Strether of Corrente.

This post is a round-up of the current issues in the never-ending saga of ObamaCare, Rube Goldberg device (an example for those who came in late[1]). There are three current issues:

1) The new and improved ObamaCare website. Does it make “smart shopping” possible? Spoiler alert: No.

2) The collapse of ObamaCare co-ops. Was it pre-ordained when ObamaCare was passed? Spoiler alert: Yes, but there’s unexpected hope.

3) The current court challenge to ObamaCare, Sissel. What does it tell us about Democrats?

(There’s plenty more to cover — premium increases, for one, as well as the actual policies made available — but these three issues are the hot stories right now.)

The ObamaCare Website

Since citizens consumers of ObamaCare mostly do their shopping online, the design of the exchanges (the “marketplace” website) is thought to be critical to their finding the best “deal.” In reality, purchasing health insurance on the exchanges is a lemon market, full of information asymmetries, and purchasing health care itself is a lemon market, for the same reason, so ObamaCare’s fundamental premises — that consumers can drive health care costs down, and quality up, through “smart shopping” — is a double-bind of enormous proportions; citizens consumers cannot do the very thing that ObamaCare (and the political class (and economists)) demand that they do. The entire premise of ObamaCare is false, and a better website can’t fix this. ObamaCare’s premise that  health care citizens consumers are smart shoppers is false.  The New York Times cites a new study:

Eric Johnson, a Columbia business professor, led a study that found that without substantial additional assistance, a consumer’s likelihood of selecting the lowest-cost plan is no better than chance. The researchers conducted a series of experiments on people similar to those who would shop for marketplace coverage. Each study participant was asked to presume he’d use a certain amount of health care and, based on that, to choose the lowest-cost plan from among eight choices, which varied by premium, doctor co-pay and deductible. Only 21 percent could accomplish this task, a figure not statistically different from chance. The annual cost of errors was about $250.

$250 may not seem like much to you and me [snort], but over 10 million citizens consumers, it adds up to a nice chunk of change. (Of course, that $250 is just the hidden fee for entering the system, not the co-pay or deductible or balance billing for out-of-network care; that comes later.) 

With this background, we can look at this year’s improvements to the Federal ObamaCare website, used by most states (and which I’ll have to use as a proxy for websites hosted by individual states). Recall that ObamaCare (to give credit) greatly limits the amount of underwriting that health insurance companies can do (for example, they must accept applicants with pre-existing conditions) and therefore takes away a major source of their profits. The insurance companies, naturally enough, then attempt to make up for the loss by raising profits elsewhere. Chief among their techniques (so far) is the narrow network, which limits the doctors available under any given plan. Narrow networks raise profits in at least three ways: First, the insurance companies can make deals with medical service providers to get a better price. Second, by not including certain kinds of specialists on their lists, the insurance companies can do underwriting through the back door; for example, if they don’t want to insure against a certain sort of cancer, they simply don’t include specialists who treat that cancer. Third, a narrow network often means that travel times to the nearest service provider may be high, a deterrrent to seeking care. (There’s also the profitable outcome that rates, and profits, for out-of-network heatlh care, are not capped, so players run scams to kick sick people out-of-network while they’re being treated, and stick them with a huge surprise bill.)[2] 

Now, consumers understand, even if neoliberal economists do not, that health care is a lemon market in which “smart shopping” is extremely difficult; as we’ve seen above, only 21% of the population can do anything remotely approaching it. (Especially on a gurney in the back of an ambulance, right?)  Therefore, they fall back on heuristics, like trust (“you can keep your doctor”), or a history of success (“first, do no harm”), or a doctor’s reputation in their social circle. To be fair to the economists, a minority of the 21% minority, mostly those with serious diseases, can, smartly or desperately, manage to make lemonade by cobbling together their own personal health care strategy involving the right specialist, the right drugs, the right clinic, and the right treatment.  Both for heuristic and strategic citizens consumers, it’s critical to know whether their doctor is in-network for any health insurance policy available on the ObamaCare website.

So we would naturally expect that the ObamaCare website makes it possible and easy to find this out. Dream on. Of course, if you read this lead from US News (October 23) you might be deceived:

Like a car company bringing out a new model, the Centers for Medicare and Medicaid Services will debut a shiny and improved website Sunday that will allow people to see whether the plan they pick would cover particular doctors, prescriptions and hospitals.

(Notice the sleight of hand here: The claim that purchasing health insurance is like buying a new car. It isn’t. It’s like buying a used car; see Akerlof’s classic paper on lemon markets, where purchasing a used car is the paradigmatic example of information asymmetry.) But do undecieve yourself, read on, and read carefully:

Consumers  [sic] can also search for a specific doctor, or available prescription or hospital that is covered by their plan. Previously, customers had to go to each insurer’s website to find out.

Changes in coverage [that is, churn; see NC here]. can mean that patients lose access to family doctors they have been seeing for years, or may not be able to undergo medical tests or procedures in the hospital that is closest to where they live. Some consumers may decide a lower premium is worth such changes, and others many not, said Lori Lodes, communications director for the CMS. Right now the agency has collected about half of issuer data, she said.

“Half the data.” So, three years into ObamaCare, and six years since the law was passed,  the administration has made half of the data “smart shoppers” would need to make informed decisions available. First, BWA-HA-HA-HA-HA-HA-HA!!!! Second, why isn’t this fraud? But wait. There’s more! From AP (November 1):

Doctor and prescription look-up tools that were supposed to be showcase improvements this year are still in final testing and could turn out to be less than reliable.

“Could turn out to be less than reliable.” First, BWA-HA-HA-HA-HA-HA-HA!!!!  I mean, it’s not like the ObamaCare website has ever been “less than reliable” before! (And if the administration runs true to form, nobody will be held accountable for any debacle, and the program managers will turn Flexian and go on to lucrative private sector jobs.) Second, now we’ve got three layers of lemony goodness: Health care is a lemon market, health insurance is a lemon market, and the ObamaCare marketplace expects people to remedy the information asymmetries of these lemon markets with lemon software that not only lacks critical information, but is buggy. Third, ObamaCare is a product that people are mandated to buy. Surely there is some legal theory that explains how a mandate that forces people to buy a defective product cannot stand, constitutionally? For example, suppose there were a statute that mandated that every American purchase a gun, but that the gun manufacturing process inherently caused a certain number of guns to misfire, or discharge when dropped. Surely there is a theory under which such a mandate could be challenged?

As AllGov drily points out:

Obamacare is not single-payer, Medicare-for-all, insurance. It’s a marketplace driven by consumer choice, which doesn’t work very well without information about provider networks.

No, it doesn’t. And remember the incentives that health insurance companies have: If they can no longer do underwriting, they’ll try to do backdoor underwriting. So we’ll have an arms race; if, at some future date, HHS manages to get the other half of their data, and debug their software, the insurance companies will have figured out some other way to game the system in the name of profit. 

The Collapsing Co-ops

Here’s the HHS definition of a co-op:

A non-profit organization in which the same people who own the company are insured by the company. Cooperatives can be formed at a national, state, or local level and can include doctors, hospitals, and businesses as member-owners. Co-ops will offer insurance through the Marketplace.

Which sounds like a good idea, since a co-op has every incentive to remove the parasites that plague the for-profit health insurance business. However, co-ops have a tortured political history[3], and were (as one might expect) hobbled from the very beginning, as Politico describes:

The nonprofit co-op program was devised as a way to placate liberals who were irate that the health care law didn’t include a government insurance option. Supporters say it was undermined from the outset, most notably when the original $6 billion funding was slashed by more than half. In addition, the plans were saddled with rules that prohibited them from using federal funds for marketing and restricted which customers they could go after.

Bob Laszewski — while snarking at Politico, and the Democrats — describes these rules in greater detail:

About anyone I have talked to in the business of health insurance saw this as doomed from day one:

  • Co-ops could only sell individual and small group policies–the most problematic part of the health insurance business–and went up against established health plans with well-diversified market portfolios.
  • Co-ops were new start-ups lacking lots of covered people forcing them to have to go to providers and ask for deep discounts like the big established carriers but with no comparable market share.
  • Co-ops were new start-ups with little or no proprietary information about the risk pools and businesses they were entering while the big carriers had lots of data and experienced actuaries and managers.
  • Co-ops were limited to only the capital the government gave them and could not raise more money in the public markets or merge with a bigger more established player when they got into trouble.
  •  

As one might have expected, then, a large number of co-ops (not all) are collapsing. Bloomberg:

Ten co-ops have folded this year after state regulators stopped them from offering plans, because of weak balance sheets. Seven have closed just since the end of September, the most recent on Oct. 27. That’s left more than 500,000 people to find new coverage, some in rural areas that now have only a single ACA provider. Co-ops in New York, Oregon, Colorado, and elsewhere are also at risk of defaulting on their federal loans.

And although the Republican Congress pulled the rug out from under them, the administration doesn’t seem to be fighting very hard:

[T]he government is paying out only a fraction of the money it owes the co-ops under an Obamacare provision guaranteeing support for insurance plans facing high medical payouts. As recently as July 21, the administration said it would pay 100 percent of what insurers expected to get. But on Oct. 1 it announced the government would pay just 13¢ on the dollar because of restrictions Congress added after the ACA was passed—a hit many small co-ops couldn’t absorb.

After the Republicans insisted late last year on limiting the ability of the administration to pay for one of the programs to protect the insurers from losses in the early years, administration officials say they had few, if any, options. “Those were the deck of cards that we had to work with,” Mr. Counihan said [or rather sighed], adding that the insurers should have not have been surprised.

Kent Conrad, who pushed for the co-ops, reacts:

Former Senator Kent Conrad, the North Dakota Democrat who proposed the co-ops, said they were “sabotaged.”

“Those who wanted to kill them — largely Republicans and competing insurance companies — just step by step took actions to subvert them and to assure they would have an extraordinarily difficult time surviving,” he said.

It seems to me that paying 13 cents on the full dollar the co-ops had every right to expect would have been the final nail in the coffin for any struggling co-op. But it’s also clear they were hobbled from the beginning; a program that optimizes for health care for profit would have been unlikely to support them in any case. On the bright side, 10 co-ops in 14 states have survived, and Maine’s is a roaring success![4]

The Constitutional Challenge

Finally, we turn to the latest Constitutional challenge from conservatives. Here’s a roundup of all the cases;  I’m going to focus on just one, Sissel v. U.S. Department of Health & Human Services, brought by the right wing Pacific Legal Foundation, because it enables me to take a Martian’s perspective to ObamaCare’s history. In short form:

PLF’s case of Sissel v. U.S. Department of Health & Human Services targets the individual mandate tax specifically, but calls for Obamacare to be struck down in its entirety, because it is a massive tax-raising bill that began in the Senate instead of the House, as the Constitution requires.

The Constitutional requirement is called the “origination clause” (Article I, Section 7, Clause 1:  “All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.” Notice the weasel word following the semicolon.) In longer form from Newsweek:

As it happens, Obamacare “originated” in the House in only a very formalistic sense. H.R. 3590, the bill that became Obamacare, was originally titled “Service Members Home Ownership Tax Act of 2009” and had nothing to do with health care.

In the first major Obamacare decision, NFIB v. Sibelius, the Court upheld the law as a tax—something that surprised many people. But if it’s a tax, shouldn’t the bill have originated in the House?

But to secure passage of Obamacare, the Senate decided to take this bill, which had passed the House, and gut it entirely, replacing the entire text of that bill with the Obamacare title and text and keeping only the bill number. After it passed the Senate, the House then approved the new Senate-drafted bill through a reconciliation bill.

The House made no changes to the text, which, because of the Senate’s obscure procedural rules, meant that when the bill went back to the Senate, it was not subject to a filibuster.

This was significant because, in the interim, Sen. Ted Kennedy, D-Mass., had died and been replaced by Scott Brown, R-Mass., thereby depriving the Democrats of the 60 votes they would need to defeat an otherwise inevitable Republican filibuster.

And thus was Obamacare born.

The problem is that this doesn’t look like the bill “originated” in the House in any meaningful way. It was as though the Senate bulldozed a house and erected an entirely new structure, but said it was the same house because it had the same address. And so Pacific Legal Foundation has sued.

Recently, they lost their challenge before a three-judge panel of the U.S. Court of Appeals for the District of Columbia. When this happens, plaintiffs have a chance to get the entire circuit to reassess the question. But just last week, the D.C. Circuit, unsurprisingly, declined to re-hear the case en banc.

Why unsurprisingly? Because it takes a majority on the court to revisit a case and you might recall that then-Senate Majority Leader Harry Reid, D-Nev., invoked the “nuclear option” to get more Obama appointees on the D.C. Circuit.

(The issue seems to turn on the impact of the weasel wording; that is, is the origination clause a mere formalism, or is it substantive? If the former, then Harry Reid’s shenanigains in the Senate pass muster; if the latter, they do not. Judges differ on this point.)

At this point, since whether the Supreme Court will accept Sissel for review seems wholly dependent on tea-leaf reading by court watchers, we’ll take the Martian perspective. Reread the Newsweek article for the legislative history, and you and the Martian will see the big picture:

(1) The Democrats were willing to invoke the “nuclear option” — that is, to abolish the filibuster — to appoint a few judges. But they were not willing to help millions of people by invoking the nuclear option to pass a better health care law than ObamaCare (for example, single payer).

(2) The Democrats were willing to pass ObamaCare through “reconciliation,” without a single Republican vote. But they were not willing to help millions of people by using reconciliation to pass a better health care law than ObamaCare (for example, single payer).

Remember this Martian perspective whenever a Democratic loyalist speaks of their desire for reform. The Democrats were not willing to use the legislative tools available to them to do anything other than pass a Republican plan (see Appendix).

Conclusion

Best article on ObamaCare I’ve seen in the mainstream press, by the excellent Trudy Lieberman in July’s Harpers (and I missed it because of the Harper’s paywall). Let me quote a great slab of it:

Essentially, the law is a means-tested program, like food stamps or Medicaid. It offers people the chance to buy private insurance online through a state- or federally run exchange, and to receive a government subsidy to help them pay their premiums. It is primarily aimed at the poor and the nearly poor: this year, 87 percent of A.C.A. enrollees qualified to receive monthly subsidies averaging $263 per person (at least in the thirty-seven states with federally run exchanges). To its credit, the law also allowed sick people to buy insurance and more of the neediest Americans to qualify for Medicaid. But in the twenty-one states that chose not to expand their Medicaid programs, the poorest of the poor are ineligible for A.C.A. subsidies and, in many cases, receive no help from the regular Medicaid program.

And what of those middle-class Americans who were supposed to benefit from the law, and were promised that they could keep the policies and health providers they already had? They’ve already been hit with higher premiums and higher out-of-pocket costs — and people with top-of-the-line coverage from their employers will soon find those policies shrinking, thanks to a provision of the law that encourages companies to offer less-generous benefits.

It’s bad enough that the A.C.A. is fattening up the health-care industry and hollowing out coverage for the middle class. Even worse, the law is accelerating what I call the Great Cost Shift, which transfers the growing price of medical care to patients themselves through high deductibles, coinsurance (the patient’s share of the cost for a specific service, calculated as a percentage), copayments (a set fee paid for a specific service), and limited provider networks (which sometimes offer so little choice that patients end up seeking out-of-network care and paying on their own). What was once good, comprehensive insurance for a sizable number of Americans is being reduced to coverage for only the most serious, and most expensive, of illnesses. Even fifteen years ago, families paid minimal deductibles of $150 or $200 and copays of $5 or $10, or none at all. Now, a family lucky enough to afford a policy in the first place may face out-of-pocket expenses for coinsurance, deductibles, and copays as high as $13,200 before its insurer kicks in. Of course, these out-of-pocket caps can be adjusted by the insurer every year, within limits set by the government, and there are no caps at all for out-of-network services, which means that some providers charge whatever the market will bear. In the post-A.C.A. era, you can be insured but have little or no coverage for what you actually need.

The A.C.A.’s greatest legacy may finally be the fulfillment of a conservative vision laid out three decades ago, which sought to transform American health care into a market-driven system. The idea was to turn patients into shoppers, who would naturally look for the best deal on care — while shifting much of the cost onto those very consumers.

(Because markets, ya know.) I quoted so much of Lieberman’s article for a couple of reasons. First, NC isn’t alone in its views of ObamaCare — though you’d never know that from Republicans, Democrats, or the career “progressive” nomenklatura in the Beltway. Second, Lieberman shows — as we have been arguing — that ObamaCare, while a Rube Goldberg device from the standpoint of actually provisioning health care, is already a very successful and ginormous screwjob, a double-crossing of the American people by the political class on behalf of bloated and parasitical “stakeholders”: insurers, drug makers, and medical providers, along with employers anxious to crapify jobs by shedding benefits. Third, there is an alternative to ObamaCare’s “conservative vision”; in 2016, at least, one single payer advocate is running for President.

NOTES

[1] Come to think of it, “nudge theory” is a lot like a Rube Goldberg device. “Economist (A) adjusts tax incentives (B) causing consumer’s penny (C) to drop (D)….

[2] Backdoor underwriting can also be achieved with narrow formularies and hospital selection. If you don’t want to treat TB, then make sure the TB drugs in your formulary are unavailable or very expensive. If you don’t want to treat children’s cancer, make sure the hospital with a department specializing in that form of care is not in your network.

[3] Back in 2009, co-ops were offered to the left as a sop for not including the so-called public option in ObamaCare. (The “public option” was itself a bait-and-switch operation run for the Democrats by career “progressives” to head off single payer; see here and here.) It’s amusing to read Obama’s protestations on the “public option” vs. co-op kayfabe, knowing what we now know.

[4] More on Maine. Speculating freely, I wonder if strong Maine co-ops like Fedco and MOFGA made take-up by Maine Community Health Options easier; people were used to the concept.

APPENDIX

Lieberman’s article includes this gem from Obama:

In late 2010, after the fierce backlash against the A.C.A. had begun and the G.O.P. swept the midterm elections, the president appeared on 60 Minutes to reflect on his party’s drubbing. Obama acknowledged that health-care reform had “proved as costly politically as we expected” — hardly earth-shattering news. More surprising was his frank admission that the law had been taken straight from the Republican playbook. “We thought if we shaped a bill that wasn’t that different from bills that had previously been introduced by Republicans, including a Republican governor in Massachusetts who’s now running for president, that we would be able to find some common ground there,” Obama said. “And we just couldn’t.”

It’s the eternal question, isn’t it? Stupid, or evil? Remember, the Republicans are the party that impeached the previous sitting Democratic Party over a *******, tried to steal Florida 2000 and Ohio 2004, had been thoroughly discredited by Bush’s Iraq debacle, and that the Democrats had just won a mandate for “hope and change,” held the House and the Senate, and were (at that time, at least) led by a charismatic figure known for his oratorical abilities. So, to “seek common ground” with the Republicans was either a ginormous strategic miscalculation by Obama (stupid) or a grotesquely cynical betrayal (evil). Here, it’s worth noting Glen Ford’s thesis that Obama is “the more effective evil.” And operationally, in terms of the policy actually adopted, “common ground” is exactly what Obama and the Democrats sought and achieved, if we put aside the partisan frothing and stamping, and the 11-dimensional chess so beloved of career “progressives.” ObamaCare is thoroughly bipartisan. So perhaps it’s stupid and evil.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

60 comments

  1. Vikas Saini

    Re: collapsing co-ops. Even if they had gotten the whole dollar instead of 13 cents, I question whether they would have survived. The whole scheme was predicated on provider pricing set by negotiations between medical empires and the big plans. The irrationality of provider pricing, and the structural distortions of our specialty and hospital dominated “system” made the outcome we are seeing a foregone conclusion. Because markets. The only possible hope for this idea was to have co-ops create alliances with provider networks aligned with their social mission — trying to create a Group Health out of whole cloth — but where would anyone find those in this environment?Essentially impossible due to the decades long marination of doctors and hospitals in neoliberal culture. Or having a massive capital buffer while building a counter culture. Where might one find that kind of capital? hmmmm.

  2. participant-observer-observed

    Your prediction was smuggled into the budget deal. The naked lemon is exposed.

    Businesses Will Be Off the Hook for Providing Employee Health Benefits in Bipartisan Budget Deal…: http://youtu.be/1WEHh_oUc8c

    What is most infuriating is that those voting the benefit cuts enjoy full sungle payer health care!

    Time for a streak of anti incumbency elections!?!

      1. Oregoncharles

        “Health care” is not the main contributor to life expectancy. Nutrition and public health (sanitation and vaccines) are. So you’re probably right.

        1. jrs

          I certainly don’t advocate that solution, but people 45 and up with little education do often have little economic prospects. Actually if your 35 or older your economic fate is set and can not be changed, so it’s kind of all over and downhill from there.

  3. Oregoncharles

    Thanks. A treasure trove of ammunition to forward to our single payer activists.

    And a note on Harper’s: I am a subscriber and can extract excerpts (whole articles seem unfair, as well as probably illegal.) I will endeavor to be more alert to articles that should be here.

  4. allan

    Slightly off-topic, but even the Very Serious™ Vox.com has now thrown in the towel on the claim that the Cadillac tax will increase wages. Of course, that the claimed benefits of the Cadillac tax are a fraud will be news to exactly zero people at NC. But as a sign of Beltway conventional wisdom, the Vox piece indicates that the tax might be in trouble.

    1. allan

      From the Vox piece:

      But Gruber and the other economists I spoke with didn’t find this absence especially troubling. They argue that if the wage-premium relationship works in one direction, there’s no good reason to expect it not to exist in the reverse.

      “There’s no economic reason to think it wouldn’t be symmetric,” says Gruber. “If it’s really true that firms could just say, ‘I’m going to keep it,’ then why aren’t they already paying lower wages?”

      1. fresno dan

        “There’s no economic reason to think it wouldn’t be symmetric,” says Gruber. “If it’s really true that firms could just say, ‘I’m going to keep it,’ then why aren’t they already paying lower wages?”

        Some ideas are so stupid that only an intellectual could believe them
        Orwell
        http://www.abelard.org/abstracts/quotes4-orwell.php

        There probably is something bad that happens to your brain if you read too much economics – I almost succumbed to it myself.
        Here is Dean, whom I agree with the vast majority of the time, making what I just regard as a preposterous statement, apparently because he is oblivious to self dealing:

        (Dean) A NYT article on the prospects of an interest rate hike by the Federal Reserve Board at its December meeting told readers:

        (NYT) “The case for raising rates hinges in part on the Fed’s forecast that the economy will continue to add jobs at a healthy pace and that inflation will begin to rise more quickly. Moreover, some analysts argue that maintaining near-zero interest rates is now doing more harm than good by encouraging businesses to invest in things like share buybacks to lift their stock price, rather than long-term investments in equipment and developing new products.”

        (Dean) It’s difficult to see how low interest rates would cause firms to prefer share buybacks to long-term investment. Low interest rates make the cost of borrowing lower. This could lead some firms to carry more debt and use cash for share buybacks or dividends. But low interest rates also make it easier to borrow for long-term investment. There is no obvious mechanism through which low interest rates would lead firms to divert money from investment to share buybacks.

        http://www.cepr.net/blogs/beat-the-press/economists-say-the-darndest-things
        =====================================================
        Now maybe the Times argument is incorrect. Maybe the most important thing is low interest rates. But its as if Dean had never heard of bonuses tied to stock prices, and that such a scheme is so much easier, certain, and lucrative than actually investing. Its as if Dean’s attitude is that these are just ALL honest businessmen who will always use capital for its most efficient and effective purpose. Maybe in most cases, most businessmen will invest – – but to completely dismiss the idea could exert a negative affect strikes me as doctrinaire. Something that Dean is not gullible enough to fall for in other circumstances, so I am amazed he falls for it here…

        And its as if Gruber had never heard of Silicon valley titans trying to manipulate temporary visa program, or make deals among themselves not to compete for labor.
        “…. then why aren’t they already paying lower wages?” Gruber, they already are. But even with record profits, they will continue to try and pay less. And humans aren’t rational, so they will pay less even if it means profits are reduced by hiring less competent, less honest, or less physically able employees to do the work. Unlike your textbooks, they pay less sometimes not because they HAVE to, they pay less because they want to.

        Its as if some of these economists can’t grasp that these CEOs (not every single one – but not insignificant either) cheat and manipulate the system to get themselves MORE. Really, if they were rational, why would anyone continue working after they were worth more than 200 million??? There is plenty of places they could work for gratis, or hobbies they could take up…

  5. Synoia

    The cost of billing alone in the US health Care system is staggering. We receive three to five, bills, statements, records of treatment etc per month per person.

    In the UK the amount of paperwork sent? None, Zero.

    1. fresno dan

      I point I make infinitely….
      If its suppose to be a market, than why isn’t it setting the price correctly initially?
      If you bought something from the store, and weeks later you had gotten 2, or 3, or 4 or more add ons, you would rightly think it was a big scam…..

      BIG SCAM

    1. Lambert Strether Post author

      Fixed, thanks. I seem to have filed Trudy under the Trudy who writes for the Philadelphia Inquirier, not the Trudy who writes for Columbia Journalism Reviews.

  6. Bridget

    It is still possible to get access to a national network of providers by purchasing a short term plan, which can last up to twelve months. In my state, these plans cost $250-$300 per month, and look just like the individual plans from the good old days. (except that your insurance company is no longer obligated to keep you after the term of the plan expiresl) You’d have to pay the Obamacare penalty, but, depending on your income, you could get much better coverage for less money. As long as you stay relatively healthy and your income doesn’t increase the penalty you are charges, there is nothing to stop you from renewing the plan over from year to year. But if you get sick, it’s off to Obamacare land for you.

    This article explains the upside and downside: http://obamacarefacts.com/insurance-exchange/short-term-health-insurance/

    1. different clue

      For those who have the money to travel to Mexico or Cuba or India, perhaps its off to Mexico or China or India if they get sick.

    2. txchick57

      Bridget: Right. That’s what we do. That plus pay into a concierge medical practice where you have all the access you need. Adds up to about the same as an Obamacare plan and much better bang for the buck. And with a little tax planning, I don’t pay the penalty either.

  7. shinola

    A quibble with a statement in the Appendix:

    (…the Democrats were) “…led by a charismatic figure known for his oratorical abilities.”

    I presume this means Mr. Obama, so WTF?

    Mr. Obama is a horrid public speaker; his oratorical “style” is littered with “uh’s” and inexplicable pauses. I find his delivery extremely annoying.

    1. Oregoncharles

      Are you sure that isn’t because you now know who he really is? I think that’s my problem – can’t stand to listen to him.

      OTOH: early in his presidency, there were widespread complaints by liberal Democrats that he wasn’t selling his proposals, including the ACA. There was a huge contrast between his campaigning style and his governing style. Almost as if the former was a huge scam.

    2. TG

      Well, yes. But everything is relative. Compared to Dubya and McCain? I mean Obama is evil, but as disgusting as he is as a person, he CAN speak in complete sentences. Truly the bar is set low…

  8. Bridget

    If you are young, these short term plans cost from about $50 to $135 per month. If I was young and healthy and making less than about $70,000 per year, I would seriously consider this option. I’d structure the coverage to end during open enrollment, just in case my insurer wouldn’t renew me, and simply roll it over from year to year. If my situation changed, I hop onto Obamacare during open enrollment.

  9. blert

    The “Romneycare” plan in Massachusetts was not what Romney or the Republicans wanted.

    The overwhelming super-majority of Democrats in Boston rammed “Romneycare” through over Romney’s objections.

    It then promptly went wildly into the red — as outlays sped past all informed expectations.

    At one point, IIRC, the scheme had to begin excluding legal residents from coverage. Their number proved to be drastically greater that anyone imagined.

    ( Legal immigrants were ‘importing’ their elderly parents. This exact same phenomenon has caused the Cuban immigration preferrence to come under widespread attack. Now that diplomatic relations have been restored, hundreds of elderly Cubans are flying in to become instant Americans. They then instantly qualify for SSI and SS. Then they fly back to Cuba to live high and mighty.)

    We can expect a staggering leap in ‘health tourism’ should America ever adopt ‘single payer’ in any form. We’ll even be drawing the needy from Canada… especially from Canada.

    They have single payer — and so routinely escape it to get timely care in Detroit.

    1. marym

      To examine the extent to which Canadian residents seek medical care across the border, we collected data about Canadians’ use of services from ambulatory care facilities and hospitals located in Michigan, New York State, and Washington State during 1994–1998. We also collected information from several Canadian sources, including the 1996 National Population Health Survey, the provincial Ministries of Health, and the Canadian Life and Health Insurance Association. Results from these sources do not support the widespread perception that Canadian residents seek care extensively in the United States. Indeed, the numbers found are so small as to be barely detectible relative to the use of care by Canadians at home.
      ….
      For the 2013 Waiting Your Turn report, look at Chart 6 on page 10. Except for plastic surgery, orthopedics and internal medicine (not primary care), the actual median time between an appointment with a specialist and treatment is quite close to the median time that the specialists deemed to be a reasonable wait. And where there are problems, they are working on it.

      http://pnhp.org/blog/2014/03/17/42000-canadians-come-to-the-united-states-for-care-really/

      1. blert

        The Canadians drive into Detroit under their own power.

        The treatment that gets them going: heart surgery.

        Nice try, though.

    2. Oregoncharles

      You can’t “instantly” qualify for SS you have to pay into it for a certain time first. Your SS payments are based on your contribution, though not limited by it.

      1. blert

        You are factually incorrect.

        There is a provision that is allowing Cubans to immediately qualify.

        Ditto for SSI.

        It’s in the open press. It’s become a real hot potato.

        Watching these elders fly off to Cuba once their paperwork was in order — has proved too much to tolerate.

        As you might imagine, it’s exponentiating away — something crazy.

        A ‘fix’ in the works in Congress as I post.

  10. blert

    The Democrat party owns Obamacare — all the way through.

    Unique in the national experience, it was passed on a purely partisan basis — even though it is epic in scope — and de facto a record increase in taxation. ( The Supremes agree on that point. )

    It’s a highly regressive tax — that MUST shut down most first time home purchases.

    Why? It is of benefit to those too poor to afford a home mortgage.

    It’s extremely costly to young couples in the midst of family formation… just on the cusp of affording their own home.

    The tax is so great that the minimum income threshold to carry a mortgage is up towards $100,000 per annum.

    Not taking out a mortgage means SHRINKING the money supply.

    This effect is currently hidden by the house trading performed as folks move on up, and by the new landlords snapping up low end properties that would otherwise not have any market.

    1. Oregoncharles

      By “tax,” do you mean the penalty (which is what the SCOTUS meant), or the entire cost of insurance+ copays, etc., which would be much higher?

      1. blert

        SCOTUS meant everything.

        That interpretation is out and about in the open press.

        Including utterances by Roberts, himself. He did write the controlling opinion.

        It’s a compulsory taking of your money — just no doubt about it.

  11. jo6pac

    Well from I’ve read here overtime and today this ACA thingy is smashing success;) Then again if tpp $ tipp pass this aca thingy might just go away and become hurry up and die.

  12. parisblues

    There’s another way that the ACA screws the middle class: Should a health care “consumer” choose to set aside $6,650 in a tax-deferred Health Savings Account to cover some of those deductibles and copays, he/she is limited to only certain plans on the exchange — generally the more expensive ones. (And by the way, the Covered California site is completely opaque in this regard. I learned this only after entering my information on getinsured.com.) When I enter my and my spouse’s information, I am initially offered a choice of 51 plans, beginning with a HealthNet Silver plan with a “Plan Score” (reflecting the presumed cost-benefit ratio for someone in my situation) of 94, for $705.94 a month. However, when I check the “HSA compatible” box, the number of plans available to me drops to SIX, starting with a Kaiser-Permanente Bronze HMO with a “Plan Score” of 73 for $809.55 a month. Apparently the authors of the ACA figure that if you can afford to put that money in a Health Savings Account, then you can afford to pay $1200 more in premiums — for substantially lower benefits!

    This seemed so completely off-the-wall to me that I searched the term “HSA-compatible” online, and came up with the link below, where a health care “shopper” such as myself recounts how she asked an insurer’s customer service representative point blank why her proposed health plan made her ineligible to contribute to her HSA when it met all of the federal requirements for a “high deductible” plan. She was told that “it depends on the carrier. They have the right to make the plan eligible or not.”
    WTF?!?!?! So tax law is now applied differently depending on how much of your hard-earned money you’re willing to fork over to an insurance company? How on earth is that legal or constitutional?

    http://clubthrifty.com/obamacare-taking-away-my-hsa/

    1. parisblues

      Essentially what this means is that in order to be able contribute to an HSA, I’d need to fork over MORE THAN THE ACTUAL TAX SAVINGS for making the HSA contribution to the insurer.

      1. blert

        BIngo, we have a winner.

        The industry hates HSA — whose only function must be to throttle demand — and funds — from the healthy fraction.

        So they repealed the HSA law by way of their rate schedule — totally gutting its rationale.

  13. Saltaire

    Possibly a vote for Sanders will throw the bums out and we start over! Or is the vote already rigged? Don’t mean to insert politics but…

    1. Lambert Strether Post author

      Again, all I expect from the Sanders campaign is that the issues he’s raising, single payer among them, enter the discourse. That’s how the Overton Window gets dragged left.

  14. TG

    Sigh. At this point the only thing I can say is that anyone who claims that Obama is a ‘liberal’ should be cast into a bottomless pit and eaten by Shoggoths. It’s better than they deserve.

    But seriously, there is a bright side. Medical tourism! Lower- and Middle- class peasants – I mean citizens – can just go to sunny Mexico and have medical procedures done for less even that the cost of Obamacare’s deductibles!

    On the other hand, it’s already illegal for a private citizen to import legal drugs from cost-controlled Canada (though of course the rich can import cheap drugs from China in unlimited amounts). Perhaps soon our customs agents will check elderly Americans to see if they might have had any ‘gray market’ procedures performed in other countries. “Hey grandma, you didn’t have that metal hip when you left a month ago! I think we are going to have to confiscate that leg of yours.”

    Ridiculous? Of course. But then, so is everything else that’s going on… I would not be too quick to rule out laws against ‘medical tourism’ just yet… Remember, you heard it here first.

    1. blert

      Folks have ALREADY been busted at the border for bringing back generic prescription drugs.

      We have no funds suitable for ICE — but the DEA and Customs are a different thing, entirely.

  15. Beans

    Lambert –
    Could you please give a summary of how single payer works or provide a link?
    I know this is a bit off topic but single payer is always referred to as a great solution. How does it work?
    Wouldn’t single payer ultimately result in massive consolidation and a handful of gigantic national healthcare corporations?

    1. Lambert Strether Post author

      Here are two posts from PNHP.

      1) Why do Canadians so strongly support their single payer system? This should reduce the fear factor generally.

      2) Single-Payer FAQ. I don’t think single payer is a deus ex machina that will solve all problems, including concentration, for which we have anti-trust laws. However, I would argue that single payer, by assaulting the rental stream from which these concentrated entities feed, will also reduce their growth.

  16. different clue

    I predict, if that “Sissle” thingie reaches the Roberts Court, the Roberts Court will strike it down. The Roberts Court will uphold Obamacare if Roberts has to figure out how to do it himself.

  17. Knute Rife

    OK, so the ACA wasn’t what any sensible person wanted (That would be single payer. Like that was gonna happen given the Talibaggers in Congress and the Fascist Five on the Supremes.). Would you prefer the old system? I certainly wouldn’t.

    1. Yves Smith

      Did you actually read the post? It appears not. Like this part from Trudy Lieberman at Harpers:

      And what of those middle-class Americans who were supposed to benefit from the law, and were promised that they could keep the policies and health providers they already had? They’ve already been hit with higher premiums and higher out-of-pocket costs — and people with top-of-the-line coverage from their employers will soon find those policies shrinking, thanks to a provision of the law that encourages companies to offer less-generous benefits.

      I take it you don’t know anyone who had an individual or small company plan they liked and wound up thrown into Obamacare. One of the intended feature of the law, which was drafted by the health insurance industry, was to let them dump old insurance policies. A doctor I know in upstate NY has seen his premiums for his family go up by $24K a year, and then he has a $6K deductible PER PERSON before he gets any coverage. A friend in NYC is paying $1500 a month for a plan she deems to be useless, since as she puts it, “No one would want to use any of the doctors in the network.” My self-employed brother and sister-in-law in Virginia are similarly looking at mind-boggling increases for pretty much no coverage. If I had to get Obamacare, I’d be forced to leave NYC. I could not afford the cost increases on my income.

      I’ve met people who had pre-existing conditions (cancer!!!) and they’ve they weren’t sure it was worth it to enroll, given the premium costs, magnitude of deductibles, and number of specialists that were not covered.

      You get hit by a bus and taken to a hospital which is not in your plan (and an EMT professional is not going to take you to a further-away hospital even if you are coherent enough to ask to go to one where you have coverage), you are liable for the entire bill, and with no insurance discount either. And even if you do wind up at a hospital in your network, it is routine for hospitals to game the system and put doctors who are not in your plan on your case to pad their profits. Obamacare is a vehicle for the neoliberal policy that Lambert has labeled, “Insert tube, extract rents.”

      Oh, and that’s before you get to the fact that Obamacare is a nightmare from an administrative impact for anyone who does not a completely predictable income….meaning salaried, stable job, no incentive pay. You have to predict your pay EVERY MONTH! Most small business people get extensions for their tax returns because there’s just too much that happens in the 4th quarter to sort it out by the March 15 corp filing deadline. They don’t know with any degree of accuracy what they made for the previous year until sometime the following year. And people who have unpredictable hours have the same issue with not being able to make good income estimates on a current basis.

      The only unambiguous winners are people who benefited from Medicaid expansion.

      And due to the effort invested in designing and passing Obamacare, further significant health care “reforms” are off the table for at least a decade, probably two. And you applaud this?

      1. Knute Rife

        Yes, I read it. My point, and I did have one, was that someone should spell out a version that could have gotten through Congress. Was I unhappy that Obama took single payer off the table from the start (i.e. that he proved to be just another corporate tool)? Of course (though I was not surprised). But regardless of any supposed mandate the Democrats supposedly had in 2009 (questionable at least), single-payer was not getting through. Further, I know of people other than Medicaid winners who have benefited (This is a nonexpansion state, BTW.). And as a self-employed small businessman who hangs out mostly with other self-employed small businesspeople, I know the administrative mess and have heard the endless variety of complaints. But we had these complaints before ACA because it was a nightmare before ACA, except that then we had to deal with a thousand shady brokers finding us “coverage.”

    2. Lambert Strether Post author

      Blaming the Talibaggers in Congress for ObamaCare when Democrats, in 2009, had a mandate for “hope and change,” a thoroughly discredited opposition, the Presidency, a majority in the House, a filibuster-proof majority in the Senate and could have, in any case, used reconciliation or the “nuclear option” to pass a better bill (HR 676 and SB703 spring to mind) is pure distraction. Stop it.

      I’ve noticed that Democrats never take responsibility for any failure. (For example, no heads rolled after the ObamaCare site launch debacle). Your comment confirms me in my view. If you want to cheerlead, the door to Kos is at your right.

  18. diptherio

    Third, there is an alternative to ObamaCare’s “conservative vision”; in 2016, at least, one single payer advocate is running for President.

    Um…notwithstanding the pet name of the fiasco currently under examination, since when does the President write or pass laws? That would be the House and Senate, no? And how many single-payer advocate we got there? Why do you think that electing Bernie, or any other single-payer advocate, President would have any affect on the ACA? You know something about the Constitution that I don’t? It would seem that if we’re serious about single-payer we would be focused on congressional races, not the Presidency. Just sayin’…

    1. Lambert Strether Post author

      Because Presidential candidates get policies into the discourse, thereby (we hope) dragging the Overton Window left. Who said anything about the President making laws?

    1. Lambert Strether Post author

      Thanks. I have to work harder at pointing out how ObamaCare creates a criminogenic environment for the health care business. Because I started out look at it from an IT perspective, that means I need to change my framing a bit. But it is clear that ObamaCare enables health insurance companies to sell one thing, and deliver another. That’s fraud. Whether it’s fraud within the meaning of the act is another issue…

  19. Art As Social Inquiry

    I’m wondering if the intent is just to find ways to slam the law — cherry-picking to support an ideology?
    A couple of things.
    You excerpt the Trudy Leiberman piece where she talks about “keeping the policy” dead horse refrain which, apparently, isn’t dead enough. So many of those policies put people in the “underinsured” ditch. Customers wouldn’t know those policies could bankrupt them until they had a serious medical problem and discovered the insurance was too skimpy. C’mon…unbridled profit motives without consumer protections drove companies to sell these cr*p policies.

    As a former business owner I saw my small group premiums rise sometimes as much as 20% every year, and we NEVER used the insurance. They healthcare law did not exist then. We took less coverage for more money every year. By the 12th year in business, our last move was going to be a high deductible plan. The move toward cost shifting was around WAY before Obamacare.

    There’s a ton I could say, but I’ll leave with this. I’ve been interviewing folks for almost 8 years about how they access healthcare. I’ve studied the law to understand how it would and would not affect them.Ms. Lieberman’s characterization of the ACA as a means-tested program is a bit narrow. Yes, subsidies are based on income. But the exchanges also give many (especially those with preexisting conditions) the opportunity to start businesses,or retire early and still get insurance.

    The ACA has cracked the shell of the dead end this country hit with 50 mil uninsured and 25 mil underinsured. It was a start. Would Colorado be talking about their version of a single-payer system without the changes wrought by Obamacare? How long before a state actually makes true universal healthcare work? We will see it. And we will always have the ACA to thank for getting the ball rolling. Thank God for the provision that says a state will still get its federal funding if it comes up with something better.

    Is it Gruber who said the administration had to tackle access OR healthcare costs? Not both at the same time. OK access was first (and still needs major improving). The actual cost of healthcare still has to be addressed.

    Yeah, I want single-payer, but credit where credit is due.

    1. Lambert Strether Post author

      Thank you for your evidence-free comment. I’ve heard the refrain, especially from career “progressives” and some Democratic loyalists that ObamaCare is “a good first step”* toward single payer. Frankly, I think it’s a crock, for two reasons. First, as mentioned in the post, these same Democrats had the chance, with Obama’s election, to take a giant step, instead of a baby one. They didn’t. Second, it’s inconsistent with the actual behaviors of career “progressives” and Democratic loyalists from the top down, which include Obama insulting single payer advocates, the White House censoring them from live blogs, Baucus having them arrested in his hearing room, blogs funded by “progressive” institutions refusing to cover single payer stories and banning single payer advocates, and on and on and on. We also have the Democratic front-runner claiming — give credit, she’s got stones — that her views on health care are “evidence-based,” while at the same time refusing to take single payer evidence into account. It’s a classic case of how Republicans fear their right but don’t hate them, and Democrats hate their left but don’t fear them. Hopefully that imbalance will, at some point, be addressed….

      As for your rhetorical question, “Would Colorado be talking about their version of a single-payer system without the changes wrought by Obamacare?” Well, I don’t know. Do you? In any case, it’s chutzpah. Are you really saying that Democrats should take credit for the trainwreck they themselves created, because the disaster (to continue the metaphor) led to track, signaling, and rolling stock improvements? That seems odd. I will await the actual publication of your interviews with interest, then.

      As for your rather insulting first rhetorical question, you must be new here. I’ve been posting on single payer and ObamaCare a long, long time. I don’t have to cherry pick a thing. And the comments, where people share their actual experiences of the program, should disabuse you of the notion that I would. So you don’t have to “wonder” any more. You’re welcome.

      NOTE * The other trope is “I love single payer, but….” Your last paragraph exemplifies this.

  20. S. Swan

    Obamacare, in my opinion, was never about healthcare but a law that is essentially a tax. Whereas, a free market system lends competition and price regulation and thus the best option, for the best possible care, would have been to allow all health insurance companies the ability to expand and access all health related markets across state lines. What we have now is what I refer to as a “door”, a premium is paid to access a policy that is only paper and not healthcare at all. Healthcare lies on the other side of that door and once accessed comes with additional costs. I cannot think of one other thing I buy that has so many loopholes or filled with such egregious deceit. Think of home or car insurance, would you buy a policy that charges you for repairs or a portion of every replacement part after paying your ‘deductible’? Even Vegas understands the term “insurance” better than our elected leaders and president. You can buy “insurance” if the dealer’s hand raises your suspicion he might have 21. Sadly, our fear of the unknown, what could happen, or any other scenario clouds our rational thinking and lays way to the trust that we freely hand over to those who tax us for a broken healthcare system that was never designed to be about health in the first place. Interestingly, the IRS is the backdoor payment masters and they aren’t even a governmental entity. Just saying…

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