Kathleen Sebelius Explains Obamacare About As Well As She Builds Websites
To defend the Affordable Care Act, Kathleen Sebelius published an op-ed in the Wichita Eagle on Sunday, October 20, 2013. Because it was filled with so many questionable statements and a lot of poor economics, I am going to go through the entire editorial point by point and correct it. This may take a while, but the Affordable Care Act is going to impact the lives of every American (and a lot of non-Americans who live here) and will be one of the largest government programs ever created. It is worth a little time to examine all these details. Secretary Sebelius's statements are in italics; my responses are in ordinary text.
For the past 3 1/2 years, opponents of the Affordable Care Act have made misstatements about what would happen to families, to seniors, to employers and to health care costs as a result of the historic law. In spite of their predictions being so wrong, the attacks continue. So it's important to give a snapshot of what health benefits the law has already produced for Kansans and what the new health insurance marketplace means for qualified residents in the Sunflower State.
Okay, nice introduction. Now let's get to the meat of the argument.
Let's start with the 86 percent of Kansans who already have health coverage. Since March 2010, when the law was signed, 448,000 Kansas seniors on Medicare have benefited as costs have been held down in historic fashion - national cost growth has been constrained to the slowest rate in nearly 50 years. Furthermore, seniors now have an annual wellness visit and preventive care, such as cancer or cholesterol screenings, with no co-pays, as part of their new Medicare benefits under the ACA.
The Affordable Care Act had no effect on holding down Medicare costs, so that is not a benefit of the law. As to wellness visits and preventive care, that is now part of Medicare which means that taxpayers get to pay for it. Thus, while seniors may get a benefit, taxpayers get the bill. Kansas may have 448,000 seniors, but it has about 1.9 million taxpayers. Thus, this benefit is imposing a cost on four people for every one person that gets a benefit.
About 25,000 young Kansas adults who would otherwise be uninsured now have insurance on their parents' plans, and the parents of the 166,500 Kansas children with pre-existing health conditions no longer fear an insurance company denying their child health insurance, thanks to changes under the law. Most health plans now include preventive care for adults and children - from immunizations to cancer screenings, with no co-pays or deductibles - to try to help people stay healthy.
Parents are allowed to keep children on their insurance longer, but it is not free. In fact, it can be quite expensive so this benefit may not be quite as great as a lot of families think. As to the pre-existing conditions, that is a part of the law that few people argue with, so I will grant that is a gain with no argument on my part. The preventive care and wellness argument that applies to seniors applies the same here. Yes, we now get more coverage, thanks to the ACA. We also get to pay more for it, thanks to the ACA.
The insurance companies did not add these features for free. The fact that plans must now be more comprehensive is the major reason that insurance costs are rising. Nobody should be surprised that when insurance has to pay for more treatments, it will cost more up front. Free health care is not free; somebody is going to get the bill sooner or later.
More than $4 million in refunds are being sent from insurance companies to 83,700 Kansas customers this year, because under the new law, health insurance companies now have to spend at least 80 cents of your premium dollar on health services, rather than on administrative costs or ad campaigns.
That's great that some people got refunds averaging around $50, but not everything is so wonderful. The increased self-employment tax imposed to help pay for all this reform will hit the roughly 30,000 Kansans who earn $200,000 or more in wages and salary to the tune of about $16 million.
No one who has affordable employer coverage, or Medicare or Medicaid, or veterans' health benefits has to change plans through the new Marketplace.
In fact, lots of people had insurance that did not meet the minimum requirements under the new law (deductible too high, coverage not complete enough, etc.). These people have been receiving notices that their plans are being cancelled, because such minimum plans are not legal any more. Thus, lots of people will have to change insurance plans. For example, in Florida just one insurer cancelled a plan that covered 300,000 people. Nationwide, millions are losing their coverage for this exact reason.
In addition, many of the plans in the new exchanges have very limited networks of doctors and hospitals. The insurance companies are doing this to keep the costs down given all the new items that have to be paid for, and the fact that people will be able to compare all the costs side-by-side. This means that many people may have to change not just insurance plans, but also doctors once they find out that their providers are no longer in-network as part of their new insurance.
The 327,000 Kansans who have no health coverage - and those who purchase insurance in the individual markets - have new choices and some financial help. These are people who were often locked out of the market with a pre-existing condition or priced out with rates that skyrocketed year after year.
This is true, but rates under the Affordable Care Act are going to be even higher than they were before it was implemented. According to a study by the Heritage Foundation, the average Kansas family of four will see a 22 percent increase in insurance premiums. An average single 50 year old will pay 72 percent more and a 27 year old will pay 129 percent more under the Affordable Care Act.
The only way this coverage can be called affordable is if the people are given large government subsidies, which many people will be. However, that simply means another Kansan is paying the bill for that person to get "affordable" health insurance.
In case you wonder why this is important (or why anyone really needs health insurance), I want to share what Roy Jensen, the director of the Kansas Masonic Cancer Research Institute at the University of Kansas, shared with me and his fellow cancer researchers during a recent meeting: If you are uninsured and diagnosed with cancer, the research shows that you are 60 percent more likely to die within five years than if you're insured. That's a pretty powerful endorsement for health insurance.
No argument from me here. However, that does not mean mandating insurance for everyone and implementing a complicated scheme of taxes and subsidies to finance it makes sense. We could probably prevent more deaths from cancer by banning tobacco products than we will from enrolling more people in insurance plans.
There's no doubt that the Oct. 1 launch of the marketplace website was frustrating for way too many people. We're working hard to make sure that HealthCare.gov is easy to use and understand. Many improvements have already been made and more are coming. Clearly, Americans are eager to know the facts about their new options and how they can get health security for themselves and their families.
College dropouts successfully build websites without spending hundreds of millions of dollars. The federal government could have bought a year of health insurance for 100,000 uninsured people for less than they spent to build a dysfunctional website.
To be clear - no one is losing access to health benefits in these early days. There's a 26-week open enrollment period through March 31, 2014. And plan benefits don't begin until Jan. 1, 2014 - so as long as you are signed up by Dec. 15, you'll have coverage on the first possible day.
So, the government had three years to build the website and failed, but as long as it can fix everything in less than two months, you'll be fine. No need to worry. (Sorry, the sarcasm came through there.)
There's also a toll-free hotline, open 24 hours a day and seven days a week, with trained representatives able to answer questions in 150 languages and to help you sign up for a plan. The number is 800-318-2596.
Those "trained" representatives were trained for one week. Ask an insurance agent if somebody with one week of training can explain dozens of health insurance plans over the phone and help guide you in choosing the best plan for your family. Trying to make this decision over the phone is basically impossible if you want to make a good choice.
Additionally, there are trained workers at community health centers and in neighborhoods throughout Kansas to answer questions and assist with enrollment.
This is a much better solution than the phone lines. These trained "navigators" may have a little more training than the people on the phone and it will be much easier to explain things in person with paper and computers to allow for comparisons. Hopefully, the navigators will be able to get through the website to actually help people because they have to use the same website that is giving everybody so much trouble.
In Kansas, there are now multiple private insurance companies offering competitive plans. Kansas rates are significantly lower than predicted, and lower than rates in most parts of the country. So farm families and self-employed Kansans, entrepreneurs and workers who have no health coverage through their jobs can now shop for new insurance, and many will qualify for some financial assistance with paying their premiums. No one can be denied health insurance because of a pre-existing condition, and women will no longer be charged more than men just because they are women. Kansans have choices among plans, and insurance companies now have to compete for their business based on price and service.
Notice she says that rates are lower than predicted, not lower than what you were paying before. Again, I refer to the Heritage Foundation study which shows that the rates are not lower than people could have paid previously. Insurance is not getting more affordable when the full cost is considered. Only the subsidies will make it look more affordable.
Kansas Insurance Commissioner Sandy Praeger has been holding town hall meetings throughout the state, joining health care providers and local elected officials and neighborhood leaders, to answer questions and get people information about what benefits and health security they are entitled to receive under the law.
Good for Commissioner Praeger. I certainly would hate to have her job right now.
In addition to the new marketplaces, the ACA provides funding for states to expand Medicaid. In Kansas, 169,000 people could be covered. But many will have no affordable option if the state doesn't act.
Kansas does not want to expand Medicaid because it is highly suspicious that down the road the state of Kansas and its taxpayers will get stuck with a very large bill to continue the coverage. Because it is so hard to remove a benefit once a person has become accustomed to it, Kansas (and a number of other states) are refusing to take the "deal" the federal government is offering.
We're currently working with Republican and Democratic governors in the neighboring states of Iowa, Missouri, Arkansas and Colorado to expand Medicaid eligibility for the lowest-income working adults. The federal government is committed to paying 100 percent of the costs for the first three years and no less than 90 percent thereafter. This would mean $3 billion in federal funding for Kansas in the first seven years, to pay for the health benefits of Kansans who currently are uninsured.
Secretary Sebelius can say it will be paid for, but federal budgets are annual and the "promise" can change at any moment. Further, that $3 billion does not appear by magic; it comes from taxpayers. Kansas is pretty close to a breakeven state for taxes paid versus federal money that comes back to the state, so new federal funding is not a win for Kansas; it is just Kansas taxpayer money being returned.
Medicaid expansion is fully paid for, doesn't add a dime to the federal deficit, and is supported by Kansas hospitals and many business leaders, such as the Kansas City Chamber of Commerce, because independent studies project that as many as 4,000 Kansas jobs would be created and more than $3.5 billion would be generated in the state's economy.
Again, it may be paid for (I doubt it), but it is paid for by somebody. Kansas taxpayers will be paying for all the supposedly free goodies that are being offered. The state of Kansas is not winning; the Affordable Care Act is just moving money from some people's pockets into the pockets of others.
The ACA has already produced benefits for Kansans enrolled in Medicare and employer coverage, and it has slowed the growth of health costs for everyone. In football terms, we're early in the first quarter, and while our opponents want to declare "game over," I'm confident that by the end of open enrollment, we'll have millions of Americans, and thousands of Kansans, with health security that they never thought was possible.
The Affordable Care Act will definitely produce benefits. Some people will get new government jobs enforcing the law or helping people to sign up for insurance. Other people will get subsidized health insurance at prices far below what they could have found previously. People with pre-existing conditions get some benefits.
However, all these benefits come with costs. Everybody not in one of the groups just mentioned above will be paying more in taxes to finance those who benefit. Most people will be paying more for their own insurance because of the additional coverage that must now be provided (as a 48 year old male, I am personally very excited to now have maternity coverage). Millions of Americans will lose their insurance because it did not meet the minimum requirement, will be forced to find new insurance and possibly new doctors, and will get to pay more for the privilege.
Secretary Sebelius is paid to implement and defend the Affordable Care Act. From the looks of her column and the performance of the healthcare.gov website, she is not doing particularly well at either part of her job.