Is Obamacare “Medicaid for the Middle Class?” –A Muddled Argument

Yet another catchy phrase, “Medicaid for the middle class,” is popping up in conservative propaganda.  What are Obamacare’s opponents trying to say?

Those who have latched onto this catchphrase make two very different arguments. The arguments actually contradict each other, but they have one thing in common: Both are untrue.

#1 ) Obamacare isn’t good enough because the coverage families will receive in the exchanges will limit them to a tiny network of providers.

Originally, conservatives claimed that Obamacare would be too expensive. Americans who tried to buy insurance in the exchanges would experience “Sticker Shock!”  Now that states have begun to announce premiums, it’s becoming apparent that this isn’t true.

So conservatives have regrouped. In an about-face, they are acknowledging that some plans offered in the exchanges may be affordable, but this, they say, is because insurers are limiting their networks to providers who will accept lower fees.

Reform’s critics insinuate that “narrow networks” will exclude top-notch doctors and hospitals. The Citizens’ Council on Health Freedom (CCHF) calls exchange coverage “second-tier Medicaid for the middle class.”

Nevertheless, CHCF says, “Many people are expected to choose narrow-network plans that offer a limited choice of doctors, clinics and hospitals … because the cost will be less.”

Note that, while grousing about “limited choice,” CHCF predicts that patients will “choose” narrow networks.

When you’re fibbing, it’s easy to begin contradicting yourself. The truth is that people who have not been able to afford insurance in the past are far more interested in price than they are in the size of the network.

Moreover, many Baby Boomers already have embraced HMOs: they charge less when a patient stays “in network,” and the best focus on keeping patients healthy. I

In fact, when Consumer Reports published NCQA ratings of quality and customer satisfaction HMOs out-ranked other insurers.

“Narrow” Doesn’t Necessarily Mean “Not As Good”

Everything turns on who is included, who is left out – and why.

In the exchanges, insurers will be competing on price. As a result, carriers are pushing back against providers that over-charge – including brand-name hospitals that demand far more for very simple procedures.

The push-back could help rein in health care inflation: “As narrow networks continue to exclude high-priced, academic hospitals … we expect they will consider re-pricing,” says Jenny Kerr, Market Analyst at HealthLeaders-InterStudy.

Both insurers and “employers are sending a message that they are no longer willing to pay for hospitals that charge higher rates for routine services to cover costs of their teaching and research missions,” Kerr adds.

 For example, employers (in this case the city of Los Angeles)   as well as exchange insurers are rejecting LA’s pricey Cedars-Sinai Medical Center. Cedars-Sinai boasts a reputation as “hospital to the stars.”

Among the nation’s 50 top-grossing non-profit hospitals, it ranks third.  But this does not necessarily mean that it provides superior care. In 2012 when the Joint Commission released its list of the Top Performers on Key Quality Measures, Cedars-Sinai did not make the cut.

By contrast, Kaiser Permanente’s hospitals stand out on the Joint Commission’s list. Little wonder that the exchanges are embracing Kaiser. Not only does Consumer Reports gives Kaiser stellar marks for quality, the premiums Kaiser will be charging California’s 40-year-olds for a Silver Plan are among the lowest in the state.

#2) Obamacare is too good 

While some contend that Obamacare offers sub-par health care to the middle-class, when folks like Rush Limbaugh call Obamacare “Medicaid for the Middle Class” they are arguing that it is too generous.  Under the Affordable Care Act, they say, affluent early retirees will be able to sign up for Medicaid.

For the full story, see the post I published on HealthInsurance.org earlier today (Just scroll down to #2.)

10 thoughts on “Is Obamacare “Medicaid for the Middle Class?” –A Muddled Argument

  1. Conservatives are opposed to any program which makes more
    persons dependent on the government. This is seen to favor Democrats in the long run………e.g. the dominance of Democrats and liberal Repubs in the 30 years after FDR passed Social Security in 1936.

    That gives you the spectacle of wealthy columnists railing on about the imperfections in Medicaid. If they were poor for five minutes, they would appreciate the broad coverage and zero deductibles in Medicaid.

    On the specific issue of narrow networks:

    I did read an insightful post somewhere which said that only narrow-network PPO plans could come in with prices low enough to be competitive on the Exchanges.

    I find it unfortunate that HMO’s are apparently too expensive for the Exchanges. I have been puzzled for over ten years as to why HMO’s are not less expensive than PPO plans. But I have not had time to research this.

    • Bob–

      I don’t know who said that only PPOs would be in the Exchanges but they were Wrong.

      There will be many HMOS in the Exchanges– including Kaiser’s, Harvard Pilgrim’s, etc. etc. etc.

      HMOs are generally less expensive than PPO’s.

      Here is Consumer Reports description of PPOs and HMOs

      Preferred Provider Organization

      You’ll pay more out of pocket for a PPO compared with an HMO, especially if you see out-of-network doctors. But PPOs tend to have larger networks and they make it easier to get out-of-network care.

      Here are the major features of PPOs:

      •For in-network, or “preferred,” doctors, you typically pay a $15 to $30 co-payment.
      •You have to pay an annual deductible, generally between $250 and $1,500, before insurance kicks in.
      •You can see specialists, including those outside the network, without a referral from a primary-care doctor.
      •You can get care outside the network but will pay more, generally 20 to 50 percent of the bill. Moreover, you will likely also have to pay the difference between what the doctor charges and the PPO deems “reasonable and customary.” For example, say a doctor’s bill is $100 and the PPO pays 80 percent but says the reasonable charge for the service is $75. In that case, the insurer will pay $60 (80 percent of $75) and you will pay $15 (20 percent of $75) plus the $25 difference between the doctor’s bill and the reasonable charge, for a total of $40.

      :Health Maintenance OrganizationsWith an HMO you will have more limited options for out-of-network care than with a PPO. But you will generally pay less out-of-pocket, have less paper work, and have more coordination of your care that’s overseen by your primary-care doctor. HMOs also emphasize measuring and improving quality of care.Here are the major features of HMOs:

      •Co-payments are generally $10 to $20.
      •Deductibles are generally lower than in a PPO, between $100 and $500.
      •You usually won’t have to pay co-insurance.
      •You need a referral from your primary-care doctor to see a specialist. But these are more readily available now than in the past.

      Above from http://www.consumerreports.org/cro/2012/09/understanding-health-insurance/index.htm

  2. Hi Maggie-

    No comment on this particular piece but wanted you to know I’ll be back to posting on your blog

    As always my very best to you,

    Rick Lippin
    Southampton,Pa

    • Rick–

      Great to hear from you–
      Welcome back, and I look foward to your comments!

  3. It will be medicaid for all as Harry Reid states ObamaCare is a stepping stone to a single payer system. Our government struggles to run even the most basic of organizations (post office anyone?) It should be very interesting to watch how badly they bungle this one. Practice good health because you’re going to need it.

    • Doc–

      For decades, I have used the U.S. Postal system. Never has a package been lost–or delivered to the wrong address. Occasionally, it takes longer than it should for a letter to arrive. Perhaps it went astray. But somewhere within the system, the error is discovered, and it is delivered. I have never had to call the post office and ask them to “track” a letter or a package.

      I wish I could say the same for UPS. (I have nothing against UPS. It is just not as efficient as Fed Ex. Then again it is less expensive.)

      Meanwhile, when it comes to reliable service, in my long experience, the U.S. postal service tops both.

      According to the conventional wisdom, the post-office is a bureaucracy staffed by incompetent people.

      Here are the facts: As 2012 International STudy, showed that the USPS is “the most efficient in the world” when compared the other “Group of 20” Global Economies. It also boasts some of the loest prices in the world. Japan ranked second. The. “reserachers chalk up the USPS success to management and technology” (this was reported by CNN and numerous other sources in the mainstream media.

      If it’s so efficient, one might ask, why is it losing money? Email has been eating its lunch.

      Of course, these are just the facts. People who rely on the Convetional wisdom to suppoprt their prejudices usually are not interested in the facts.
      But that is what the research shows.

      Speaking of facts, just where did Harry Reid state that “ObamaCare is a stepping stone to a single payer system”? Where those his exact words, or your interpretation?

  4. Run 75411–

    Thanks for the link.

    It’s a little hard to tell whether Reid actually said anything like “Obamacare is just a step away from eventual single-payerr.”
    I haven’t seen any other reports suggesting that he said that– and this is from the Las Vegas Sun . . .
    It’s likely that over the long haul (and I mean years) we will move away from empolyer-based insurance. But
    most insured Americans now have employer -sponsored insurance and they like it –with good reason. Large Employers pay 80% of the cost of individual plans and 70% of the cost of family plans–even if you are upper-middle-class or upper-class. Your income doesn’t matter (as it does with subsidies in the Exchanges). You still get the 70% to 80%.
    The upper 10% (upper middle class and upper class earning somehwere north of roughly $80,000 annually ) have huge political clout. They are not eager to give up this rich tax-free benefit. And the insurance that most large companies provide is comprehensive– very much like Obamacare. They don’t discriminate against women, older people don’t have to pay higher premiums, there is no discrimination against
    people with pre-existing conditions; out of pocket expenses are usually capped. All in all, it’s a good deal.
    If we were to move to single-payer, tax payers woudl have to come up with the money to cover the 70% to 80% of premiums that private sector employers now pay. We’;re talking about huge tax increases.

    Sure, if employer didn’t provide benefits, they might pay higher corporate taxes or hike wages to help cover the costs– but Congress is never going to pass legsilation that woudl require that they cough up anything close to what they now spend on health benefits.
    Corporations get somethign in return for that spending on health benefits– employee loyalty (also known as golden handcuffs). If you provide good benefits, it’s must less likely that your best employees will go to another company.
    Note that in countries that have single-payer, the taxes that ordinary citizens pay are considerably higher.
    The reason we don’t have a public option is because Sen. Joe Lieberman killed it.
    But in the future, I think it it will come back.
    Note that most large private sector insurers are not selling insurnace in teh Exchanges. As I predicted, they don’t like the regulations that will cut into their profits.
    So we are winding up with mainly non-proift insurers like Kaiser selling in the Exchanges. (not long ago, I wrote a post about this.) Many of them will be very good.
    My prediction is that eventually we’ll wind up with a system of non-profit insurers competing with a public option– a hybrid system just like Westen Europe.

    Western Europe does not have sngle-payer. Only the UK and Canada have singel payer. The rest of Western Europe use non-profit insurance companies plus some
    government options.

  5. Another excellent post, Maggie. I do agree that most people look for affordability rather than whether they are able to access a wide network of hospitals. And HMOs certainly benefit both patient and healthcare provider- one gets healthcare, the other gets a steady stream of patients.

    • Matthew–

      Thanks very much.

      People who now have good insurance (in most cases through their employer) may be very attached to their doctor, and have strong feelings about hospitals.

      But if you’re uninsured there is probably no one that you think of as “my doctor.” You would just be very happy to have affordable access to our health care system.

      Also, polls show that young people are much less concerned about who is in the network than older people who have been seeing the same doctor for many years.

      I agree that HMOs benefit both the provider and the patient. And there are some excellent ones out there.