Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

Health reform’s critics are sounding the alarm: in 2014, they say, health insurance premiums will climb, both for small businesses and for individuals who purchase their own coverage. “Hold onto your hat,” writes  Bob Laszewski, editor of Health Care Policy and Market Place Review. “There Will Be Sticker Shock!” 

Laszweski’s piece has been cross-posted on popular blogs, and his forecasts have been popping up in mainstream newspapers, including  USA Today Such wide circulation makes Laszewski’s warnings worthy of attention, and compels me to ask an important, if impertinent, question: Is what he says true?

Cherry-picking a CBO report

The Congressional Budget Office expects  that the ACA will have a “negligible” effect on the premiums that large employers pay for insurance, and most experts agree. But in the individual market, Laszewski claims that CBO projections show “10% to 13% premium increases.”

Here is what the CBO actually said:

About 57 percent of people buying [their own] insurance would receive subsidies  via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium.

“Thus, the amount that subsidized enrollees would pay would be roughly 56 percent to 59 percent lower, on average, than the premiums charged under current law.”

Wait a minute: “56 to 59 percent lower?” Where does Laszweski get “10 percent to 13 percent higher?

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Obama Wins Round One of Budget Negotiations

CNN is reporting that the “Fiscal cliff deal is down to wrangling over the details.” While others in the media continue to say that talks are stalled, everything I know about both the economics and the politics of the situation tells me that CNN is right.

At 4:30 this afternoon, CNN updated its story: “Both sides agree the wealthy will pay more, so now fiscal cliff  talks come down to how much Republicans can wring out of the White House in return for giving in on taxes.

“To President Barack Obama, it’s all about first locking in additional revenue from raising taxes on high-income owners, an outcome the GOP has long rejected.”

President Obama had made it clear that negotiations over government spending on safety nets such as Medicare wouldn’t begin until Republicans accepted a higher marginal tax rate for individuals earning over $200,000 and couples earning over $250,000.

The president dug in, and, according to CNN, he has won round one.

“Retiring Republican Rep. Steve LaTourette of Ohio told CNN on Thursday that he sensed a shift in the House GOP approach during a conference meeting the day before.

“A GOP source told CNN that talks between staff members on both sides resumed Thursday for the first time this week, after Obama and Boehner spoke by phone the day before.”

A Two-Step Approach

It is not clear whether negotiations over so-called “entitlements” will be concluded before the end of the year. But CNN, reports

“All signs point toward a two-step approach sought by newly re-elected Obama — an initial agreement that would extend lower tax rates for income up to $250,000 for families, while letting rates return to higher levels from the Clinton era on income above that threshold.”  That agreement on taxes will be signed and sealed before the end of the year.

“Even conservatives such as Oklahoma Sen. Tom Coburn and Louisiana Gov. Bobby Jindal acknowledge the obvious — taxes on the wealthy are going up despite opposition by Republicans.

“‘Whatever deal is reached is going to contain elements that are detrimental to our economy,’ Jindal wrote Thursday in an opinion piece published by Politico. ‘Elections have consequences, and the country is going to feel those consequences soon.’”

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Can U.S. Businesses Afford Obamacare?

No doubt you have heard that the Olive Garden, Denny’s and Papa John’s Pizza all are slapping an “Obamacare surcharge” on the price of their products.  They claim they have no choice.

But the news that Americans might pay 50 cents more for a mediocre $10 meal at the Olive Garden is not what bothers me most. Since President Obama was re-elected each of these restaurant chains have announced that they also plan to cut many full-time workers’ hours back to less than 30 hours a week in order to duck the cost of providing health care benefits.. This means that employees who are now working 40 hours a week will have to look for a second job—or find a way to support themselves on less than three-quarters of their current salary.

Michael Tanner, a fellow at the conservative Cato Institute, argues that companies outside the restaurant business also will be forced to down-size. Just a few days ago, Tanner wrote: “While restaurants are especially vulnerable to the cost of Obamcare other business are being hit too. For example, Boston Scientific has announced that it will now lay off up to 1,400 workers and shift some jobs to China. And Dana Holdings, an auto-parts manufacturer with more than 25,000 employees, says it too is exploring ObamaCare-related layoffs.”

Obamacare will  “keep unemployment high,” Tanner claims, because under reform legislation, businesses that have at least 50 employees working over 30 hours a week are expected to offer their workers affordable health insurance. If they choose not to, and more than 30 of their employees qualify for government subsidies to help them purchase their own coverage, the employer must pay a penalty of $3,000 for each worker who receives a subsidy— up to a maximum of $2,000 times the number of the company’s full-time employee minus 30. (The Kaiser Family Foundation offers an excellent graphic explaining the rule.) 

By paying the fine, the employer is, in effect, paying a share of a tax credit that would cost the government anywhere from roughly $1,700 for a single young worker  to over $12,000 to help the average 35-year-old worker who has a spouse, two children, and reports $35,000 in total household income.

Conservatives like Tanner argue that that is unfair, and that small businesses– “the engine of job growth”– will be hit hardest.  

What they  don’t do is look at the math:

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Truth Squad: Is “Obamacare” Pushing Health Care Spending Higher? What Will Happen in 2014?

In last Tuesday’s debate Mitt Romney suggested that, under Obamacare, health insurance premiums have spiraled by $2,500 per family. Not true.  (Hat tip to Healthcarefinancenews.com.)

 First let’s get the number right: According to an annual survey of employer plans  by the Kaiser Family Foundation and Health Research & Educational Trust, since the Affordable Care Act (ACA) passed in 2010, the average annual premium for family coverage has risen by $1,975 not $2500.  $1975 is a hefty sum, but 20% less than Romney claimed.

More importantly, $1,975 represents the combined increase in contributions made by employers and employeeswith employers picking  up the lion’s share of the hike. “In reality, premiums paid by employees haven’t changed that much.Factcheck observes. In fact, when you look at the rise in how much employees contributed, “the federal health care law was responsible for a 1 percent to 3 percent increase because of more generous coverage requirements.” In other words, employees were paying a little more, but getting value for their dollars.

After telling a whopper about how much employee’s health care premiums have risen in the past, Romney went on to assert that if Obamacare is  “implemented fully, it’ll be another $2,500 on top” of that. His evidence?  None.

                                              The Media Spreads the Myths

Yet the media continues to swallow the notion that under “Obamacare” health care spending will levitate. A few days ago, the Washington Post’s Robert J. Samuelson wrote: “Almost every expert agrees that controlling health costs is the crux of curing chronic budget deficits. Health-care spending already exceeds a quarter of federal outlays. With Obamacare’s coverage of the uninsured starting in 2014 and retiring baby boomers flooding into Medicare, the share is headed toward a third.”

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Breakfast with Atul Gawande

Sunday, Boston Surgeon Dr. Atul Gawande spoke at the New Yorker Festival about the importance of a hospital being able to “Rescue Success from Profound Failure.”   (Long-time Health Beat readers will recognize Gawande as the author of Complications: A Surgeon’s Notes On An Imperfect ScienceThe Checklist Manifesto  and a number of brilliant New Yorker articles that I have written about in the past, including: “Letting Go: What Should Medicine Do When it Can’t Save Your Life?”,  “It Will Take Ambition It Will Take Humility,” and  “The Fight for the Soul of American Medicine”  (Hat-tip to the New Yorker for publishing so many stellar articles illuminating an extraordinarily complicated subject: healthcare and healthcare reform.)

Before Gawande’s talk began, IBM, the event’s sponsor, hosted a small breakfast where Gawande spoke informally to a group of doctors, health plan executives, hospital administrators and people from IBM who are in the vanguard of healthcare reform. The New Yorker was kind enough to invite me to attend the breakfast and blog about the conversation.

                              Less Expensive Medical Care Can Mean Better Care   

At Sunday’s breakfast Gawande began by observing that “in just the past four or five years we have seen a huge shift in the national conservation about health care.” Since 2007 or 2008 many have come to realize that when it comes to medical care in the U.S., “there is no direct relationship between the amount of money spent and positive results.”  In other words, although we spend twice as much as many other developed countries on health care, medical care in the U.S. is not twice as good. In some ways it is worse.

Yet this epiphany is not as discouraging at it sounds. As Gawande pointed out, “Recognizing that expensive care does not necessarily equal top-quality care has enabled a decoupling of the two issues in the public mind, and opened up the possibility for real beneficial change in the system. The Affordable Care Act’s goal” of securing high quality care for everyone is, in fact, affordable. “We don’t have to ration care.”
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The Democratic National Convention, 1980 and 2012: Turning Points in American History

I originally published this post on HealthInsurance.org (www.healthinsurance.org) Check there for other posts on the election–just click on “Blog” at the top of the page.

Ted Kennedy’s speech at the 1980 Democratic convention still echoes in my mind. It remains the finest, most inspiring political oration that I have ever heard. Kennedy was speaking from a position of defeat. He had just lost the Democratic nomination to Jimmy Carter.

And yet this was a full-hearted, rousing speech delivered by a man who realized that in the battle ahead, the issues at stake were far, far more important than his own loss. Intuitively, he knew that the country had reached a turning point. (You can listen to the speech at The  History Place.

At that moment, Conservatives were ready to launch a revolution, and they would succeed. In November, Ronald Reagan won the White House, and his administration would set the tone for much of the next 30 years. Tax cuts for the rich, deregulation, a campaign to privatize both Social Security and Medicare. Health care reform would be off the table for many years.

Kennedy saw the danger ahead and addressed it: “My fellow Democrats and my fellow Americans, I have come here tonight, not to argue as a candidate but to affirm a cause. I’m asking you–to renew the commitment of the Democratic Party to economic justice.

“I am asking you to renew our commitment to a fair and lasting prosperity that can put America back to work.” Then, as now, unemployment was a pressing issue. In April of 1980, the unemployment rate jumped to 6.9%; in May it hit 7.5%.  “Let us pledge that employment will be the first priority of our economic policy,” Kennedy declared. “We will not compromise on the issue of jobs.”

Universal Coverage “The Passion of My Life”

Kennedy understood that “we cannot have a fair prosperity in isolation from a fair society. So,” he declared, “I will continue to stand for a national health insurance.”

“We must not surrender to the relentless medical inflation that can bankrupt almost anyone and that may soon break the budgets of government at every level. Let us insist on real control over what doctors and hospitals can charge, and let us resolve that the state of a family’s health shall never depend on the size of a family’s wealth.”

Kennedy had witnessed what economic inequality can mean when a child is sick.  Many years later he recalled “One of the searing memories in my life was being in a children’s hospital in Boston, where my son had lost his leg to cancer. He was under a regime that was going to take three days of treatment, every three weeks, for two years …
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As the Republicans Take Tampa, Consider What a GOP Victory Would Mean for Women’s Health

For decades, Republicans have opposed abortion. This, we know, and so it comes as no surprise that Mitt Romney, the Party’s presidential candidate, has called “Roe vs. Wade“ one of the darkest moments in Supreme Court history.” 

But what some call the “war against women” is escalating.  This year, the Republican platform calls for a constitutional amendment that would make abortion illegal.

In 1976, the GOP blueprint acknowledged that “the question of abortion is one of the most difficult and controversial of our time,” and the Party called for “a continuance of the public dialogue on abortion,” which it called a “moral and personal issue.”  Just eight years ago, the preamble to the Republican platform declared: “we respect and accept that members of our party have deeply held and sometimes differing views.”  But today, there is no such language in a platform that calls for “a human life amendment to the Constitution,” and declares that “abortion is detrimental to women’s health and well-being.”

Meanwhile Alabama, Arizona, Idaho, Indiana, Kansas, Louisiana, Nebraska, North Carolina, Oklahoma, and Ohio all have passed legislation outlawing abortion after 20 weeks, even though, as the Center for American Progress’  Emillie Openchowski points out “complications are sometimes discovered after this point in a pregnancy that could cause serious harm to the woman. In those states, a woman would be forced to continue the pregnancy, no matter the risk to her health.”  This is frightening.

While Republicans parade women across their Tampa stage– and avoid talking about what they have quietly embedded in the Party platform–it seems a good time to consider what a Republican victory would mean for women’s health.

Turning Back the Clock: Contraception 

Susan Faludi’s Pulitzer-prize winning 1991 book, Backlash, is subtitled: “The Undeclared War Against American Women.” Twenty-one years later, it seems the war is out in the open . As a recent New York Times editorial observes:  “Having won on abortion, social conservatives are turning to birth control.”

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Medicare, Medicaid, Global Warming and Gun Control– Can Liberals and Conservatives Find Middle Ground? Should They? Part 1

 In a nation divided, “compromise” has become an extraordinarily appealing idea. Weary of the acrimony and endless wrangling, more and more Americans are asking: Why can’t conservative and liberal politicians come together and forge bipartisan solutions to the problems this nation faces?

Keep in mind that it is not only our elected representatives who are having trouble finding common ground. The Pew Research Center’s latest survey of “American Values” reveals that as voters head to the polls this November, their basic beliefs are more polarized than at any point in the past 25 years. In particular, when it comes to the question of government regulation and involvement in our lives, the average Republican has gravitated to the right. In 1987, 62% of Republicans agreed that “the government should take care of people who can’t take care of themselves.” Now just 40% support this proposition. Democrats haven’t changed their views on this issue: most continue to believe “there, but for fortune . . .”

In Congress, where polarization has led to paralysis, some argue that Republican leaders are responsible for creating gridlock by insisting on “party discipline.” But liberals in Washington also are accused of “dividing the nation.” Even President Obama, who set out to unite the country, has been described as “the most polarizing president ever.” During his third year in office, Gallup reports, “an average of 80 percent of Democrats approved of the job he was doing, as compared to 12 percent of Republicans who felt the same way. That’s a 68-point partisan gap, the highest for any president’s third year”–though this may say more about the temper of the times than the man himself. Nevertheless, many commentators believe that progressives, like conservatives, need to cede ground. The debate has become too contentious, too “political,” they say. I disagree. There are times when we cannot “split the difference.” Too much is at stake. We must weigh what would be won against what would be lost.

But reporters who have been taught that they must be “fair” and “balanced” often write as if all points of view are equally true. After all, they don’t want to be accused of “bias.” Thus they fall into the trap of what veteran Supreme Court reporter Linda Greenhouse calls “he said, she said” journalism. To them, the “middle ground” seems a safe place– a fair place– to position a story.

This may help explain why so many bloggers and newspaper reporters are calling for “bi-partisan consensus” as they comment on some of the most important issues of the day.

Global Warming

Writing about global warming, Huffington Post senior writer Tom Zeller Jr. recently declared: “Compromise is the necessary first step to tackling the problem. What ordinary Americans really want is for honest brokers on all sides to detoxify and depoliticize the global warming conversation, and then get on with the business of addressing it. That business will necessarily recognize that we all bring different values and interests to the table; that we perceive risks and rewards, costs and benefits differently; and it will identify solutions through thoughtful discussion and that crazy thing called compromise.” [ my emphasis] (Hat tip to David Roberts (Twitter’s “Dr. Grist”) for calling my attention to this post.)

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How to Avoid Avoidable Care–by George Lundberg

Below, a  guest-post by Dr. George Lundberg, Editor-at-Large of MedPageToday; Editor in Chief of Collabrx; President and Board Chair of the Lundberg Institute.  (Full disclosure: I am a member of the Lundberg Institute’s Board)

What Lundberg says is not meant to be news.  Today, physicians tend to agree that many of the tests that patients undergo are unnecessary. Three years ago, one hospitalist shared a story on HealthBeat, describing how he warned his residents about over-testing His hospital may not have been happy about his disclosure: tests boost revenues.

But in some cases, we have solid medical evidence showing that for certain patients, these tests do more harm than good– though vested interests may try to bury that evidence. (See Dr. Hoffman’s post below.)

Yet doctors continue to order the tests– why?  

George Lundberg brings a unique perspective to this problem. Drawing on his wealth of experience, both as a practitioner and as a teacher, he puts it in a historical context.  For 40 years, he has asked physicians why they perform so many tests. The frankness of their responses is matched only by Lundberg’s own candor as he diagnoses the excesses in our medical system . 

How to Avoid Avoidable Care 

George Lundberg

Why do physicians order laboratory tests?  The traditional reasons are: diagnosis 37%, monitoring 33%, screening 32%, previous abnormal result 12%, prognosis 7%, education 2%, and medicolegal 1%.

In  order to confirm these data, I began to ask the same question of many groups of clinical and laboratory workers over three continents in the 1970s, ‘80s and ‘90s during  Socratic teaching sessions on how to use the clinical laboratory correctly. And I began to get very different answers.  

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“Essential Benefits” that Insurers Must Offer Under Health Care Reform

Will Universal Coverage Mean “Medicaid for All”?

Often, I refer to the health care reform bill that President Obama signed into law in March of 2010 as “the Affordable Care Act” or ACA.  Friday,  as I read the Institute of Medicine’s (IOM’s) report on the “Essential Health Benefits” (EHB) that private insurers will be required to cover under reform, I resolved never to make that mistake again.

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