Fact, PolitiFact, and the Real World

Jim Renacci (R-OH) got caught.  Last Thursday’s Plain Dealer called out the congressman in the PolitiFact column

Obamacare includes “a $63 charge every American will begin paying (in 2013) as a way to cover some of the increased costs associated with providing health insurance to those with pre-existing conditions.”

And this was deemed Mostly False

So what did Congressman Renacci get wrong and why is this important?

  • The $63 fee is part of a Health and Human Services (HHS) rule.  And though this fee is as good as done, it is not done so this isn’t good.
  • The $63 fee is slated for 2014 not 2013.
  • The $63 fee is a charge each employer would pay per person covered under a group health insurance policy.  The money would help defray the cost of insuring all of the unhealthy Americans who will soon be flooding our health care system.
  • The $63 fee is supposed to decrease over three years and then disappear. 

The last point is the most amusing.  How many governmental fees, otherwise known as taxes, have you seen disappear? 

So, PolitiFact is technically correct.  Mr. Renacci oversold his point.  What he could have said is the HHS is about to impose another charge to employers to help cover the cost of the Patient Protection and Affordable Care Act (PPACA).  He might have noted that HHS is making up the rules as it goes, is actively looking for funding sources, and has yet to facilitate an honest, open discussion about priorities. 

Renacci was wrong and PolitiFact was irrelevant. 

* * *

The health care debate is replete with faux experts and near truths.  Here is what I know: Premiums are increasing, now and in the foreseeable future. 

My small group clients are getting hit hard.  The March small group renewals from Anthem are well over 20%.  My Medical Mutual groups are seeing rate increases in the high teens.  The clients aren’t interested in theories or promises.  They are only concerned with the size of their monthly bills. 

What is contributing to the rate jump?  Some of this is the ramp-up to 2014, but the insurers will tell you that the rates reflect the reality of higher health care costs and increased benefits.

Carrie Haughawout, assistant director for health policy of the Ohio Department of Insurance, recently told the Dayton Daily News, “Ultimately health insurance rates are just reflecting the cost of health care and the cost of health care has been going up for years, so the cost of health insurance has correspondingly been going up.” 

In that same article, Aetna spokesman, Scot Roskelley, blamed premium increases on “the increasing prices of hospital care, prescription drugs, doctor’s visits, and other health care services.  Other underlying cost pressures – from the underpayment for government insurance to the rising rates of obesity – also drive up premiums.”  

The only cost drivers Mr. Roskelley skips are all of the new free benefits that have been added to individual and small group health policies.  Some people seem to believe that $3,500 colonoscopies are just gifts from the insurance fairies. 

ThinkProgress found a law professor from Washington and Lee, Timothy Jost, who opined that “The cost of new benefits should not be a big deal.  Most of the costs of health insurance are for inpatient, outpatient, physician, lab, radiology, and pharmaceuticals, which virtually all insurers now cover.” 

At Washington and Lee, cheerleading is nine tenths of the law! 

* * * 

Dave Jones, California’s insurance commissioner, is really unhappy.  He is allowed to jump up and down and stamp his feet, but he cannot block insurers from raising their rates.  He’d like to change that.  He would like California to give him more authority. 

The regulatory gold standard may be New York.  A recent New York Times article noted that insurers may have requested an average increase of 9.5% on individual policies, but the actual state approved increase was only 4.5%.  Small group rates had an even bigger spread.  The insurers proposed an average increase of 15.8% but saw that number knocked down to 9.6%. 

We are left with two options.  Is insurance priced the same way as trinkets at some third world tourist trap?  Do the insurance companies price their products high enough so that the regulators can score well-publicized victories while the companies still receive sufficient funds to perform their primary function – insure the public?  Or, did reducing the insurers’ renewal rate increases by 40% possibly jeopardize the companies’ future ability to pay claims?  Are the regulators making insurance no more secure than a government program?

So which is more important to you, Renacci and others on the right overselling the new fees or the future stability of how we fund the payment of medical services?  It all affects us, those of us living in the real world.



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3 Responses to Fact, PolitiFact, and the Real World

  1. dave@cunixinsurance.com says:

    This comment was posted on the original Blogspot site:

    Holly Green
    January 13, 2013 7:43 AM
    I would be interested in knowing what your groups, David, in OHIO see in increases a year in their policies normally: as before the threat of the PPACA goes fully into effect. Also, let us consider that there may not be a big influx of patients as you suggest once this all goes into effect. People of all ages,races, pre-existing conditions, or not, and job status with or without health insurance are getting care. What I think this will hopefully bring forth is a current flow of SICK patients from the ER to NOT SICK or PREVENTIVE even visits to the Dr’s offices. Many doctors are gearing up for this by employing more Nurse Practitioners in their practices. But this all is hitting also at a scary time of increased retirees, those baby boomers, who almost all have pre-existing conditions, as well as an aging population that is only getting older and older and sicker and sicker because we keep them alive longer and longer and longer, which only stacks their co-morbidities, or pre-existing conditions if you may, higher and higher. What some people may not realize is we have been paying for all these patients ALL ALONG. Now that it is being charged in a more upfront way, people are revolting. Unfortunately, it is being done in what people are seeing as an unfair way, a way that is directly hitting their pocket instead of the invisible way that it has been hitting their pockets in the past. David can probably help us with exactly how that is. Holly
    P.S. Sorry, I may have gotten a little carried away.

  2. dave@cunixinsurance.com says:

    Ms. Green:

    You are correct – The people are revolting!

    To your other point, yes, we have been paying all along and it might start to get a little more transparent. But I think that we have underestimated the future cost of this program. And since there is NO COST CONTAINMENT, this will get a lot worse before there is any chance of it getting better.

  3. dave@cunixinsurance.com says:

    From our friend Susie Sharp:

    The CAPTCHA is’t coming up in Chrome for some reason, but here’s my comment, and it’s OK to use my name: (I don’t know how to make the link a liink, but I tried to use html to bold and italicize. Please fix if I messed up.

    I have seen my small firm’s insurance premiums rise annually from 18-23% since 2006, so I don’t understand why everyone is so up in arms now. We’ve always paid for the uninsured in some form or another; we’re just giving that group the option to move from the ER to a regular doctor, and the chance at participating in preventative medicine. Parts of the PPACA have being implemented since 2010 – Kaiser has the easiest to understand timeline of what’s been implemented and what’s to be implemented. You can find it here at: http://healthreform.kff.org/timeline.aspx Just click on the little “+” sign on the right of each year to expand.

    Change is not comfortable for most people, and the hyperbole in which each side is engaging isn’t helping matters any. Thank you, Dave, for being the voice of reason.

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