The Shell Game 2.0

It is important to remember that everything works in theory. Communism, in its purest form, is just as effective as Capitalism, in theory. Reality is a much different story. The Russians and Chinese are now embracing many of the benefits of Capitalism just as the U.S. faced-down the Robber Barons and put an end to such practices as child labor a hundred years ago.

Reality has a habit of rudely poking holes in theories. My favorite piece of Swiss cheese is the Patient Protection and Affordable Care Act (PPACA). Today we are going to revisit the Preexisting Condition Insurance Plan, the stop-gap measure to provide access to coverage to the long-time uninsured.

Eighteen months and millions of dollars later, it might be difficult to recall that the main justification for completely remaking our health care system was to provide coverage for the uninsured. Remember the uninsured? They were of real concern two years ago. The PPACA was supposed to cure this problem.

Last June, in a post entitled The Shell Game, I discussed the five billion dollars the federal government had allocated to the Preexisting Condition Insurance Plan. Of more local relevance, $152,000,000 was given to Ohio for the four year interim program. Even though Ohio had about 17,000 chronically uninsured, state officials were thrilled that $152,000,000 would help 5,000 people get insurance. I felt that they were a touch optimistic.

Theory, meet Reality.

How’s the program working? Initial projections from the Office of the Actuary of the Centers for Medicare and Medicaid had as many as 375,000 uninsured Americans rushing the states and jumping at the opportunity to acquire heavily discounted coverage. As of April that crush was only 21,454. Ohio, with almost 1800 enrollees, is one of the most successful programs. Don’t worry. We may not insure that many people, certainly no where near the governments rosy projections, but all of the money will be spent.

Sunday’s Cleveland Plain Dealer detailed the difficulties Ohio and Medical Mutual of Ohio, the state’s contractor, are having raising prices and limiting access. The biggest problem was that no one was prepared for the shocking reality that really sick people rack up big claims.

Now we’re paying actual claims and those claims have come in much higher – the loss ratio is much higher – then had been projected, said Carrie Haughawout, assistant director for health policy for the Ohio Department of Insurance.

The claims for 1800 people were more than what they thought 5,000 unhealthy people would incur? That is hard to imagine. The simple math in last year’s blog post showed that premiums for a 60 year old male would need to be around $800, with the subsidy, to have a chance of covering the cost of care. The Ohio High Risk Pool is charging between $416 and $458 for a 60 year old non-smoker! That isn’t even close.

The PPACA does not include any meaningful cost containment. There is also no underwriting and no exclusions for preexisting conditions in the PPACA’s planned future which begins in 2014. So, as theory invades reality, one day all of these incredibly unhealthy individuals will be moved into the common risk pool. How will this impact the premiums you or your employer pays for health insurance?

The theory is that the unhealthy will disappear in the sea of doctor avoiding, health obsessed, average Americans who will hardly notice the difference of adding a couple hundred thousand chronically ill individuals into the mix. And besides, now they will be paying premium instead of just invading the E/R and counting on the kindness of strangers to pay their bills. Yeah, right.

The High Risk Pools, the Preexisting Condition Insurance Plan, was a dry run for the future of the PPACA. No real planning. Not nearly enough honest, transparent public discussion. An idea that meant well, but was underfunded and was neither properly explained nor promoted. The Preexisting Condition Insurance Plans were projected to do so much at what may have almost seemed like a reasonable amount of money. Instead, we have another program that has fallen tragically short.

Reality, meet Theory.

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12 Responses to The Shell Game 2.0

  1. Holly says:

    and folks are back in the ER for anything and everything for which we are again paying for…

  2. Senor Citizen says:


    I’ve been reading your health insurance blog from day one and I am sick. O’Bummer Care is just that. Can you recommend a doctor and does medicare cover this illness?

    Senor Citizen (Push 2 for Spanish)

  3. Abram says:

    Great article, cool webpage design and style, carry on the good work

  4. Bloomix says:

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  5. i love eminem says:

    ” This information is really good and I will say will always be helpful if we try it risk free? So if you can back it up ? That will really help us all. And this might bring some good repute to you. The diet of human beings prior to the arrival of agriculture, technology and civilization is known as the Paleolithic Diet !! This Stone Age diet, in short, consisted of mainly lean red meat and vegetables. In this type of diet animal meat is consumed in large quantities and 45 to 65% of the energy needed by the body is derived from it. Over and over again, life expectancy studies related to diet, including by the World Health Organization (WHO), have concluded that Americans and Europeans would do better to eat more like third world peoples as the options provided by their additional wealth have most often lead to poor nutritional choices. This is the same basis for the USDA based their popular food pyramid in 1994 !! Researchers at Harvard have only suggested perhaps tweaking the food pyramid by replacing some dairy products and read meat with more fruits, vegetables, and fish while also emphasizing the importance of improving the ratio of good to bad cholesterol, Plus, exercise not only makes weight loss much easier, but also lowers blood glucose levels, decreases blood pressure, improved circulation, and increases one’s metabolism. Good regular sleep patterns are also just as important. Diets based on USDA recommendations include DASH, American Diabetic Assoc, Weight Watchers, and Jenny Craig When children understand how important real food is and where the natural ingredients of our food come from, they will increase the general population’s appreciation for preserving our natural environment and limiting toxins and polluting processes in our world. We may even trend back to the time when people stepped outside their homes to interact with family and neighbors in home and community gardens and block-party barbeques? Does anybody even remember how nice those days were?”

  6. […] Act (PPACA). How you ask? Will the President be administering the Chemo? No, but close. As we have discussed before, the PPACA included the creation of guaranteed issue policies that cover pre-existing conditions […]

  7. Anonymous says:

    I just read your article on The Shell Game 2.0 | and want to thank you for it.

  8. […] preexisting conditions.  The federal government also provided five billion dollars of which Ohio received $152,000,000 for the four year […]

  9. Some guy in Russia plagarizing my blogs says:

    […] preexisting conditions. The federal government also provided five billion dollars of which Ohio received $152,000,000 for the four year […]

  10. Some Russian guy plagarizing my blogs! says:

    […] preexisting conditions. The federal government also provided five billion dollars of which Ohio received $152,000,000 for the four year […]

  11. 0 For 2 | says:

    […] noted in June 2010, Medical Mutual of Ohio won the contract to administer this underfunded and poorly designed program.  Since then we have had the federal government try to change the rules and even attempt […]

  12. […] We have already seen what happens when you underfund high risk pools. Over 30 states tried one version or another prior to the Patient Protection and Affordable Care Act (Obamacare).  Even the PPACA had a high risk pool to help during the transition.  The $5 billion dollar fund quickly evaporated. […]

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