Health Care Spending Accelerating; High Costs & Red Ink Plague Insurance Providers

Editorial Cartoon by William Warren

Today in Washington, D.C. - July 31, 2015:
The House not in session and are in their Home Districts for all of August, They will return on Sept 8th, 2015 (no recorded votes until 6:30 PM). What a job!

The Senate reconvened at 10 AM today for a pro forma session and will next convene on Monday at 2 PM.

At 5:30 PM on Monday the Senate will vote on cloture on the motion to proceed to (i.e. whether to take up and debate) S. 1881, the bill to defund Planned Parenthood and redirect the money to women’s health programs.

Yesterday, the Senate voted 65-34 to pass H.R. 22, as amended, the 3 year paid-for highway bill. The Senate later voted 91-4 to pass H.R. 3236, the House-passed 3 month extension of the current highway authorization. The extension bill now goes to the president for his signature.

In the News:
Over 5 years after Democrats jammed their unpopular health care law through Congress, barely a week passes without yet another news story documenting the problems it has created in the American health care system. Nearly as common are stories revealing how the law has failed to live up the lofty but implausible promises Democrats made when they were writing and passing it.

In his speech to a joint session of Congress in September 2009, President Obama boasted that his health care plan “will slow the growth of health care costs for our families, our businesses, and our government.” Later that year, as the Senate debated the bill, Sen. Dick Durbin (D-IL), then the Assistant Majority Leader, said, “Bringing down costs of health insurance and making it more affordable is job one for this health care reform.” A few months after that, as he was selling the bill to House Democrats, President Obama claimed that “every single good idea to bend the cost curve and start actually reducing health care costs are in this bill.”

Sen. Michael Bennet (D-CO) told The Coloradoan newspaper in 2009, “Health-care reform that focuses on driving down health-care costs is essential to Colorado families and our long-term effort to put our fiscal house in order … health-care reform that is focused on reducing cost is not only the smart way to go; it's the only way to go.” In an interview, Sen. Claire McCaskill (D-MO) said, “My statement all along is it has to slow down the increase of health care costs over time, and that is bending the cost curve . . . .” Sens. Durbin, Bennet, and McCaskill all helped provide critical votes, without which, the bill could not have passed the Senate.

Now fast forward to this week. Politico reports, “Health care spending is rising at a faster clip than at any time since the Great Recession, with costs ticking up by 5.5 percent in 2014, CMS announced Tuesday. Over the next decade, health care costs are expected to rise by 5.8 percent annually, according to the agency’s latest projections. The growth in spending is being driven by the coverage expansion provisions of the Affordable Care Act, the continuing economic recovery and a population that’s steadily aging. . . .

“The projected health care cost increases over the next decade would exceed growth in the gross domestic product by 1.1 percent. As a result, the share of the economy devoted to health care will increase from 17.4 percent today to 19.6 percent in 2024.”

The Wall Street Journal adds, “Growth in national health spending, which had dropped to historic lows in recent years, has snapped back and is set to continue at a faster pace over the next decade, federal actuaries said Tuesday. The return to bigger growth is a result of expanded insurance coverage under the 2010 health law, a revived economy and crunchtime as Medicare’s baby-boom beneficiaries enter their 70s. . . .

“The consequences are also significant for Washington and state governments, which by 2024 will be responsible for paying around 47% of the nation’s health bills, up from 43% in 2013. In all, health care will comprise about a fifth of the U.S. economy by 2024, and the growth rate will exceed the expected average growth in gross domestic product by 1.1 percentage points. . . .

“The actuaries pointed to the rising numbers of people who have health coverage under the Affordable Care Act, projecting that around 8.4 million fewer Americans were uninsured in 2014 than in 2013 and noting their increased use of medical services.

“Medicaid, the federal-state program for low-income Americans, was expanded under the health law in most of the country. The report projected 78.1 million people will be enrolled by 2024, continuing to outstrip Medicare, the federal insurance program for people 65 and older, which will have 70.3 million enrollees. Those Medicare beneficiaries will become increasingly expensive, however, as they age and seek more care, from hospitals in particular.”

During the health care summit the White House held with Congress in February 2010, Vice President Joe Biden said, “Unless we bend that cost curve, we're in trouble.” This week’s reports suggest Obamacare still isn’t bending that cost curve down.

Meanwhile, Obamacare keeps causing trouble at the state level, where, once again, costs are growing. According to a Monday AP report, “State-run health insurance markets that offer coverage under President Barack Obama's health law are struggling with high costs and disappointing enrollment. These challenges could lead more of them to turn over operations to the federal government or join forces with other states.

“Hawaii's marketplace, the latest cautionary tale, was awarded $205 million in federal startup grants. It has spent about $139 million and enrolled 8,200 customers for individual coverage in 2015. Unable to sustain itself, the state marketplace is turning over sign-ups to the federal HealthCare.gov for 2016.

“Twelve states and the District of Columbia fully control their markets. Experts estimate about half face financial difficulties. Federal taxpayers invested nearly $5 billion in startup grants to the states, expecting that state markets would become self-sustaining. Most of the federal money has been spent, and states have to face the consequences.”

The AP runs down the list of the latest financial difficulties in several states:

“Hawaii is the third state exchange going to the federal sign-up system, following Nevada and Oregon, which made the switch last year. Among the problems confronting states:

“Minnesota's MNsure faces a murky financial future. Its budget is balanced as a result of repeated cuts when enrollment has come in below projections, a tactic that cannot work forever. Despite a slew of proposals, no concrete changes came out of the state's most recent legislative session. Democratic Gov. Mark Dayton has signaled that MNsure's fate is on the table, including the option of shifting operations to HealthCare.gov. . . .

“A federal audit concluded that Maryland used exchange establishment grants from Washington to pay for $28.4 million in costs that should have been allocated to the state's Medicaid program. State officials dispute that, but federal officials say Maryland should pay the money back. Separately, the original lead contractor for the state website has agreed to repay $45 million to avoid legal action over rollout problems last year.

“In Vermont, a debate has been raging about whether to abandon the state exchange. Democratic Gov. Peter Shumlin originally wanted a single state-run system for all residents, along the lines of Canada. Shumlin backed off because it would have meant prohibitively high taxes. He wants to fix the state exchange, still grappling with technology problems that plagued it from launch.”

Piling on, another AP report this week discusses the financial struggles of the nonprofit co-ops created by Obamacare. “Fed up with the insurance industry, Democrats used the health care overhaul to create nonprofit co-ops that would compete with the corporations. Now a government audit finds co-ops are awash in red ink.

“Only one out of 23 — the co-op in Maine — made money last year, said Thursday's report from the Health and Human Services inspector general's office. Thirteen lagged far behind their sign-up goals for 2014. The Massachusetts co-op spent more than six times as much on administrative expenses as it collected in premiums.

“The audit raised questions about whether co-ops will be able to repay $2.4 billion in taxpayer-financed loans that President Barack Obama's overhaul provided to help stand them up.

“‘The low enrollments and net losses might limit the ability of some co-ops to repay startup and solvency loans, and to remain viable and sustainable,’ said the report. . . .

“One of the 23 co-ops in the report has already gone out business. The Iowa/Nebraska co-op was shut down by state regulators over financial concerns. Another one, the Louisiana Health Cooperative, announced last week it will cease offering coverage next year, saying it's ‘not growing enough to maintain a healthy future.’

“Although the audit only goes through the end of 2014, problems apparently persisted into this year. A preliminary review of 2015 data by government officials shows that enrollments have increased, but co-ops continue to report financial losses. . . .

“As recently as the spring, the White House touted co-ops as an accomplishment. 'In states throughout the country, co-ops have competed effectively with established issuers and attracted significant enrollment,’ said a report by the president's Domestic Policy Council on the fifth anniversary of the health law.

“The IG's audit paints a very different picture,” the AP writes. “Among its findings:

“Maine was the only co-op in the black for 2014, with $5.9 million in net income. Losses ranged from a high of $50.4 million for Kentucky's co-op to $3.5 million for Montana's. Most of the co-ops had previously projected losses for 2014, but the actual losses they experienced tended to be higher. Illinois had projected $28 million in income and instead came in with a loss of $17.7 million. New York, the leader in enrollment, had a $35 million loss.

“Thirteen co-ops fell far short of their enrollment projections, and nine met or exceeded them. New York enrolled 155,400 people, more than five times what it had projected. But co-ops in Arizona, Illinois and Massachusetts only hit 4 percent of their enrollment targets. There were no year-end data for the Iowa/Nebraska co-op that was shut down.

“—Low enrollment and medical claims expenses that exceeded the income from premiums contributed to the losses. Nineteen co-ops had medical claims that exceeded premiums. The reasons included higher-than-expected enrollment of people with expensive health problems, lower-than-expected enrollment of younger people, and inaccurate pricing of premiums.”

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Tags: Health Care Spending Accelerating, High Costs, Red Ink, Plague Insurance Providers U.S. House, U.S. Senate To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. and "Like" Facebook Page - Thanks!