The Obamacare Tea Leaves

Conspiracy theorists should be swarming over the news of the past week: the Supreme Court pulled a rabbit out of the hat to save Obamacare for a second time; and five of America’s largest health insurance companies are involved in possible merger and/or acquisitions.  Conspiracy theorists are now invited to connect the dots.  It’s a pretty green field to work with – so theorize away.

Justice Scalia is definitely not a part of this conspiracy.  He bluntly called Chief Justice Robert’s decision a foul.  How is it that the Supreme Court could misinterpret a simple phrase that requires an individual to purchase health insurance through “an Exchange established by the State” in order to receive federal subsidies?  The wording of the law seemed extremely clear – to qualify for a federal health insurance subsidy, your state must have established its own website (or “Exchange”) and you must have obtained your health insurance through your State’s established Exchange.  However, my legal consultant advised me that the Supreme Court got it right.  According to my legal consultant, a law has to be interpreted in its entirety and its intention must be based on the entirety of the law.  Unambiguous or poorly written phrases should not be taken out of context with the overall spirit of the law.  Since nobody has read the 2,000+ page law, who can argue with Chief Justice Robert’s interpretation of the law’s intention?  Furthermore, does any American believe that the intent of Obamacare was NOT to give subsidies to people who could not afford Healthcare?

The Supreme Court based its decision on the spirit of the law; not on the very clear imperfections in the letter of the law.  But come on, the conspiracy theorists can’t believe this.  Chief Justice Roberts must be an actor in the conspiracy to force Obamacare down our throats.  The conspiracy is not just to force tax payers to subsidize other Americans’ health insurance – it is also to keep the train moving toward a fully socialized health care system.  Now, the conspiracy theorists are cranking.

If only such a conspiracy actually existed.  It would cause us all much less pain then the well-intended but still very imperfect Obamacare law.  An actual conspiracy would move us down the path to fully socialized health care much more quickly than the current path we are on.  The current path is one where Republicans scream that we must repeal and replace Obamacare but never define the replacement.  The current path has Democrats so defensive about the negative emotions surrounding Obamacare that they dare not take any actions to make it better.  Democrats sit back and say: “you Republicans say it is so terrible - you figure out how to fix it.”  In the meantime, President Obama declares that the Affordable Care Act (the real name of Obamacare) is a tremendous success and that it is now so neatly woven into the fabric of America that it will never go away.

If the Affordable Care Act (ACA) is such a success then why do the majority of Americans still oppose it?  Could it possibly be that the majority of Americans do not trust Washington?  Could it be that the majority of Americans believe that there is another foot to be dropped by the ACA?  Could it be that those Americans that did not receive subsidies got screwed by the ACA?  Could it be that health insurance under the ACA covers less than it did before the ACA even though the law itself mandates coverage for things that people may not need or want (e.g.: birth control and maternity benefits for a sixty year old woman)?  Could it be that you really couldn’t keep your doctor if you liked you doctor, or keep your health plan if you liked your health plan?  Could it be that the little guy making $60K a year that has to pay for his own health insurance had his premiums double and his deductible go up even more?  Could it be that the law does not apply to big businesses that are self-insured?  Could it be that members of Congress do not have to purchase their health insurance through healthcare.gov?  Or, could it be all of the above?

Note to the conspiracy theorists: focus on the insurance companies NOT the politicians.  These health insurance companies were the impediment to socializing health care.  The health insurance companies wanted to protect their survival.  Now they cannot see the forest for the trees and are setting themselves up for distinction.  It’s not a conspiracy, it’s the insurance companies’ stupidity – but we should welcome their stupidity because it paints a picture of the future and brings into to focus the questions that need to be answered to fix the ACA.

In the past week, five of the largest health insurance companies in the United States were in the news because they were trying to buy each other (United Healthcare, Aetna, Cigna, Antham, and Humana were all mentioned as targets of one or another’s takeover plans).  Apparently, the ACA leaves little room for innovative health plans to bring the cost of healthcare down, so the best way for the big insurance companies to bolster their bottom line is to reduce their administrative costs.   Bigger is better; one set of high paid executives instead of two or three improves the bottom line.  Likewise, one information system is less costly than multiple information systems.  All the insurance companies are offering the same bronze, silver, gold or platinum plans so why do they need multiple managers and information systems to manage the same plan?

If there is a conspiracy (and I am not a conspiracy theorist) it will manifest if and when the government does not prevent these large health insurance companies from massive consolidation.  But just for fun, let us ignore this sensible preventative measure and dream of a world where consolidation among health care insurance companies proceeds unencumbered.

Eventually the health insurers will consolidate to only a handful of large companies providing health insurance to the majority of Americans.  Then the government will have to intervene under our anti-trust laws and regulate these de facto monopolies.  Regulating the health care monopolies will require the government to stipulate the premiums that the health insurance companies can charge and the remuneration that health care providers will be paid.  Essentially, the monopoly health insurance companies will be outsourced administrators of the government’s health plans.  And, then someone will ask: why do we need more than one company to provide the administrative services?  And, once there is one administrator of the government’s health care plan that provides the same benefits to all citizens and pays the same fees to all health care providers someone will ask: why should different people pay different rates as over their lifespan they will all consume the same amount of healthcare?  Then someone will ask:  wouldn’t it be easier to just take a percentage of each individual’s paycheck then to administer all these individual monthly premiums?

While the above questions regarding the cost of administration are debated, another issue will be debated – should we have different pools of people provided with different benefits and charged different rates.  Today, the self-paying individual is in a pool with other self-paying individuals while the employees of big businesses are pools unto themselves.  Pools are further divided based on the geographic boundaries of each state.  There are also pools of Medicare and Medicaid recipients in each state.  Government employees are also in their own, different pools.  The obvious question is: why are there so many different pools with so many different benefit levels?  Wouldn’t the underwriting of one large pool with the same benefits provide less risk (and therefore less cost) than the sum of the risk associated with each of the individual pools?

The last question that needs to be addressed is who should pay the premium.  Why is America the only developed nation on earth where businesses pay for health insurance?  Doesn’t that put American businesses at a disadvantage?  Individuals should pay for health care the same way they pay for Social Security and Medicare.  This will not only make American businesses more competitive in the global marketplace it will also result in a more engaged nation of citizens.  Why do a higher percentage of senior citizens vote than any other voting bloc?  Because they have a vested interest in Social Security and Medicare.  If we instill a vested interest in each individual paying for their health insurance we will have a more robust democracy.

All of the above questions will be answered in time and then we will have a fully socialized health care system with a single payer and basic but equal benefits to all citizens.  And it will be more efficient than the current mess for which no one can offer a replacement.  It will also provide the health care that citizens of a developed nation deserve.  It will also allow for wealthy individuals who can afford better service to pay for it themselves.  It will also allow for health insurance companies to sell these “add-on” health care services to businesses and individuals: although the health insurance companies overall take will be a much smaller slice of the pie than it is today. 

To all those health insurance companies contemplating mergers and acquisitions: Thank you for the wisdom your stupidity has revealed.