A blog by the magazine's editors and contributors


Run Everybody! Avik Roy is Coming!

Avik Roy is a conservative blogger on healthcare who is also an adviser to the Romney campaign and who by sheerest coincidence also wants to scare the bejeesus out of everyone about Obamacare, especially if they live in a swing state. In two articles (so far) covering Ohio and Wisconsin, Roy leads off with a dire prediction: that Obamacare is going to cause premiums to go up 55 percent to 85 percent (Ohio) and 35 percent (Wisconsin) for individual insurance policies. Is this true? Are premiums going to go up like this?The individual market, where individuals (rather than businesses) purchase insurance policies is not like the group market and the way that the individual market operates now underlines a great deal of what is wrong with American healthcare today. Individual insurance is what is called in the business "heavily underwritten", which means that each policy sold is heavily scrutinized by underwriters. This means, of course, that no pre-existing conditions need apply, which in turn means that one has to be in almost perfect health to get such a policy. People who buy these policies also do not get the same level of benefits (as a rule) that people get with company policies. (For example, maternity care is usually not covered). So individual policies are relatively uncommon (only about ten million Americans have them -- out of about 200 million people with insurance) and relatively cheap.Under Obamacare, the individual insurance market will have to offer the same benefits that everyone else gets and will have to offer individual policies to everyone, even those with pre-existing conditions. People who have individual policies and want to keep their current rate levels and benefit levels can be grandfathered. People who before could not purchase insurance at any price will now be able to buy individual policies regardless of their pre-existing condition status and with the same benefit levels that people with group policies have. These new policies will cost about 55 percent to 85 percent (in Ohio) more than the cut-rate policies that can only now be purchased by the very healthy.

In the case of Ohio, Roy has appended a chart from an actuarial consulting company called Milliman that outlines the sources of the new rates. By way of comparison for small commercial groups (employers with 100 or fewer employees), the same things that will be increasing individual rates will be increasing small group rates by 1 percent to 3 percent. In the case of groups larger than 100 employees, rates won't go up at all.Roy uses a similar sleight of hand when he talks about Medicare. Obamacare will "cut" $716 billion from Medicare over the course of a decade. Ohio's share of this is $21.2 billion. Roy says:

This year, Ohio has 1,971,260 Medicare enrollees, which means that these cuts amount to $10,763 for every senior in Ohio.

He does not say that he is not talking about benefit cuts and that he is not talking about one year, but it sure looks like seniors are going to be hit for almost $11 grand a piece. In fact, these cuts are costs that will be cut over ten years whether or not Obamacare is repealed. The fact is, medical care becomes more efficient each year and these efficiencies (not benefit reductions) are going to fuel the savings. Fraud elimination will also contribute to these savings; Roy himself points out in another shrill article that Medicare fraud now amounts to four times the total profits of all commercial insurance companies.Roy also (in the Ohio article) has a headline that says Survey: 24 percent of Ohio doctors will stop accepting Medicare patients. Read further and one finds that the 24 percent said they would stop taking Medicare patients if fees decrease ten percent. While Obamacare mandates that fees will be reduced this much over a decade, Medicare mandates the same thing. Again these are not some kind of lump-sum reduction but cost cuts over a decade. If you think that they are utterly unreasonable, think about how many things that were once done with lengthy hospital stays that are now done on a outpatient basis.Avik Roy has made himself a bit of a career trying to scare people about Obamacare with articles like How Obamacare's $716 Billion in Cuts will Drive Doctors Out of Medicare and Obama's MLR 'Bomb' Will Create Private Insurance Monopolies and Drive Premiums Skyward Hallelujah! where he predicts declining insurance profits (didn't happen), soaring individual and small group premiums (also didn't happen), and further monopolization of private insurance markets (been happening for decades). I think he knows better. But his main job isn't to inform; it's to alarm. What he wants to do is to scare enough people to tip the balance towards Romney and the other GOP candidates. Don't be scared, even if it is Halloween.


Commenting Guidelines

unagidon, why has healthcare been reframed as an insurance debate? and why is healthcare treated as a commodity? I don't buy education insurance to send my kid to public school. I expect the schools to be there.I don't buy fire and rescue service insurance. I expect the Fire department to be there.(maybe I do buy that insurance, but I call it property taxes)

Andy Kowalczyk: Education, fire service and rescue service are all government-provided; but none of them are federal government-provided. Governor Romney might like your observation!

Healthcare is treated as a commodity because for most people it is part of their pay. To give it to some people who can't afford it is like paying them for not working. This seems, at least, to be the way that many people talk about it.There is a good business reason for having universal insurance. It will create a healthier and therefore more productive population. Also, the spreading of risk for the purely catastrophic events makes the same sense as any other kind of insurance. And making it universal is as logical as requiring everyone who drives to have car insurance.

Andy Kowalczyk: Education, fire service and rescue service are all government-provided; but none of them are federal government-provided.

They probably would be federally provided if it happened that they were not provided at all in certain parts of the country or to certain kinds of people.

About disaster services -- the big lesson Katrina taught us is that there has to be coordination of local, state, and federal services in major disasters affecting more than one state. You simply can't wait till the last minute, or later, to ask a neighboring state to lend some ambulances or send some food packages. The planning has to be regional and flexible. (Romney, of course, would get rid of FEMA entirely, the idiot.)

"Insurance" is a cover-all word for some very different things. "Health insurance" is more a complicated, Rube-Goldberg device for paying most of most people's everyday medical bills than a Lloyds of London device for preventing bankruptcy in the event of rare catastrophies.And health insurance is rapidly becoming a government-controlled pass-through system like Social Security, paid for by taxes, debt, and, where politically possible, reduction of service. Private insurance companies seem to be stll in the mix because Washington's not yet found a way to get rid of them.

I wrote: "Education, fire service and rescue service are all government-provided; but none of them are federal government-provided."unagidon replied: "They probably would be federally provided if it happened that they were not provided at all in certain parts of the country or to certain kinds of people."It might. The federal government might try to supplement what local governments do in order to fill the gaps, or it might nationalize the entire service. Or it might regulate, e.g. set minimal standards of service, as has been done in education for everything from academic achievement to how Americans with disabilities are to be educated. Isn't this really what the insurance exchanges are going to be: set up state by state?Certainly, in the case of education and fire service, there are huge disparities in how they are provided by local bodies, and arguably they are inadequately provided in certain parts of the country or to certain kinds of people. The same is true of police service.On the other hand, the federal government spends tens of billions of dollars, year after year after year, to subsidize education, and outcomes don't seem to be appreciably better - apparently, they are worse - than they were before the Education Department was created.

@Jim Pauwels (10/31, 4:10 pm) On what basis do you make the claim that education "outocmes don't seem to be appreciably better---apparently, they are worse---than they were before the Education Department was created".The evidence I'm aware of demonstrates, if anything, the opposite. First, that there was never a "Golden Age" of American public education. Second, based on NAEP scores, education outcomes are improving. As education reformer Diane Ravitch states, "NAEP scores show steady and very impressive improvement over the past twenty years. Our problems are tough, but they are not intractable. The next time someone tells you that U.S. education is failing, or declining, tell them they are wrong."

I really don't understand why conservatives don't love Obamacare. As far as I can see, it's a great big wet soul kiss to the insurance industry: You make sure you provide policies for the middle-aged and those with pre-existings, and we'll promise to subsidize whatever premiums you want to pay.It's federal money going where conservatives think it should go--back into private coffers.And, while I hope Unagidon's read on this situation is correct, I feel pretty pessimistic about America's willingness to help those who are priced out of health care insurance. The most frustrating part about health care is that there is no free market at work. If I'm short of cash, I can go shop at a cheaper supermarket and buy store brand oatmeal instead of name-brand cereal. But if I need gall bladder surgery or a CT scan, I have to go to the hospital where my doctor has privileges, and the costs at any of the five hospitals in a 30-mile radius of my house charge pretty much the same.

Luke, there is evidence that progress among American adults is flat at best over the years on basic literacy and numeracy; that the gains you cite for 8th and 3rd graders pretty much evaporate sometime during high school; that the US is in the second ten worldwide, and possibly slipping farther down the list, when it comes to education attainment among its young adults.If you're interested, look at p 12 of this link. It graphs long-term NAEP trends for elementary, middle school and high school students. A fair-to-optimistic reading of these charts is that we've been flat. I admit I base my view as much, or more, on anecdotes I've heard from veteran college and high school teachers who tell me that, on the whole, students aren't as good as they were thirty or forty years ago. Perhaps they are remembering a golden age that never was.Regarding the federal government's role: how many hundreds of billions of government dollars have been funneled through the Department of Education over the years covered by the graphs on p. 12, to achieve those flat results? Are those results acceptable? Those seem to be reasonable questions.

@Jim Pauwels (10/31, 10:59 pm) Thanks for your reply. Here's a link to a .pdf file from the Dept. of Education that summarizes the history of its funding since 1980.'ll notice that DOE includes all education funding---colleges and universities as well as elementary and secondary, although the chart helpfully provides subtotals for each category.The figures aren't adjusted for inflation, or compared to GDP growth. They also cover a time in which the number of children coming from homes in which English is not the primary language has grown dramatically. Also during this past generation, more children are poor---which is strongly linked to standardized test scores.I agree we're not currently in a "Golden Age" of public education. But by all sorts of measures (e.g., dropout rates, NAEP scores) we live in an age that's doing as well as or better than previous generations.

Excellence in federal services: This might be a controversial thing to say, because it's losing money right now, but I think the US Postal Service is an example of excellence. I think it's a miracle that for forty five cents I can drop a letter in the mail and fully expect it to arrive at its intended destination in a reasonable amount of time. Monday, as the NY City was shutting down for the hurricane, I saw mail carriers on the street. And yesterday, though the City is a shambles, my mail was delivered and my neighborhood post office was open.The US Post Office is one of my favorite institutions.

Irene --The super-conservative view that big government can't do anything well is pure myth.

Give me that good old time socialized medicine that I had while I was in the military and now have with the VA. I have been amazed at the very good quality of service and coverage that I have under the VA. I also have Kaiser coverage (us Californians are still reaping one of the true benefits of WWII!) and if Obamacare can be as encompassing and efficient as is Kaiser, this country will realize how much it has been bamboozled under the current rash of for-profit insurance plans that have been ripping off them and their employers for decades.

The US Postal Service is losing money because the House has forced it to prepay 75 years of anticipated retiree healthcare costs at the rate of $5 billion per year. No other federal agency has to do that, even the military or the VA which will and have incurred ginormous future costs. the fact that a significant portion of the USPS employee group is non-white have anything to do with that? Only asking dontcha know.

Jim McC. --I read just this week that the cost of administration per person on Medicaid is 1/3 less than the cost of administration per persons with private insurance. The notion that private businesspersons are automatically smarter, more efficient, more honest than government employees is a big conservative myth.

Ann and Irene, yes, I agree wholeheartedly! I am able to get some health screenings through the local health department, and the staff there are incredibly efficient. There is a "window" every year when you can apply for these screenings. You give your name and household income, and if you qualify you get an appointment within a week (compare to my family doc with whom I have to sked routine check-ups two months out). All I needed was photo I.D. and W2 form to verify income need. I waited just 15 minutes for my exam with the nurse practioner. She was as attentive and thorough as my own family doctor. The health department even scheduled the follow-up tests for me with the local hospital and gave me a "coupon" for them. My own family physician leaves it up to patients to schedule their own appointments with the hospital.So I would say that the service was actually superior to my private doctor's office. The problem is that it's a crapshoot each year whether I can get the screenings. If Raber's business has been good, we make too much money (but can't afford the $7K it costs for the screenings). Depending on funding levels, the state may also raise and lower the income eligibility bar. But being able to get the screenings every three or four years is better than nothing!

Roy "who by sheerest coincidence also wants to scare the bejeesus out of everyone about Obamacare, especially if they live in a swing state." Make that swing states ... and a whole bunch of them. It's a pretty brilliant / devious approach to campaigning. not just run one article? Because a whole bunch of headlines repeating the same data can go to a whole bunch of targeted states. And why place just one article, when you can release essentially the same article multiple times over several days from an oft-quoted mainstream publication? Think these individual Forbes headlines might show up in TV or newspaper ads in each of the states? Wouldn't surprise me a bit. And do you think viewers/readers would see them as opinion? or as Forbes news reporting?Yes, Roy admits he's a Romney campaign advisor. But that's just a helpful heads-up to readers that he's going to put his full weight ... and apparently Forbes' ... into repeating GOP talking points (which surely, as an advisor, he helped craft).It's a brilliant, dare I say, Rove-ian strategy.

Unagidon. My computer crashed and lost your email. Please email me I'd like to continue our conversation. TS