ObamaCare's Date with Destiny Approaches

Is America being set up for a bailout of the insurance companies?

health-overhaul-problemsjpeg-060d8_s640x384Health and Human Services (HHS) Secretary Kathleen Sebelius, who remains as determined as ever to substitute Obama administration talking points for the truth, gave it her best effort in yesterday’s session before a House Energy and Commerce subcommittee. It was an underwhelming performance at best. As key dates approach and more facts about the government overhaul of the health care system emerge, it is becoming apparent that the ObamaCare scheme is headed for structural disaster -- and will take tens of millions of Americans with it.

In her testimony, Sebelius was quick to tout the new and improved website. “As more Americans give healthcare.gov a second look, they're finding the experience is night and day compared to where we were back in October,” she said in her opening statement. “And they're responding by shopping for plans and enrolling in greater numbers.” She boasted that the improvements resulted in 258,497 Americans "signing up" through the end of November, bringing the two month total to 365,000.

Rep. Joe Pitts (R-PA) was the first to let some air out of Sebelius's balloon. "The AP reported that a September 5 memo sent to you listed monthly enrollment targets for the exchanges, and this memo indicated that your target enrollment number for the end of December is 3.3 million. Based on HHS's release this morning, your department is more than 3 million off their target number, isn't that correct?" he asked. "Through the end of November, that is correct, sir," Sebelius responded.

Pitt also pressed Sebelius on the president's repeated claim that the average American family would save over $2,000 on their premiums, asking her if that statement was misleading. "I think the president talked about health care costs going down for Americans," she responded evasively.

Energy and Commerce Committee chairman Rep. Fred Upton (R-MI) took Sebelius’s boasting down another notch, noting that the regulations imposed by the new healthcare bill have already resulted in as many as 5 million Americans getting their plans cancelled. Thus, even if one assumes the administration's best-case scenario in terms of achievement, “millions more Americans would have lost coverage than gained it in the first months of the rollout,” he said.

It is far worse than that. Of the approximately 1.2 million Americans who have gained healthcare coverage so far, 803,000 have been determined to be eligible for Medicaid. In other words, those enrolled in "free" government-run healthcare account for two out of every three signups.

Rep. John Shimkus (R-IL) hammered Sebelius regarding that reality, noting that the expansion of Medicaid "is going to kill the states." He also grew enormously frustrated by Sebelius's refusal to admit that ObamaCare is making premiums spike. "It’s like talking to the Republic of Korea or something,” he fumed.

Despite Sebelius's obstinacy, premium spikes are almost inevitable, and not just because the law mandates unnecessary coverage for some Americans, in order to subsidize coverage for other Americans. For the law to operate effectively, 7 million Americans must enroll by the March 31 deadline for coverage in 2014. But not just any 7 million Americans. According to Robert Zirkelbach, spokesman for America's Health Insurance Plans, the association that represents U.S. health insurers, at least 40 percent of those enrollees must be young and healthy. "Because if only people who are older and have high health care costs decide to purchase coverage now, that's going to mean that next year, when open enrollment comes around again, premiums may be significantly higher than we see today," he explained.

"Purchase" is a key word, and once again at yesterday's hearing the HHS Secretary was forced to admit the administration's totals are for those who have chosen a plan, but have not yet paid their premium. Sebelius stated that actual payments are not due until mid-December. "Most Americans will not pay until the money is owed," she explained.

That is somewhat inaccurate, and perhaps wildly optimistic. With regard to accuracy, payment deadlines vary both by state and by insurer. Yet those who wish coverage to begin on January 1, 2014 must pay the first month's premium on time. As for optimism, according to consultants and some insurers, it's been slow going with regard to actual payments. Industry consultant Robert Laszewski reveals that one client reports only 15 percent "have paid so far." Consultant Kip Piper notes that he's hearing from health plans where only 5 to 10 percent of consumers are "truly enrolled.” Piper expects less than 50 percent will pay on time for coverage in January, rising to three-in-four by February or March.

Which brings us to the next potential ObamaCare land mine few Americans know about. If consumers pay their first month's premium, but fail to continue paying, their insurer cannot drop them for 90 days. Yet the insurer is only responsible for making payments during the first 30 days of that grace period. After that, it is up to the enrollee to make payment to healthcare providers for services rendered. If they don't (and why would they, if they're not paying their premiums) it’s up to the providers to collect.

The system is ripe for fraud as well. People can pay nine months of premiums for 12 months of healthcare, and when they are dropped, simply sign up for another plan--since they cannot be denied, due to the guaranteed-issue mandate contained in ObamaCare.

As Bloomberg News reported in October, many providers are already demanding upfront payments based on an individual's deductible. If enough of them take a beating via the aforementioned scenario, they could end up demanding upfront payments for non-emergency services period.

Sebelius was also pressed on the delays unilaterally imposed by the president on the business mandate part of the bill and the online small-business exchange. “What new delays will be coming on Christmas Eve and New Year's?” asked Rep. Marsha Blackburn (R-TN), seemingly sarcastically. Sebelius didn't take it that way, failing to rule out further delays. “We're working with insurers to make sure there is a smooth transition in the new year.”

Make that the beginning of the new year. By the end of the year, experts predict a tsunami of policy cancellations affecting 80-100 million Americans who get employer-sponsored insurance. And despite the Obama administration’s efforts to push the implementation of the business mandate beyond the 2014 elections, policy holders will be notified of those impending cancellations earlier than that. Considering the amount of public consternation engendered by five million policy cancellations, 16 to 20 times that number is likely to ignite an unprecedented firestorm--unless the date is delayed yet again.

Unsurprisingly, Democrats rose to Sebelius's defense. Rep. Henry A. Waxman (D-CA) insisted it "absolutely cannot be true, and is not true" that more people would lose insurance under ObamaCare than gain it. Rep. John Dingell (DMI) read letters from constituents and posed a series of yes/no questions to Sebelius, allowing the Secretary to tout the improvements of the website. Rep. Jan Schakowsky (D-IL) continued in that vein, before heaping praise on Sebelius. "Madame Secretary, let me tell you, I am absolutely confident that the role you have played in bringing health care to millions, tens of millions Americans, will go down in history,” she gushed.

Yet while anecdotal evidence may have comforted Democrats, Republicans remained unsatisfied. Rep. Joe Barton (R-TX) focused on last month's testimony by CMS officer Henry Chao, who revealed that the back end of the website, which processes insurance payments, had yet to be built. Sebelius claimed she didn't know what Chao was talking about, and that the payment process was working. What isn't working yet is the reconciliation process between the government and insurance companies regarding subsidies, she contended.

That is hardly good news. It is those subsidies that are supposed to help insurance companies defray the costs of implementing ObamaCare. Without them, many of those companies could go out of business.

Rep. Michael Burgess (R-TX) wasn't buying Sebelius's contention that all was well with regard to the payment process either. He told the Secretary he was unable to make a payment at healthcare.gov, further noting that "it's almost impossible" to do so.  He remains concerned that people who sign up for ObamaCare won't be able to complete the transaction, and won't get insurance.

Rep. Ed Whitfield (R-KY) speculated that America was headed for exactly the same kind of two-tiered healthcare system separating the wealthy from everyone else. "That's what's happened in other countries where laws like this are passed," he warned.

All of the above, including anemic enrollment numbers for private insurance while Medicaid signups explode; premium price increases necessitated by unnecessary coverage; the undue burden places on providers and insurance companies to collect payments and subsidies, respectively; fraud; and the reality that millions of additional American will see policy cancellations, threaten complete chaos. Chaos that could lead to a massive taxpayer-funded bailout to keep insurance companies afloat, that is already built into the law. If it gets to the point where the federal government owns insurance companies, just like they owned GM, it will be ObamaCare for the masses and healthcare "memberships" for the privileged few.

In other words, Americans are going to have to experience every one of the unforeseen and "unintended" consequences of ObamaCare before they find out what's really "in it." The next date with destiny is January 1, when a substantial number of Americans will either be pleased they have coverage, or shocked to discover they don't--even if they paid for it. That's reality. And nothing said by Sebelius, any other member of the Obama administration, or any Democrat can change it.

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