Another Failed Obamacare Promise: The Continuing “Job Lock” Problem

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Oops! It seems Barack Obama did it again. He made another healthcare promise he didn’t keep.

I know: You’re shocked. Am I? Not at all.

Healing the Economy Through Health Care—or Not

Remember way back in 2009 when Obama was pushing health care reform while the country languished through its worst financial crisis in years? Obama sold the country on socialized medicine—the last thing a country teetering on the edge of bankruptcy needs—by arguing that health care reform was economic reform. He promised that the Affordable Care Act would “build a new foundation for lasting and sustained growth.” One of the ways that health care reform would give a much-needed boost to the economy, Obama promised, was by ending what is known as “job lock.”


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Job Lock

First, a little background: Why do economists worry about job lock, anyway? More importantly, what is job lock?

I’m glad you asked.

Job lock is the phenomenon whereby individuals who receive their health insurance through their employers are afraid to leave their jobs out of fear of losing their health insurance. Those employees are literally “locked in” their jobs by their health insurance needs. Where employees are afraid to leave dead-end jobs for better jobs or, more importantly, to start their own businesses, they are less productive than they could otherwise be.

Growth in American productivity, in turn, is widely assumed to be necessary in order for American workers, as a whole, to see their wages rise. Indeed, this lack of productivity growth is one of the fundamental problems keeping the United States economy stagnant. For that reason, insurance-related job lock is seen as a major impediment to American economic prosperity—so much so that it is acknowledged as a pressing concern by politicians on both sides of the aisle.


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Unkept Promises

In 2009, the newly elected President Obama campaigned for the Affordable Care Act before a skeptical American public. In his characteristic eloquent style, Obama stood confidently before hopeful crowds flush with the promise of exceptional but free care. He spoke eloquently of health care as a human right, not a privilege. He told the stories of ostensible victims of the vicious healthcare system that routinely brought attendees to tears. He told of the horrors of the insurance industry, drug manufacturers, physicians like me, . . . everyone except the government—his government.

In an attempt to appear to reach across the aisle while doing nothing of the sort, Obama made a show of good will for his recently vanquished presidential opponent, Republican Senator John McCain. Obama magnanimously cited research from the conservative Heritage Foundation praising McCain’s 2008 health reform plan and its proposed ability to solve the job lock problem by offering tax credits to employees so they could afford to buy health insurance on the private market. While the details under Obamacare differed (and who has time for details?), Obama confidently promised the same outcome. As a result, Obama argued, American workers would feel free to leave unfulfilling and unproductive jobs, because they would “own” their health insurance coverage and could take it with them to a new, more fulfilling, and more productive job.

The American public could almost hear the cha-ching-punctuated purring of a humming, happy economy.

Curing job lock was the first step to economic utopia. Upon that both parties agreed. Obama had a point. The problem was, he had no power to deliver on his grand promise. To the contrary, the Affordable Care Act promised not relief, but exacerbation of the problem of job lock. And the American public was supremely uninterested in the boring details. And so they fell for Obama’s empty promises—as they say, hook, line, and syringe. Or something like that.



The Final Analysis

Now, over seven years later, as Obama prepares to leave the White House, we can chalk Obama’s pledge to end job lock up as another promise eloquently made but not kept.

According to a new study by the nonpartisan National Bureau of Economic Research (NBER), Obamacare has done nothing to solve the problem of job lock.

NBER economists recently studied states that expanded their Medicaid programs under the ACA. They found no evidence that there was a reduction in job lock in those states as a result.

What they did find was something completely predictable—and damning to Obamacare:

New Medicaid enrollees exceeded expectations. That is a problem, because those individuals require taxpayer subsidies, some to the tune of 100% of their Obamacare premiums. And they are likely—make that certain—to require continuing subsidies in the future. To make matters worse, many of them are the sickest of the sick and already need long-postponed—and very expensive—care. And Obamacare says they can have it, after the fact, for free.

It gets worse: While the number of new Medicaid enrollees exceeded expectations, the enrollment of middle-class, working, taxpaying Americans fell far short of expectations—according to one recent study, by more than one-half.

Economic Death Spiral

Obamacare, it seems, suffers from the most devastating economic malady of all: one-way cash flow. All of the Obamacare cash—heck, all of the healthcare cash—is destined to flow out to those who contribute nothing. At the same time, those who do contribute get nothing for their good deeds. And so they opt out. And the money stops flowing in. And there is nothing that Obama or anyone else can do to revive the dying patient.

As it turns out, you don’t have to have a degree in economics—or even be that interested in the boring details—to understand that this represents an economic death spiral.

The insurance industry’s reaction has been equally predictable: One by one, they are throwing in the towel and exiting the Obamacare exchanges. Despite the fact that they supported the law and were instrumental to its passage. Despite the fact that they knew these very losses would occur, and why. Despite the fact that they have already received their cash bailout, which was baked into the Obamacare pie.

So much for ending job lock. Now, we have both job lock and “disease lock.” Because the chances of your navigating these choppy waters without subjugating your interests to those of the federal government, and the Wall Street and insurance fat cats with whom they share both a bed and a lifeboat, are slim to none—nonexistent, really.

Welcome to Obamacare. I’m sure you’re going to hate it.

Those are my thoughts. Please let me know yours.




Another One Bites the Dust: Aetna Joins Humana, UnitedHealth, Others Leaving the Obamacare Exchanges

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Let’s face it: The American health insurance industry is officially dead.

Before you reach for the tissues and plan the funeral, know this: Theirs was a self-inflicted wound. It was also a calculated endgame.

Its victims? You and me, that’s who.

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Aetna Bows Out

Earlier today, Aetna reported that it is all but exiting the Obamacare exchanges starting in 2017. The company is slashing its involvement in the exchanges by 70%, from an initial participation in over two dozen states down to a mere four states for 2017. No doubt, that number will reach zero by 2018.

The only folks surprised by Aetna’s exit are those who haven’t been paying attention. In fact, all Aetna did today was join a growing list of major insurance conglomerates to leave the Obamacare exchanges. Just yesterday, I posted a blog about the equally abrupt exit of UnitedHealth (“Growing Profit by Bleeding Loss: The New Accounting of Obamacare”). And then there is Humana.

The community of Obamacare expats is growing by the day.

It is worth remembering that a mere two years ago, Aetna served as one of the biggest—and most influential—proponents of the Obamacare exchanges. Almost from inception, Aetna joined the exchanges in over two dozen states, eagerly jumping behind the Obamacare podium and preaching a sermon of free lunches and healthcare for all. At little to no cost to you. Coming to a hospital near you.

The only problem was, the sermon was  a lie. As they pounded the podium and wiped their furrowed brows, asking for donations and support—not to mention your trust—they knew that the sermon was a lie. You were the only one who didn’t know. Even back then, I tried to warn anyone who would listen; but no one wanted to hear my message.

Let’s try this again.

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Golden Parachutes and Beachfront Real Estate

They lied to you, and now they are leaving you with the consequences of their misdeeds.

Oh, and one more thing: They are getting rich in the process, and leaving you poorer than ever. And sicker than ever.

Welcome to Obamacare. Welcome to government-run healthcare designed by Wall Street and insurance fat cats and administered by liberal Democrats intent upon both controlling and rationing the care that you receive.

In yesterday’s blog referenced above, I discussed the fact that Obamacare specifically included a “risk corridor” that was intended to bail out the insurance industry. Everyone knew from the beginning that the nation’s insurance companies would lose massive amounts of money. And they have. Aetna lost over $200 million in the second quarter of this year alone. So did UnitedHealth, which has reported overall losses of some $1.3 billion in 2015 and 2016.

And yet to a company, they all came out in rousing support of the Obamacare mandate.

What gives?

They were promised money. Like most of American politics, money talked—or convinced them to keep their mouths shut, as it were, regarding what Obamacare would really do to the health care that you receive.

Okay. So in exchange for the insurance behemoths’ agreement to stand dutifully at the Obamacare podium—and thereby (as I mentioned yesterday) help forge the instrument of their own demise—they got a bailout. A nice, big, fat wad of government cash, guaranteed. Their CEOs dreamed of golden parachutes and sunset years on sun-drenched beaches.

Today, those same insurance executives are preparing to cash in, and are now looking at oceanfront real estate. But there is a catch, and it’s a big one: As with every government bailout, it now seems that there isn’t enough money to go around. After all, beachfront real estate is expensive—very expensive. And the list of those seeking to cash in is growing.

Forgive me for not weeping openly for their plight.

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Earlier today, Aetna Chairman and CEO Marc Bertolini issued a statement identifying as the problem that Obamacare plan members tend to incur high medical costs, while the federal risk adjustment program (the so-called “risk corridor”) meant to offset insurance company losses has not been adequate. As a result, Aetna, as many insurers, is losing money in the exchanges.

If you haven’t yet read it, you should read my post from yesterday that is referenced above. I said just that.

In other words, Aetna made a bad deal. So did UnitedHealth. And Humana. And now they want out. And the federal government—the same federal government that shoved this entire mess down the throats of good Americans—says that is just fine. Seems they never thought, before handing out the bailout cash, to require that the insurance companies stick around for the ride. And so that ride just got a lot bumpier—for you and me.

So . . . What is going on?

Here is the truth:

You are being hosed by the same fat cats this administration encouraged you to hate. My former law school classmate Barack Obama—assisted by generations of liberal progressive Democrats, free-lunch politicians, and medical establishment and educational elites—convinced you that they were the good guys. At the same time, they made you hate the insurance industry. They made you hate them, while blaming them for healthcare’s enduring plagues: high cost and inadequate access.

Having done that, they fed you a line that somehow the federal government would put the insurance companies in their place. They put them in their place, all right: right beside them in the bed that they share, and have always shared.

For their part, the insurance companies were happy to go along for the ride. After all, public vilification is nothing new to them. Everyone already hated them. All that was needed was a little reinforcement and the acquiescence of the insurers themselves. And that came at a price—a very high price, indeed. And, we now learn, with no strings attached. It was a typical government deal in which we, the American taxpayers and the only folks with no seat at the table, get hosed.

In the meantime, the politicians, policymakers, and government bureaucrats encouraged you to hate the insurance industry. They publicly blamed the nation’s insurers for most of the shortcomings of the American healthcare system. But here’s the kicker: They did all that with a wink and a nod in the insurance industry’s direction. Theirs was a fake conflict manufactured to lead you down the path to the destruction of not them, but you. Only you could not see that.

With the exits of Aetna, Humana, and UnitedHealth—not to mention the long list of insurers who will join them at the exit door—millions of Americans will be left with few to no viable options for both insurance coverage and care.

It was the classic bait-and-switch. And we are the catch of the day.

Even worse, the void will be filled—by the same federal government that orchestrated this entire charade. Acting as though they are benevolently bailing us out this time, they will offer what they intended for us all along: universal, single payer health care. Health care by the government, for the benefit of the chosen, in accordance with the social good. Socialized medicine.

Welcome to the VA Health System on steroids. Get comfortable. You’re going to be here for a while.


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Let’s face it: We allowed them to brainwash us into screwing up our own health care.

And now they are all bailing out, leaving us without care. Because make no mistake: single payer health care is the closest thing to no care that you will ever have the misfortune of experiencing.

Welcome to Obamacare. I’m sure you’re going to hate it.

Those are my thoughts. Please let me know yours.




Growing Profit by Bleeding Loss: The New Accounting of Obamacare




It’s all UnitedHealth’s fault. Sort of.

Modern Healthcare is a leading publication of the healthcare industry. Recently, Modern Healthcare published an article entitled “UnitedHealth posts major gains despite $200 million of additional ACA losses.”

Needless to say, the article caught my attention.

As bad as the headline is, the details in the article are even worse.

According to the author:

  • “UnitedHealth Group . . . grew revenue by more than 28%, even though the conglomerate continued to bleed money from the Affordable Care Act’s exchanges.”
  • “UnitedHealth’s profit increased 11% in the second quarter to $1.75 billion” despite “an additional $200 million of losses from the ACA’s public exchanges.”
  • UnitedHealth “has now lost approximately $1.3 billion in 2015 and 2016 from the new marketplaces.”
  • “Despite those losses, UnitedHealth raised premium prices and controlled costs in other areas to solidify its fundamental business.”
  • “Earnings from UnitedHealth’s operations totaled $3.2 billion in the quarter and $6.2 billion in the first half of this year.”
  • Finally, having made its excess profit despite record losses, “UnitedHealth has pulled out of most of the exchanges for 2017.”

Keep in mind that UnitedHealth currently insures almost 48 million Americans.

And yet they are pulling out of the Obamacare exchanges. After making record profits from the confusion and insurance industry . . . um, flexibility (I’m being nice) it created.

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A spokesman for UnitedHealth recently opined—out loud, and in public—that the only way the Obamacare exchanges will survive is with “a massive new infusion” of taxpayer money.

Keep in mind that Obamacare and its regulations already established a so-called “risk corridor” to subsidize insurance behemoths, like UnitedHealth, that lost money in the exchanges (as everyone knew they would). It was the only way to get the politically powerful insurance industry on board as supporting the passage and implementation of the very law that would destroy their industry. Tricky business, that: getting smart folks to help forge the instrument of their own death.

Everyone knew that the Obamacare exchanges would fail. And so, in exchange for their public support, the country’s largest—and most profitable—insurance companies demanded a bailout. It was classic quid pro quo. It was also the classic pay to play scheme. Only this time, the payer is you. And you don’t even get to play.

Welcome to health insurance administered by the federal government.

Needless to say, the insurance industry got just what it asked for in the risk corridor.

Only like all bailouts, now it seems what they got was not enough. Now they want more—of your money. And the federal government has signaled that it is more than willing to oblige. And remember that this time around, they have the power of the federal Internal Revenue Service and Department of Justice on their side. You will pay—dearly—for their . . . um, miscalculation (again, I am being nice, which isn’t easy).


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How can this be?

How, you may ask, can one of the nation’s largest insurance conglomerates support the passage of Obamacare over the wishes of its insureds, intentionally lose billions of dollars in the exchanges as a result, yet still make record profits?

And how can they legitimately make up for those losses—all of which were of their own doing—by increasing premiums paid by, and decreasing coverage provided to, those they insure?

And having cashed in on the legislated risk corridor, what right do they have to return to the well and demand even more taxpayer dollars to subsidize their mistake if not their misconduct?

Finally, having done all that, how can they simply exit the system, leaving some 48 million Americans with few options other than substandard Obamacare offered through an obscure and unaccountable middleman, if not the federal government itself?

Do those 48 million Americans have any idea where they will go? Does UnitedHealth even care?

I think we know the answer to both questions:  No.

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Welcome to the future.

Welcome to government-controlled healthcare administered by nameless, faceless, and unaccountable bureaucrats, working in concert with equally unaccountable insurance and Wall Street fat cats, none of whom cares about you or your care.

None of what is about to happen will make sense to good folks like you and me. None of it will be right, or fair. None of it will improve your health—quite the opposite.

And there is not one thing that you or your doctor can do about it.

And who do you think footed the bill for UnitedHealth’s “major gains” despite their record losses under Obamacare?

That’s right: You and me, that’s who.

And who do you think will provide the “massive new infusion” of cash that UnitedHealth now demands?

That’s right: You and me, that’s who.

Welcome to Obamacare. I’m sure you’re going to hate it.

Those are my thoughts. Please let me know yours.